Financial Daily from THE HINDU group of publications
Tuesday, Apr 15, 2003
Financial Daily from THE HINDU group of publications Tuesday, Apr 15, 2003 |
|
|
|
|
|
Logistics
-
Airlines IA may be allowed to hedge on ATF Ashwini Phadnis
NEW DELHI, April 14 INDAIN Airlines may soon be following in the footstep of the Maharaja. The Government is likely to allow the airline to go in for hedging of aviation turbine fuel (ATF) that it uplifts from abroad. Official sources told Business Line that IA could be allowed to hedge on the ATF that it picks from international stations, provided a formal request is made to the Government. "The airline has not approached the Government for being allowed to hedge on ATF that it lifts from abroad. There should really be no problem in allowing them, especially as AI has been allowed to hedge. However, the airline will have to make a formal request with the Government," sources said. Globally, several international airlines hedge on ATF prices, which is basically forward buying and selling of aviation fuel. Meanwhile, AI, which was granted permission to hedge on ATF by its board recently and has appointed ICICI Bank as the authorised dealer to carry out fuel hedging for it, plans to make a cautious start to its hedging activities. Sources said that initially, the airline is to hedge on ATF from only two international stations - Dubai and one more in the Far East. The airline is likely to hedge on about 10-15 per cent of the entire fuel that it uplifts from these two centres, officials said. AI is also said to be looking at the scenarios of going in for the various options that are available in the global hedging market, including taking positions on ATF prices being quoted at the London market though delivery could be taken in Dubai, sources said. The start of hedging activity is likely to improve the financial health of the two state-owned airlines. AI had, late last year, estimated that a spurt in fuel prices was likely to put an additional burden of Rs 150 crore on account of fuel and oil charges during September-March 2003. AI incurred an expenditure of Rs 906 crore towards its fuel bill during 2001-02, while during 2000-01, the outflow on account of fuel and oil was Rs 985 crore. Similarly, IA has also been badly hit by the steady northward movement of ATF prices during a four-month period ending March this year. The airline got some relief in April this year, when domestic ATF prices came down marginally by Rs 1,000 per kilolitre. However, IA officials maintain that the reduced ATF prices being quoted during April was unlikely to provide any major relief to the domestic state-owned airline.
Article E-Mail :: Comment :: Syndication
|
Stories in this Section |
|
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription Group Sites: The Hindu | Business Line | The Sportstar | Frontline | The Hindu eBooks | Home |
Copyright © 2003, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line
|