Hedge Strategy Analysis and Financial Analysis of Chinese Eastern Airlines

Xincheng Du (), Weiqiang Feng and Suyang Yao
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Xincheng Du: Harbin Institute of Technology
Weiqiang Feng: Zhongnan University of Economics and Law
Suyang Yao: Zhejiang University

A chapter in Proceedings of the 2022 2nd International Conference on Economic Development and Business Culture (ICEDBC 2022), 2022, pp 460-465 from Springer

Abstract: Abstract Hedging is crucial to a company’s financial status, a good hedging strategy can effectively avoid the loss caused by price fluctuations. However, a bad hedging strategy can lead a company into a crisis. This paper aims to study the failed case of fuel option hedging of China Eastern Airlines in 2008. We make a financial analysis based on the company's basic background, financial situation, and stock price. On this basis, the hedging schemes of fuel long call options, short put options, and short Call options are analyzed respectively, and the reasons for the company's huge losses are finally obtained. This paper will provide a reference for airlines to make hedging plans in the future, so as to avoid inappropriate hedging decisions.

Keywords: Corporate background; Financial analysis; Fuel hedge (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-036-7_68

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DOI: 10.2991/978-94-6463-036-7_68

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