From the management at SWA: Dear UAL management, nice job on the fuel hedging. FYI...you are suppose to MAKE money on the hedges. Perhaps you need another CEO.
UAL sees potential $544M fuel hedge loss for 3Q
Wednesday September 17, 11:48 am ET
United Airlines facing possible $544 million fuel hedging loss for 3Q
MINNEAPOLIS (AP) -- United Airlines said Wednesday that its fuel hedges are under water by $544 million.
Like other airlines, the nation's second-largest carrier has been aggressively hedging its fuel expenses, which have seemed to rise without respite. But oil prices have declined since peaking at $147 a barrel this summer, down to less than $94 a barrel on Wednesday.
In a filing with the SEC, United estimated its hedging loss through the end of the month based on Monday's predicted fuel prices. It included $72 million in realized losses and another $472 million in unrealized losses.
Even while falling oil prices cause hedging losses, United still benefits from buying cheaper jet fuel, its largest single expense.
United also said it expects third-quarter passenger revenue to increase 4.5 percent to 5.5 percent per mile. It said it is reducing overall capacity by around 3.6 percent.
JPMorgan airline analyst Jamie Baker wrote in a note that United's guidance suggests it will lose $2.30 per share for the quarter. Analysts surveyed by Thomson Reuters were predicting a loss of $1.08 per share.
United shares were down 99 cents, or 7.1 percent, to $13.03 in late morning trading.