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Author Topic: Fuel Hedging and Fuel Contracts  (Read 600 times)

Offline Gaius Marius

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  • Posts: 339
Fuel Hedging and Fuel Contracts
« on: July 30, 2012, 07:59:47 PM »
Hi everybody.  I hedged my fuel 100% for 12 months.  Later, I also signed up for a discount contract.  What happens?  I don't think my hedge price went down and I'm wondering if I am paying the contract fee every month too.  I can't see where the contract fee is shown in the financials.  Any help out there?

Gaius Marius
Legion Air
"Flying is learning how to throw yourself at the ground and miss"

Offline EsquireFlyer

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Re: Fuel Hedging and Fuel Contracts
« Reply #1 on: July 30, 2012, 08:40:47 PM »
Contract fee is rolled into fuel expense in your Income Statement but is not separately itemized.

The contract discount is stacked on top of the fuel hedge price (but only at your base airport, not at outstations).

So you get to combine both discounts (or potentially, pay both markups, if you signed an unfavorable fuel contract and also bought a bad fuel hedge).
« Last Edit: July 30, 2012, 10:20:03 PM by EsquireFlyer »

Offline JumboShrimp

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Re: Fuel Hedging and Fuel Contracts
« Reply #2 on: July 30, 2012, 08:42:28 PM »
Hi everybody.  I hedged my fuel 100% for 12 months.  Later, I also signed up for a discount contract.  What happens?  I don't think my hedge price went down and I'm wondering if I am paying the contract fee every month too.  I can't see where the contract fee is shown in the financials.  Any help out there?

Gaius Marius
Legion Air

Both can be active at the same time.  Fuel contract is reported on the same line as fuel expense.  So you pay that independently of everything else (fixed daily payment).

Then, your fuel price is determined based on the hedge.  That price is discounted based on the discount contract, and that's your final rate.  The rate is then just multiplied by fuel usage.

I kind of forgot about fuel bought outside of your bases.  I think you just pay the hedged, but non-discounted price.

Offline Gaius Marius

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  • Posts: 339
Re: Fuel Hedging and Fuel Contracts
« Reply #3 on: August 01, 2012, 08:09:35 PM »
Thanks.

GM
"Flying is learning how to throw yourself at the ground and miss"

 

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