First, it’s great to be here at BoardingArea. Thanks to everyone who helped me get set up and transfer my old posts over to the new site!
If you read my other blog yesterday, this graph should look very familiar. As I mentioned, new EIA data was coming out, so here’s a fresh graph with spot prices for WTI Crude that go up to September 15. Quite a dramatic drop!
Yesterday I mentioned how Continental, made some hedges with the expectation that oil would continue its rise. Apparently United is in the same situation. Based on a SEC Filing from yesterday, is forecasting a $544 million loss on the hedges, all made over $100/barrel. This number can change, though as this number is based on contracts United is still holding, so current prices are used. If the price of oil goes back up, the loss goes down, but if oil goes down even more, then the loss gets worse.
Business Week has a good article about the situation, and it makes a good point: “even if United loses money on fuel hedges, it will save money because the fuel itself is cheaper.”
Anyway, I’m excited to be here at BoardingArea, and I’m looking forward to many more posts in the future.
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