Protect from fluctuating fuel costs

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Reference no: EM1365769

Risk management for Southwest Airlines to protect from fluctuating fuel costs: hedging strategies, forward contracts

You have been hired by Southwest Airlines. Your primary task is to keep the Airfares low and the company profitable. In the prior years, Southwest has extensively bought forward contracts of barrels of oil at low prices between $20 to $40 a year. However currently the fuel prices in the past year has fluctuated wildly between $40.00 to $140.00. Fuel cost represents about 35% of the cost of operation and is next in importance to salaries and wages. Find the steps you would initiate to protect the company from fluctuating fuel costs and achieve your objective

Reference no: EM1365769

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