2020 is a bad year for global airline industry. Even before the pandemic reduced the demand for oil, crude oil prices plummeted from the high of $66 per barrel in 2019 to sub $25 per barrel in the first quarter of 2020 due to talks between OPEC and Russia breaking down which led to a ramp up in oil supply. International Airlines Group, whose fleet includes British Airways and Iberia, could be facing mark to market hedging losses as high as $3.2 billion. EuroFinance calculated this figure based on IAG's disclosures on 28 February that it had hedged 90% of its 9.6 million tonne fuel consumption for 2020, and subsequent moves in the oil futures curve. Ryanair which last year hedged 90% of its forecast 2020 fuel consumption may be sitting on mark-to-market losses as much as $1.5 billion, according to calculations by EuroFinance based on its financial disclosures. Its dollar hedge price per barrel is $83 which is way above the current June oil futures price of $30, creating a loss of $53 per barrel. Budget airline Easyjet may have lost $1.3 billion using a similar calculation to Ryanair, while Air France KLM lost an estimated $800 million based on the swap or forward contracts in its hedging portfolio. Most of the major European airlines had hedged above 60% of their anticipated fuel consumption before Covid-19 decimated their flight schedules. (1) Please use forward or futures hedging to explain why and how airlines had made the hedging, and why and how this hedging led to losses. (2) Please use option hedging to explain what will be the consequences to the company if they use option hedging instead of forward or futures hedging to reduce loss