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139 Qantas Annual Report 2008
Notes to the Financial Statements
for the year ended 30 June 2008
The following table summarises the impact of reasonably possible changes in foreign exchange rates on net profi t and equity. For the purpose of
this disclosure, the sensitivity analysis assumes a 10% increase and decrease in all currency pairs. Sensitivity analysis assumes designations and hedge
effectiveness testing results as at 30 June 2008 remains unchanged. This analysis also assumes that all other variables, including interest rates,
remain constant.
Qantas Group Qantas
Net profi tEquity Net profi tEquity
2008
$M
2007
$M
2008
$M
2007
$M
2008
$M
2007
$M
2008
$M
2007
$M
10% increase in all currency pairs (31.7) (23.3) (548.5) (391.3) (31.7) (23.3) (549.0) (393.6)
10% decrease in all currency pairs 42.5 32.5 703.8 530.1 42.5 32.5 704.4 532.9
(iii) Fuel price risk
The Qantas Group uses options and swaps on aviation fuel, gas oil and crude oil to hedge the exposure to movements in the price of aviation fuel.
Hedging is conducted in accordance with Qantas Group policy. Up to 100 per cent of estimated fuel consumption out to 12 months may be hedged
and up to 50 per cent in the subsequent 12 months, with any hedging outside these parameters requiring approval by the Board. As at 30 June 2008,
65 per cent (2007: 59 per cent) of forecast fuel exposure less than one year and two per cent (2007: two per cent) of forecast fuel exposure between
one and fi ve years have been hedged. During the year, the net gain arising from effective fuel hedging was $474.7 million (2007: $39.8 million loss)
which has been recognised in fuel expenditure. In addition, an $11.3 million loss (2007: $59.7 million (loss)) was recognised in ineffective and
non-designated derivatives – closed positions and $36.9 million loss (2007: $11.5 million loss) in ineffective and non-designated derivatives –
open positions in accordance with AASB 139.
For the year ended 30 June 2008, other fi nancial assets and liabilities include fuel derivatives totalling $840.4 million (asset) (2007: $129.3 million
(asset)). These are recognised at fair value in accordance with AASB 139.
The following table summarises the impact of reasonably possible changes in fuel price on net profi t and equity. For the purpose of this disclosure,
the sensitivity analysis assumes a 10 per cent increase and decrease in all relevant fuel indices. Sensitivity analysis assumes designation and
effectiveness testing results as at 30 June 2008 remains unchanged. This analysis also assumes that all other variables, including foreign currency
exchange rates and option volatilities remain constant.
Qantas Group Qantas
Net profi tEquity Net profi tEquity
2008
$M
2007
$M
2008
$M
2007
$M
2008
$M
2007
$M
2008
$M
2007
$M
10% increase per barrel in fuel indices 32.2 18.9 254.7 149.4 32.2 18.9 254.7 149.9
10% decrease per barrel in fuel indices (29.3) (16.9) (231.9) (133.9) (29.3) (16.9) (231.9) (133.9)
33. Financial Risk Management continued
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