January 22, 2015 / 6:57 PM / 3 years ago

Southwest Airlines restructures fuel hedges following oil price drop

Jan 22 (Reuters) - Southwest Airlines has closed fuel hedges so it is “essentially unhedged” for 2015, Chief Executive Officer Gary Kelly said on Thursday during the company’s quarterly earnings call.

The largest U.S. carrier by domestic traffic expects to participate in 90 percent of the decline in oil prices this quarter, paying around $1.90 per gallon of jet fuel, Chief Financial Officer Tammy Romo added during the call. Southwest paid $2.62 per gallon in the fourth quarter of 2014.

Southwest estimates it will save $1.7 billion more in 2015 than in 2014 thanks to the oil glut, which includes an average 20 cent bump in its fuel price in part from costs related to closing its hedges, according to Romo.

The company still has hedge positions in place for 2016 and 2017, Kelly said. (Reporting By Jeffrey Dastin in New York; Editing by Chris Reese)

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