Maurice Gallagher on fuel hedging
From Maurice J. Gallagher, Jr. "Management Challenges from the Tarmac to 30,000 feet" · · UC Davis Graduate School of Management
“We stopped hedging in 2007. We were the first company to stop it and back then the Wall Street types it was kind of like you check a box are you hedging yes. We started looking at it and realized there are fundamental problems with hedging fuel in a business we don't know. If oil goes up strongly, we pull our capacity back; if oil falls, we expand. We're now running at a 30% operating margin which is unheard of in the business.”
On , Maurice Gallagher, Executive Chairman at ALLEGIANT TRAVEL CO, spoke about fuel hedging during Maurice J. Gallagher, Jr. "Management Challenges from the Tarmac to 30,000 feet" on UC Davis Graduate School of Management.
About Maurice Gallagher
Maurice Gallagher, Executive Chairman of Allegiant Travel, spoke at a Dean's Distinguished Speaker event on September 17, 2016, where he discussed the company's business model and management philosophy. He stated that Allegiant stopped hedging fuel in 2007, explaining that the company adjusts capacity based on oil prices. Gallagher noted that the company had been profitable for 52 consecutive quarters and was operating at a 30 percent margin, which he described as "unheard of in the business." He attributed this success to a focus on leisure customers, the use of older airplanes, and cost efficiency. Gallagher also described his approach to management, saying he is "a big believer in stockholder benefits" and that none of Allegiant's management have employment agreements. He stated that he does not take a salary and that bonuses are based on performance. Gallagher discussed the challenges of scaling management as the company grew from a small commuter airline to one with 83 airplanes and 322 routes. He advised against giving too much money to young companies, saying they "don't learn how to do things inexpensively and efficiently."