Fuel hedges can postpone the effect of the latest oil shock, but they cannot remove it. The eventual pressure on margins will reveal whether European airlines can raise unit revenue without sacrificing demand.
Europe’s renewed energy shock is now raising both operating costs and financing costs. The most vulnerable companies are those where weak pricing power, short hedges and refinancing needs occur together.
Input costs pass through to margins at very different speeds depending on contract structure and hedging policy. The disclosure needed to tell the difference is usually there, just not summarised.