Does JetBlue hedge Fuel?

[Spectre]

Couple reasons not to hedge fuel at JetBlue for 2006:

1. It takes a lot of cash up front to hedge fuel. If you are buying new aircraft and paying for new facilities for expansion, that cash isn't available.

2. Your competition isn't hedging fuel. Thus, if you hedge fuel at $55-60 and next year's fuel price falls below 55, watch out!

 

[castle bravo]

"So your inquiry is to point out that being 100% hedged is unimportant and it's really all about what they paid for the hedges? "


Yes, that is my position, especially with fuel prices recently finding some stability (relatively) at high levels.





"I know they hedged when oil was at about $58 a barrel, but they probably bought some hedges in the open market that SWA was looking to sell for $30, so it was a great deal, no?"



IF, in fact they were actually able to acquire acquire $30 hedges it certainly does look smart at this point in time. However, finding out factual, verifiable information pertaining to NK is sometimes a challenge.

 

[castle bravo]

2. ..... Thus, if you hedge fuel at $55-60 and next year's fuel price falls below 55, watch out!

Which goes back to my original inquiry to LC.

 

[FlyBoeingJets]

Couple reasons not to hedge fuel at JetBlue for 2006:

1. It takes a lot of cash up front to hedge fuel. If you are buying new aircraft and paying for new facilities for expansion, that cash isn't available.

2. Your competition isn't hedging fuel. Thus, if you hedge fuel at $55-60 and next year's fuel price falls below 55, watch out!

Buying hedges now at say $55 is much more of risk than buying in the mid $30's, I agree.

If your competitors leapfrog you by not hedging at $55 and buy hedges later at $45, bought with higher profits due to no hedging, you may get a double whammy. If your profit with hedges at $55 limit how much you can hedge next year at $45 you continue to trail your competitors in fuel price.

I wonder what the break even on these hedges are?? If you buy a hedge (I know its a complex financial instrument) at $30 what does oil have to trade at to pay for the purchase of the hedge?

It must be easier to buy hedges in a rising oil market than a declining one. The management type to bet wrong on these now will get sacked next year.

 

[CitationLover]

$30.....

wow thats got to be EXPENSIVE in and off itself with oil being at its current price. how much cash was spent on these derivatives?

 

[zkmayo]

We'll find out on 10/20. Most likely, there will be a loss for the next two quarters (3+4th).

JB is hedged at 22% at $30 for the rest of 2005. Nothing for 2006. Catastrophic ins was locked in at like $58-60. It was prob a smart move bc a hedge at current prices dont make sense to make such a large capital expenditure. Not much help unless fuel goes to Pluto in which case were all hosed.

 

[furloughfodder]

why hedge fuel when you only pay a 4 year captain $76 an hour???

 

[DIAMONDDD]

why hedge fuel when you only pay a 4 year captain $76 an hour???

And don't pay for your planes, and don't pay for aircraft cleaners, and don't pay for fuel, and fire every pilot after five years to keep payroll down, and don't have a pension, and don't have a union, and, and and and....what am I missing? Just wanted to lay it all out here in one post.