The State of Airline Fuel Hedging & Risk Management

Pmh Stfth ja Fordoeh Auhd Mh`goeg ! ^osl Ifefghihet 

Hxhcutovh Suiifry Pmh Stfth ja Fordoeh Auhd Mh`goeg ! ^osl Ifefghihet os tmh rhsudt ja f stu`y cje`ucth` tj rhvhfd tmh currhet stfth ja auhd mh`goeg fe` rosl ifefghihet fijeg cjiihrcofd fordoehs% Pmh ijst ejthwjrtmy e`oeg ja tmh stu`y os tmft$ wmodh tmh ifkjroty ja  fordoehs frh mh`goeg tmhor auhd proch rosl$ ehfrdy mfda stfth` tmft tmhor mh`goeg prjgrfis smjud` nh udozoeg mh`goeg strfthgohs wmocm nhhr rhhct tmhor tjdhrfech ajr rosl fe` cjrpjrfth jnkhcvhs% 

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=6( stfth` tmhy frh jr$ mfvh prhvojusdy$ mh`gh` tmhor kht auhd proch rosl Ja tmjsh wmj frh jr mfvh hegfgh` oe kht auhd mh`goeg$ 71( stfth` tmft tmhy mfvh fe jcofd auhd mh`goeg pjdocy Wmhe fslh` fnjut tmh proifry purpjsh ja tmhor auhd mh`goeg prjgrfi$ 00( stfth` tmft ot os tj prjthct fgfoest fgfoest smjrt thri proch oecrhfshs Swfps fe` cfdd jpjes frh tmh ijst pjpudfr mh`goeg oestruihets udozh` fijeg stu`y pfrcopfets =>( stfth` tmft tmhy currhetdy mfvh auhd mh`ghs oe pdfch Wmhe fslh` mjw tmhy cjud` ijst oiprjvh tmhor auhd mh`goeg prjgrfi$ 3?( stfth` tmft tmhy cjud` `j sj ny udozoeg mh`goeg strfthgohs wmocm nhhr rhhct tmh cjipfey‟s rosl tjdhrfech fe` mh`goeg gjfds

Oetrj`uctoje Jvhr tmh cjursh ja tmh pfst ahw yhfrs$ vjdftodh jod prochs mfvh wrhflh` mfvjc je tmh fordoeh oe`ustry$ f trhe` wmocm `jhse‟t fpphfr tj nh roph ajr cmfegh feytoih oe tmh ajrhshhfndh auturh% Nhtwhhe cru`h jod jod rosoeg tj ehfrdy 682*NND 682*NND oe >22=$ sunshquhetdy cjddfpsoeg tj nhdjw 02$ fe` rhchetdy rosoeg tj fnjvh 6>8$ tmh pfst aovh yhfrs mfvh prjvhe tj nh f vhry cmfddhegoeg toih toih ajr ajr tmh fordoeh oe`ustry oe`ustry%% F``oeg oesudt tj oekury$ tmh stfth ja tmh cfpotfd ifrlhts mfs dhat ifey fordoehs wotmjut fcchss tj iucm ehh`h` cfpotfd% Oe tmhsh toihs ja sogeoaocfet cmfegh fe` uechrtfoety$ ot os hsshetofd tmft cjiihrcofd fordoehs hipdjy f sjue` auhd mh`goeg fe` rosl ifefghihet prjgrfi% Pmhsh prjgrfis wodd ejt jedy fddjw tmh fordoehs tj survovh tmh ijst cmfddhegoeg toihs$ nut smjud` fdsj fddjw tmhi tj hxchd oe tmh nhst ja  toihs fs whdd% Pmh proifry ajcus ja hehrgy rosl ifefghihet fs ot rhdfths tj cjiihrcofd fordoehs os tmh mh`goeg fe` rosl ifefghihet ja   kht auhd proch rosl% Cjeshquhetdy Cjeshquhetdy$$ tmos sunkhct ajris tmh nfsos ja tmos stu`y stu`y$$ wmocm strovhs tj fefdyzh tmh currhet auhd mh`goeg fe` rosl ifefghihet prfctochs ja cjiihrcofd fordoehs fcrjss tmh gdjnh%

@hijgrfpmocs 8>( ja pfrtocopfets oe`ocfth` tmft tmhor cjipfey‟ cjipfey‟ss smfrhs frh pundocdy trf`h`$ 33( oe`ocfth` tmft tmhy frh provfthdy provfthdy mhd`$ wmodh 62( oe`ocfth` tmft tmhy frh gjvhreihet jweh`% Wmhe fslh` wmhrh tmh ifkjroty ja tmhor adogmts jrogoefth$ jrogoefth$ 0=( stfth` stft h` tmft tmhor adogmts jrogoefth oe Hurjph$ >0( oe Ejrtm Fihrocf$ 60 ( oe tmh Fsof)Rfcoaoc rhgoje fe` 62( oe Farocf% 87( ja pfrtocopfets oe`ocfth` tmft tmh ifkjroty ja tmhor adogmts frh oethreftojefd$ wmodh tmh rhifoeoeg 03( oe`ocft oe`ocfth` h` tmft tmhy ifkjroty ja tmhor adogmts frh `jihstoc% Pmh pfrtocopfets stfth` tmft tmh euinhr ja forcrfat oe tmhor adhht frh fs ajddjws;

E uinhr uinhr ja Forcrfat Forcrfat oe Adhht 3=%62(

02( 33%33( 32(

>3%=6( >2( 62(

0%71(

2( 6 ) >0

>8 ) 78

71 ) 682

5 6 82

Auhd Mh`goeg Rjdocy ! Gjv Gjvhrefech hrefech 71( ja pfrtocopfets stfth` tmft tmhy mfvh fe jaaocofd auhd mh`goeg fe` rosl ifefghihet pjdocy wmodh tmh rhifoe`hr stfth` tmft tmhy `j ejt mfvh sucm f pjdocy% 13( stfth` tmft tmhy `j hipdjy mh`gh fccjuetoeg$ >8( sfo` tmhy `j ejt$ wmodh tmh rhifoe`hr oe`ocfth` tmft mh`gh fccjuetoeg os ejt fppdocfndh tj tmhor auhd mh`goeg prjgr p rjgrfi% fi% Wmhe fslh` wmj os rhspjesondh ajr ifloeg tmhor cjipfey‟s mh`goeg `hcosojes$ pfrtocopfets oe`ocft oe` ocfth` h` tmh ajddjwoeg;

^hspjesonodoty ajr Mh`goeg @hcosojes 08( Njfr` ja @orhctjrs @orhctjrs

3?(

02( 38(

Mh`gh Mh` gh Cjiiotthh Cjiiotthh

32( >8(

CHJ*Rrhso`het*I@ >>(

>>(

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CAJ*QR ja Aoefech 66(

Jtmhr 1(

Stfth ja Oe`ustry Mh`goeg Rrfctochs Wmhe fslh` oa tmhy frh currhetdy mh`goeg fe`*jr wmhtmhr tmhy mfvh prhvojusdy hegfgh` oe mh`goeg$ =6( feswhrh` oe tmh faaoriftov faaoriftovh% h% Ja tmjsh wmj oe`ocfth` tmft tmhy frh currhetdy mh`goeg jr mfvh prhvojusdy hegfgh` oe mh`goeg$ =>( oe`ocfth` tmft tmhy currhetdy mfvh auhd mh`ghs oe pdfch% Wmft fslh` wmft os tmh proifry purpjsh ja tmhor auhd mh`goeg fe` rosl ifefghihet ifefghihet prjgrfi$ prjgrfi$ pfrtocopfet stfth` stfth` tmh ajddjwoeg;

Rroifry Gjfd ja Auhd Mh`goeg Rrjg Rrjgrfi rfi 12(

Iotogfth cfsm adjw vjdftodoty

8>( 82( 02(

Rrjthct Rrjthct fgfoest fgfoest smjrt)thr smjrt)thri i auhd proch oecrhfsh oe crhfshss

3>( 32( >2( 62( 2(

61(

Rrjthct Rrjthct fgfoest fgfoest djeg)thr djeg)thri i auhd proch oecrhfshs

Ijst Xtodozh` Mh`goeg Oestruihets Rfrtocopfets stfth` tmft tmhy frh currhetdy fe`*jr mfvh prhvojusdy utodozh` vfrojus mh`goeg oestruihets fe` structurhs fs fs oe`ocfth` oe`ocfth` oe oe tmh cmfrt smjwe nhdjw nhdjw%% Fs wh wh wjud` mfvh fssuih`$ tmh ifkjroty ja pfrtocopfets frh utodozoeg aoxh` proch swfps fe` cfdd jptojes$ wmocm the` tj nh tmh afvjrh` mh`goeg oestruihets ja tmh oe`ustry oe`ustry%%

Mh`goeg Oestruihets Xtodozh` 08%22(

3=%76(

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6>%?2 %?2(

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Autu Auturhs rhs

Ajrw jrwfr`s fr`s -Rmysocfd/

2%22( Swfps

Cfdd Jptojes

Cjstdhss Pmrhh)Wfy Cjddfrs Cjddfrs

 Fvhr  F vhrfgh fgh Phejr Phejr ja Mh`gh Rjsotojes Wmhe fslh`$ ft fey govhe toih$ wmft os tmh fvhrfgh `urftoje ja tmhor auhd mh`ghs$ pfrtocopfets stfth` tmh ajddjwoeg$ fs oe`ocfth` oe`ocfth ` oe tmh cmfrt cmfrt smjwe smjwe nhdjw% nhdjw% Wmodh ot smjud`e‟t smjud`e‟t cjih fs f surprosh tmft tmh ifkjroty stfth` tmft tmhor mh`gh pjsotojes fvhrfgh dhss tmfe jeh yhfr$ ot os oethrhstoeg tj ejth tmh djw phrchetfg phrchetfgh h ja djeghr `fth` mh`goeg% Wmhe cjipfrh` tj mostjrocfd aoefecofd stfthihets ja euihrjus fordoehs$ ot fpphfrs tmft mogmdy vjdftodh jod prochs frh `rovoeg ijst fordoehs tjwfr`s mh`ghs ja smjrthr thejrs tmfe wjud` nh tmh cfsh oe f djwhr vjdftodoty hevorjeihet% hevorjeihet%

Fvhrfgh @urftoje @urftoje ja Mh`gh Rjsotoj Rjs otojes es 82( 02(

3=%01( 32%77(

32( >3%2=( >2( 7%1?(

62( 2( 2)1 Ije Ijetms

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6?)> ?)>0 Ijet jetms

Currhet Mh`gh Rjsotojes Wmhe fslh`$ ft fey govhe toih$ wmft phrchetfgh ja tmhor fetocopfth` auhd cjesuiptoje os mh`gh` ajr tmh upcjioeg yhfr$ pfrtocopfets stfth` tmh ajddjwoeg$ fs oe`ocfth` oe tmh cmfrt smjwe nhdjw nhdjw%% Wmodh sjih pfrtocopfets frh cdhfrdy vhry whdd mh`gh` ajr tmh cjioeg yhfr$ kust smy ja mfda ja tmh pfrtocopfets frh dhss tmfe ajrty phrchet mh`gh`$ oe`ocftoeg tmft tmhy frh quoth cjiajrtfndh mfvoeg vhry sogeoaocfet hxpjsurh tj spjt ifrlht ifrlht prochs% Pmos os oethrhstoeg oethrhstoeg fs ifey fordoehs mfvh rhchetdy stfth` tmft tmhy frh ahfraud ja jod prochs rosoeg fnjvh tmh currhet ajrwfr` curvh% Fvhrfgh Rhrchetfgh ja Auhd Mh`gh` ajr Ehxt 6> Ijetms 82( 03( 02( >?(

32(

>2( 60( 62(

7(

7(

2( 2)>2(

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06)12(

16)=2(

=6)622(

Auhd Mh`goeg Succhss Wmhe fslh` mjw tmhor cjipfey `hthrioehs wmhtmhr tmhor auhd mh`goeg prjgrfi os fe`*jr mfs nhhe succhssaud; 31( stfth` tmft fvjo`oeg hxpjsurh tj smjrt)thri auhd proch oecrhfshs os tmhor `haoeotoje ja succhss% Fe f``otojefd 31( stfth` tmft tmhor auhd mh`goeg prjgrfi os `hhih` tj nh f succhss oa tmhy frh fnodoty tj iotogfth cfsm adjw vjdftodoty% Oethrhstoegdy$ 60( stfth` tmhy nhdohvh tmhor mh`goeg prjgrfi os succhssaud oa sfo` prjgrfi prjvo`hs tmhi wotm f cjiphtotovh f`vfetfgh oe tmh oe`ustry% Pmh rhifoe`hr ja tmh pfrtocopfets p frtocopfets hqufddy stfth` stfth` tmft tmhor auhd mh`goeg prjgrfi os cjeso`hrh` f succhss oa tmhy frh fndh tj fvjo` hxpjsurh tj djeg)thri auhd proch oecrhfshs jr oa ot oiprjvhs tmhor prjaotfnodoty%

Oiprjvoeg Auhd Auhd Mh`goeg Mh `goeg ! ^osl Ifefghihet Rrjgrfis Wmhe fslh` mjw tmhy cjud` ijst oiprjvh tmhor auhd mh`goeg fe` rosl ifefghihet prjgrfi; 3?( sfo` utodozoeg mh`goeg mh `goeg strfthgohs strfthgohs tmft nhtthr rhadhct tmh cjipfey's rosl tjdhrfech fe` cjrpjrfth gjfds% >>( stfth` tmft hstfndosmoeg f cjesosthet fpprjfcm fpprjfcm ja mh`goeg je f rhgudfr nfsos wjud` ijst oiprjvh oip rjvh tmhor mh`goeg prjgrfi% 67( oe`ocfth` tmft tmhor mh`goeg mh` goeg prjgrfi wjud` nh ijst oiprjvh` ny `hvhdjpoeg nhtthr prjchsshs tj hxhcuth fe` oipdhihet tmhor mh`goeg strft strfthgohs% hgohs% ?( ja pfrtocopfets oe`ocfth` tmft jptoiozoeg jr ijehtozoeg tmhor hxostoeg mh`gh pjsotojes wjud` nh tmh nhst wfy tj oiprjvh tmhor auhd mh`goeg prjgrf prjgrfi% i%

Sjurchs ja Auhd Mh`goeg  F`voch$  F` voch$ @ftf ! Oeajriftoje Wmhe pfrtocopfets whrh fslh` oa fe` wmji tmhy rhchovh mh`goeg f`voch$ `ftf jr oeajriftoje tmhy oe`ocfth` tmh ajddjwoeg; Pmh afct tmft tmh vfst ifkjroty ja tmh pfrtocopfets stfth` tmft tmhy frh rhdyoeg je aoefecofd oestotutojes fe` auhd suppdohrs$ ijst dolhdy tmhor cjuethr)pfrtohs$ tj prjvo`h tmhi wotm mh`goeg f`voch$ `ftf fe` oeajriftoje$ oipdohs tmft ifey oe tmh fordoeh oe`ustry mfvh yht tj f`jpt hehrgy mh`goeg fe` rosl ifefghihet nhst prfctoc p rfctochs% hs% Rroifry Sjurch ja Mh`goeg F`voch$ @ftf ! Oeajriftoje Oeajri ftoje =2( 72(

1=%0>(

12( 82( 02( 32( 68%7?(

>2(

62%83(

62(

8%>1(

2( Aoefecofd Oestotutoje

Auhd Suppdohr

Cjesudtfet

Oethrefd ^hsjurchs

Ihtmj`jdjgy Pmh Stfth ja Fordoeh Auhd Mh`goeg ! ^osl Ifefghihet prjvo`hs fe jvhrvohw ja tmh currhet auhd mh`goeg fe` rosl ifefghihet prfctochs ja tmh cjiihrcofd fordoeh oe`ustry% Pmh twhety)ajur pfrtocopfets ja tmh stu`y whrh oevoth` tj pfrtocopfth vof hifod fe` thdhpmjeh% Pmh stu`y wfs cje`ucth` jedoeh `uroeg tmh woethr ja >266)>26>%

 Fclejwdh`ghihets  Fclej wdh`ghihets Wh wjud` dolh tj tmfel Fordoeh Hcjejiocs ajr tmhor cjiiueocftojes fe` ifrlhtoeg fssostfech je tmos prjkhct%

Ihrcftus Hehrgy F` F`vosjrs vosjrs Ihrcftus Hehrgy F`vosjrs os tmh dhf`oeg$ oe`hphe`het hehrgy mh`goeg ! Ihrcftus rosl ifefghihet f`vosjry ri% Jur cdohet nfsh oecdu`hs hehrgy cjesuihrs$ ifrlhthrs$ ifrlhthrs$ prj`uchrs$ rhehrs$ fe` trf`hrs fs whdd fs efecofd oestujes$ oestujefd oevhst o evhstjrs jrs fe` prjahssojefd shrvochs ris% Ajr ijrh oeajrifje$ pdhfsh vosot www%ihrcftushehrgy%cji jr cjetfct us ny pmjeh oe Mjustje ,6%763%?72%6223 jr Dje`je ,00%>2%312=%6>77%

 Fordoeh Hcjejiocs os tmh ajrhijst gdjnfd pundocfje `h`ocfth` tj ehws fe` fefdysos ajr forcrf jwehrs$ jphrftjrs jphrftjrs fe` dhssjrs fe` hvhrytmoeg tmft fhcts tmh `fy)tj)`fy rueeoeg ja tmhor nusoehss%

 Fordoeh Hcjejiocs Hcjejiocs

Fs f dhf` pundocfje ja Fvofje Ehws Dt`$ Fordoeh Hcjejiocs Hcjejiocs dds f ifrlht vjo` wotm h`otjrofd stf fndh tj wroth fnjut tmh tmoegs tmft fordoehs fe` dhssjrs ehh` tj lejw oe jr`hr tj iflh oeajrih` `hcosojes% Pj vohw tmh dfthst dfthst ossuh ja Fordoeh Hcjejiocs$ Hcjejiocs$ pdhfsh vosot www%fvofjeehws)jedoeh%cji*fordoeh)hcjejiocs hcjejiocs%%