Fuel Costs Hedging for an Airline
Company
International airline that operates a fleet of over 50 aircraft across 4 continents.
Challenge
Improve hedging strategy by using simulation-based forecasting and risk management solutions that enable advanced risk metrics and more accurate fuel cost forecasting.
SATURN
- Simulated most likely future jet fuel prices using most recent forward curves and captured market dynamics and price volatility.
- Developed dynamic hedging strategies that comply with risk policy and analyzed impacts on airline margins and risks.
- Empowered fast analysis of alternative strategies and enabled developing improved hedging and regular updates.
Impact
- Enabled advanced simulation-based analysis of structured hedging alternatives.
- Identified effective risk management strategies that significantly reduce extreme risks.
- Developed re-useable framework that enables fast updates and dynamic hedging.