6100 / Spartacus
Hedging is not insurance .....
Options are a little like insurance in that you will collect if your option "goes īn the money"
Straight forwards contracts are really just "fixing" the price for future consumption ... and yes Airtags nailed it when he mentioned
VB came to hedging way to late in the game!!! What they should have done was lock in fuel prices against reasonable known forward revenues ....... to lock in a reasonable known profit forecast .......
A good airline, IMHO, would do a some fixed price forwards, a little options (including collars to reduce the option premiums), and leave some unhedged (say an amount equivalent to parking a few planes if you don't happen to fly them ... theres nothing worse than paying on a hedge for fuel you don't actually use!!)
And I bet they didn't even hedge the FX exposure of having the fuel hedges in USD .....