This master thesis examines the jet fuel hedging behavior in the European airline industryusing publicly available information. US companies are also included for comparisonsbetween the markets. The thesis concludes that jet fuel hedging airlines have higher marketto-book ratios measured by Tobin’s Q. The authors believe that putting an absolute number onthe hedging premium, must be done with caution. The hypothesis that hedging adds morevalue in periods of greater uncertainty and higher volatility is inconclusive and rejected. Ofthe variables included in regressions, the papers suggest that the most important determinantsof jet fuel hedging levels are company size, dividends, debt ratio and investment levels.
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