Originally Posted by gregorygrady
1. The fuel hedging is a simple question. Does anybody know exactly how SWA is hedged? Are they hedged in terms of jet fuel prices or are they hedged in terms on crude oil prices? I know they are hedged 85% thru the end of this year at $26 per barrel. But did they actually hedge themselves in crude oil or do they just "translate" into crude oil prices so the average layperson can understand it since most people don't know what jetfuel costs? Recently I have been reading a lot about how the price of refining the crude into jetfuel is what is actually driving up prices for airlines since this increase is FAR higher than just the increase in crude oil. Anybody know the answer to this? Is SWA's hedging contracts are for jetfuel, they should be in great shape. If their hedges are only for crude, then they are not in nearly as good shape since they still have to pay the high prices to refine the crude into jetfuel.
WN's hedges consist primarily of home heating oil positions, since heating oil tends to mimic jet fuel pricing. (Very similar distillate.) Dunno if there are any jet fuel hedging vehicles. WN's hedges should protect it against the widening "crack spread" (the ever-widening gap between crude prices and jet fuel prices). The WN 3Q numbers are gonna be very impressive as a result, compared to other airlines.
No idea how the hurricane situation is gonna affect WN. It was the biggest carrier at MSY, and now runs two daily flights. Of course, this allowed WN to expand other regions faster then otherwise. But the hurricanes affected all airlines, as all airlines have substantial presence in MSY and IAH (as well as HOU).
Originally Posted by gregorygrady
That's OK, B6 will still be profitable at $80 a barrel, remember Neeleman's words back then when oil was in the $50s?
Now oil is closer to $80, we'll see if he was correct or not.
Neeleman's gonna love having that bravado thrown back in his face in the coming weeks.
As mentioned above, the crack spread has widened in recent weeks to over $40/bbl, raising the price of a barrel of JetA to over $110 (even over $120 for a while). JetFuel is bleeding JetBlue - B6 is gonna be really blue when those 3Q numbers are announced.
The other day, AA announced that mainline unit revenue is up about 12% in the third quarter over 3Q2004. Wonder if unit revenue was up half that percentage at B6??