The question
If airlines had hedged most of their fuel, why did higher oil still damage guidance, and could that identify the next vulnerable airline?
What the filings showed
Hedged does not mean fixed.
- ~80%
- Lufthansa said around four-fifths of its 2026 kerosene requirement was covered in May, yet sharply higher kerosene prices still put considerable pressure on costs.
- 76%
- The year-end filing showed the coverage was a mix of crude oil, gas oil and kerosene futures and forwards. These are related to jet fuel, not identical to it.
- €409m
- The annual report estimated that a 10% kerosene-price rise could still add €409m to 2026 fuel costs after hedging.
The missing variables
A hedge ratio hides the economics that matter.
Public coverage percentages do not fully reveal strikes, maturities, option structures or when protection rolls off. Hedges in crude oil and gas oil also leave basis risk because airline fuel is kerosene, while the fuel bill is paid in dollars and creates a separate FX exposure.
Even perfect fuel-cost information would not determine earnings. Ticket yields, passenger demand, capacity, cargo revenue, route disruption, labour costs and fleet decisions can offset or amplify the oil shock.
Conclusion
The proposed basket short was not defensible.
A high headline hedge ratio does not remove fuel-price exposure, and the shape of protection matters more than the percentage alone.
Public disclosures did not provide enough comparable detail to rank airlines reliably before management updated guidance.
Company-by-company hedge structure, fuel sensitivity, FX exposure, capacity, yields and consensus earnings would need to be modelled together.
Research record
Concluded without a trade. The work produced a better fuel-risk framework but not a differentiated pricing view.
Sources
Primary disclosures.
Independent student research for education only; not investment advice.