Showing posts with label HEDGING. Show all posts
Showing posts with label HEDGING. Show all posts

Tuesday, May 15, 2012

FUEL HEDGING

Srinivas Rao | 12:05 AM | | | Best Blogger Tips

Fuel hedging is a contractual tool used by some airlines to stabilize jet fuel costs. A fuel hedge contract commits an airline to paying a pre-determined price for future jet fuel purchases. Airlines enter into such contracts as a bet that future jet fuel prices will be higher than current prices or to reduce the turbulence of confronting future expenses of unknown size. If the price of jet fuel falls and the airline hedged for a higher price, the airline will be forced to pay an above-market rate for jet fuel.(Wikipedia)