UAL Loses $520 mil on fuel hedges

[Cheeta]

Who is running that arline...Get rid of them!

 

[SpauldingSmails]

That was the surefire way you would know oil prices would drop. Once the airlines bought in at $130/bbl you just had to know it would go down.

Why? Because no matter what airlines screw it up.

 

[bluefin]

Source?

 

[curtaindriver]

UAL sees potential $544M fuel hedge loss for 3Q
Wednesday September 17, 11:48 am ET United Airlines facing possible $544 million fuel hedging loss for 3Q

MINNEAPOLIS (AP) -- United Airlines said Wednesday that its fuel hedges are under water by $544 million.
Like other airlines, the nation's second-largest carrier has been aggressively hedging its fuel expenses, which have seemed to rise without respite. But oil prices have declined since peaking at $147 a barrel this summer, down to less than $94 a barrel on Wednesday.
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if(window.yzq_d==null)window.yzq_d=new Object();window.yzq_d['2cMmIEwNBlE-']='&U=13fdh7a8m%2fN%3d2cMmIEwNBlE-%2fC%3d632061.11883682.12483716.1435155%2fD%3dLREC%2fB%3d5113717%2fV%3d1';In a filing with the SEC, United estimated its hedging loss through the end of the month based on Monday's predicted fuel prices. It included $72 million in realized losses and another $472 million in unrealized losses.
Even while falling oil prices cause hedging losses, United still benefits from buying cheaper jet fuel, its largest single expense.
United also said it expects third-quarter passenger revenue to increase 4.5 percent to 5.5 percent per mile. It said it is reducing overall capacity by around 3.6 percent.
JPMorgan airline analyst Jamie Baker wrote in a note that United's guidance suggests it will lose $2.30 per share for the quarter. Analysts surveyed by Thomson Reuters were predicting a loss of $1.08 per share. United shares were down 99 cents, or 7.1 percent, to $13.03 in late morning trading.

 

[CAL to T-1A]

http://biz.yahoo.com/ap/080917/airlines_fuel.html?.v=1

 

[On Your Six]

How much more can UAL lose before things come to a screeching halt? Every quarter we are seeing major losses... I understand some of those losses are "paper" losses but the party has to end sometime. I would think their banks or funding sources are scared by now - the picture ain't getting much better.

No doubt Tilton would still walk away with $ millions...

 

[TWA Dude]

UAL's only the first. Just wait for the other airlines (excluding SW) to announce how much they're losing on their hedges.

 

[habubuaza]

UAL's only the first. Just wait for the other airlines (excluding SW) to announce how much they're losing on their hedges.

Without knowing a single thing about SWA hedging, I would bet money that they did not hedge fuel at $130. As a matter of fact I would venture to say that most people who invest in futures trading probably did not bet on this kind of oil price sustaining itself.

 

[ThisistheDream]

after the govt bail out of Lehamans and AIG, I would expect the govt will bail out any legacy airline before they just go way!!! Becuase according to the Govt companies that are too big...cannot fail and they will step in to help out any legacy stay afloat.

 

[ultrarunner]

Without knowing a single thing about SWA hedging, I would bet money that they did not hedge fuel at $130. As a matter of fact I would venture to say that most people who invest in futures trading probably did not bet on this kind of oil price sustaining itself.

I bet you're right...but if SWA did hedge at a buck thirty, they prly sold it to UAL for a buck forty!

And UAL being UAL, they were happy to pay it....

Idiots!

 

[WalterSobchak]

How in the name of Raptor Jesus is Tilton still at the helm at UAL?

 

[Raoul Duke]

trading 101 would tell you to cover that position with a short as soon as the mkt fell. They are so stupid it is embarassing.

 

[ultrarunner]

How in the name of Raptor Jesus is Tilton still at the helm at UAL?

If I were to venture a guess Walter, it's because his exit contract is likely way to expensive for UAL to pay right now.

I'm sure a UAL person will chime in with the data, but I'm sure if he's terminated, he walks with millions...not a popular thing for UAL to do right now...

 

[RedDogC130]

after the govt bail out of Lehamans and AIG, I would expect the govt will bail out any legacy airline before they just go way!!! Becuase according to the Govt companies that are too big...cannot fail and they will step in to help out any legacy stay afloat.

I would not bet on it. If say United failed...the rest of the industry would have huge gains. They would have all thier passengers, incresed loads, then the price of tickets go up helping the bottom line.

I do not see the government keeping a carrier around that is just not needed. We have too empty seats flying around. Cut 1/4 of those out of the mix and then you are flying close to full making $$$.

Losing 1 big or even 2 airlines (legacy size or SWA size) will not kill this industry...it will help it

 

[Whataburger]

Just think how well United will do when their hedges run out!!