Wednesday we wrote about a projected $220 million "loss" that Alaska Air Group expects to report on its fuel hedging portfolio in the third quarter.

The airline called to say we didn't get the complicated details of the hedging arrangement quite right.

Alaska says the drop in oil prices from above $140 a barrel in mid-summer when the company's fuel hedging contracts were last valued to now when crude oil futures are selling for about $87 a barrel have diminished the amount of money the airline expects to save by hedging by $220 milion, thus the term "loss."

Brandon Pedersen, the airline holding company's vice president of finance, draws an analogy to buying a gallon of gas.

If gas is selling for $3.50 a gallon at the pump, and you've got a coupon in your hand that allows you to buy gas for $3 a gallon, that coupon is worth 50 cents a gallon. If the coupon was good for 100 gallons, then it would have a total value of $50.

If gas dropped to $3.40 a gallon, the coupon would be worth 40 cents a gallon or $40 for 100 gallons, he said.

On much larger and more complicated scale, that same example applies to Alaska Air Group. The airline holding company has hedged its fuel expenses by buy options to procure fuel at a fixed price sometime in the future. As the price of oil diminishes, as it has this summer, the worth of those options drops too.

That's where the $220 million balance sheet loss comes in, he said. Because crude oil prices have dropped, its options are worth less. If the spot oil price drop below the option price, the company will save nothing in buying fuel

The company's options are still worth something overall because some of its options are for prices less than the spot price, but because oil prices have dropped, they are worth $220 million less than they were at the end of the second quarter in June.

Because the company bought options giving it the right to buy fuel at a particular cost, it's not obligated to buy oil at that price, he said. The airline holding company is only out the cost of the option.

Good news in this ocean of bad tidings: Sea-Tac Airport expects its newest runway will cost about $115 million less than its budgeted cost.

Sea-Tac spokesman Perry Cooper says the 8,500-foot third runway is now expected to cost $1.013 billion. That's down from a budgeted figure of $1.128 billion.

The new runway is now scheduled to open Nov. 20 to commercial traffic.

When fully operational, the runway will speed up operations at the airport during low visibility conditions because a staggered stream of traffic can use two runways for operations.

The two present runways are too close to be used at the same time during inclement weather.

Though the final costs are under the present budget, critics of the runway point out that the cost more than doubled during the 15 years between conception and completion.

After more than a month without discussion, the Machinists Union and The Boeing Co. have agreed to reopen talks aimed at ending the union's 34-day-old strike.

In a message to its 27,000 striking members, the International Association of Machinists and Aerospace Workers District Local 751 said local president Tom Wroblewski and chief negotiator Mark Blondin met with Boeing Commercial Airplanes President Scott Carson Wednesday to outline their issues.

Both sides then agreed to return to the bargain table.

"We have kept lines of communications open and have agreed to pursue additional talks through the federal mediator," said Boeing human resources vice president Doug Kight.

"We hope this meeting marks a major step forward," the union said in a statement. "The union will continue to do everything possible to bargain a contract that addresses the concerns our members have identified."

The strike has taken its toll on both sides. Boeing stock Wednesday hit a 52-week low of $47.18 in intraday trading. That's less than half of the stock's 52-week high of $102.40.

Analysts have estimated that the company may have foregone up to $1.3 billion in profit for now because of lost production. If the strike is settled, the company will make up that lost production, but it will take months or years to do so.

Meanwhile, the union has encountered criticism from the public for turning down what some considered a generous contract during a period when the economy is struggling and workers in other industries and government are being laid off.

Boeing President Jim McNerney Monday criticized the strike and said Boeing can't give more or it will become uncompetitive in the world-wide aerospace marketplace.

The union contended Boeing is making record profits and can well afford to enhance its last offer which was rejected by 80 percent of voting union members.

Two key issues have emerged during the strike's duration:
so-called "take aways" in the Boeing medical and retirement plan and job security.

The takeaway issue, which Boeing contends is overblown, appears easy and inexpensive to solve.

The job security issue will be a tougher nut to crack. The union wants some concrete assurance that Boeing won't continue outsourcing work without at least some guarantee that internal forces can bid on that work.

Boeing's outsourcing policy is driven by two factors: marketing and cost and capital containment.

Boeing uses subcontracts to place work in other countries where it wants to sell airplanes.

And it lays off work to foreign contractors to share the capital costs of creating and building a new plane and to lower production costs.

The union points to the new 787 as an example of outsourcing gone wrong. That plane is approaching two years behind schedule in large part because outside contractors haven't performed as required.