Since jet fuel accounts for a significant share of airline operating costs, carriers are locking in prices using futures and options, while also hedging currency exposure as fuel is priced in US dollars
Higher oil prices due to the Iran
war are increasing prices of jet fuel, which accounts for a big
portion of airlines’ costs.
Brent crude oil rose above $80 per barrel on Tuesday
on worries about disrupted supply.
Spot Northwest European jet fuel prices were at $1,133 per
metric ton on Tuesday, their highest since late 2022.
Some airlines use futures and options to hedge against price
increases. They also try to hedge against value changes in the
U.S. dollar, in which jet fuel is priced.
Below is a summary of how some of the world’s largest
airlines are hedged:
AIR FRANCE-KLM:
The Franco-Dutch group said in February it had adjusted its
fuel hedging policy to increase its total exposure over one year
consumption to 87% from 68%. It said it had extended its hedging
horizon to eight quarters from six and increased hedging
percentages.
AIR NEW ZEALAND:
New Zealand’s flag carrier said in February it was hedging
83% of fuel for the second half of its financial year and 46%
for the first half of the year to 2027.
It said the majority of its hedges were in Brent Crude, with
some opportunistic Singapore Jet swaps expected in the second
half of this year.
CATHAY PACIFIC:
Hong Kong’s flagship carrier said last year it was hedging
fuel into the second quarter of 2027, covering around 30% of
costs until the second quarter of 2026.
CHINA EASTERN AIRLINES:
The state-owned airline said it made careful assessments
based on the derivatives market conditions and did not carry out
any jet fuel hedging transactions in the first half of 2025. As
of 30 June 2025, it had no outstanding jet fuel hedging
contracts.
EASYJET:
The British budget airline said in January it had hedged 84%
of its fuel needs for the first half of 2026, 62% for the second
and 43% for the first half of 2027, at an average cost of $715,
$688 and $671 per metric ton, respectively.
It has 80% of the dollars it expects to need in the first
half of the year, bought at $1.30 per British pound, 62% for the
second half at $1.24 per pound and 40% for the first half of
2027 at $1.32 per pound.
FINNAIR:
The Finnish carrier updated in December its risk management
policy to extend the hedging horizon to 24 months from 18 months
previously.
It has covered 219 tons of fuel for the first quarter at an
average price of $718 per ton and a total 834 tons of fuel
through the second quarter of 2027, at an average price of $697
per ton.
It aims for a hedging ratio of about 70% to 95% for the
first three months of the hedging period and lower hedging ratio
limits for each following quarter.
IAG:
The owner of British Airways and Iberia said in February its
fuel and currency hedging was down about 9% in 2025 compared to
a year before.
It said its policy includes hedging on a three-year rolling
basis, with hedging of up to 75% of expected near-term
requirements near-term, and up to 80% for low-cost airlines.
ICELANDAIR:
The Icelandic carrier said in February it planned to hedge
between 20% and 50% of estimated fuel consumption six months
forward, 0% to 40% 7-12 months forward and 0-20% 13-18 months
forward.
It said a 10% increase in fuel prices would have an impact
of $11.6 million on its equity.
LUFTHANSA:
The German carrier said last year its fuel hedging has a
horizon up to 24 months. It said its hedging at the end of 2024
covered about 76% of forecast 2025 fuel requirement and about
28% of forecast 2026 requirement.
NORWEGIAN AIR:
The Norwegian carrier said in February it had hedged about
45% of estimated jet fuel consumption for 2026 and about 25% for
2027.
QANTAS:
The Australian airline reported in February it had 81% of
its fuel hedged for the second half of its financial year ending
June 30, 2026.
RYANAIR:
The Irish carrier’s CEO Michael O’Leary said in January the
company was 84% hedged at $77 per barrel for the current quarter
and had hedged 80% of jet fuel requirements at about $67 per
barrel.
SAS:
The biggest Scandinavian airline said last year it had
temporarily adjusted its fuel hedging policy due to uncertain
market conditions and that it had 0% of fuel consumption hedged
for the following 12 months.
The company’s hedging policy targets between 40% and 80% of
anticipated volumes for the coming 12 months, and allows hedging
up to 50% for the following six months.
SINGAPORE AIRLINES:
The company said in November it was hedging fuel for up to
five years, with 49% of fuel covered in the quarter to December,
47% in the quarter to March reducing to 24% in the second half
of the full-year to 2027 and 7% in the following years.
It said it was paying between $66 and $69 per barrel of
Brent hedged, and between $79 and $87 per barrel of MOPS.
VIRGIN AUSTRALIA:
The Australian airline said in February it was hedging 85%
of fuel and 94% of foreign exchange for the second half of its
financial year.
WIZZ AIR:
The Hungarian budget carrier said in January it was hedging
83% of its jet-fuel needs for the year to March 2026 at a price
between $681-$749 per metric ton.
It said it had coverage of 55% for the full-year to 2027 and
7% for the full-year to 2028, at a price of $650-$716 per metric
ton and $628-$694 per metric ton, respectively.
Published on March 3, 2026