Delta loses $450m bet on fuel prices

Delta is taking a $450m loss because jet fuel prices didn't jump as much as the airline bet they would. The airline had locked in fuel purchases, in a contract known as a hedge, at levels above the current market value, betting that jet fuel prices prices would climb. And they did indeed rise. But they didn't go nearly as high as Delta had anticipated, which made that hedge a loser. So Delta pulled out of the fuel contracts, which cost the airline nearly half a billion dollars. But it's not all bad news for Delta. Fuel prices are up 60% from their January lows, but they're down 20% from a year ago. So, even with the cost of canceling its fuel contract, Delta will save money on fuel, which is its second largest expense, in Q2. Delta took an even bigger hit on hedges last year -- $2.3b according to company filings -- as fuel prices fell throughout the year. It lost another $274m on hedges in the first three months of this year.<br/>