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Minimising volatility for the airline industry

Executive summaryIn the current market environment there are many factors causing volatility in the Income Statement – political, economic, financial…

By Jacqui Drew, Solution Consultant, Reval | Updated on April 13, 2012

Executive summary

In the current market environment there are many factors causing volatility in the Income Statement – political, economic, financial and industry specific factors that to try to manage some of this volatility or report it in a sensible manner is the objective of many treasurers. The aim of the EU Emissions Trading Scheme (EU-ETS), tarted on 1st January 2005, is to reduce emissions in a cost effective manner allowing companies to trade emission allowances and thereby determine how and where they reduce emissions. Following legislation in 2009 the aviation industry is now included. From 1st January 2012 all airlines flying to and from the European Union are required to match their carbon emissions with carbon credits. Although each airline receives an allowance on an annual basis this is unlikely to match actual emissions incurred and hence the airline will be exposed to this very volatile commodity.

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