At the beginning of 2012, Helena Morales, an equity analyst, was analyzing the jet fuel hedging strategy of JetBlue Airways for the approaching the year. Airlines cross-hedged their jet fuel price risk utilizing derivative agreements on different petroleum products including Brent crude oil and WTI. In 2011, displacement in the petroleum market resulted in a Brent-WTI premium as it customarily did jet fuel started to go with Brent instead of WTI. Dealing with hedging losses, several U.S. airlines started to switch their hedging practice, moving further away from WTI.
However others were anxious that the Brent-WTI premium will be a short-term phenomenon.For 2012, would the JetBlue carry on utilizing WTI for its hedges, or would it transform to an alternative such as the Brent?
PUBLICATION DATE: June 21, 2013 PRODUCT #: UV6682-HCB-ENG
This is just an excerpt. This case is about FINANCE & ACCOUNTING
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