Southwest Airlines: Hedging and Shareholder Value

25 Pages Posted: 4 Sep 2006

See all articles by Michael R. Ingrassia

Michael R. Ingrassia

Georgetown University Law Center

Victor Fleischer

UC-Irvine School of Law

Date Written: August 30, 2006

Abstract

This teaching case describes the hedging program of Southwest Airlines and asks students to consider whether the purchase of additional (now more costly) fuel hedging contracts makes sense. The case prepares students to consider arguments for and against hedging. The case also explores the legal implications of hedging and its relationship to shareholder vs. stakeholder theory, and it asks students to consider in what circumstances hedging against unsystematic risk is a proper exercise of fiduciary duty.

Keywords: hedging, Southwest, airlines, fiduciary duty, shareholder value

Suggested Citation

Ingrassia, Michael R. and Fleischer, Victor, Southwest Airlines: Hedging and Shareholder Value (August 30, 2006). U of Colorado Law Legal Studies Research Paper No. 06-29. Available at SSRN: https://ssrn.com/abstract=928094 or http://dx.doi.org/10.2139/ssrn.928094

Michael R. Ingrassia

Georgetown University Law Center ( email )

600 New Jersey Avenue, NW
Washington, DC 20001
United States

Victor Fleischer (Contact Author)

UC-Irvine School of Law ( email )

401 E. Peltason Dr.
Ste. 1000
Irvine, CA 92697-1000
United States

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