Oil Over $51

[Rico]

Question:

I remember U asking the judge for permission to hedge fuel a little while back Jim, were they able to do so...?

Thanks...

 

[BoeingBoy]

Don't know, Rico. Once the judge approved it, the ATSB also needed to approve (though not publicly). So unless something appears in the monthly or quarterly statements, we won't necessarily know.

Jim

 

[Rico]

Well, since it was a bit back, and I assume that they would not have gone to the trouble to get the judge's ok without also consulting with the ATSB, I hope that they were able to do so.

Thanks

 

[BoeingBoy]

I can only assume that they ran it by the ATSB beforehand also. My guess is the the feds would only place limits on the amount of hedging, not whether or not to hedge.

The only ATSB concern that I can see is that the cash collateral to cover the hedges would have a first priority lien held by the hedging partner, which would trump the ATSB's claim. So I assume that they wouldn't want hundreds of million of dollars of their collateral potentially taken off the table.

Jim

 

[BoeingBoy]

I should have added (somewhere) that the judge approved the hedging on Jan 27, or at least that's when his order was entered on the docket.

Jim

 

[BoeingBoy]

The DOE just released the latest report, so I thought I'd update the prices.

On 2/18/05, jet fuel spot prices for delivery at 3 U.S. points were:

New York Harbor - $1.3888 per gal, $58.33 per bbl
Gulf Coast - $1.3600 per gal, $57.12 per bbl
Los Angeles - $1.4793 per gal, $62.13 per bbl

Crude on the same day was:

West Texas Intermediate - $48.45 per bbl
Brent - $45.85

For comparison, Bloomberg is showing current crude at:

West Texas Intermediate - $51.27 per bbl
Brent - $48.75

Jim

 

[mweiss]

Looks like my back-of-the-envelope calculations weren't all that far off the mark.

 

[BoeingBoy]

Indeed they weren't....

Jim