Royal Jordanian to increase fuel hedging to tackle rising costs

05 June 2008
Royal Jordanian will seek to substantially increase its advance purchasing of fuel in the coming months, to stave of the effects of rising fuel costs.

Jordan’s national carrier, which was recently privatised, is seeking to mitigate the effect of fuel prices that have spiked sharply in recent months by doing more fuel hedging.

Hedging involves the airline buying fuel in advance at a set price, allowing it to know in advance how much it will have to pay and protecting it against further potential price rises.

Samer Majali, the airline’s vice chairman, president and chief executive officer, says the company wishes to raise the amount of fuel hedging it does, from 30 per cent of all the fuel it uses at the moment to 50 per cent in the future.

“Our fuel costs last year were 30 per cent of total costs. In the first three months of this year they are already 42 per cent,” he says.

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