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Mon, Jul 11, 2016

Delta Takes $450 Million Hit On Jet Fuel

Prices Did Not Increase As Much As Airline Anticipated

Delta Airlines has taken a $450 million hit on fuel contracts because the price did not rise as anticipated.

CNN reports that the airline had locked in a price on fuel, a process called "hedging", that was above the market price. Delta execs expected that the price would rise above that level, resulting in savings for the carrier.

But that didn't happen. While the price did rise, it did not cross the hedge threshold, and Delta bailed on the contracts to the tune of about $450 million.

It's not the first time Delta has taken a loss on fuel speculation. CNN reports that the airline lost $2.3 billion on fuel contracts as prices fell last year, and an additional $247 million in the first quarter of this year.

FMI: www.delta.com

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