Mumbai: “Low cost carrier Spicejet has started hedging its fuel risk on the Multi Commodity Exchange (MCX) platform in the wake of volatile fuel prices,” said Chief Financial Officer Parthasarathi Basu.
“The first hedge has been done yesterday,” Basu added.
The airline has appointed Karvy Comtrade Ltd as its broker, both companies said in a press release issued late on Monday.
“The fuel risk is being hedged by participating in crude oil contract, which has very high correlation with Aviation Turbine Fuel (ATF) prices,” the brokerage said.
“We have designed a strategy which best suits Spicejet and are hedging on crude oil contracts traded on MCX,” said Harish Galipelli, head of research, Karvy Comtrade Ltd.
ATF, which has a 95% correlation with crude oil, accounts for about 40% of an airline’s runing cost.