There is no shortage of dialogue on the positives of airlines hedging annual fuel requirements. Most energy trading professionals are astounded that many airlines do not hedge their fuel purchases. What trading desk wouldn't drool at the prospect of billions in easy, repeatable, hedging business annually? In an industry where fuel can comprise upwards of 30% of total annual costs, it would seem at first glance to be short sighted not to hedge. Combined with increasing competition, world globalization, and shrinking margins - it would seem to many to be just plain common sense. A closer look into the airline business quickly reveals a few reasons why airlines may choose to remain unhedged.
Posted by Sherry Hagerty, June 16, 2016.