Virgin America sees fuel hedge opportunity
SAN FRANCISCO (Reuters) - Lower fuel prices present a "unique opportunity" to hedge buying up to four years out, the chief executive of airline Virgin America said on Saturday.
David Cush said in an interview the tough economy could push back the profit target of the company, founded last year, to 2011 from 2010, and that the airline would stay at the current size, 28 planes, for 1 1/2 to two years.
Virgin America, in which Richard Branson's Virgin Group VA.UL has a minority stake, has enough funds to last three years, Cush said.
He was speaking on a flight to test a new Wi-Fi wireless Internet system the company plans to roll out on all its planes by the second quarter of next year.
Volatile fuel costs have made it difficult for airlines to manage, and hedges are instruments that effectively lock in long-term prices.
"We see a pretty unique opportunity with what's going on in the fuel markets right now to go in and lock in some long positions. I would imagine over the course of the next several weeks that we will be going out two and three, and perhaps even four, years into the fuel market and locking in some of the prices that are there today," he told Reuters.
"Our view way back was 2010 would be a break-even year or a profit year. And I still think we have a shot at that. But given what's going on with the economy, it could push it back to 2011," he added. (Reporting by Peter Henderson; Editing by Stacey Joyce)
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