Global Airlines Navigate Rising Fuel Costs with Diverse Hedging Strategies

Higher oil prices, influenced by geopolitical factors, are significantly increasing jet fuel costs, which represent a major expense for airlines. Brent crude oil has recently approached $100 per barrel, and spot Northwest European jet fuel prices have traded near an all-time high of $1,633 per metric tonne.

To mitigate the financial impact of rising fuel prices and fluctuations in the US dollar (the currency for jet fuel pricing), many airlines utilize financial instruments such as futures and options for hedging.

In contrast, US airlines have largely discontinued fuel hedging practices, potentially making them more vulnerable to prolonged price increases.

Airline Hedging Overview

Here's a look at how various international airlines are managing their fuel and currency exposures:

Air France-KLM
The airline has increased its fuel hedging exposure to 87% over one year, extending its hedging horizon to eight quarters.

Air New Zealand
Air New Zealand has hedged 83% of fuel for the second half of its financial year and 46% for the first half of 2027, primarily utilizing Brent Crude hedges.

Cathay Pacific
Cathay Pacific is hedging fuel into the second quarter of 2027, covering approximately 30% of costs until the second quarter of 2026.

China Eastern Airlines
The airline reported no jet fuel hedging transactions in the first half of 2025 and had no outstanding hedging contracts as of June 30, 2025, indicating a non-hedged position.

easyJet
easyJet has hedged 84% of fuel for the first half of 2026 at an average of $715/metric tonne, 62% for the second half at an average of $688/metric tonne, and 43% for the first half of 2027 at an average of $671/metric tonne. The airline has also hedged significant portions of its US dollar needs.

Finnair
Finnair has extended its hedging horizon to 24 months. It has covered 219 tonnes for Q1 and a total of 834 tonnes through Q2 2027 at average prices, aiming for a 70-95% hedging ratio for the initial three months.

International Airlines Group (IAG)
IAG reported a 9% reduction in fuel and currency hedging in 2025 compared to the previous year. It maintains a three-year rolling hedging policy, covering up to 75% of near-term requirements and up to 80% for its low-cost airline subsidiaries.

Icelandair
Icelandair plans to hedge 20-50% of its estimated fuel consumption six months forward, with lower percentages for longer periods. The airline estimates a 10% fuel price increase would impact its equity by $11.6 million.

Lufthansa
Lufthansa maintains a fuel hedging horizon of up to 24 months. By the end of 2024, it had covered 76% of its forecast 2025 fuel requirements and 28% of its 2026 requirements.

Norwegian Air
Norwegian Air has hedged approximately 45% of estimated jet fuel consumption for 2026 and 25% for 2027.

Qantas
Qantas has hedged 81% of its fuel for the second half of its financial year ending June 30, 2026.

Ryanair
Ryanair has covered approximately 77% of estimated fuel needs for its fiscal year to March 2026 at an average price of about $761 per metric tonne. It has also locked in about 80% for the upcoming year based on a crude oil price of $67 per barrel.

SAS
SAS has temporarily adjusted its fuel hedging policy, with 0% of fuel consumption hedged for the following 12 months due to market uncertainty. Its standard policy targets 40-80% for the coming 12 months.

Singapore Airlines
Singapore Airlines practices long-term hedging, covering fuel for up to five years. It had 49% coverage in the quarter to December, reducing to 7% in later years, at specified Brent and MOPS prices.

Virgin Australia
Virgin Australia is actively hedging, with 85% of fuel and 94% of foreign exchange covered for the second half of its financial year.

Wizz Air
Wizz Air has hedged 83% of jet fuel needs for the year to March 2026 (at prices between $681-$749/metric tonne), 55% for 2027, and 7% for 2028 at specified prices.