FILE PHOTO: Airasia planes are seen parked at Kuala Lumpur International Airport 2, amid the coronavirus disease (COVID-19) outbreak in Sepang, Malaysia October 6, 2020. REUTERS/Lim Huey Teng
March 7, 2022
(Reuters) – The price of oil has surged to its highest level since 2008 after Russia’s invasion of Ukraine, adding to airline costs at a time when carriers have been struggling to recover from a pandemic-related dip in demand.
Some airlines have oil hedges that will help offset portions of the price increase, while Malaysia’s AirAsia on Saturday introduced fuel surcharges on tickets for the first time since 2015.
Other carriers are fully unhedged, including European budget airline Wizz Air and U.S. majors United Airlines, American Airlines and Delta Air Lines, though the latter owns an oil refinery.
The oil price increase comes as many carriers are forced to fly longer routings to avoid Russian and Ukrainian airspace.
Air France KLM
The airline has hedged 72% of oil consumption for the first quarter and 63% for the second quarter at $90 a barrel, with smaller amounts hedged in the second half, it said in a results presentation on Feb. 17.
Air New Zealand
The airline has hedged 1.34 million barrels of oil in the current half ending June 30 and 707,500 barrels in the following half year period, it said in a results presentation on Feb. 24. It had unrealised gains from the hedges of around $31 million as of that date.
Cathay Pacific Airways
The Hong Kong airline had hedged more than 60% of its expected first-quarter consumption and about half of its second-quarter consumption by the time of its interim results last August, as well as lower amounts in future quarters through 2023. Cathay will release its full-year results on Wednesday.
easyJet
The European airline 60% hedged for fuel in the financial year ending on Sept. 30 at around $504 per metric tonne, it said on Jan. 27.
IAG
The British Airways owner is hedged against volatile crude prices for two years, with the first year around 60% hedged, Chief Executive Luis Gallego said on Feb. 25.
Lufthansa
The German airline is 63% hedged in 2022 at a break-even price of $74 a barrel, it said in a results presentation on March 3.
Qantas Airways
The Australian airline has more than 90% of its fuel hedged in the current half, ending June 30, it said in a results presentation on Feb. 24. It also has hedges in place for the following half-year period but did not provide details.
Ryanair
The budget carrier is 80% hedged on fuel out to 2023, but rising prices will still cost the airline group around 50 million euros ($54.22 million) over the next 12 months, Chief Executive Michael O’Leary said on March 2, adding Ryanair would not introduce fuel charges for the summer.
Singapore Airlines
The airline hedged 30% of its oil needs at an average Brent price of $57 a barrel for the six months ending March 31, it said in a results presentation in November. It had also hedged 40% of its needs at an average price of $60 for the following five quarters. It said on Monday it had no updates from guidance in November.
($1 = 0.9223 euros)
(Reporting by Jamie Freed in Sydney. Editing by Gerry Doyle)
