How do airlines react when oil prices fall out of the skyline?China Airlines plans to hedge

How do airlines react when oil prices fall out of the skyline?China Airlines plans to hedge
Fuel cost and exchange loss are important factors that affect the airline’s operating performance.After the plunge in international oil prices, on the evening of March 9, China Airlines (002928) issued an announcement saying that in order to reduce the risk of fluctuations in crude oil, jet fuel prices and exchange rates and interest rates, the company proposed crude oil and exchange rate hedging.Some market participants pointed out that lower oil prices will benefit fares.The airline company is currently under the impact of the epidemic and its attendance rate has decreased. This news has changed the performance of the airline company in the capital market and has shown a boost.At the close on March 9, according to a flush flush, the airport’s continuous sector rose 1 against the market.79%, Huaxia Airlines daily limit, Air China increased by 3.24%, Spring Airlines is up 2.79%; On March 10th, a daily reporter issued a report.What is the use of the airline company to carry out hedging business?On the evening of March 9, China Airlines announced that in the context of the gap between the cost of jet fuel and the operating cost of the company, and the correlation between jet fuel prices and crude oil prices in the international market, in order to reduce crude oil prices, jet fuel price fluctuationsInfluenced by performance, the company plans to take necessary measures to carry out crude oil hedging business in a planned way.China Airlines said that the company and its subsidiaries carry out crude oil hedging business, and the trading varieties include forward, futures, swap (swap) and alternative products or financial instruments that mix the characteristics of the above products.Within the actual oil consumption, for the purpose of avoiding the risk of aviation oil price fluctuations, no speculative and arbitrage transactions will be conducted, and no additional funds will be used due to crude oil hedges.China Airlines said that according to the company’s calculation of the future demand for the use of aviation fuel, within 12 months from the date of the establishment of the board of directors, the total purchase amount of the crude oil hedging transaction to be implemented by the company does not exceed 900 million yuan worth of commodity value.Rolling positions are used, and the quota can be recycled.On January 24 last year, China Airlines announced that it had completed a crude oil hedging transaction with a total purchase amount not exceeding US $ 900 million, and the transaction period authorized by the board of directors was also 12 months.In addition, China Airlines also announced that it has adopted the “Exchange Rate on Foreign Exchange and Interest Rate Hedging”. In order to reduce the adverse effects of exchange rates and exchange rate changes on the company’s financial income and expenditure, it agreed that the company and its subsidiaries shall adjust from the date of the board’s adjustmentWithin a month, right does not exceed 8.5 trillion yuan or equivalent foreign currency is used for foreign exchange forwards, foreign exchange budgets, currency swaps or financial instruments that mix the characteristics of the above products, and the principal does not exceed 9.5 ppm Renminbi or equivalent foreign currency loans are operated using financial instruments with product characteristics during periods of interest rate declines or mixed interest rate declines, and the equal amount can be recycled.It is limited to the same currency as the main settlement currency used by the EFF and the company ‘s production and operation, and is currently limited to the US dollar.Some market participants pointed out that lower oil prices will benefit fares.The airline company is currently under the impact of the epidemic and its attendance rate has decreased. This news has changed the performance of the airline company in the capital market and has shown a boost.On March 9th, China Airlines’ daily limit was reached. On March 10th, the last reporter issued a report. China Airlines once again rose against the trend by more than 7%.The 2019 performance report issued by China Airlines in February this year showed that the company is expected to achieve operating income of 54 in 2019.1.6 billion yuan, an increase of 27 from the same period last year.12%.The company said that the main reason for the increase in operating income is the steady growth of the company’s capacity, the continuous optimization of the fleet structure, the daily income of the aircraft has increased significantly, and the price level of passenger tickets has increased.How much influence does the fuel cost accounting airline have?China Airlines said in its 2018 annual report that, in terms of costs, the increase in aviation fuel prices and the fluctuation of the exchange rate of RMB against the US dollar have a significant impact on the company’s operating results.In the number of reports, the average unit cost of the company’s jet fuel increased by 25%, and the overall jet fuel cost increased by 61.74%.Aviation fuel costs accounted for 25% of operating costs from the previous period.76%, increased to 30 per year.83%, which has a significant impact on the growth of operating costs during the reporting period; meanwhile, the central parity of the exchange rate of RMB against the US dollar increased from 6 January 2, 2018.5079 yuan fell to 6 December 28.8,632 yuan, a cumulative depreciation of about 5.5%.The company incurred foreign exchange losses of RMB 36.04 million, and exchange gains of RMB 55.78 million in the same period last year.Take the three major airlines as an example. In the 2019 semi-annual report, the three major airlines have stated that jet fuel is still the largest cost.The cost of China Eastern’s aircraft fuel is RMB 166.2.5 billion, an annual increase of 9.00%; China Southern Airlines pointed out 206 in the first half of 2019.1.6 billion, an increase of 6 from the same period last year.37%; Air China Aviation Fuel cost 176.1.5 billion US dollars, basically the same as last year.Air China weighs and reports that the average aviation fuel price will increase or decrease by about 8% if other average variables remain unchanged.8.1 billion yuan.China Eastern Airlines pointed out in the 2019 semi-annual report that in the first half of 2019, the company optimized its capacity investment and production organization, strengthened marketing, and strived to increase the passenger load factor and unit income level.In the future, the company will actively research and judge the trend of oil prices and, based on the authorization of the board of directors, will prudently develop the hedging business of aviation fuel.In the first half of 2019, the company did not engage in hedging of aviation fuel.Sauna, Ye Wang Zhang Zeyan editor Wang Yu proofreading Wang Xin reporter email: zhangzeyan @ xjbnews.com