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New! Friday Fuel Watch - Airline fuel hedging horrors

23-Jan-2009
  • Jet fuel prices eased around 5% in week ended 21-Jan-09.

The Centre for Asia Pacific Aviation's new ‘Friday Fuel Watch' provides a handy summary of latest jet fuel spot prices from around the world. Jet fuel spot prices eased further in the week ended 21-Jan-09, dropping 8.3% in Singapore and 6.4% in the US Gulf Coast.

Reductions were more moderate in Amsterdam (-4.6%) and Los Angeles (-2.0%).

Daily jet fuel prices (kerosene, cents per gallon) at New York, US Gulf Coast, Los Angeles, Amsterdam, Singapore: 14-Jan-09 to 21-Jan-09

 

14-Jan-09

15-Jan-09

16-Jan-09

20-Jan-09

21-Jan-09

one week
Change

12 month
Change

New York Harbor

153.4

153.5

151.6

145.8

145.1

-5.4%

-43.8%

U.S. Gulf Coast

149.1

148.5

146.2

139.8

139.6

-6.4%

-45.1%

Los Angeles

138.4

141.5

140.6

133.3

135.6

-2.0%

-45.8%

Amsterdam-Rotterdam-Antwerp (ARA)

142.5

143.4

141.3

136.0

136.0

-4.6%

-46.9%

Singapore

145.7

140.8

145.2

133.5

133.6

-8.3%

-43.4%

Over the past 12 months, jet fuel prices are down approximately 43-47%.

Daily jet fuel prices (kerosene, cents per gallon) at New York, US Gulf Coast, Los Angeles, Amsterdam, Singapore: Jan-08 to Jan-09:

Hedging horrors for Asian airlines

The steep reduction in fuel prices is cold comfort for many carriers locked into higher prices. Hedging contracts have provided some spectacular losses for many carriers in the past few months.

A sample of North Asian airlines that have disclosed their positions as at 31-Dec-08, shows unrealised losses totalling over an astonishing USD3.5 billion. Merrill Lynch expects nine Asian carriers to report combined losses of USD6 billion in 2008, due to wrong way bets on fuel and slowing demand for air travel.

Asia Pacific airlines fuel hedging mark to market losses:
As at 31-Dec-08

Airline

Gain/Loss (USD millions)

Air China

(994.5)

Cathay Pacific

(980)

China Eastern Airlines

(908)

China Airlines

(629)

Shanghai Airlines

(24.9)

China Southern Airlines*

6.3

Stay tuned for the next Friday Fuel Watch on 30-Jan-09.


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