The Lufthansa Group
One of the chosen companies for purposes of this report is the Deutsche Lufthansa AG with a ticker symbol of LHA.DE as listed with the XETRA. As of May 10, 2018, the company’s shares traded with an adjusted closing price of €24.29 (Yahoo! Finance, 2018).
Hedging Tools and Methods
Based on the Lufthansa Group’s 2017 annual report, at least four types of hedging instruments are used to mitigate mainly fuel price risks (Lufthansa Group, 2018):
1. Forward contracts are used to hedge charter expenses, which more likely pertains to the group’s freight airline arm - the Lufthansa Cargo. In addition, full hedging is implemented as soon as a contract is signed.
2. A combination of options is used for fuel hedging, for purposes of market liquidity.
3. With respect to crude oil and kerosene hedges, futures and options are used.
4. Currency swaps are used to manage U.S. dollar exposure from planned fuel requirements.
British Airways Plc
The other chosen company is the British Airways Plc of the International Consolidated Airlines Group, S.A with a ticker symbol of IAG.L as traded through the London Stock Exchange. As of May 10, 2018, the company’s shares traded with an adjusted closing price of ₤693.20 (Yahoo! Finance, 2018).
Tools and Methods
Based on the British Airways’ 2017 annual report, a set of hedging instruments similar to the Lufthansa Group is used by the company to manage various foreign currency transaction exposures (Bristish Airways Plc, 2018):
1. Oil derivative forward contracts are used to partially hedge price risks. In particular, the hedging program is aimed at increasing predictability of cash flows as well as profitability.
A combination of fuel hedging derivatives, which includes options

In your own words, define two methods to adjust for varying levels...