Ailing airlines get fuel price boost
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Cathay Pacific Airways, Air China and Singapore Airlines are among the airlines to benefit from the 43% surge in the price of jet fuel this year, as it will help curb losses from their fuel hedging policies. According to a Bloomberg report, the rise in jet fuel price this year may help Cathay and Air China trim paper losses from wrong-way bets on oil. Cathay, which posted its first annual loss in a decade last year, could recoup HK$1.1 billion (US$142 million), according to Citigroup Inc., while Air China may write back more than CNY4 billion (US$585 million), estimated Deutsche Bank AG. Singapore Airlines meanwhile, could cut its fuel hedging losses by SG$50 million (US$34.4 million), Bloomberg reported a JPMorgan Chase & Co. analyst as saying.
Rewards from fuel hedging could narrow losses at Cathay and help Air China return to profit this year, according to Louis Wong of Phillip Securities HK Ltd.
“What has been a negative for airlines may have turned positive with oil prices rising,” Bloomberg quoted Wong as saying. “Any write-back will give airlines the breathing space they need during these times.”
However Cathay Pacific spokesperson, Carolyn Leung, said that high fuel prices “are not good for airlines.”
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