To Swap or not to Swap, that is one of the questions

Following the latest news about swaps contracts on state owned enterprises, I remembered a comment I read may years ago stating something like: "they are so smart at company X, they bought a future contract on Y [fuel, jet-fuel, or something else they needed for their operations] and as Y's price is going up that will improve their profit".

In my opinion the comment is just plain stupidity! 

If you really know that the price of something is going up (probably you just think it will...) just make a business of it - set up a trading company - and leverage as high as you can. The issue is that there's no such thing as the price of something going up in the future, only opinions (more or less informed) and most business are "real stuff" not speculative trading (more on this in a future post).

Taking that your business isn't speculative trading, you should indeed use a swap or future contract to minimize your operational risk, for instance:
 - an airliner sells plane tickets today, for a flight in 2 months and pays the jet-fuel 1 month after the flight, it's therefor exposed the fluctuations of the price of jet-fuel in the future, that can improve or decrease the expected profit of the plane ticket. As the business of the airliner is to fly passengers and not to earn money from jet-fuel fluctuations, it makes sense buy a contact to take out that risk (sort-of, no risk is completely taken out).
The future contract price should obviously be taken into it's cost structured and priced into the tickets. But here things become more interesting, if a company doesn't cover it's risk, it will have a lower cost structure and could improve profits!... not obvious as otherwise it will have an higher risk profile that may increase it's costs (of capital and goods).

So in reality the decision is, what's the risk profile of an enterprise? what do the managers and/or shareholders want it to be?

In the case of private owned long-term infrastructure projects that aren't easy to transact, it seems that the profile risk should be low - otherwise who would invest long-term in projects subject to go bankrupt due to market changes (for sure to occur in the medium-long term).

The recent news were indeed about enterprises with long-term infrastructure projects, but in this case they were state owned, so does it make sense to reduce the risk profile, namely in relation to interest rate fluctuations?
As governments have generally lower financial risk than other entities (they can tax their way out, while others have to persuade others to mutual benefit transactions) and state owned enterprises in question already needed a government guarantee of some sort to contract their loans, I personally don't think those swap operations made sense ! 
... the worst case for those enterprises would be to go bankrupt, but most already would be without state support !

(note: a big part of the current problem isn't reducing the risk profile but transferring cost into to the future, out of the balance-sheet and short-term P&L, that is a different story, to be addressed in a future post).

An important issue is, what should be the risk profile of the state itself? namely the liquidity risk associated with its debt (also to support the risk of its state owned enterprises)... but that will be for future posts!

How about everyone of us, what should the risk profile of a person? (more on that on a future post)

PS: getting started is always the most difficult part... in my first post I managed to leave leads to further 3 posts  :-)