Cullen Airlines fuel hedging disclosure here;
http://www.airnewzealand.co.nz/asset...ctober2014.pdf
My understanding is that derivative contracts are now required to be marked to market. The largest hedging type currently are Brent Collars. I assume the floor and ceiling prices in the disclosure are the maximum and minimum prices for Cullen Airlines to exercise the collar based on the Brent Crude price. The floor of USD$99 is well out of the money meaning that Cullen Airlines is obliged to settle the collar at a price greater than the current physical price.
I take this to mean the price savings Cullen Airlines makes at current prices buying the fuel on the airfield is clawed back by losses on their hedging contracts.
In note (1) of the disclosure the losses described as "Compensation from Fuel Hedges" include losses from mark to market adjustments. The compensation for the March 2015 quarter show a loss of $13 million using October 2014 prices. If current prices hold or decrease further the amount of red ink will increase.
Of course all this is a bit of a mystery to a blonde movie star who thinks diamonds are girls best friend as a store of value, so I stand to be corrected.
Boop boop de do
Marilyn