Turkish Airlines to hedge 10 pct of fuel annually

A decision was taken by Turkish Airlines' board to use hedging to protect the company against risk, according to a filing to the Istanbul Stock Exchange.

Turkish Airlines to hedge 10 pct of fuel annually
Turkish Airlines, one of Europe's fastest-growing carriers, said on Monday it will hedge about 10 percent of the fuel it uses each year to lessen the impact of fluctuations in the price of oil.

A decision was taken by Turkish Airlines' board to use hedging to protect the company against risk, according to a filing to the Istanbul Stock Exchange.

The move aims to "lessen the effects of the changes in the price of jet fuel, fix the cost of jet fuel at known intervals or at a single price and ensure the minimum effect from the negative scenarios that can occur in the fuel market," Turkish Airlines said in the statement.

Hedges are typically derivatives used by companies to lock in a fuel price in advance to protect airlines against price volatility. If the market price falls below the preset price floor, hedges become worthless and may even force carriers to pay more than the market price.

Top airlines wrote down billions in the third quarter of 2008 to account for losses in their hedge portfolios after the global price of crude fell sharply from a record high in July.


Reuters
Last Mod: 26 Ocak 2009, 11:53
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