Cathay Pacific 2009 Annual Report Download - page 32

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Percentage consumption subject to hedging contracts
0%
10%
20%
30%
50%
40%
60%
2010 2011
Maximum fuel hedging exposure
$40 $50 $60 Brent
(US$/barrel)
$70 $80 $90 $100
Financial Review
Fuel expenditure and hedging
A breakdown of the Group’s fuel cost is shown below:
2009
HK$M
2008
HK$M
Gross fuel cost 20,107 39,347
Realised hedging (gains)/losses (740) 309
Unrealised mark to market (gains)/losses (2,018) 7,661
Net fuel cost 17,349 47,317
Settlement and premium paid 3,180 1,458
The Group’s maximum fuel hedging exposure and a sensitivity analysis of both the cash and the profit and loss
impact of fuel price movements on fuel hedging contracts as at 31st December 2009 are set out below:
The Group’s policy is to reduce exposure to fuel price risk by hedging a percentage of its expected fuel
consumption. As the Group uses a combination of fuel derivatives to achieve its desired hedging position, the
percentage of expected consumption hedged will vary depending on the nature and combination of contracts
which generate payoffs in any particular range of fuel prices. The chart above indicates the estimated maximum
percentage of projected consumption covered by hedging transactions at various settled Brent prices.
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