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Wednesday, 18 September 2013

Air India to hedge jet fuel lifted overseas to cut costs

New Delhi:  In a major step to slash costs, Air India today cleared a proposal to enter into hedging of aviation turbine fuel its airplanes lift overseas, officials said.
A maximum of 5,00,000 barrels of jet fuel, lifted abroad, would be hedged each quarter at a price of up to USD 110 per barrel, as per a decision taken by the airline Board's Finance Committee which met here today.


A small committee has been set up to take the process forward, with the airline identifying organisations like J P Morgan, Citibank and GDF Suez to carry out the fuel hedging, the officials, requesting anonymity, told PTI.
Fuel hedging is a contractual tool large fuel-consuming companies like airlines use to reduce their exposure to volatile and potentially rising fuel costs. A fuel hedge contract allows such a company to establish a fixed or capped cost through a commodity swap or option.
Read news in full 17/09/13 PTI/Economic Times

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