Fuel price risk in flight operations
Fuel price risk management is based on a risk management policy approved by the Board of Directors. Various hedging instruments such as forward contracts and options are used to manage the price risks. The hedging period is mainly less than 12 months. At the end of financial year 2003, Finnair had hedged 37% of its jet fuel purchases for the first six months of 2004.
In the financial year 2004, fuel used in flight operations accounted for 9.7% of the Group's operating costs. Fuel costs depend on fluctuations in the oil market and the value of the US dollar. Without the hedging programme, a ten per cent increase in the world market price of jet fuel has a negative impact on the result of 13-14 million euros. |