lufthansa
Pros and cons In the following each hedging method has been evaluated separately. After that Ruhnau´s decision about using Fifty-Fifty hedging method has been evaluted. Remain uncovered When 360 forward rate is same as current rate, markets do not expect change in the currency value. In many cases remaining uncovered is the most cheapest option. This method offers possibility for the unlimited damage and profit. However, that is not the best interest of the company, as speculating is not their core business. In the Lufthansa case, the size of the purchase is too large that this kind of risk could be accepted. Therefore this option could not have been used in any case. Forward Forward is locking the purchase price on the same level that will not change. This is very stabile and safe solution. Company will know what it will receive and when. However, this can be very expensive solution if courses change. In the risk management sense, this is the best solution. This could have been good option, but some analytist did allready see signs of the depreciating dollar.