Factbox: How European airlines have hedged against fuel price increases
28/11/2023 08:02
(Updates Easyjet and current prices)
Nov 28 (Reuters) - Higher oil prices amid turmoil in the
Middle East are increasing prices of jet fuel, which accounts
for a big portion of airlines' costs.
Brent crude oil LCOc1 almost hit $94 per barrel shortly
after the Hamas attack in Israel on Oct. 7. It has since eased
to around $80.
Spot Northwest European jet fuel prices JET-C-NWE were at
$895 per metric ton, or around $113 per barrel, on Tuesday. That
compares to a peak of over $128 per barrel in the week following
the assault, and an all-time high of around $186 in June 2022
after Russia's invasion of Ukraine.
Some airlines use futures and options to hedge against price
increases. They also try to hedge against value changes in the
U.S. dollar, in which jet fuel is priced.
Here is how European airlines are hedged heading into 2024:
AIR FRANCE-KLM AIRF.PA :
The CEO of the Franco-Dutch airline said on Oct. 27 it was
"quite sufficiently hedged" for six months ahead.
The group has hedged 70% of its jet fuel consumption for the
fourth quarter of 2023 and 64% for the first quarter of 2024,
for $129.87 and $123.80 per barrel, respectively.
EASYJET EZJ.L :
The British discount airline said on Nov. 28 it had hedged
76% of its fuel needs for the first half of 2024 and 51% for the
second, at an average cost of $109.75 and $104.18 per barrel,
respectively. This was slightly higher than the $109.62 and
$104.05 reported in October.
It has 76% of the dollars it expects to need in the first
half of the year, bought at $1.22 per pound, and 53% for the
second half at $1.24 per pound.
FINNAIR FIA1S.HE :
The Finnish carrier, which said in October its quarterly
operating result was hurt by higher fuel prices, hedges its fuel
purchases for 12 months on a rolling basis.
It has covered 159,000 tons of fuel for the first quarter at
an average price of $116.20 per barrel, 126,000 tons for the
second at $109.87 per barrel, and 87,000 tons for the third at
$118.23 per barrel. At the end of September, this amounted to
over 50% of Finnair's fuel purchases for the next 12 months, a
company spokesperson told Reuters.
IAG ICAG.L :
The owner of British Airways, Iberia and Vueling said in
July it was 58% hedged for the first quarter, 49% for the
second, 39% for the third, and 32% for the fourth quarter of
2024. Including currency risk, the group was hedged at $103.16
per barrel for the first and third quarters, and at $102.53 for
the second and fourth quarters.
On Oct. 27, the group's CEO said IAG was well-hedged on jet
fuel for the first and second quarters.
ICELANDAIR ICEAIR.IC :
The Icelandic carrier said in October it had 20,500 tons of
fuel hedged for passenger flights in the first quarter, or 33%
of estimated total usage at $102.66 per barrel. It has hedged
26% of second-quarter usage at 26,500 tons for $106.33 per
barrel, and 5% of third-quarter usage at 7,000 tons for $106.58
per barrel.
JET2 JET2.L :
The British leisure travel company said in July it had 81.8%
of fuel hedged over the next 12 months.
LUFTHANSA LHAG.DE :
The German carrier said on Nov. 2 its "high hedge ratio"
meant it was well protected against rising oil prices. Lufthansa
has hedged 74% of the fuel it expects to need for 2024 at an
average price of $120.38 per barrel.
NORWEGIAN AIR NAS.OL :
The Norwegian carrier said on Nov. 2 it had hedged about 35%
of its fuel needs for 2024 "at levels considerably below current
forward prices". As of October, it had hedged 63,100 tons of jet
fuel at $97.22 per barrel for the first half and 91,300 tons at
$99.24 per barrel for the second half of 2024.
RYANAIR RYA.I :
The Irish carrier said on Nov. 6 it had secured about 85% of
its fuel requirements for 2024 at $89 per barrel, and over 50%
for 2025 at $79 per barrel.
The airline has bought more than 90% of the dollars it
expects to need for operating expenses next year at $1.08 per
euro, and a half of those needed for 2025 at $1.12 per euro, it
said.
SAS SAS.ST :
As of July, the biggest Scandinavian carrier had hedged 40%
of the U.S. dollars it expected to need in the next 12 months.
In terms of Norwegian crowns, its largest surplus currency, 47%
was hedged for the next 12 months. At that time, it had not
hedged any of the fuel consumption for the same period.
WIZZ AIR WIZZ.L :
The Hungarian budget carrier had as of Nov. 6 hedged 70% of
its 2024 fuel needs at a price ranging from $102.66 to $117.85
per barrel, and 38% of 2025 needs for $94.56 to $108.10 per
barrel.
It has bought 69% of the dollars it expects to need for jet
fuel in 2024 at $1.07 to $1.11 per euro, and 32% for 2025 at
$1.09 to $1.14 per euro.
(1 metric ton of jet fuel = 7.9 barrels)
(Compiled by Camilla Borri, Louis van Boxel-Woolf and Marta
Frąckowiak in Gdansk; editing by Milla Nissi and Edwina Gibbs)
((Camilla.Borri@thomsonreuters.com;
marta.frackowiak@thomsonreuters.com;
Louis.vanBoxel-Woolf@thomsonreuters.com;))