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Old Oct 20, 08, 9:47 pm
  #36  
FWAAA
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Join Date: May 2001
Location: LAX; AA EXP, MM; HH Gold
Posts: 31,790
Originally Posted by Sam - DFW View Post
can i assume that from this may post by one of our most knowledgeable contributors that AA does not hedge?
Nope - that's not the content of that post. That post explained why AA didn't hedge fully in 2003 the way WN did. AA lacked the cash or good credit and settled its hedges in early 2003 as bankruptcy was looming. After it imposed concessions on its employees on May 1 of that year, it restarted its hedging program, albeit on a much smaller scale than WN.

Originally Posted by Sam - DFW View Post
so, aa is paying market price - no more no less, right?
Nope. AA has been hedged in varying degrees since late 2003 and has saved hundreds of millions of dollars on fuel costs since then. Since the oil price peak in July, however, AA's hedges for the third quarter became much less advantageous.

Originally Posted by Sam - DFW View Post
now FWAAA was very clear (in this thread) that the increased fares/fees might have only accounted for oil at $70/$80 and that AA continued to lose (despite increases fees/fares) on fuel at $140.
Well, AA just reported a third quarter loss from operations of $360 million, or about $4 million per day before special items. Pretty obvious that AA should have priced its tickets (fare or fuel surcharge) at least $4 million higher per day. Clearly, the surcharges were not high enough to cause a profit.

If AA were rolling in billions of profits, then I'd agree that the time had come to reduce fares (either base fare or surcharges). But until then . . . AA should attempt to raise them, not reduce them.
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