← Back to Squawk list

Delta loses $450 million bet on fuel prices

7년 전 제출됨

Delta Air Lines is taking a $450 million loss because jet fuel prices didn't jump as much as the airline bet they would. The Atlanta-based airline had locked in fuel purchases, in a contract known as a hedge, at levels above the current market value, betting that jet fuel prices prices would climb. And they did indeed rise. But they didn't go nearly as high as Delta had anticipated, which made that hedge a loser. So Delta pulled out of the fuel contracts, which cost the airline nearly… (money.cnn.com) 기타...

Torsten Hoff

12 멤버 코멘트

Sort type: [Top] [Newest]

WALLACE24 7년 전 6

Bet it doesn't affect the bonuses.

응답 ↓•퍼머링크•Report

R J 7년 전 4

Hedges are insurance policies, not bets. These were protetective trades in case the worst happened, not speculation on the direction of fuel prices.

응답 ↓•퍼머링크•Report

R J 7년 전 1

Clearly I cannot spell. "Protective"

응답 ↓•퍼머링크•모•Report

BaronG58 7년 전 1

Hedges are bets/speculation. Buyer/seller is speculating what direction the price of a commodity will be x-number of months down the road. Hedges are risky. Money can be made and lost.

응답 ↓•퍼머링크•모•Report

Stuart Fountain 7년 전 6

They will more than make up the loss by ripping off their customers through baggage, wifi and in-flight service costs.

응답 ↓•퍼머링크•Report

paul trubits 7년 전 3

I thought Delta owned their own refinery. How much money did the refinery make?

응답 ↓•퍼머링크•Report

BaronG58 7년 전 1

Yes, Delta owns their own refinery but buy their crude at the market. Their losing money on oil hedging.

응답 ↓•퍼머링크•모•Report

Torsten Hoff 7년 전 1

Ouch!

응답 ↓•퍼머링크•Report

Brian Bishop 7년 전 1

The whole hedge / speculation / futures trading thing, whatever you want to call it, serves a valuable function in actually stabilizing world prices and supply of petroleum products over time. As pointed out in another comment huge profits were made when oil did skyrocket and those profits will offset the losses. You win some, you lose some, but in the end you are better able to project costs long term and in a business as fuel hungry as an airline, that's pretty darn important.

응답 ↓•퍼머링크•Report

scott ellsworth 7년 전 1

Couldn't have happen to a nicer company..Hope they choke on it

응답 ↓•퍼머링크•Report

Muchits 7년 전 1

Southwest is losing twice as much on their hedge - thanks for the kind words though.

응답 ↓•퍼머링크•모•Report

matt jensen 7년 전 2

Actually not. They had contracts going out years in advance, starting in 2003. It loaded up years ago on hedges against higher fuel prices. They bought @51/bbl and made a killing when it went to 149/bbl.

The hedges have helped keep Southwest profitable - producing gains of $455 million in 2004, $892 million in 2005 and $675 million in 2006 and $439 million for the first nine months of 2007, as oil prices nearly doubled that year. Other airlines were mostly unprotected against the increases

Right now oil trades @ 47/bbl for August contracts and it just depends at where they bought in. If at 52 then they lost a few shekels, but if it rises above 53 they made money.

응답 ↓•퍼머링크•모•Report

FlightAware.com의 광고를 허용하면 FlightAware를 무료로 유지할 수 있습니다. Flightaware에서는 훌륭한 경험을 제공할 수 있도록 관련성있고 방해되지 않는 광고를 유지하기 위해 열심히 노력하고 있습니다. FlightAware에서 간단히 광고를 허용 하거나 프리미엄 계정을 고려해 보십시오..

종료

Delta loses $450 million bet on fuel prices

12 멤버 코멘트

Sort type: [Top] [Newest]

로그인