The cost of fuel has been cited by air transport companies as a critical factor in the stability of profits and consequently financial success. This has been identified to have a significant effect on profitability of the firm. In an attempt to counter the effects of rising fuel costs airlines have found it prudent to hedge on fuel costs. However, there have been arguments that in the long run, hedging does not improve profitability but serves to dampen the volatility of fuel prices (Jay, 2012). The main objective of the study was to find out the effect of price hedging on the profitability of Kenya airways Ltd. The study reviewed and identified knowledge gaps in related literature. It adopted an ex-post facto research design. The study performed extant document analysis between the 2009 to 2012 financial years of Kenya Airways Ltd. The study adopted document analysis of data obtained from financial reports, annual reports and management accounts reports. Graphs, tables and pie charts were used to present data. The data was analyzed using statistical methods such as mean, standard deviation, multiple linear regression and correlation analyses were also conducted
Keywords: Foreign Exchange, Kenya airways, Price hedging, Profitability
