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Does Hedging Success Matter? An Empirical Study Of Jet Fuel Hedging In The U.S. Airline Industry, Brian Hornung
Does Hedging Success Matter? An Empirical Study Of Jet Fuel Hedging In The U.S. Airline Industry, Brian Hornung
USF Tampa Graduate Theses and Dissertations
Airlines commonly employ hedging as a risk management strategy to protect themselves against sudden, unpredictable increases in the price of jet fuel. In a seminal paper by Carter, Rogers, and Simkins (2006), it is established that jet fuel hedging by airlines increases the firm value of the airline. This dissertation replicates their study using an expanded dataset over a greater period of time. This study finds a smaller “hedging premium” than Carter, Rogers, and Simkins (2006). It is shown that the leasing of aircraft plays an important role in the relationship between the hedging premium and capital expenditures.
The measure …