StudentShare solutions
Got a tricky question? Receive an answer from students like you! Try us!

Dissertation example - Hedging Strategies Adopted by Airlines Organizations for Hedging their Foreign

Only on StudentShare
Hedging Strategies Adopted by Airlines Organizations for Hedging their Foreign Dissertation example
Masters
Dissertation
Finance & Accounting
Pages 80 (20080 words)
Hedging Strategies Adopted by Airlines Organizations for Hedging their Foreign Currency Risks Abstract The research aimed to assess the hedging strategies used by multinational organizations that have operations in diverse countries and hence are exposed to changes in exchange rates and interest rates…

Extract of sample

It was found that these organizations continue to use hedging strategies like foreign currency contracts, foreign currency swaps, foreign currency forwards and interest rate swaps. They also use a policy of matching receivables and payables and a mix of floating and fixed interest rates to provide stability across their diverse operations. There is also a visible change towards greater acceptance of methods like swaps and options that are available over the counter and which are more flexible and customizable. While Thomas Cook predominantly uses forward contracts, British Airlines and Easy Jet appear to increasingly favor swaps and options as a way to hedge their positions. The research also aimed to assess the financial health of the organizations and how hedging strategies suit the organization’s current position. It was found that the airline industry, being impacted adversely by the recent financial crisis, was vulnerable exceptionally due to the debt funding. Organizations like British Airlines and Easy Jet rely heavily on money market hedging which is a radical and risky strategy, and may further adversely affect their financial performance. This research is conducted using data and information that is available in the public domain and employs qualitative interpretation of the available findings. ...
Download paper
Not exactly what you need?

Related papers

Hedging against a Weak Dollar
This paper aims to discuss financial hedging against a weak dollar. A. Euro/US dollar Rate of Euro/Dollar over the last five-year period For the five-year period ranging from 2007 to the end of 2011, the US dollar has experienced numerous fluctuations. The highest value of the Euro in comparison to the dollar was 1.5991, during the 2008 global economic crisis, when American multinationals were…
8 pages (2008 words)
Finance - Hedging Strategies
The essence of hedging strategies is to reduce business risks while deterring the creation of additional risks. Multinational firms encounter a multitude of risks, particularly as a result of their competitive exposures across the globe. General Motors has along experienced competitive exposure due to the Japanese yen. This exposure has a lot to do with the depreciating Japanese yen. However, the…
3 pages (753 words)
American Airlines
This can lead to unethical activities when the senior management and organization can gain significant rewards because of the short-term concentration on stock price (Machan, 2007). The senior management may tolerate organizational conflict of interest, abusing a number of rules of fair conduct or normal decency, gaming the rules of the society, and turning to cronyism as a means of making the…
5 pages (1255 words)
Hedging an Equity Portfolio
Cross hedging capabilities may depend on various factors. First is the degree in which the spot and futures currencies are negatively or positively correlated. Secondly, this also depends on the level of accuracy of the estimated risk-minimizing cross-hedge factors. In addition, time is an important factor in this process and therefore the capability of cross hedging depends on the stability of…
7 pages (1757 words)
Hedging An Equity Portfolio
7 Reference: 9 1.0 Introduction A US equity fund manager holds €100m in a portfolio comprising the largest US stocks which perfectly replicates and benchmarks the S&P 500 index. The US Federal Reserve indicated that the programmed quantitative easing of purchasing $85 billion is not going to be carried out. The quantitative easing is used to stimulate the price when the corresponding interest…
8 pages (2008 words)
Hedging Oil Consumption
There are other inherent risks associated with business such as currency fluctuations, volatility of crude oil prices and so on. In order to reduce exposure to volatility in the market, many participants prefer hedging strategies using derivatives. A derivative is a financial instrument which derives its value from the underlying asset. One of the hedging strategies alternatives that are available…
6 pages (1506 words)
The task is to review EuroJet's foreign exchange exposure
In addition to this, as has been noted in the case study that the company plans to opt for one of the two options for expansion, which include expansion of network to intercontinental destinations and growth of existing network, the report also provides an evaluation of the risks associated with these two options in terms of foreign exchange risk and international environment risks. Besides this,…
14 pages (3514 words)