Airline Fuel Hedging and Management Ownership

We study whether hedging affects firm value within the U.S. airline industry. In contrast to prior work in the area, we study hedging during a time window that includes periods of very high price risk. We find a relatively weak relationship between firm value and hedging. We further find that management ownership increases the firm’s degree of hedging. Finally, we find that especially during periods when firms are more heavily exposed to fuel price risk, the market value of passive hedgers is significantly higher than that of selective hedgers.