SIA got burnt hedging fuel at US$116/barrel!

Now we know why SIA not in hurry to reduce fares! The mgt ought to be shot for making this crazy call!
SINGAPORE - Singapore Airlines does not plan to unwind any of its existing jet fuel hedges, which are fixed at US$116 (S$145) per barrel for 65.3 per cent of its requirements in the six months to the end of March, a spokesman on Friday.



With jet fuel prices in Asia JET-SIN hovering at nearly $63 a barrel after a 60 per cent fall in crude prices since June last year, the SIA has been caught out by fixing more than half of its fuel costs at a far higher level.

Unwinding the hedges, however, could result in losses of more than tens of millions of dollars, according to brokers who handle jet fuel hedges for airlines.

Earlier this month, US carrier United Airlines said it had paid a premium to dump old losing bets on higher oil prices and that it was reviewing its strategy for insulating itself from oil market volatility. "It is not correct that we are looking to unwind existing hedges. Our hedging policy remains unchanged," said the SIA spokesman. The airline uses a combination of swaps, collars and call options to hedge its jet fuel purchases, he said.

- See more at: http://news.asiaone.com/news/travel...ain-high-jet-fuel-hedges#sthash.xR6FppQo.dpuf

Is this the result of letting backdoor PAP MPs go run GICs ?

these GLCs are good at ripping their own, but when they come to ang mo land, they are at their wits end. why i say so? i am currently subscribed to OPTUS which is owned solely by Singtel. their subscriptions is only $30 a month and comes with a 10GB data plan and the data can be rolled over to next month if not finished within the previous month. in sinkieland, they charged you obscenely high subscription with low data volume so that high chance you will exceed and pay more, which i think is rip off. i really see no more future in investing in singtel shares cos' they have run out of ideas generating income except ripping off sinkies with their high exorbitant subscription.:oIo:

enterprise2 said:

Now we know why SIA not in hurry to reduce fares! The mgt ought to be shot for making this crazy call!

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Hindsight is 20/20. If you're so smart why don't you make the call regarding what they should do for next 12 months as far as oil prices are concerned.

even when oil prices are falling,which is supposed to help airlines,they are betting that oil prices will go up,are they stabbing themselves in the foot?and hedging is supposed to eliminate risk by making sure all ur positions in ur portfolio will result in zero no matter if prices go up or down so u neither win nor lose,how the fuck do u fuck that up?

Leongsam said:

Hindsight is 20/20. If you're so smart why don't you make the call regarding what they should do for next 12 months as far as oil prices are concerned.

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i say buy.oil is near rock bottom now,buy all u can....i already bought xop and xle.

Leongsam said:

Hindsight is 20/20. If you're so smart why don't you make the call regarding what they should do for next 12 months as far as oil prices are concerned.

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between thats the point of hedging,u cant predict the future at least u can hedge,but apparently these mofos cant.

frenchbriefs said:

even when oil prices are falling,which is supposed to help airlines,they are betting that oil prices will go up,are they stabbing themselves in the foot?and hedging is supposed to eliminate risk by making sure all ur positions in ur portfolio will result in zero no matter if prices go up or down so u neither win nor lose,how the fuck do u fuck that up?

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frenchbriefs said:

between thats the point of hedging,u cant predict the future at least u can hedge,but apparently these mofos cant.

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Doesn't hedging mean machiam buy insurance....prices go either way they're covered?
I think it's pap creative lingo at work again.....betting on futures but call it hedging.

It's already factored into their books. So they have long term planning based on their hedge. If price goes up they also won't lose so much. Anyways it's only for 60% of their fuel that is hedged. The rest bought at market rates should improve their bottom line significantly.

Leongsam said:

Hindsight is 20/20. If you're so smart why don't you make the call regarding what they should do for next 12 months as far as oil prices are concerned.

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Going to sound crazy, but switching to equities is a better call now.

Scrooball (clone) said:

Going to sound crazy, but switching to equities is a better call now.

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LOL? You want to switch from drowning in Bedok reservoir to jumping from HDB 10th floor ah?

Cash is king, middle of the year the recession will hit liao...

enterprise2 said:

Now we know why SIA not in hurry to reduce fares! The mgt ought to be shot for making this crazy call!
SINGAPORE - Singapore Airlines does not plan to unwind any of its existing jet fuel hedges, which are fixed at US$116 (S$145) per barrel for 65.3 per cent of its requirements in the six months to the end of March, a spokesman on Friday.



With jet fuel prices in Asia JET-SIN hovering at nearly $63 a barrel after a 60 per cent fall in crude prices since June last year, the SIA has been caught out by fixing more than half of its fuel costs at a far higher level.

Unwinding the hedges, however, could result in losses of more than tens of millions of dollars, according to brokers who handle jet fuel hedges for airlines.

Earlier this month, US carrier United Airlines said it had paid a premium to dump old losing bets on higher oil prices and that it was reviewing its strategy for insulating itself from oil market volatility. "It is not correct that we are looking to unwind existing hedges. Our hedging policy remains unchanged," said the SIA spokesman. The airline uses a combination of swaps, collars and call options to hedge its jet fuel purchases, he said.

- See more at: http://news.asiaone.com/news/travel...ain-high-jet-fuel-hedges#sthash.xR6FppQo.dpuf

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NOL gone..........when SIA turn

Leckmichamarsch said:

NOL gone..........when SIA turn

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that's why I said after LKY is gone, there is no other intelligent or wise sinkie left . whole economy is screwed. DBS and temasick also screwed by china investments. really stupid people. when oil goes up they buy excess to hedge thinking they would cut loss if it goes higher. if only making money is so simple. stupid people at almost all of sinkies GLC. I am very worried yet delighted. hahhahah . catch my hint. even the sultan of johor is way smarteri n business than these assholes.

numero uno said:

that's why I said after LKY is gone, there is no other intelligent or wise sinkie left . whole economy is screwed. DBS and temasick also screwed by china investments. really stupid people. when oil goes up they buy excess to hedge thinking they would cut loss if it goes higher. if only making money is so simple. stupid people at almost all of sinkies GLC. I am very worried yet delighted. hahhahah . catch my hint. even the sultan of johor is way smarteri n business than these assholes.

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The fact is that some hedging is based on where you think the direction of oil will go. According to the article below, most North American airlines guessed oil would go up and hedged accordingly. It appears that SQ belong to this school of thought. Other airlines like European airlines hedged based on their premise that oil prices will go down. These are the guys laughing all the way to the bank. Other airlines Like American Airlines don't bother hedging at all, and they are also going to win big time from lower oil prices.

Of course, once again, highest paid civil serpents in the world, parachuted into GLCs cannot out think and out profit the rest of the world. More evidence of PAP mediocrity and stupidity. Indeed, this hedging losses would total hundreds of millions USD for SQ.

Gambles that haven't paid off
Jan 19th 2015, 15:10 by N.B. | Washington, DC

Timekeeper

THE FALL in oil prices—and the resulting drop in the cost of aeroplane fuel—is good news for airlines and business travellers hoping to cut costs. This could be the airline industry's best year in half a decade, according to the International Air Transport Association, a trade group. But the practice of fuel-price hedging—used famously by Southwest Airlines and now a favourite tool of most carriers—will sort airlines into a clear hierarchy of winners and losers. Those that foresaw lower prices will benefit—and may even extend their hedges. Those that expected high prices to continue will pay dearly. Reuters has details:

In Europe, airlines such as Aer Lingus and Ryanair are aiming to take advantage of the low oil prices to lock in fuel costs into 2016 and beyond. Thai Airways plans to hedge 100 percent of its fuel purchases this year... U.S. airlines that hedged based on higher oil prices, such as United Airlines, have had to dump losing bets and are now reviewing their strategies for protecting themselves from oil market volatility... At least one Asian carrier, South Korea's Asiana Airlines, has stopped hedging since November due to recent price volatility, while Germany's Air Berlin has said it is considering reducing its hedging rate.

United isn't the only big American carrier with a hedging problem. Another (excellent) Reuters story explains how Southwest and Delta have found themselves facing higher-than-usual hedging costs. American Airlines, by contrast, will benefit disproportionately from the fall in prices—it hasn't signed a hedging contract since 2013, according to Reuters. But because airlines tend to benchmark their prices against one another, that extra profit probably won't be passed on to consumers; American will likely just enjoy its better margin while it can.

It would be easy to make too much of this, though. Delta will lose $1.2 billion on hedging in 2015, but overall, it still expects to see a $1.7 billion benefit from lower fuel prices.

numero uno said:

that's why I said after LKY is gone, there is no other intelligent or wise sinkie left . whole economy is screwed. DBS and temasick also screwed by china investments. really stupid people. when oil goes up they buy excess to hedge thinking they would cut loss if it goes higher. if only making money is so simple. stupid people at almost all of sinkies GLC. I am very worried yet delighted. hahhahah . catch my hint. even the sultan of johor is way smarteri n business than these assholes.

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the mastermind behind singapore's economy was albert winsemius,not LKY.LKY was a useless fart who was good at nothing except instilling fear and corrupting every body of government and civil service in this country.if LKY was a true economist,financier,banker,industrialist or businessman in the first place he would have become one like Li ka shing or J.P morgan or Vanderbilt.not some lawyer/politician bullshit artist.......if he was as wise and intelligent as albert winsemius he would have stopped his ignoramus clown son from going down this path of insanity which not only doesnt benefit sinkies in anyway will ultimately result in our extinction.how has LHL economic policies helped sinkies in anyway?Zilch nada......every single one of his policies is parasitic,leech and depends on sucking cock and carrying balls at the mercy of foreign mncs and foreign nations at singaporean's expense.

if albert winsemius had a son,he wouldnt be a clown like LHL.

Narong Wongwan said:

Doesn't hedging mean machiam buy insurance....prices go either way they're covered?
I think it's pap creative lingo at work again.....betting on futures but call it hedging.

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"Hedging" is almost always directional. You scare it go up u agree to buy in advance; U scare it go down u agree sell in advance. No rocket science.

krafty said:

these GLCs are good at ripping their own, but when they come to ang mo land, they are at their wits end. why i say so? i am currently subscribed to OPTUS which is owned solely by Singtel. their subscriptions is only $30 a month and comes with a 10GB data plan and the data can be rolled over to next month if not finished within the previous month. in sinkieland, they charged you obscenely high subscription with low data volume so that high chance you will exceed and pay more, which i think is rip off. i really see no more future in investing in singtel shares cos' they have run out of ideas generating income except ripping off sinkies with their high exorbitant subscription.:oIo:

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their idea is to charge people for using watsapp

mojito said:

"Hedging" is almost always directional. You scare it go up u agree to buy in advance; U scare it go down u agree sell in advance. No rocket science.

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hedging is omnidirectional,otherwise it wouldnt be called a hedge,it would be a long or short.

frenchbriefs said:

hedging is omnidirectional,otherwise it wouldnt be called a hedge,it would be a long or short.

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O rly? Tell me how it done?

mojito said:

O rly? Tell me how it done?

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options i think.according to investopedia u can hedge with options in order to reduce risk of your investments.