Air India is conducting large-scale hedging of jet fuel for the the first time, as the state-run carrier seeks to take advantage of lower crude oil prices, a person with direct knowledge of the matter said.
Air India was hedging two million barrels of aviation turbine fuel annually at $75 per barrel, which should cover more than a fifth of its fuel requirements, the person said. The company did not expect oil prices to fall any further, the person said.
Crude oil prices slumped almost 50 per cent last year as the US pumped oil at the fastest rate in more than three decades while Opec resisted calls to cut supply. That resulted in boosting economies of import-driven countries, while providing a breather to airlines, which typically operate on tight margins.
Cheaper oil prices could help Air India save $324 million for the year ending March 31, 2016, and help it break even before its target of turning a profit by 2019.
20/01/15 Business Standard
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Air India was hedging two million barrels of aviation turbine fuel annually at $75 per barrel, which should cover more than a fifth of its fuel requirements, the person said. The company did not expect oil prices to fall any further, the person said.
Crude oil prices slumped almost 50 per cent last year as the US pumped oil at the fastest rate in more than three decades while Opec resisted calls to cut supply. That resulted in boosting economies of import-driven countries, while providing a breather to airlines, which typically operate on tight margins.
Cheaper oil prices could help Air India save $324 million for the year ending March 31, 2016, and help it break even before its target of turning a profit by 2019.
20/01/15 Business Standard
