AIR - Air NZ.

[Beagle]

They've done very well out of their hedging this calendar year. They moved to their maximum allowable, (within their own rules) hedged position in late January 16 when oil was just on U.S.$30 barrel.
Hedging for all airlines was terrible last year when oil fell dramatically and airlines that don't hedge did very well as a result. There is always a cost to hedging, both visible, see any NZX attachment, (I will find one and post a link) and invisible, the staff required to monitor and initiate the hedging programme. Yes all business's need to know their costs but I often wonder if over the long run taking into accounts wins and losses from hedging whether all that really results is all the significant costs from the programme.
https://www.nzx.com/files/attachments/241795.pdf

The above is their last fuel hedge disclosure in August. If you check the bottom two lines to the right you'll see that on a net basis after costs they are ~ U.S.$20m in credit this year from hedging but that was after purchase costs of options totaling a whopping ~ U.S.$16.5m. How many staff are on significant six figure salaries running this programme as well ?
Good they got it right this year but last year they got it horribly wrong, (as did almost everyone else when oil collapsed in price), but I guess my point is if you're incurring direct hedging costs of the magnitude noted above plus unknown staff costs how is it possible to win from this in the long run ?
My analysis shows on average AIR carries at any one point in time ~ 2 months passenger sales of forward bookings. Given forward bookings aren't on average that far out maybe they'd be better to simply "wing it" when it comes to aviation fuel costs and save themselves truck loads of costs every year ?

[winner69]

Hedging all about managing certainty / risk management - not gambling per se

[winner69]

These Dreamliners get in the headlines quite often

http://www.stuff.co.nz/national/8613...tional-airport

[Beagle]

These Dreamliners get in the headlines quite often

http://www.stuff.co.nz/national/8613...tional-airport

See what happens when you don't hedge your fuel costs

[janner]

Competition..

British Airways will be Mooo ving more passengers in Cattle Class

https://www.rt.com/uk/365434-british...seats-economy/

Could this be Baa aa d for AIR ??

[winner69]

Cam the Revenue Guy cashing up part of his wages cheque - sells 47k shares

[winner69]

Cam the Revenue Guy cashing up part of his wages cheque - sells 55k shares

[Beagle]

Dislike how many senior exec's treat their share incentive scheme (which is something that meant to keep them invested and motivated), as little more than an ATM machine with shareholders the ones paying out the cash !

[couta1]

Dislike how many senior exec's treat their share incentive scheme (which is something that meant to keep them invested and motivated), as little more than an ATM machine with shareholders the ones paying out the cash !

Agree, and this guy is a repetitious offender, he hasn't been with Air that long either, let's just call him a tosser to make us all feel better.

[brend]

Dislike how many senior exec's treat their share incentive scheme (which is something that meant to keep them invested and motivated), as little more than an ATM machine with shareholders the ones paying out the cash !

I look after a few ANZ senior execs that do the same. They cash up as soon as they can....

but yes disappointing...