[January 21, 2014]DUBLIN (Reuters) — Taking out complex
call options or even buying a refinery are some of the measures
airlines should consider as they try to combat volatile oil prices,
air finance industry experts said.
Jet fuel can account for anywhere from between 20 and 50 percent of
an airline's operating costs, and predicting oil prices is a
"No one knows where oil prices will be in six months, let alone 10
years away," James Dempsey, Ryanair <RYA.I> group treasurer, told a
conference hosted by Airline Economics on Monday.
"Oil prices are one of the biggest risk factors in the business."
Delta Air Lines <DAL.N> bought its own refinery in 2012 to address
the risks from fuel prices.
Even though the refinery turned only a small profit for the first
time in the third quarter of 2013, over 60 percent of air finance
executives polled at the conference on Monday believed this was a
Some airline executives took a more cautious stance to such a
"We'll keep an eye on how successful they are," Gerry Laderman,
senior Vice President for Finance and Treasurer at United Airlines
told Reuters on the sidelines of the conference.
Mike Corley, the chief executive of Mercatus Energy, an independent
energy hedging, trading and risk management advisory firm, said
airlines should take a more active approach to hedging fuel costs.