USAirways not hedging fuel

[ua767fo]

Below is a link to a very positive article about USAirways' fuel strategy.

DENVER, CO

http://www.bnet.com/blog/airline-business/us-airways-why-we-don-8217t-bother-hedging-jet-fuel-prices/3362

 

[Pi brat]

Below is a link to a very positive article about USAirways' fuel strategy.

DENVER, CO

http://www.bnet.com/blog/airline-business/us-airways-why-we-don-8217t-bother-hedging-jet-fuel-prices/3362

They put a great picture in that article, an IL-76 I believe. They are going west and the A321s are going east.

We will see how this strategy works out this year. I will have to put the article in a folder and pull it out in DEC.

 

[john john]

It is easer to do noting

 

[crazystnic]

author used to work for AWA...

it's a bad move to not be partially hedged in this enviorment

 

[john john]

author used to work for AWA...

it's a bad move to not be partially hedged in this enviorment

Biography
Brett Snyder

Brett has worked in various pricing, sales, and marketing functions for airlines including America West and United. In addition to writing for BNET's Travel industry blog, he also writes the award-winning consumer travel blog, The Cranky Flier, and holds an MBA from Stanford.

 

[WorldTraveler]

Hedging is insurance - and any insurance is tied to the volatility surrounding the environmentr that is being insured.

Given that there was only a couple cents worth difference between the average price paid for fuel by US and the price paid for the other network carriers and WN that hedged extensively, it should tell you that the margin for when the value of that insurance kicks in is pretty thin.

Given that the whole Egypt thing blew up in the 1st quarter - and with it a spike in fuel prices - the formula US used might have already changed. We will know later this year - and if US' situation changes substantially, they will have to report it before 1st quarter earnings.

I personally would not want to be the only carrier that didn't have hedges in place while others do and be in the midst of a volatile fuel environment. It wouldn't take a whole lot of effort by a competitor or two to really put the screws on US during a fuel cost crisis.

 

[does this plane go to paris]

I personally think that the Wikileaks guy is an #### but The Guardian newspaper in England, which has been given first access to Wikileaks, is now reporting that there are State Department cables discussing the fact that Saudi Arabia is running out of oil and that as soon as next year, the Saudi's will not be able to maintain their guarantee output of 12.5Million barrels a day. If true that would jolt the market.

 

[wings396]

I personally think that the Wikileaks guy is an #### but The Guardian newspaper in England, which has been given first access to Wikileaks, is now reporting that there are State Department cables discussing the fact that Saudi Arabia is running out of oil and that as soon as next year, the Saudi's will not be able to maintain their guarantee output of 12.5Million barrels a day. If true that would jolt the market.

Too bad that we have to depend on these countries for a good portion of our oil. Let's face it, if somebody in the middle east has diarrea it effects the price of oil for the rest of the world. I tend to think that they make up a lot of this crap just to run the price up anyway. I hope that I am around long enough to see the USA tell these nitwits to shove their oil, because we don't need it. Of course we can't leave out the traders that run it up to make a quick buck too.....

 

[WorldTraveler]

As of this hour, Nymex crude futures are nearing $100/bbl, Brent spot futures are just under $111/bbl, and heating oil futures (a reasonable proxy to jet fuel since there are no futures in jet fuel) is nearing $3/gal. Most of the US airlines had all-in fuel costs under $2.50/gal in the last quarter.

Without hedges, US obviously will face the fill impact of fuel prices.

Should the situation in the Middle East wipe out the summer travel season because of a necessary run up in prices and a reduction in capacity - while costs continue to increase, US' future could well be jeopardized; other airlines are not exempt but their hedges will help reduce the impact on them.

 

[autofixer]

As of this hour, Nymex crude futures are nearing $100/bbl, Brent spot futures are just under $111/bbl, and heating oil futures (a reasonable proxy to jet fuel since there are no futures in jet fuel) is nearing $3/gal. Most of the US airlines had all-in fuel costs under $2.50/gal in the last quarter.

Without hedges, US obviously will face the fill impact of fuel prices.

Should the situation in the Middle East wipe out the summer travel season because of a necessary run up in prices and a reduction in capacity - while costs continue to increase, US' future could well be jeopardized; other airlines are not exempt but their hedges will help reduce the impact on them.
[/quote]

Depended on how it goes in Asia Minor, we could see $200+ per barrel oil very soon. If this occurs, LCC will be the least of our worries, food will be our biggest worry. Get ready.

http://www.cnbc.com/id/41717408

http://www.independent.co.uk/news/business/news/oil-prices-heading-for-200-per-barrel-jim-rogers-warns-2190289.html

http://www.naturalnews.com/031049_food_supply_population_control.html

 

[crazystnic]

yeah the dynamic duo don't look to smart at this point do they?

Everyone knows oil was going up...

not heding to get thru this when prices were very very low was a mistake.

Now we all pay for it.....

so much for there so called natural hedge!

 

[autofixer]

It is amazing that the "talking heads" on CNBC are yawning as oil screams above $100 per barrel in NY and over $111 in London. I find this very scary as these idots are sheep and they move as a herd which is almost always wrong. I guess there is no "shock" value with oil being above $100, as it has been there before. I have been looking for a chart to back me up, but every recession since the post WWII recession have been preceeded by oil spikes.

If you want a scare, here is an article for you. Note when this article was written: http://www.naturalhub.com/slweb/fading_of_the_oil_economy_depression_timing.htm

 

[Art at ISP]

When are we going to learn that we need to find an alternative for oil yesterday? Where is all the research on renewable oil substitutes like biofuel?
There was a big deal a while back about making fuel from garbage...where is that?

We need to deal with the fact that a substitute for oil is needed NOW.

Two years ago, my two cars were averaging 20 miles per gallon.

My two cars today are averaging 25-27.....one 4 cyl turbo and one hybrid.

Time to continue improving fuel efficient vehicles along with oil substitutes.

A while back I attended a seminar on the root causes of terrorism at my daughter's college. The professor happened to be from Iran, and at the end I asked him what would happen if you found a way to make oil basically worthless....his answer? Problem solved!!!


My best to you all...

 

[FrugalFlyerv2.0]

A while back I attended a seminar on the root causes of terrorism at my daughter's college. The professor happened to be from Iran, and at the end I asked him what would happen if you found a way to make oil basically worthless....his answer? Problem solved!!!

If a prof honestly and seriously gives you that answer regarding the root cause of terrorism you should consider sending your daughter to a different college. It' obvious that at this college she's getting no value (education) for the money.

 

[FWAAA]

Parker and Kirby have to be hoping that oil prices moderate (or plunge quickly). Yesterday, jetA spot prices hit $3.12/gal:

http://www.marketwatch.com/story/airline-stocks-struggle-with-oil-near-100-2011-02-24?siteid=yhoof