practically speaking, a hedge allows a company to determine its break-even price point when a portion or a large portion of their product is determined with non fixed priced goods or services. Our labor at UAL is a fixed price, but fuel is not. We know the labor price over the next 4 years for example. Hard to be strategic about business plans when 50 percent of your costs fluctuate so greatly.

Also, you could also consider hedging as a way of dollar-cost-averaging your expenses over a period of time, if you had your hedges set either monthly or quarterly.

CAL did really well on hedges and then did really bad, so I guess it evened out, but then they went into a liquidity shortfall and then we ended up with POS 02.