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Essay / Research Paper Abstract
This 5 page paper examines 2 questions that will be answered in a research paper looking at whether or not the use of fuel hedging in the interests of shareholders. The two questions look at if fuel hedging supports profitability in the aviation industry and if there is a link between hedging and profitability in individual airlines. The bibliography cites 10 sources.
Page Count:
5 pages (~225 words per page)
File: TS14_TEairhedge3.rtf
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Unformatted sample text from the term paper:
of benefit to airline shareholders two questions which will need to be answered are * Is there a relationship between hedging on fuel and airline profitability? * Does hedging on
fuel lead to profitability within the airline industry? To research these questions it is necessary to consider why these questions were chosen and the expected outcome on
each of the questions. The questions regarding the relationship between hedging on fuel and airline profitability there is a direct correlation between the outcome of the
hedging and the interests of the shareholders as the primary stakeholder group. To assess whether or not hedging is in the interests of the shareholders it is necessary to identify
what the needs or desires of the shareholders will be. Hsieh (2009) notes that there may be many responsibilities for firm, but whatever approach its taken towards stakeholder responsibility one
of the key responsibilities that will remain is to provide the shareholders with a return. To provide shareholders with that return, whether it is through increased firm value which facilitates
further investments and increases in equity, or with dividends, the firm needs to make a profit. Hedging may be used for a number of reasons, Corman
(1996) notes that there are potential benefits to managing Cash flow for some hedging practices, also supported by Mello (2000). However, although management accounting may be concerned with cash flow,
if it is the bottom line that investors, or shareholders, are interested in and the key to answering whether or not hedging in shareholder interests should start with whether there
is a link between airlines that hedge and profitability. However, this alone will not answer the specific research question alone; it provides a starting point for the assessment. If hedging
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