BLOOMBERG reported that Malaysia Airlines Bhd. projects oil prices will increase to about $70 a barrel toward the end of this year and has aggressive fuel hedging in place as the national carrier seeks to return to profitable operations.
“At the moment we are hedged about 65 percent of the current year at about a little bit north of $60,” Chief Executive Officer Peter Bellew said in a Bloomberg TV interview with Haidi Lun on Friday. “We are quite aggressively hedging 12 months ahead on a quarter-to-quarter basis and taking a fairly prudent approach to it.”
According to BLOOMBERG, Malaysia Airlines is projecting a return to what Bellew calls “more consistent profitability” in 2018 following an expected loss this year as it fills a larger portion of seats amid demand from markets leading with China. The ringgit’s depreciation against the dollar since Donald Trump won the U.S. presidential election in November is a big concern for Malaysia Airlines, the CEO said.
It is not clear, however, why Peter Bellew believes that crude oil price woul reach $70 a barrel. In my opinion. there is little hope that it will be the case. The reason for my pessimism is that Trump’s policy of isolationism would only mean departure from ideaof globalization. It will also trigger a domino effect worldwide. Europe is already showing initial signs of the future inwards looking trends.
There is no doubt that protectionism will result in a number of obsticles for foreign business worldwide and shrink access to a bigger market. Lack of access will lead to low growth potential or stagnation, if not resession. Needless to say that low or declining demand will follow.
It is also important to remember that due to huge number of DUC, the U.S. producers are able to rapidly increase oil production the moment oil price will start to go up. It would continue to keep the oil price surpressed for quite a while.
Besides. Donald Trump’s policies have real potential to cause worldwide volotility. As we all know, business does not favour it. Therefore, I do not see and reason to expect good growth numbers.
If nothing would change, I do not understand how crude oil price may reach $70 a barrel.
Malaysia Airlines ‘Aggressively Hedging’ on Forecast Oil Will Rise to $70 https://bloom.bg/2lkrtjl