The carrier also posted a substantial 710 million Singapore dollar loss as a result of ineffective fuel hedging contracts that matured during the last fiscal year.
Singapore Airlines has a hedging policy very different to those of many carriers.
They are the only carrier hedging their fuel needs up to 60 months in advance, and the sudden drop in the price of crude oil caused by the COVID-19 pandemic is likely to cause
significant losses for the airline in the fuel hedging department until 2025.
At the end of January 2020, Singapore Airlines had hedged 79% of its fuel requirements for February and March at an average price of $76 per barrel, the Singapore Business Times reported. For the full fiscal year ending on March 31, the airline had hedged 73% of its fuel needs at a price corresponding to $58 per barrel.
After the COVID-19 outbreak, the price of crude oil collapsed to reach a record low — close to $10 per barrel — and it is now trading close to $30 per barrel. Singapore Airlines has already hedged 59 percent of its fuel needs for the next four years at prices above $50 per barrel, meaning the airline is vastly overpaying for the time being.
The airline has said it expects potential fuel hedging losses for 2.6 billion Singapore dollars for the next fiscal year.
https://airlinegeeks.com/2020/05/17...s-heavy-losses-over-ineffective-fuel-hedging/
