Oil Not Management Will End This Airline + Others

[mweiss]

This does not stop them from "subsidizing" an unprofitable new routew with a hedged old one however.

[post="260535"][/post]​

You were fine up to that last sentence. The new routes aren't necessarily unprofitable (except in the very short term). They're less profitable, perhaps, but that hardly makes them bad choices.

 

[RowUnderDCA]

See, and I thought a fuel hedge was a separate financial arrangement from the actual purchase of fuel. I thought that it simply brought in cash when fuel prices go up and that purchasing more fuel or less fuel going forward wouldn't effect a hedge..... of course that was just my imagination.

 

[Busdrvr]

See, and I thought a fuel hedge was a separate financial arrangement from the actual purchase of fuel. I thought that it simply brought in cash when fuel prices go up and that purchasing more fuel or less fuel going forward wouldn't effect a hedge..... of course that was just my imagination.

[post="260584"][/post]​

I'm with you 100%. I personally think the hedges should be reported as investment income with operating income reported seperately. Going forward it gives a much better picture of what is really going on. But in any case, your statement is dead on.

 

[FWAAA]

I'm with you 100%. I personally think the hedges should be reported as investment income with operating income reported seperately. Going forward it gives a much better picture of what is really going on. But in any case, your statement is dead on.

[post="260976"][/post]​

50 years ago in CORN PRODUCTS CO. v. COMMISSIONER, 350 U.S. 46 (1955) , the US Supreme Court faced a very similar situation where the issue was capital gain/loss v. ordinary income treatment.

I agree that airlines should have to very clearly disclose the impact of hedging, and not just "It saved us $xxx million this past quarter."