Originally Posted by
Hank Kingsley
I was referring to Q4, 2014, where Delta reported fuel hedging losses of $2billion. While that will cover some of 2015 fuel expenses, it's still an incredible amount of money. If any one of us gambled on our fuel plannning, and lost the bet, we'd be held accountable. I would suggest a more conservative approach in fuel hedging, which Delta is now adhering to.
Hank, $2B was a forward looking
projection required by GAAP. It was based on fuel cost versus hedges in place at one specific time. Since then the gap has closed reducing the
projected loss significantly. DAL took an immediate $300M charge against earnings (actual loss) and redistributed future hedges to further reduce possible losses. So the $2B number means little. The actual loss is $300M this year. And RA has stated that hedging is not gambling but a tool to help DAL project fuel costs in a volatile market over a long period of time.