Need help with my writing homework on Delta Airlines. Write a 1750 word paper answering; Generally a fluctuating exchange rate exists between dollar and euro which implies that one euro is not always equals to one dollar. Hence Delta Air Lines in order to finance its day to day operations has to exchange the euro for the dollars. The airline can be at a disadvantageous or in an advantageous position depending upon the current market situation. This leads to distortion in the earnings of the airlines as the currency exchange affects the revenue of the company. If euro is high as compared to dollars then while Delta Airline is converting its earning, which is from euro to dollar then the company will be able to benefit from this situation. Like for instance if 1 Euro = $ 1.20, then for every euro the company will get more dollar than what it had got if the situation is just reverse. Therefore, cost incurred in monetary terms by the company is of less or more value than company’s income recognized in monetary terms depending on the market condition. The airline company engages in currency hedging in order to mitigate currency risk. Currency hedging signifies protecting against the fluctuations in the exchange rates by locking in a particular exchange rate or a series of exchange rates (Vasigh, Fleming &. Mackay, 2010. Papaioannou, 2006)). Delta Air Line participates actively in the Fuel hedging program in order to manage the fuel price risk. This program helps in reducing financial impact that occurs due to change in the price of jet fuel. Different commodity and contract types are used in this fuel hedging program. The economic efficiency of the hedge portfolio is evaluated on a regular basis with the financial targets of the company.
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