Another massive fuel hedging loss has emerged among Asia's airlines. Wrong-way bets on fuel cost embattled China Eastern Airlines USD908 million in 2008. Last week, Cathay Pacific stated its unrealised mark-to-market fuel hedging losses reached USD980 million as at 31-Dec-08. China Eastern's shares fell 5.1% on 09-Jan-09, while Cathay's shares dipped 0.8%.
There are likely to be several other Asian carriers carrying big hedging losses after the spectacular fall in oil prices in the second half of last year. Signs of further weakness in the global economy sent oil prices down 17% last week alone - with the February contract in New York slipping below USD40 per barrel again on Friday.
Meanwhile, Indian carrier shares were under further pressure as the broader market suffers from the Satyam scandal. Jet Airways shares plunged 10.1%, as Kingfisher (-4.9%) confirmed plans to expand its international network. SpiceJet was down 6.8%.
Asia Pacific selected airlines daily share price movements (% change): 09-Jan-09