Wednesday, February 10, 2016

United could face losses on fuel contracts

United Airlines, like all carriers that bet on oil prices continuing to rise, now faces the flip-side of the coin -- falling prices that could cost it money in the third quarter because of the futures contracts it holds. United could face losses on fuel contracts

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United Airlines, like all carriers that bet on oil prices continuing to rise, now faces the flip-side of the coin -- falling prices that could cost it money in the third quarter because of the futures contracts it holds. The good news, as you will see in this AP story, is that the losses on the futures could be offset by what United actually has to pay for fuel. Analyst Jamie Baker of JP Morgan estimates that airlines saved about $3 billion in fuel costs in just a week as crude oil prices fell. The plunging price of crude is going to be an important ongoing story as this quarter closes and airlines report the results.

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Tom Belden
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