So can someone please explain to me how this hedging stuff really works?
I would have thought they would have purchased options to buy fuel at a certain price (say $150pb). And then, if the price of fuel goes up to $200pb, then they simply use these options to buy at the hedged price of $150. Saving = $50pb less what the options cost.
But now the price has gone the other way, there's no point buying at the hedged price of $150 when they can buy on the market at $50, so they just let the options lapse. Total losses = whatever it cost to buy the options.
But seeing as the losses are so high, this is obviously not how it works???!!