We lead in with these two quotes to illustrate the disparity in senior management views of the wisdom of hedging commodity price risk within the same industry. Mr. Topping’s statement reflects a view that hedging commodity risk management is a financial policy that airlines should follow as part of their fiduciary duty. In fact, Southwest Airlines has continued to maintain an active fuel hedging program throughout most of the last 15+ years. However, risk management, including commodity risk management, varies dramatically across firms. Mr. Kirby’s statement implies that airlines should not attempt to manage fuel price risk by entering into derivative contracts because Wall Street has “an advantage” in terms of pricing contracts. Furthermore, in a Modigliani and Miller world with perfect capital markets, corporate risk management should not matter, so shareholders should be indifferent about whether firms hedge or not. In the real world with imperfect capital markets, academic research has shown that managing risk can be a value adding activity by reducing expected taxes, decreasing cash flow and earnings volatility, lowering the costs of financial distress, decreasing the cost of capital, and alleviating the underinvestment problem.