3-Mar-2011 11:40 AM

Qantas bets on fuel price increases, hedges 96% for 2011

Qantas confirmed it had hedged 96% of its remaining fuel requirement for FY2011 at a worst case USD99.48 with 35% of its fuel for FY2012 at USD105.65 (The Australian, 03-Mar-2011). The announcement marks a change in the airline’s fuel hedging strategy and is now betting fuel prices will continue to increase this year. The FY2011 position is an increased from two weeks ago, when it has 75% of its second-half fuel costs hedged at a USD95 worst-case price and 25% of its FY2012 exposure at USD100. Qantas said it expects second-half fuel costs to be about AUD2 billion, up AUD260 million on the previous corresponding period. The airline added it has also hedged 96% of its operational foreign exchange exposure at a worst case of USD91.64 cents. The Australian dollar is currently trading above parity with the US dollar.

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