Eastern Airlines Fuel Hedging Strategy

China's commodity futures markets has more than twenty years of history, in 2010 it launched the first financial futures contracts-stock index futures contracts. The rapid development of capital markets for the industry provides the external environment to risk capital.As a force for economic development china's industrial capital, through the capital market, avoids risks effectively such as interest rate risk, currency risk, price risk and so on, eventually to ensure operational stability and continuity.In recent years, the price risk management of China's industrial capital is not successful, the copper smelting industry, soybean industry,the airline industry which is in leading,not only failed to ensure the smooth operation, but also result in insolvency,. The systemic risk appears in all the industry area. In the face of international business competition, the paper intends to discuss the fuel hedging problems of Eastern Airlines in 2008, and then hope that the enterprises can effectively carry out the hedging activities in order to avoid price risk.Through searching literature, financial ratio analysis and in other methods,the paper review the practice and analyze the Eastern Airlines jet fuel hedging contracts. There are many problems in the presence of hedging,such as inappropriate hedging,positions high, the principle of hedging is not clear, etc. the paper also proposes to choose the right set of insurance markets and hedging contracts, and control risk aversion of hedging positions in program.In order to improve the Eastern Airlines jet fuel price risk control, China Eastern Airlines must have a clear understanding of the futures markets, mark their position in the industrial chain, and master the price volatility law of dollar, oil, jet fuel, design a strategy for their preservation and make it an important part of business model and operate strictly. By doing this the enterprise can take the initiative to manage their price and risk.