Loading ...Comment: I guess these days we can find any kind or variety of news we want.
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Some major U.S. airlines including Delta and Southwest are rushing to finance losing bets on oil and revamp fuel hedges as tumbling crude prices leave them with billions of dollars in losses, according to people familiar with the hedging schemes.
In theory, airlines are among the top beneficiaries of a six-month slump that halved crude prices to five-year lows.
Delta said it would pay $800 million to counterparties if oil fell 20 percent between Oct. 1, 2014 and Dec. 31, 2015. Brent already has tumbled 36 percent since then to trade at about $60 a barrel on Monday.
http://www.reuters.com/article/us-oil-hedging-airlines-idUSKBN0K10AJ20141223
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Airlines that significantly overpaid for fuel in 2015 have a bigger opportunity to realize fuel cost savings in 2016 than airlines that were paying market prices the whole time. However, some of these airlines have also bought fuel hedges for 2016 and beyond. Since oil prices have continued to sink, companies like Southwest Airlines will be on the hook for more big hedging losses in the future.