Airbus offers airlines way to guard against fare declines

Airbus is developing a derivatives-based trading platform that will allow airlines to protect against declines in ticket prices -- and potentially help sustain growth and jet orders. Clients of the Skytra subsidiary will trade futures and options on a series of indexes that capture fare fluctuations across the industry. The venture is the brainchild of 2 Airbus veterans and emerged from a workshop with a struggling airline. “What do you do if you lock in your cost but revenues fall?” said Elise Weber, one of the founders. “We said, can’t we improve the risk management of our customers to be able to plan more long-term, to do long-term investment?” Airbus says the mechanism will help airlines to insulate against the impact of reduced demand or increased seat supply, just as they already hedge against currency and oil-price movements. <br/>