Originally Posted by
Cogf16
Lost on hedges but paid MUCH LESS for fuel and hence, was a winner. hedging is insurance. If you lose money on hedges, that means the price of gas is lower than expected. About a year ago, I caught some of J Graham's talk in the ATL pilot lounge. Re: fuel, he said that every penny change in fuel prices is 40 million a year difference. he said we were paying a little over a dollar less for fuel than same time, previous year. Over 4 Billion in savings. Now I now it would be great if we didn't hedge and just "rolled the dice" on spot prices, but you guys would crucify mgmt. if that backfired. And be honest, NO ONE could have predicted Oils massive drop 2 years ago or even it continued low prices.
Again, it's insurance for volatility and negative geopolitical events. Let it go.
Over all our fuel costs were lower for the year however they would have been much lower had we not hedged. We paid considerably more then our competition not to mention around a billion we dumped into the refinery.