30 July 2008

OOPS did Ryanair get it wrong

Hmmm seems that the smart team at Ryanair is having a little difficulty. They got Fuel pricing wrong and they are going to be savaged for it.

So here is the scoop – wrong fuel hedging. For 2008 they didn’t actually hedge at all. Ooops. But worse – for 2009 they are getting it wrong also. Read from CAPA and Bloomberg.

Ryanair stated (28-Jul-08) it has hedged 90% of its fuel requirements for Sep-08 at USD129 per barrel, and for the three months ended 31-Dec-08 at USD124 per barrel (Bloomberg, 28-Jul-08). The carrier, which reported fuel costs increased 93% year-on-year to EUR367 million for the three months ended 30-Jun-08, has no hedging in place for the fourth quarter (Jan-Mar-09), though it would take out further hedges shortly. CEO, Michael O'Leary, stated in May-08 that Ryanair would not hedge until oil prices fell below USD100 a barrel.

Oh dear.

So lets hope they get it right soon… otherwise the big boys will be very happy to throw a lot of dog poo in Michael O’Leary’s direction.

This does seem to point out that there the airline business is no place for the feint hearted and that you can make mistakes even if you are one of the leaders.



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