EVA Airways Corp (EVA, 長榮航空), the nation’s second-largest airline, plans to raise its jet fuel hedging position to 40 percent of its annual fuel consumption, from the current 15 percent, within the next six months, to minimize potential impact from relatively low global crude oil prices.
EVA announced last month that it would book about NT$2.42 billion (US$76.81 million) in unrealized losses from crude oil forward contracts to hedge against price volatility, mainly due to a significant reduction in global crude oil prices from the fourth quarter last year.
However, the carrier is carefully considering raising its hedging position in the near-term to ensure future profitability from a significant impact created by crude oil price volatility, EVA president Austin Cheng (鄭傳義) said.
Boosting its hedging position might help it avoid any impact of future increases in global crude oil prices, Cheng said.
The weak crude oil price has helped the carrier’s profitability by cutting its operating expenses, especially for flights on intercontinental routes, which consume more fuel.
Cheng maintained a bullish outlook for EVA’s sales and profitability this year, expecting passenger business to stay strong following a higher-than-expected average passenger load after the Lunar New Year holiday.
The aviation cargo business might also show some rebound over the next few months, he added.
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