“It's actually a view, right? It's actually a trade. … These traders in the corporate, they don't call themselves traders because that sends compliance into a fit … So compliance goes ballistic. And they'll say, no, no, we're not trading. We're hedging.”
Odd Lots · Money & Markets · October 2026
Kang, who ran fuel hedging at an airline, has just said that "hedging is a bit of a misnomer." His point is that a corporate hedge is a bet on price like any other, and companies avoid the word "trading" because compliance and auditors won't accept it.
Transcript
I've only worked for an airline in a corporate sense, so I can only talk about that. But what I can say is that the word hedging is a bit of a misnomer.
Okay.
It's actually a view, right? It's actually a trade. And it's a good word that you said that, you know, these traders in the corporate, they don't call themselves traders because, right, that sends compliance into a fit because they believe that hedging is is good for them. So compliance goes ballistic. And they'll say, no, no, we're not trading. We're hedging. So what do we hedge? We're a consumer. We have to buy whatever we're consuming in order to lock that price in. If we're a producer, we've got to sell to make sure we lock in our revenue that we made at the top. So the word trading is not very well accepted at corporates. They don't believe in it. And auditors don't like it either. But I think if I can find that little bit of a tweak where I can get something as a product and the product is linked to the underlying risk that I have, which is exposure to jet fuel, I'm sure in another company you can find links like that. And then you can put on hedges that will protect you. It's like the food market. It's perishable. It's got to be within one day. I'm sure that somebody's going to be able to find out that with certain techniques they can prolong that. And by prolonging that, now they're long vegetables. They're not short. Something in that vein.
I just want to hear the sort of stories of how much money you made from this particular hedge and what happened at Qatar Airways when this was unveiled to your management.
Okay. It was $ 130 million. And actually that year our revenue side lost 65. So if not for my hedge, we would have lost money. But on top of that, because of my hedge, right. Going out the curve, we may have lost that money at that time, but because of that hedge and making money, I was able to give the revenue department the ability to cut fares. So Qatar Airways used to be a follower. They'd follow EK, sometimes even EY, right? So EK is Emirates, EY is Etihad. So they're always a follower. And when Emirates cut, then they cut fares, right? When Emirates put up the fares, they put up their fares. But I worked with Ankur and I gave him advantage, first mover advantage, and he took advantage of that. And he cut fares by 20% and then we led the market, right? And sorry to say, bums on seats. We sold. I mean, you know, we had every plane that was nearly 80 to 90% full. So we were able to give them that ability and they were able to make use of it. So I think as with anything that you do in life, you always try to add value to that food chain.
Since you brought up the other Middle Eastern airlines, I'm going to ask what is a potentially sensitive question, but I'm sure a lot of people will be wondering about this. There are many sensitive questions I could ask when it comes to the Middle Eastern airlines, but this one in particular, the UAE, Qatar, a lot of those regions are supposedly not drowning in oil, but they have a lot of oil. Why the need to source jet fuel externally in the first place? Why couldn't, you know, these countries subsidize, subsidize? I'm using air quotes here for those watching on video. Why couldn't they subsidize their airlines with, I don't know, exchanging Brent with a refinery down in wherever for a lower price jet fuel for their airlines?
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