105 million euros, that is, of course, a drop of water in an ocean of losses, with 2.6 billion euros in the second quarter, according to announcements this Friday morning during the presentation of the accounts of Air France-KLM. The same quarter of 2020, the revenue of 1.18 billion euros, compared to more than 7 a year earlier. The fuel budget is the endorsement : 213 million euros, compared to more than 1.4 billion beginning in 2019.
But one line of the accounts, the financial plot : “the Impact of the “over-coverage” of the fuel – 105 m€. This amount is a combination of the price of higher fuel and adjustment capabilities. “This mumbo-jumbo accounting, requires an explanation. In Exchange, you can bet on the rise or fall of an action with the short sale, a comparable mechanism, purely financial, can be used by the airlines to negotiate the fuel expenditure with refiners supported by the banks. This is the hedging or hedging of fuel, available to all carriers with good health.
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Lower prices and aircraft more fuel-efficient
“In 2019, Air France had, therefore, anticipated an increase in the barrel with the good health of the economy and purchased at the rate being 60 % of the consumption in the next twelve months and 20% of 13 to 24 months,” said Frédéric Gagey, chief financial officer of the group. The hedging had a permit last year a saving of nearly 40 million. Note that IAG, the group of British Airways and Iberia, made to appear in its accounts a similar approach. With the pandemic, the traffic collapsed and the companies have preferred the jet aircraft (B777, B787, A330, A350) consuming less than the quadriréacteurs (A340, A380, B747).
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At the same time, responding to the law of supply and demand, the price per barrel collapsed the Brent up to 16 usd and the WTI u.s. had negative a time for lack of available storage capacity. In addition, the political conflicts tended to promote the increase of the production (hence the lower price). Air France should therefore fund the implementation of its commitments. The leaders are going to play end for the future and look in their crystal ball what traffic is expected in 2021…
The cover fuel is also a (good) explanation on the relative change in the price of airline tickets based on the fuel (approximately 25 % of the price of the ticket). When the barrel drops, the companies affected rarely change, because they have sometimes set the fuel a year earlier at high price. Only the decline of the offers of the competitors managed to make them fold. And if oil climbs, the fuel surcharge comes quickly on the plane ticket, except if, once again, the competitors play the rise.
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