Research
Does hedging actually protect an airline?
3
Published across three peer-reviewed journals
Challenge
Airlines spend heavily to hedge jet fuel, which represents roughly 30 to 50 per cent of operating cost, yet several major carriers accumulated billions in hedging losses. Whether the practice creates or destroys value was contested, and most of the argument was theoretical.
Approach
A multi-year empirical programme: panel analysis of financial and operational hedging across one hundred international airlines; a historical-simulation Value at Risk model of the cash collateral required to run a futures-based hedge; and a survey of sixty-two airlines across twenty-eight countries testing the institutional and cultural drivers of risk appetite.
Outcome
Financial hedging reduces EBIT-margin volatility without raising profitability, and collateral costs offset much of the benefit. Operational hedging through engine commonality lowers operating cost but cannot stand alone. Doctoral research published across three peer-reviewed journals, including Transportation Research Part A and Part E, the leading journals in transport economics and logistics.
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