Airasia ... Benefit From Lower Crude Oil Prices !!!

Airline stocks are getting a lift from the slump in global crude oil prices as fuel cost represents up to 40% of their operating costs.

Nevertheless, the influence of fluctuation oil prices will also determined by the strength of the USD. As such, the actual impact of lower oil prices in airline companies will only be seen in their next quarterly results.

Industry observers expect the savings in fuel cost would be offset the strengthening USD. After all, operating costs for an airline is affected by a number of factors such as exchange rates and the size of its fleet.

Still expects the airline which typically hedge about 40% of their jet fuel cost, to re examine their hedging positions as oil prices continue to fall.

Industry observers also expect no particular reason for oil prices to rise in the next two to three years from Sept 2014 as US shale oil production increases and the Americans become more independent and less reliant on oil imports.

Most global airlines have reduced their fuel hedging exposures in reaction to the falling price and waning volatility in crude oil market.