WEBVTT - Surveillance: Inflation Pressures With Dutta 0:00:05.120 --> 0:00:09.200 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene along 0:00:09.240 --> 0:00:13.200 with Jonathan Ferwell and Lisa Brownwitz Jaily, we bring you 0:00:13.320 --> 0:00:18.600 insight from the best and economics, finance, investment, and international relations. 0:00:18.960 --> 0:00:23.840 Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot Com, 0:00:23.920 --> 0:00:30.480 and of course on the Bloomberg terminal. Well, what we 0:00:30.520 --> 0:00:32.760 need to do, John and Lisa is remain calm on 0:00:32.920 --> 0:00:35.920 radio and television. Right now, we welcome Neil dot Ahead 0:00:35.920 --> 0:00:40.080 of US Economic Research, Renaissance macro research. Neil, you are 0:00:40.080 --> 0:00:43.479 the king of transitory. Why is six point x per 0:00:43.560 --> 0:00:47.760 cent inflation transitory? Well, I don't know that I'm the 0:00:47.840 --> 0:00:51.559 king of transitory yet, Tom. I mean, we have been 0:00:51.560 --> 0:00:55.880 telling clients that that inflation is going to be getting 0:00:55.880 --> 0:00:59.200 worse before it gets better, and um, you know, today's 0:00:59.200 --> 0:01:04.160 inflation data has been so it vindicates that. I mean, 0:01:04.200 --> 0:01:05.959 I think if you look at this, this is actually 0:01:06.040 --> 0:01:12.400 somewhat worse under the surface than it is on the surface. Um, 0:01:12.480 --> 0:01:15.520 so you know, I'm looking at my Bloomberg obviously shelter, 0:01:15.680 --> 0:01:17.600 but you know, look, we still got a beat despite 0:01:17.680 --> 0:01:21.559 no contribution from airfares. Air airline fares were actually a drag. 0:01:22.840 --> 0:01:25.839 It's hard to see how that keeps up. Considering, um, 0:01:25.880 --> 0:01:29.319 you know, the travel situation which is beginning to heat up. 0:01:29.360 --> 0:01:32.760 I mean, if you look at search interests for flights, uh, 0:01:32.880 --> 0:01:37.000 there's increasing demand for travel. So it's it's unlikely that 0:01:37.000 --> 0:01:41.840 that we see a repeat performance on that front going forward. Um. 0:01:41.920 --> 0:01:44.920 You know, I still think there's a decent amount in 0:01:44.959 --> 0:01:47.680 the pipeline for use car and truck prices to keep 0:01:47.800 --> 0:01:50.440 going up. Um. But again, the big, the big story 0:01:50.520 --> 0:01:52.840 is here is rental inflation, and it's and it's and 0:01:52.840 --> 0:01:57.200 it's firming. So UM, I do think that the FEDS 0:01:57.240 --> 0:01:59.160 still has a story to tell. So it's not so 0:01:59.280 --> 0:02:01.960 much what the lation is doing. Obviously that's important, but 0:02:02.000 --> 0:02:04.960 really it's what's the FED going to do about it? Um? 0:02:05.760 --> 0:02:10.240 And I think Powell, um, it's not ready to do 0:02:10.320 --> 0:02:14.639 something about it. Yeah to Q one, Nail if you can, 0:02:14.840 --> 0:02:16.640 Sorry to jump in, but I think this is important 0:02:16.880 --> 0:02:19.000 when we get to Q one, and as I listen 0:02:19.080 --> 0:02:21.600 to you, it seems to be getting broader and stickier 0:02:22.120 --> 0:02:23.960 when we get to Q one. If we're still in 0:02:24.000 --> 0:02:27.919 this position, and unemployment, as Jim Pallada suggested, could drop 0:02:27.960 --> 0:02:30.840 to a three handle. How do you think communication evolves 0:02:30.840 --> 0:02:33.880 around that? From your perspective, you're understanding of the reaction 0:02:33.919 --> 0:02:37.919 function of the FED. Well, I think that that will 0:02:38.040 --> 0:02:40.520 keep the door open for rate hikes starting in the 0:02:40.560 --> 0:02:43.679 second half of of next year. I mean, remember that 0:02:43.840 --> 0:02:48.080 the FED is a very slow moving entity, right, and 0:02:48.120 --> 0:02:51.160 their institutional constraints. I mean, think about what Powell said 0:02:52.280 --> 0:02:55.080 last week. I mean, you know, you had folks like 0:02:55.160 --> 0:02:58.880 Waller and soon to depart corals talking about how, well, 0:02:58.919 --> 0:03:01.799 if the next two inflation prints or firm, we may 0:03:01.840 --> 0:03:06.000 have to shift the timeline for rate hikes. Um, you know, 0:03:06.080 --> 0:03:10.000 maybe even hinting at speeding up the tapering process. Powell, 0:03:10.160 --> 0:03:14.400 I think effectively put the kabash on on that talk 0:03:14.639 --> 0:03:18.200 last week. So they've kind of locked themselves in to 0:03:18.480 --> 0:03:21.800 a steady pace of tapering I think over the first 0:03:21.800 --> 0:03:24.960 half of next year. So you know, look, we're talking about, 0:03:25.120 --> 0:03:30.040 you know, potentially substantial acceleration and employment activity between now 0:03:30.080 --> 0:03:33.120 and the end of the year. Obviously inflation is firming, 0:03:33.520 --> 0:03:37.440 so we're seeing an acceleration and nominal growth and guess 0:03:37.480 --> 0:03:42.040 what the FET is still buying right, So, um, So 0:03:42.240 --> 0:03:44.640 it just tells you how slow moving the fete is 0:03:45.400 --> 0:03:48.000 um And look, I mean I think that labor supply 0:03:48.080 --> 0:03:50.000 is going to come up, and I think the FED 0:03:50.040 --> 0:03:52.640 will have a good story to tell and they'll they'll, 0:03:52.760 --> 0:03:54.800 you know, and they'll continue to stick to that. But 0:03:55.680 --> 0:03:57.520 you know, the risk, of course, is that there's more 0:03:57.560 --> 0:04:00.640 of an abrupt shifting policy. Sometime later night, steer Neil. 0:04:00.680 --> 0:04:02.880 Let's say the data continues to come in like this, 0:04:03.000 --> 0:04:05.800 and the fact it feels like it needs to hike rates. 0:04:05.800 --> 0:04:09.080 How high can rates go given where the economy is, 0:04:09.080 --> 0:04:12.320 given how much debt we've incurred. Well, so that's the issue, right. 0:04:12.440 --> 0:04:14.520 Li says that if you look at the pricing in 0:04:14.560 --> 0:04:17.200 the forward market, I mean, the curve is so flat. 0:04:17.320 --> 0:04:21.120 So basically, if I'm interpreting the market correctly, it's, you know, 0:04:21.240 --> 0:04:23.360 let's hike twice and then be done, which sort of 0:04:23.440 --> 0:04:26.760 raises the question like why hike at all? Like so 0:04:26.839 --> 0:04:29.560 I don't, um, you know, to me, the back end 0:04:29.600 --> 0:04:33.159 of the curve looks very misspriced. Um, because there looks 0:04:33.200 --> 0:04:35.559 to be, at least in my mind, a significant amount 0:04:35.600 --> 0:04:38.080 of momentum in the in the in the economic situation, 0:04:38.120 --> 0:04:40.520 I mean, demand is running very very strong, and it 0:04:40.600 --> 0:04:43.400 still continues to run strong, and you know, you mentioned 0:04:43.400 --> 0:04:47.400 about how real wages may slow demand. That's unlikely in 0:04:47.440 --> 0:04:51.400 my view, because aggregate incomes are surging, right, So it's 0:04:51.440 --> 0:04:53.760 not just about what people are making on each our work. 0:04:53.800 --> 0:04:57.039 It's about how many people are working, how long they're working, 0:04:57.600 --> 0:05:00.320 and also they're hourly earnings. And if you up the 0:05:00.440 --> 0:05:03.320 some product of those three things, I mean, that's growing 0:05:03.360 --> 0:05:06.440 like ten percent, So that's a rough proxy annualize, So 0:05:06.440 --> 0:05:08.840 that's a rough proxy phenomenal GDP. So now we need 0:05:08.880 --> 0:05:11.320 to think about what's going to be the distribution of 0:05:11.360 --> 0:05:13.520 that growth. I mean, is it going to be you know, 0:05:13.760 --> 0:05:17.279 six percent real real activity and maybe four percent inflation? 0:05:17.360 --> 0:05:19.240 Is it going to be seven percent real activity and 0:05:19.240 --> 0:05:22.120 three percent inflation? What I can tell you at a 0:05:22.120 --> 0:05:24.280 minimum is that the FED is going to be having 0:05:24.320 --> 0:05:27.400 to revise up their inflation estimates for next year. And 0:05:27.400 --> 0:05:29.120 one of the things that we've been seeing is that 0:05:29.160 --> 0:05:31.800 they've you know, when you look at the median expectations, 0:05:31.920 --> 0:05:35.520 they've always been sort of just expecting inflation to slow 0:05:35.520 --> 0:05:37.719 down to two percent, right, So it's just sort of 0:05:37.720 --> 0:05:39.920 this mark to market exercise. There hasn't been this kind 0:05:39.920 --> 0:05:44.240 of capitulation from the FED on the inflation story. And 0:05:44.560 --> 0:05:47.640 I wouldn't expect that in December, and I wouldn't expect 0:05:47.680 --> 0:05:50.640 it in March either, because, if anything, the composition of 0:05:50.680 --> 0:05:53.440 the of the farm C is going to change. I 0:05:53.480 --> 0:05:55.760 don't think Biden is going to put people in there 0:05:56.320 --> 0:05:59.320 that are going to adopt a more hawkish response function 0:05:59.360 --> 0:06:02.240 to the data that's coming in. Neil Love catching up 0:06:02.240 --> 0:06:04.240 with you, the perfect guest to talk about this with 0:06:04.360 --> 0:06:12.440 Neil down to that every nice on smacro research. Right now, 0:06:12.480 --> 0:06:15.159 we will pause, and this is a wonderful interlude into 0:06:15.360 --> 0:06:18.760 cp I and all that we cover here. Jeanne Plan 0:06:19.160 --> 0:06:22.719 the CEO of BMP perry Ba USA. He's an acclaimed 0:06:22.760 --> 0:06:26.279 world class sailor, but far more he has carried forward 0:06:26.320 --> 0:06:30.080 the heritage of b MP Parry Ba from Roland Garrows 0:06:30.120 --> 0:06:33.599 almost fifty years ago, where it's safe to say he 0:06:33.760 --> 0:06:37.440 and his bank brand and own the sport of tennis. John, 0:06:37.480 --> 0:06:40.400 the only equivalent, see I know, is what Barclays did 0:06:40.440 --> 0:06:44.160 in Premier League years ago. Jean, if you have had 0:06:44.160 --> 0:06:47.640 a bang up year in the branding of tennis, what 0:06:47.839 --> 0:06:51.440 will b MP Parry BA do in two thousand twenty two? 0:06:51.680 --> 0:06:54.919 How do you carry for the open in Indian Wells 0:06:55.240 --> 0:07:02.200 and bring it into your banking business of next year. Well, Tom, 0:07:02.279 --> 0:07:04.159 John and Lisa, thank you so much for having me 0:07:04.200 --> 0:07:08.599 on the show. Um and Tom, you definitely follow and 0:07:08.680 --> 0:07:12.880 no tennis extremely well. You mentioned Indian Wals, which we 0:07:13.000 --> 0:07:16.800 managed to you know, really host in one, which we 0:07:16.840 --> 0:07:19.720 could not do in twenty and it was an amazing 0:07:19.840 --> 0:07:23.400 way to send the message at work, back back in business, 0:07:23.440 --> 0:07:26.160 back with clients. And as you said, the bank is 0:07:26.840 --> 0:07:29.320 has tennis in its DNA and the plan is to 0:07:29.440 --> 0:07:32.080 having Indian Wells in twenty twenty two in March. This 0:07:32.280 --> 0:07:35.680 is you know, spring season opener and hopefully this time 0:07:35.680 --> 0:07:39.160 full capacity a lot of fans. And you know, the 0:07:39.280 --> 0:07:41.680 values of tennis fits pretty well the value of the 0:07:41.720 --> 0:07:45.000 bank going forward. Uh. We you know, it's a it's 0:07:45.000 --> 0:07:47.840 a global sport. The bank is a global bank. It's 0:07:47.880 --> 0:07:52.120 all about sportsmanship, you know, personal improvement and really uh, 0:07:52.600 --> 0:07:55.400 it's a it's it's a sport that you can really 0:07:55.520 --> 0:07:58.840 you know, develop and and and uh and follow around 0:07:58.880 --> 0:08:00.560 the world. And this is this is why we like 0:08:00.600 --> 0:08:02.280 the game, Johnny. If let's pick up on that line 0:08:02.320 --> 0:08:04.880 you just mentioned, the bank is back. The bank is back, 0:08:05.320 --> 0:08:07.800 the employees back at the back on the trading floors, 0:08:07.920 --> 0:08:09.920 business is usual. Can you help me understand how things 0:08:09.920 --> 0:08:12.520 are revolving at the moment, how things are normalizing in 0:08:12.560 --> 0:08:17.600 your business, your bank. We are absolutely, John, we are 0:08:17.760 --> 0:08:21.640 really you know, uh, asking and more specifically, you know, 0:08:21.920 --> 0:08:25.600 incentifizing our staff to come back on premises. You know, 0:08:26.040 --> 0:08:30.320 we have to acknowledge that the digitalization of our economy 0:08:30.400 --> 0:08:32.840 during the pandemic, you know, as allower us to stay 0:08:32.880 --> 0:08:36.440 in business, to stay connected, including today, by the way, 0:08:36.320 --> 0:08:39.480 I love I love being in the studio. I look 0:08:39.520 --> 0:08:42.840 forward to being back in person with you hopefully you know, 0:08:42.960 --> 0:08:45.520 in the months to come. But having said that, nothing 0:08:45.600 --> 0:08:50.640 replaces the in person relationship and connectivity. It's very complicated 0:08:50.679 --> 0:08:54.960 to convey companies values digitally. And this is what we 0:08:55.080 --> 0:08:57.080 do on the His coast, you know, in the building 0:08:57.080 --> 0:09:00.800 you know, well here in mid town Manhattan, we now 0:09:00.920 --> 0:09:04.680 have over thirty percent for staff back on premises on 0:09:04.840 --> 0:09:10.280 a rotational basis obviously, uh. And we're targeting for by 0:09:10.360 --> 0:09:16.760 your hand and hopefully early in two. We are trying 0:09:16.760 --> 0:09:19.840 to make the office attractive or we're designing of frauds 0:09:19.880 --> 0:09:23.199 to make the time effective. Um. You know it has 0:09:23.400 --> 0:09:27.280 We have to provide value for employees to enjoy being 0:09:27.320 --> 0:09:29.880 back on premises, and management is a refocused on it. 0:09:30.080 --> 0:09:32.480 They want to be paid more. You know that you 0:09:32.480 --> 0:09:34.280 can say the bank is back, we will care about 0:09:34.280 --> 0:09:36.480 this business. I care about this industry. You care about 0:09:36.480 --> 0:09:38.959 this industry. It's great to see people on trading flaws again. 0:09:39.080 --> 0:09:41.280 But you know, if something's got lost with this younger generation, 0:09:41.320 --> 0:09:42.800 they don't want to be a part of it. In 0:09:42.840 --> 0:09:44.960 the same way, how are you grappling with that? Does 0:09:45.000 --> 0:09:49.360 the price get it done well? It's uh, it's one 0:09:49.400 --> 0:09:53.720 of the major challenges and concerns. There is a tremendous 0:09:53.760 --> 0:09:57.680 competition for talent. Uh and it's already by the way, 0:09:57.720 --> 0:10:01.760 within the banking industry. Competition comes from outside of the 0:10:01.800 --> 0:10:05.800 banking industry. UH. And it's in some very targeted areas 0:10:05.840 --> 0:10:09.280 you're rightly mentioned, you know, in corporate banking, the juniors. 0:10:09.760 --> 0:10:12.000 It's in leverage finance as well. Whether it's such a 0:10:12.080 --> 0:10:14.960 high demand, I can tell you. It's in some you know, 0:10:15.160 --> 0:10:19.680 new technology areas as well, such as cyber and AI. 0:10:19.760 --> 0:10:21.640 And it's in retail. We have a retail bank in 0:10:21.679 --> 0:10:25.920 the United States. Retail as well is experiencing some tensions 0:10:25.960 --> 0:10:29.280 in terms of uh, you know, a strong competition for 0:10:29.320 --> 0:10:32.040 some positions. How do we deal with it? Listen, first 0:10:32.080 --> 0:10:34.600 and foremost, as you said, you know, it's about remaining 0:10:34.600 --> 0:10:38.520 competitive in terms of compensation. That is absolutely critical. But 0:10:38.600 --> 0:10:42.560 it's not only about compensation, john it's uh, it's working 0:10:42.600 --> 0:10:45.959 for a company that has a purpose. I believe that 0:10:46.040 --> 0:10:49.320 the mp PI BAT or focus on CSR on sustainability 0:10:49.400 --> 0:10:53.600 is quite compelling. It's acknowledging the fact that some of 0:10:53.679 --> 0:10:57.959 our staff, particularly the younger generation, is looking for flexibility 0:10:58.040 --> 0:11:02.200 and the new ways of you know, digitizing. The business 0:11:02.280 --> 0:11:06.439 is probably there, and we have to make the workplace 0:11:06.559 --> 0:11:10.080 attractive and people coming back here. It has to be 0:11:10.160 --> 0:11:14.120 for a real value, Johnny, especially as you expand again 0:11:14.200 --> 0:11:16.480 in the United States, I do wonder how you compete 0:11:16.480 --> 0:11:19.080 with the likes of JP Morgan and the oligarchy of 0:11:19.240 --> 0:11:21.679 US banks at a time when everyone wants a piece 0:11:21.920 --> 0:11:27.440 of the US dynamism. That's very true. And you know, 0:11:27.600 --> 0:11:30.520 for a bank like BNP PIPA, which is a leader 0:11:31.400 --> 0:11:33.800 in the EUBO zone and as you know, Lisa, we 0:11:33.840 --> 0:11:36.400 have a fairly large platform in the United States. We 0:11:36.480 --> 0:11:39.680 have a diversified business model. We have a retail activity 0:11:39.720 --> 0:11:43.520 or wholesale activity. We have fourteen thousand people in this country, 0:11:44.240 --> 0:11:48.880 meaning contributing to the workforce here. But to be successful 0:11:49.280 --> 0:11:51.960 as a US bank owned by a European leader, you 0:11:51.960 --> 0:11:54.280 have to be very targeted and to get a piece 0:11:54.320 --> 0:11:56.840 of the dynamism in this country of this, by the way, 0:11:57.040 --> 0:12:00.720 amazing recovery that we believe will continue into a twenty two. 0:12:00.960 --> 0:12:04.720 You have to be targeted. You have to really realize 0:12:04.760 --> 0:12:07.240 what kind of value can provide to clients. And this 0:12:07.320 --> 0:12:12.479 is what we've done. With our wholesale activities and retail activities. 0:12:12.559 --> 0:12:15.400 We we can be quite effective with US clients who 0:12:15.720 --> 0:12:18.280 not only have a business model in the United States, 0:12:18.320 --> 0:12:22.160 but who are becoming much more international and benefiting from 0:12:22.240 --> 0:12:25.560 the U s cross but European expansion that we see 0:12:25.600 --> 0:12:29.080 happening as well. In one and twenty twenty two, Johnny, 0:12:29.080 --> 0:12:31.040 if you forgive me, because only have sixty seconds left 0:12:31.040 --> 0:12:33.120 on the clock, we get some inflation data in American 0:12:33.160 --> 0:12:36.000 about five minutes. What's your take from the companies you 0:12:36.080 --> 0:12:38.920 serve you finance, what are you learning understanding? What are 0:12:38.920 --> 0:12:43.520 you learning at the moment about the price pressure in America. Well, 0:12:43.600 --> 0:12:45.920 first and foremost, I'm learning that, you know, they are 0:12:46.080 --> 0:12:50.280 really very optimistic about you know, the expansion only the 0:12:50.360 --> 0:12:53.559 recovery we face here, which is carry which will carry 0:12:54.160 --> 0:12:58.040 you out in a carry on in two. And I 0:12:58.120 --> 0:13:01.800 see them investing. I see them, uh, you know, positioning 0:13:01.800 --> 0:13:05.920 themselves for more capex investment and obviously trying to hire. Uh. 0:13:06.080 --> 0:13:10.040 Inflation is a concern for sure, but we believe that 0:13:10.559 --> 0:13:14.600 with um, you know, the supply chain disruptions will we'll 0:13:14.679 --> 0:13:19.600 probably you know normalize opput in two uh and uh 0:13:19.679 --> 0:13:23.679 that they should. It's that's not the biggest concern, particularly 0:13:23.679 --> 0:13:27.440 with such a g D pickles that we're experiencing in 0:13:27.440 --> 0:13:30.440 in this country. Johnny, thank you, sir. As always it's 0:13:30.440 --> 0:13:32.680 going to catch up. A privilege, a pleasure. Johnny philly 0:13:32.760 --> 0:13:41.040 on there the BNP paraboun USA CEO right now, and 0:13:41.120 --> 0:13:43.120 this is a joy. He's a gentleman and this is 0:13:43.160 --> 0:13:46.400 always a joy, and that he's running an airline and 0:13:46.600 --> 0:13:49.880 actually is familiar with the cockpit. He's a former gentleman 0:13:49.920 --> 0:13:54.040 from Colorado Springs and outside Dallas, Texas. Scott Kirby joins 0:13:54.120 --> 0:13:58.240 US now the chief executive officer of United Airlines. I 0:13:58.640 --> 0:14:01.679 don't want to ask a snirt question, but I think Scott, 0:14:01.720 --> 0:14:06.000 it goes to the pressure you face with COVID and vaccine. 0:14:06.920 --> 0:14:09.800 Could Aaron Rodgers fly out at Green Bay this morning 0:14:09.800 --> 0:14:14.080 on United Airlines? I have no idea where Aaron Rodgers ploye, 0:14:14.480 --> 0:14:17.440 but at the moment, uh, there there's we have a 0:14:17.480 --> 0:14:20.120 requirement frire employee. Uh and we got nine nine point 0:14:20.160 --> 0:14:22.680 seven percent of employees. Yeah. I'm really glad you have 0:14:22.760 --> 0:14:25.240 that done. And if you fly international, you've gotta have 0:14:25.760 --> 0:14:28.640 you got to be vaccinated in most geographies. But what 0:14:28.680 --> 0:14:31.920 about domestic right now? Are you checking? I mean United 0:14:32.040 --> 0:14:34.560 is lead on this, folks. Let's be direct about it. 0:14:34.600 --> 0:14:37.040 And this is your experience running American and all the 0:14:37.080 --> 0:14:40.560 other responsibilities you've had. What do you do with passengers 0:14:40.640 --> 0:14:45.280 right now? Domestically in America? There is not a requirement 0:14:45.600 --> 0:14:49.240 domestically for vaccines. There is a requirement, of course to 0:14:49.280 --> 0:14:52.760 wear a mask onboard airplanes. And the airflow on airplane, 0:14:52.920 --> 0:14:54.480 you know, literally is the best if you're going to 0:14:54.520 --> 0:14:59.080 be anywhere indoors. And our view has been on this 0:14:59.360 --> 0:15:02.760 point at and the administration has already said this, and 0:15:03.040 --> 0:15:04.920 I agree with them, which is the best way to 0:15:04.920 --> 0:15:09.440 get people vaccinated is frictional trans transactions every time you 0:15:09.480 --> 0:15:11.280 go to a restaurant, every time you get on a 0:15:11.280 --> 0:15:13.720 airplane or a train or a bus or a subway. 0:15:14.360 --> 0:15:16.280 But to do it through work and then you do 0:15:16.320 --> 0:15:18.520 it once and you get a high percentage of the 0:15:18.520 --> 0:15:21.520 population vaccinated. And that's really the most efficient way. And 0:15:21.520 --> 0:15:23.520 of course that's what we did at United as well. Scott, 0:15:23.520 --> 0:15:27.320 how much resistance did you face from your employees to 0:15:27.480 --> 0:15:31.120 these mandates? Well, you know, we got ninety nine point 0:15:31.160 --> 0:15:35.440 seven and uh, you know, there's so many of those people, 0:15:35.800 --> 0:15:40.000 uh started off unvaccinated or did not want UM to 0:15:40.000 --> 0:15:43.080 to have the mandate. Ironically, a lot of them actually 0:15:43.120 --> 0:15:45.680 had been vaccinated, but they just didn't They objected to 0:15:45.720 --> 0:15:48.960 the requirement. But um, But the good news is we 0:15:48.960 --> 0:15:51.280 were open, honest, and transparent. We started started talking to 0:15:51.320 --> 0:15:53.680 our employees about it in January, and so when we 0:15:53.760 --> 0:15:56.400 did it, it wasn't a surprise. It didn't come out 0:15:56.400 --> 0:15:59.360 of left field. We were firm. We never waffled about it. 0:15:59.800 --> 0:16:02.760 It is always about safety, that's what it was. You know, 0:16:02.920 --> 0:16:05.600 I literally have written a letter to the families of 0:16:05.600 --> 0:16:08.080 every employee that lost their lives to COVID and when 0:16:08.120 --> 0:16:11.280 you do that, you know it feel you feel it. Um. 0:16:11.320 --> 0:16:15.080 I felt it, and that the second time I started 0:16:15.080 --> 0:16:17.360 writing a letter again in July, after the delta variant 0:16:17.440 --> 0:16:19.200 kicking up, you know, I walked around and talk to 0:16:19.280 --> 0:16:22.560 my wife and call our teams. Said, we're doing it, um, 0:16:22.560 --> 0:16:25.800 because it's about saving lines. Scott looking ahead to the 0:16:25.920 --> 0:16:27.960 end of the pandemic, because it does feel like we 0:16:28.000 --> 0:16:30.200 are getting to a place where we can talk about that. 0:16:30.680 --> 0:16:35.240 How much will prices of airfares be higher? Simply because 0:16:35.280 --> 0:16:37.600 there is such a debt overhang, there is such a 0:16:37.760 --> 0:16:42.840 lost year, a lost era feels like of travel. Well, 0:16:43.200 --> 0:16:46.160 you know, ultimately I think prices, you know, by the 0:16:46.160 --> 0:16:48.960 time we're getting the next summer, I guess I'm guessing 0:16:48.960 --> 0:16:53.680 we'll be back to two thousand nineteen levels. Uh and 0:16:53.680 --> 0:16:55.600 and then they'll go up based on kind of our 0:16:55.640 --> 0:16:58.120 cost input. You know, fuel is a perfect example. When 0:16:58.120 --> 0:17:01.320 fuel goes up, airline tickets up, and when people goes down, 0:17:01.400 --> 0:17:04.000 they tend to come down. Um. And you know, the 0:17:04.000 --> 0:17:07.120 good but the good news is most airlines and particularly 0:17:07.200 --> 0:17:11.560 United you know, got much more productive using technology and 0:17:11.600 --> 0:17:14.719 more efficient, and so our core cost structure. We at 0:17:14.800 --> 0:17:17.640 United think that we can be ten percent larger than 0:17:17.640 --> 0:17:21.119 we were before with the same level of employment, and 0:17:21.200 --> 0:17:23.520 so some of that is gonna is gonna help mitigate 0:17:23.560 --> 0:17:26.639 any increases. But my guess is we're gonna be getting 0:17:26.680 --> 0:17:29.480 back to kind of two thousand nineteen levels by this 0:17:29.560 --> 0:17:32.679 coming summer. If you're just joining us Bloomberg, Greece. Scott Kirby, 0:17:32.760 --> 0:17:36.640 the chief executive officer of United Airlines, Lisa brand Woodson 0:17:36.680 --> 0:17:41.240 Tim Kane. Mr Kirby Lansing, Michigan, is looking at Delta 0:17:41.280 --> 0:17:44.480 in American and not looking at United this morning. I 0:17:44.520 --> 0:17:48.399 believe you pull out of eleven smaller towns today. Is 0:17:48.440 --> 0:17:54.200 this some form of reversion to monopsony or monopoly within 0:17:54.240 --> 0:17:57.600 the airline business that we don't have competition into some 0:17:57.680 --> 0:18:01.320 of these smaller towns. Uh, not at all. This is 0:18:01.359 --> 0:18:05.800 simply the economic reality of Frankly, you know, not enough 0:18:05.800 --> 0:18:09.960 pilots in the country, and with not enough pilots, you know, 0:18:10.119 --> 0:18:14.359 flying small regional jets just gets to be impossible in 0:18:14.400 --> 0:18:16.639 your choices. If you're only gonna have enough pilot do 0:18:16.680 --> 0:18:17.879 you want to fly to London or do you want 0:18:17.880 --> 0:18:20.240 to be landing and we're gonna fly to London and 0:18:20.240 --> 0:18:22.360 and it's as simple as that. Did you do this 0:18:22.480 --> 0:18:25.800 in conversation with the other domestic carriers? Was this an 0:18:25.920 --> 0:18:29.160 organized plan to be sure to two airlines say we're 0:18:29.240 --> 0:18:33.639 left in each town? Absolutely not. That would have been illegal, 0:18:33.840 --> 0:18:36.120 but we didn't do it. Now Robert Crandell's listening down 0:18:36.160 --> 0:18:40.840 in Florida. Question, Scott, I do wonder your conversations with 0:18:40.880 --> 0:18:44.720 other executives how much you hear about business travel coming back, 0:18:44.760 --> 0:18:48.359 how much you're adapting airplanes to an era without the 0:18:48.440 --> 0:18:52.200 kind of business class that you used to have. Well, 0:18:52.480 --> 0:18:54.720 you know, I'm in uh. It used to be a 0:18:54.800 --> 0:18:56.880 year and after it as a minority of one, and 0:18:56.960 --> 0:18:58.720 it's still a minority today. But there are a lot 0:18:58.720 --> 0:19:01.240 more people that agree with say, which is I think 0:19:01.240 --> 0:19:04.920 business travel is gonna come back. Um. We see all 0:19:05.040 --> 0:19:08.680 kinds of anecdotes, and particularly once people start traveling, they're 0:19:08.720 --> 0:19:12.600 getting back to traveling. I'm here at right now, and 0:19:12.840 --> 0:19:16.000 it is so much more impactful being here in person 0:19:16.080 --> 0:19:19.080 than it would be doing doom meetings. You know everything 0:19:19.119 --> 0:19:21.680 that you know, the magic happens at dinners or at 0:19:21.720 --> 0:19:24.800 a happy hour, meeting someone for a drink, that's where 0:19:24.800 --> 0:19:26.679 things really happen. You get to know pi where you 0:19:26.720 --> 0:19:33.200 build relationships, and that is human nature hasn't changed. Technology 0:19:33.280 --> 0:19:36.200 is great, but just like video conferencing didn't kill business 0:19:36.240 --> 0:19:38.480 travel back in the eighties when Bob Crandell was worried 0:19:38.480 --> 0:19:42.480 about it. Uh, it's not gonna kill it now. One 0:19:42.520 --> 0:19:46.359 final question. Lisa is really focused in on this s 0:19:46.480 --> 0:19:49.359 f OO is c d G. She wants to take 0:19:49.400 --> 0:19:54.679 the seven Dreamliner. How bad are you getting killed on 0:19:54.880 --> 0:19:58.600 fuel costs for Lisa to go first class s FO 0:19:58.760 --> 0:20:02.560 to c d G. Yeah, well, you know, fuel prices 0:20:02.600 --> 0:20:05.399 are up. There are biggest there are biggest cost in 0:20:05.560 --> 0:20:08.520 but um, but we're glad to be getting back to 0:20:08.600 --> 0:20:12.640 flying from San France to Paris and all the other markets. Uh. 0:20:12.680 --> 0:20:15.160 And love welcoming the customers on board. And I can 0:20:15.160 --> 0:20:18.400 tell you having phone for International in the last week there, 0:20:18.600 --> 0:20:23.080 everybody on board is excited, employees, customers. If it's palpable 0:20:23.119 --> 0:20:24.800 when you get on board of the International fly, do 0:20:24.880 --> 0:20:27.399 you call Muhammad Larian like at the end of every 0:20:27.440 --> 0:20:31.480 month and thank him for flying United? Dr Larry and Cambridge. 0:20:31.720 --> 0:20:35.119 He only flies United. He like literally won't go unless 0:20:35.160 --> 0:20:37.720 you know he goes there. Well, I I will now 0:20:37.760 --> 0:20:40.359 that you told me that. I think one of our 0:20:40.400 --> 0:20:44.639 other biggest flyers secretary carry last night, because we have 0:20:44.760 --> 0:20:47.399 we have a lot of those. Uh yeah, Scott Kirby, 0:20:47.440 --> 0:20:50.159 thank you so much, greatly appreciate it. Right now, the 0:20:50.240 --> 0:20:55.000 CEO they're ringing a bell for Scott Kirby the the 0:20:55.520 --> 0:21:04.040 end of the pandemic. Perhaps we are who we are, 0:21:04.359 --> 0:21:08.600 David Rubinstein. This is a star football player whose career 0:21:08.720 --> 0:21:12.280 ended early, and this is someone who was ever framed 0:21:12.640 --> 0:21:17.159 by the horrific mining accident of Farmington, West Virginia in 0:21:17.280 --> 0:21:22.280 nineteen Who is Joe Manchin And what do the Washington 0:21:22.359 --> 0:21:28.760 elite not understand about him? Well? I think they don't 0:21:28.840 --> 0:21:31.760 understand that he is in a state that's heavily Republican, 0:21:32.200 --> 0:21:34.800 and though he's a Democrat and he was Democratic governor 0:21:34.840 --> 0:21:39.080 as well, the state went for President Trump overwhelmingly, and 0:21:39.160 --> 0:21:41.960 therefore I just don't think you can expect him to 0:21:42.000 --> 0:21:45.479 be doing whatever the Democratic Party leadership wants. He is 0:21:45.840 --> 0:21:47.679 a Democrat and he's not going to switch to being 0:21:47.680 --> 0:21:51.480 a Republican. But he's very independent and he's not dependent 0:21:51.560 --> 0:21:54.639 on the Democratic leadership for his power base. Do you 0:21:54.800 --> 0:21:57.879 since David, and this is after the election, to be 0:21:58.040 --> 0:22:04.080 unfair that he is in close conversation with Democratic moderates 0:22:04.080 --> 0:22:11.160 who are shell shocked. Yes, absolutely, Um, I think he's 0:22:11.200 --> 0:22:14.719 saying to them, and I think he believes that the 0:22:14.760 --> 0:22:17.800 election in Virginia showed that you can go too far 0:22:17.840 --> 0:22:20.000 to the left, and that's what he thinks probably happened 0:22:20.040 --> 0:22:22.400 in Virginia. So what he's trying to do is to say, 0:22:22.400 --> 0:22:24.520 we don't need to have some of these policies that 0:22:24.560 --> 0:22:27.080 are spending a lot of money. We shouldn't, he believes 0:22:27.200 --> 0:22:29.960 very strongly, and not giving people more what he would 0:22:29.960 --> 0:22:34.400 call handouts or more gifts from the government in his view. Uh, 0:22:34.400 --> 0:22:36.440 and really we should pay for some of the things 0:22:36.520 --> 0:22:39.679 that we are paying that we're trying to get through legislation, 0:22:39.880 --> 0:22:41.840 and right now we're not really paying for it. And 0:22:41.880 --> 0:22:44.679 he doesn't favor increasing taxes either. He would favor not 0:22:44.720 --> 0:22:47.960 having these programs. But he is a very personable person. 0:22:48.359 --> 0:22:51.480