Topic Author
Posts: 194
Joined: Fri Nov 16, 2001 12:36 am

Express Jet Fuel "cap" Costing CO $$$

Wed Dec 15, 2004 1:13 am

Read it and weep.


Scroll down to operating expence. Seems CAL is footing a large bill. For Express Jets fuel purchases.

The increase in aircraft fuel expense and related taxes during the three months ended March 31, 2004 as compared to the same period in 2003was due to a 31.5% increase in fuel consumption as a result of higher block hours flown. Under the capacity purchase agreement and the related fuel purchase agreement with Continental, we incur a fuel price and fuel tax equal to the lower of the actual cost of fuel and fuel tax or the agreed-upon caps. Our caps on fuel and fuel tax are 66.0 cents and 5.2 cents per gallon, respectively, for both 2004 and 2003. Until the termination of the fuel purchase agreement, our future fuel expense related to all aircraft covered under the capacity purchase agreement will be the lower of the actual cost of fuel and fuel tax or 71.2 cents per gallon.

Do the math 2004 2003

Fuel gallons consumed (millions)........................................ 60.6 46.1 31.5 %

60 million gallons multiplied by {.71 - $1.34 Going rate on a gallon of Jet "A" = .63 cents} .63 x 60Mil Gal = $37,800,000 some odd million. CAL forked over to express jet. Granted this is by no means the whole story.But taken on its own very interesting.

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