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What a 50 percent fuel hedge does

You run the case. Read the prompt, answer questions from the notes below, and share data only when the candidate asks for it or gets stuck. Score at the end.

Case timer

00:00

Target length:

1. Read the prompt aloud

Read it slowly, then pause. Let the candidate ask questions before they structure.

An illustrative airline in Europe will buy 2 million barrels of jet fuel next year. It hedges half at USD 100 per barrel. What is its fuel cost if the market price is USD 150 per barrel, and if it is USD 70, compared with not hedging?

2. Answers to clarifying questions

This case has no scripted clarifying answers. Answer from the prompt, and say "assume what you think is reasonable" if the prompt does not cover it.

3. A model structure

Compare the candidate's structure with this one. A different split can be just as good if it is clean and fits the problem.

Fuel cost = hedged barrels x hedged price + unhedged barrels x market price
- High price case: USD 150
- Low price case: USD 70

4. The working, step by step

Each step shows how a strong candidate works it out. Share a new fact from it only when the candidate asks or is stuck, and let them do the math: the result in the dark box is what they should reach.

Step 1: High price, hedged
What a strong candidate does: 1 million barrels at 100 plus 1 million at 150, in USD millions.
Fuel cost with hedge at USD 150 (USD millions): 1 × 100 + 1 × 150 = 250
Step 2: High price, not hedged
What a strong candidate does: All 2 million at 150.
Fuel cost without hedge at USD 150 (USD millions): 2 × 150 = 300
Step 3: Low price, hedged
What a strong candidate does: 1 million at 100 plus 1 million at 70.
Fuel cost with hedge at USD 70 (USD millions): 1 × 100 + 1 × 70 = 170
Step 4: Low price, not hedged
What a strong candidate does: All 2 million at 70.
Fuel cost without hedge at USD 70 (USD millions): 2 × 70 = 140

The recommendation to listen for

At the end, say: "The CEO walks in. What is your recommendation?"

The airline should keep hedging about half its fuel, because the hedge narrows the range of outcomes: fuel costs USD 250 million instead of USD 300 million at USD 150 a barrel. First, that saves USD 50 million if prices jump. Second, it costs USD 30 million if prices fall to USD 70, since fuel then costs USD 170 million instead of USD 140 million. This means the hedge is insurance, not a bet. The risk is a long fall in prices, which leaves the airline paying more than rivals that did not hedge. As a next step, review how much of next year's fuel is hedged and at what price.

Score the candidate

Score each criterion from 1 to 5. A 2 or a 4 sits between the descriptions.

This case has no exhibit. Score Exhibit reading on how the candidate used the data you gave them: did they pick out the number that matters and say what it means?

Structuring

1: No clear structure, or a memorized framework that does not fit the problem.
3: A sensible structure, but with some overlap, a gap, or no clear priority.
5: A structure built for this problem, with no overlap and no gaps, a stated hypothesis, and a clear first step.

Math

1: Frequent errors, no units, or needed heavy help to finish.
3: Right answers but slow or messy working, or one error caught late.
5: Accurate and clearly narrated, with units, a sense check, and what the number means.

Exhibit reading

1: Read the chart aloud without finding the number that matters.
3: Found the key number but gave only part of the so-what.
5: Pulled the right number quickly and said what it means for the case.

Synthesis

1: Summarized what was done, with no clear answer.
3: Gave an answer, but with weak reasons or no next step.
5: Answer first, then two or three reasons with numbers, the main risk, and next steps.

Communication

1: Hard to follow: long silences, no signposting.
3: Clear most of the time, with some rambling.
5: Calm and concise, signposted each step, and checked in with the interviewer.

Total

0 out of 25

Score all five criteria to see the band and the feedback template.