Judge Okay's Fuel Hedging

a320av8r

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Aug 20, 2002
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Judge OKs deal with union

A bankruptcy judge on Thursday approved US Airways' new contract with its largest union, the International Association of Machinists, which represents nearly 9,000 workers.The new contract is expected to save the company roughly $270 million a year and allows the company to cut wages and benefits and to eliminate more than 2,000 jobs.

Separately at the hearing, Judge Stephen Mitchell approved motions for US Airways to enter into fuel hedging agreements, pay overdue amounts to a multi-employer pension fund benefiting mechanics-union workers, and abandon leases on certain city ticket offices, including one in Charlotte, Dow Jones reported. -- TONY MECIA
 
I am not all that clear on fuel hedging, so please help me out here. As I understand the fuel hedging, you pay for the fuel long before you actually use it. Doesn't this tie up money for a period of time, so-to-say? Looking for a clearer picture. Thanks in advance.
 
coolflyingfool said:
I am not all that clear on fuel hedging, so please help me out here. As I understand the fuel hedging, you pay for the fuel long before you actually use it. Doesn't this tie up money for a period of time, so-to-say? Looking for a clearer picture. Thanks in advance.
[post="243413"][/post]​
Fuel hedging was addressed during a maintenance meeting we had last year to of our VP's Jim Wimberly. If I remember correctly he stated you had to have A LOT of CASH on hand to hedge fuel since it's paid for in advance.

It's great if you can get it but where do you think the Liquid cash is coming from?
 
I'd wait til after the Iraqi elections, which I suspect will be perceived as better news than expected by the markets. Then buy hedges.
 
jack mama said:
does the company really want to hedge at $50 a barrel?
[post="243462"][/post]​


This bunch? Of course they will. They will hedge as much as the judge will let them at $50/barrel. And 72 hours later the oil industry will reel as the price drops precipitously to $18!
 
It's interesting to note that Alaska took a $14 million charge to its quarterly earnings due to fuel hedging losses. Like every thing in the commodity markets--there's a $ loser for every winner.
 
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