Wizz Air against high fuel prices
Hedge contracts kick off to get propellant at cheaper prices
Hungarian low-cost air carrier Wizz Air is seeking a solution to rising fuel prices. For this reason, the airline is deciding to adopt and sign hedging contracts to protect itself from the risk of price volatility that threatens the industry's post-pandemic recovery.
The mechanism works like this. Airlines fix fuel prices before they rise under the pressure of various contingent factors (from inflation to production cuts). This allows them to secure supplies at much cheaper prices in case of increases in the market.
The Budapest-based company will hedge its exposure in dollars, the currency in which aviation fuel is paid for. This is a tool that has already been introduced by other airlines. Among them is Irish low-cost competitor Ryanair, which has 80 percent protection to pay for propellant priced at 63 a barrel dollars.
AVIONEWS - World Aeronautical Press Agency