For this assignment, you’ll answer questions pertaining to risk management.We would need to discuss airline hedging practices, derivatives and risk management options. You have been hired by...

For this assignment, you’ll answer questions pertaining to risk management. We would need to discuss airline hedging practices, derivatives and risk management options. You have been hired by Southwest Airlines. Your primary task is to keep the Airfares low and the company profitable. In the prior years, Southwest has extensively bought forward contracts of barrels of Oil at low prices between $20 to $40 a year. However currently the fuel prices in the past year has fluctuated wildly between $40.00 to $140.00. Fuel cost represents about 35% of the cost of operation and is next in importance to salaries and wages. Identify the steps you would initiate to protect the company from fluctuating fuel costs and achieve your objective.