[BANGKOK] Thai Airways International plans to fully hedge its jet fuel costs to help minimise the impact of the drop in value of its fuel inventory after declines in global crude oil prices, a senior official at the airline said on Friday.
The flag carrier has already hedged 73 per cent of fuel purchases pegged to an average price of almost US$90 a barrel of jet fuel until the end of this year, and plans to extend that to 100 per cent for 2015, the official told Reuters. He declined to be named because he is not authorised to speak to the media.
Oil prices were heading for a seventh weekly loss on Friday, with key producers showing no signs of cutting output in the face of a global supply glut.
Thai Airways also plans to extend the period for which it has 73 per cent hedging cover to 2016 at the lowest possible price, the official said. The lowest prices at which the airline has hedged so far were at US$70 a barrel, he said.
Jet fuel accounts for about 30 per cent of the airline's costs.
In a telephone interview, Thai Airways president Charumporn Jotikasathira declined to comment on the carrier's own hedging policy but said falling oil prices have a provided good opportunity for airlines in general to hedge. "Crude oil prices have dropped to the levels seen in 2008-2009. It is positive for all airlines, not only Thai Airways, because nobody think prices should fall further,"Charumporn said.