BA Chief says more airlines will go bust
Aug 1, 2008, 10:22 am
#1
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BA Chief says more airlines will go bust
http://www.guardian.co.uk/business/2...irwaysbusiness
Interesting to see that the oil hedging is starting to unwind in the industry.
Interesting to see that the oil hedging is starting to unwind in the industry.
Aug 1, 2008, 10:32 am
#2
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Moving this thread to the FlyerTalk Newsstand. Thanks for your understanding.
Jouy31
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Jouy31
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Aug 1, 2008, 2:27 pm
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He is likely using the term "unwind" to mean that older hedges are simply running out. All of these instruments have time limits as well as quantity limits.
Setting up new hedges these days could be very difficult since futures have at least two variables that make them expensive these days: the underlying price is now more than double what it was a few years ago, and the volatility of fuel is much higher. So the "cost" of the hedge is also much higher and might no longer be worth it. Lastly, you need someone willing to be on the other side of the hedge. Not necessarily an easy thing to find these days.
Setting up new hedges these days could be very difficult since futures have at least two variables that make them expensive these days: the underlying price is now more than double what it was a few years ago, and the volatility of fuel is much higher. So the "cost" of the hedge is also much higher and might no longer be worth it. Lastly, you need someone willing to be on the other side of the hedge. Not necessarily an easy thing to find these days.
Aug 1, 2008, 2:30 pm
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Setting up new hedges these days could be very difficult since futures have at least two variables that make them expensive these days: the underlying price is now more than double what it was a few years ago, and the volatility of fuel is much higher. So the "cost" of the hedge is also much higher and might no longer be worth it.
Aug 1, 2008, 2:30 pm
#5
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He is likely using the term "unwind" to mean that older hedges are simply running out. All of these instruments have time limits as well as quantity limits.
Setting up new hedges these days could be very difficult since futures have at least two variables that make them expensive these days: the underlying price is now more than double what it was a few years ago, and the volatility of fuel is much higher. So the "cost" of the hedge is also much higher and might no longer be worth it. Lastly, you need someone willing to be on the other side of the hedge. Unless I'm an oil producer and am willing to trade off additional profit for pricing certainty, you are basically betting oil prices won't continue to increase.
Setting up new hedges these days could be very difficult since futures have at least two variables that make them expensive these days: the underlying price is now more than double what it was a few years ago, and the volatility of fuel is much higher. So the "cost" of the hedge is also much higher and might no longer be worth it. Lastly, you need someone willing to be on the other side of the hedge. Unless I'm an oil producer and am willing to trade off additional profit for pricing certainty, you are basically betting oil prices won't continue to increase.