United Airlines Is Apparently Crappy At Buying Fuel

United Airlines is just super crappy at fuel hedging, says Wired. Now that oil is trading at less then $100 a barrel, it turns out that United is paying more than that — and more than other airlines:

The company has 51-percent of its 2008 fuel hedged at $111. Per-barrel prices closed at under $98 yesterday. Looking forward to 2009, the airline’s fuel hedges are based on per-barrel prices of $118.

Hedging is a big roll of the dice, and no one has played it better than Southwest Airlines. It has consistently hedged more fuel than its competitors. As of this summer, Southwest has 70-percent of its 2008 fuel hedged at $51 a barrel. Compare that with American Airlines, which has 34-percent hedged hedged at $82 a barrel.

Industry analysts estimate that since 1998 Southwest has paid $3.5 billion less for fuel than its competitors. That’s equal to 83-percent of its profits over the last nine years. It’s a big part of the reason the airline continues reporting profits while the rest of the industry bleeds.

They’re going to need to sell a lot of snack boxes to make up for that…

Airlines Hurt By Dropping Oil Prices. Huh?!! [Wired]
(Photo: FlyGuy92586 )

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