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> Wherever you stand in the union issue, you have to take exception with the dishonest reporting about Delta’s profitability. Airlines are enjoying profits rece
by vageli 7y ago
> Wherever you stand in the union issue, you have to take exception with the dishonest reporting about Delta’s profitability. Airlines are enjoying profits recently because of low fuel prices over the last five years. But nobody mentions that Delta went through bankruptcy in 2007. Airlines aren’t a long-term profitable business that can support inflexible union arrangements. A spike in fuel prices can quickly put them in the red.
Airlines don't hedge against increases in fuel price by engaging in futures markets? That sounds borderline irresponsible of management.
- dboreham 7y agoThey probably do hedge but hedging also costs money and at some point becomes uneconomical due to lack of time machines and so on.
- TomVDB 7y agoI'm pretty sure airlines do hedge against increases. But that only delays things if prices go up permanently.
- function_seven 7y agoThat's another way to quickly go into the red. You purchase futures contracts to hold your fuel prices steady, then the market turns and fuel gets really cheap. Your competitors can now start a fare war and you're locked into expensive fuel while they enjoy cheap fuel. When you make a bet on the future price of a commodity, that bet may work well for you (see Southwest during the late 2000s [1]). But it just as easily can hurt you if the prices move the other way. [1] https://www.nytimes.com/2007/11/28/business/worldbusiness/28iht-hedge.4.8517580.html https://www.nytimes.com/2007/11/28/business/worldbusiness/28...