1 00:00:02,520 --> 00:00:08,840 Speaker 1: Bloomberg Audio Studios podcasts, radio news, The. 2 00:00:08,880 --> 00:00:13,160 Speaker 2: Stock Movers podcast, your roundup of companies making moves in 3 00:00:13,200 --> 00:00:17,639 Speaker 2: the stock market, harnessing the power of Bloomberg Data. 4 00:00:17,800 --> 00:00:21,720 Speaker 3: I'm Lise Matteo alongside Paul Sweeney. United Airline now it 5 00:00:21,680 --> 00:00:23,400 Speaker 3: it's profit range for the rest of the year, but 6 00:00:23,520 --> 00:00:26,400 Speaker 3: they do expect travel demand to continue to rise. Now 7 00:00:26,560 --> 00:00:29,840 Speaker 3: CEO Scott Kirby, he sat down with Bloomberg's Lisa Brahmins 8 00:00:30,000 --> 00:00:32,559 Speaker 3: and they talked about United's earnings and also their outlook 9 00:00:32,720 --> 00:00:34,080 Speaker 3: for the rest of twenty twenty five. 10 00:00:34,479 --> 00:00:37,080 Speaker 4: This year, a lot of uncertainty in the first half 11 00:00:37,080 --> 00:00:40,440 Speaker 4: of the year at Macro uncertainty and that led to 12 00:00:40,560 --> 00:00:44,000 Speaker 4: an impact on bookings and demand at United across the 13 00:00:44,040 --> 00:00:46,720 Speaker 4: whole industry. But it felt like there was a turning 14 00:00:46,760 --> 00:00:51,120 Speaker 4: point at the end of June where the tax bill 15 00:00:51,200 --> 00:00:53,600 Speaker 4: passed and the situation in the Middle East was calmer 16 00:00:54,040 --> 00:00:57,880 Speaker 4: and tariffs, while not certain, yet narrowing the range, and 17 00:00:57,920 --> 00:01:01,000 Speaker 4: it really felt like people felt enough confidence or enough 18 00:01:02,040 --> 00:01:04,399 Speaker 4: lower level of uncertainty that they kind of came off 19 00:01:04,400 --> 00:01:05,840 Speaker 4: the sidelines and were unfrozen. 20 00:01:06,319 --> 00:01:06,679 Speaker 2: All right. 21 00:01:06,720 --> 00:01:09,640 Speaker 3: That was United CEO Scott Kirby. Let's bring in the 22 00:01:09,680 --> 00:01:13,400 Speaker 3: expert on all this, George Ferguson. He's Bloomber Intelligence senior Aerospace, 23 00:01:13,440 --> 00:01:17,640 Speaker 3: defense and airlines analysts. George, thanks for joining us. Scott Kirby, 24 00:01:17,640 --> 00:01:19,399 Speaker 3: he seemed pretty confident, did he? 25 00:01:19,400 --> 00:01:21,880 Speaker 1: He does, but I guess he always sounds confident, right. 26 00:01:21,920 --> 00:01:25,720 Speaker 1: I think he's counting on some capacity cuts here in 27 00:01:25,720 --> 00:01:28,760 Speaker 1: the second half, and he talked about some of the 28 00:01:28,840 --> 00:01:32,479 Speaker 1: uncertainty going away, So I think it's a it'll get 29 00:01:32,560 --> 00:01:35,640 Speaker 1: better story. But yeah, too cu for him and for 30 00:01:35,720 --> 00:01:36,959 Speaker 1: Delta didn't look that great. 31 00:01:37,120 --> 00:01:39,000 Speaker 5: George, where's business travel today? 32 00:01:39,840 --> 00:01:42,120 Speaker 1: I'd like to tell you what the airlines try to 33 00:01:42,160 --> 00:01:44,880 Speaker 1: hide that, but you know, everything we can parse out 34 00:01:44,920 --> 00:01:49,280 Speaker 1: of sort of Delta and United earnings makes it sound 35 00:01:49,400 --> 00:01:54,440 Speaker 1: like it's lagging the leisure rebound and maybe back to 36 00:01:54,920 --> 00:01:59,120 Speaker 1: twenty nineteen levels, but that would again sort of still 37 00:01:59,160 --> 00:02:01,200 Speaker 1: be lagging. And so the sense I get is that 38 00:02:01,320 --> 00:02:05,200 Speaker 1: it hasn't come back as strongly as leisure, and these 39 00:02:05,240 --> 00:02:08,840 Speaker 1: airlines are more pointing to high end leisure as the 40 00:02:08,919 --> 00:02:10,800 Speaker 1: driver of their of their profitability. 41 00:02:11,360 --> 00:02:11,640 Speaker 4: George. 42 00:02:11,680 --> 00:02:13,320 Speaker 3: I have to point out Newark Airport because I'm a 43 00:02:13,320 --> 00:02:16,480 Speaker 3: frequent visitor. There are a lot of issues there right 44 00:02:16,560 --> 00:02:21,760 Speaker 3: construction Newark Liberty, there were outages, delays. When they asked, 45 00:02:21,760 --> 00:02:23,639 Speaker 3: you know, Scott Kirby about it, he said he was 46 00:02:23,720 --> 00:02:25,560 Speaker 3: kind of, you know, optimistic about it, but he also 47 00:02:25,600 --> 00:02:28,400 Speaker 3: pointed out JFK would love to get in there. Has 48 00:02:28,440 --> 00:02:32,040 Speaker 3: this been kind of a sticking point for United Newark for. 49 00:02:32,000 --> 00:02:35,480 Speaker 1: Sure, right because Newark they've got a strong concentration of 50 00:02:35,600 --> 00:02:38,840 Speaker 1: flights out of there. You know, he started the call, 51 00:02:39,040 --> 00:02:41,560 Speaker 1: and you know, he was sort of alluding what was going 52 00:02:41,600 --> 00:02:46,440 Speaker 1: on at Newark Airport, and so, you know, I think 53 00:02:46,480 --> 00:02:49,760 Speaker 1: it's I think we're starting to put behind us the 54 00:02:49,880 --> 00:02:53,440 Speaker 1: FAA problems, but Newark is always a challenging airport. It 55 00:02:53,480 --> 00:02:57,160 Speaker 1: has a lot of activity, you know, he said, the 56 00:02:57,480 --> 00:03:00,600 Speaker 1: FAA and the constituents there have gotten real about the 57 00:03:00,600 --> 00:03:03,200 Speaker 1: amount of throughput they could put around Newark. That would 58 00:03:03,240 --> 00:03:06,400 Speaker 1: be good because essentially Newark suffers from a whole lot 59 00:03:06,440 --> 00:03:08,920 Speaker 1: of throughput that's trying to get through that airport. And 60 00:03:08,960 --> 00:03:10,360 Speaker 1: then you get in the middle of summer and you 61 00:03:10,400 --> 00:03:13,359 Speaker 1: just have these weather events thunderstorms, which we've been having 62 00:03:13,360 --> 00:03:16,320 Speaker 1: i think every day now in New Jersey, which sort 63 00:03:16,360 --> 00:03:21,520 Speaker 1: of royal the whole deal. So he sounded optimistic that 64 00:03:21,560 --> 00:03:24,040 Speaker 1: they've got a lot of the fix in place for 65 00:03:24,080 --> 00:03:24,560 Speaker 1: the airport. 66 00:03:25,040 --> 00:03:28,520 Speaker 5: George Ware, are we on air traffic controllers? I mean, now, 67 00:03:28,560 --> 00:03:31,520 Speaker 5: hard can this be? To staff this whole system up here? 68 00:03:31,560 --> 00:03:32,840 Speaker 5: I just don't get it. 69 00:03:33,120 --> 00:03:35,000 Speaker 1: Yeah, So, I mean, it just takes a long time 70 00:03:35,040 --> 00:03:37,320 Speaker 1: to train in air traffic control, longer than I would 71 00:03:37,320 --> 00:03:40,240 Speaker 1: have expected. I mean, the last numbers I've heard were 72 00:03:40,240 --> 00:03:42,800 Speaker 1: sort of over over a year. I think, I want 73 00:03:42,840 --> 00:03:43,920 Speaker 1: to say it was like a year and a half, 74 00:03:43,960 --> 00:03:45,520 Speaker 1: but I have to go back and check my numbers 75 00:03:45,560 --> 00:03:49,680 Speaker 1: exactly on that one. You know, during the pandemic, you know, 76 00:03:49,720 --> 00:03:53,320 Speaker 1: we had people that probably not too jazzed about entering 77 00:03:53,360 --> 00:03:56,520 Speaker 1: that business because it was one of those where you 78 00:03:56,520 --> 00:03:58,640 Speaker 1: couldn't work from home. I think that worked from home 79 00:03:59,640 --> 00:04:03,119 Speaker 1: world is fading a bit now. But back again, during 80 00:04:03,120 --> 00:04:06,000 Speaker 1: the pandemic, it didn't seem that exciting. And I think 81 00:04:06,000 --> 00:04:10,000 Speaker 1: it has the problem that every other industry in America, 82 00:04:10,120 --> 00:04:13,080 Speaker 1: especially the older industries have, and that is there's a 83 00:04:13,080 --> 00:04:17,000 Speaker 1: bunch of baby boomers inside it. They're approaching retirement and 84 00:04:17,120 --> 00:04:21,000 Speaker 1: actively retiring at this point, and the backfill. Again, it's 85 00:04:21,040 --> 00:04:24,320 Speaker 1: not the most exciting industry. I guess to go into 86 00:04:24,800 --> 00:04:27,680 Speaker 1: the backfill has been harder. Recruitment has been harder, and 87 00:04:27,720 --> 00:04:29,760 Speaker 1: when you get behind the recruitment and training takes a 88 00:04:29,760 --> 00:04:32,600 Speaker 1: certain amount of time, it takes a while to fill. 89 00:04:32,640 --> 00:04:37,800 Speaker 1: And so we're still in that attempt to refill phase again. 90 00:04:37,839 --> 00:04:40,560 Speaker 1: I think it's getting better as the economy, maybe as 91 00:04:40,560 --> 00:04:43,320 Speaker 1: some of the labor market is not as white hot 92 00:04:43,360 --> 00:04:45,440 Speaker 1: as it was coming out of the pandemic. But we're 93 00:04:45,480 --> 00:04:46,960 Speaker 1: still behind the curve a bit, all right. 94 00:04:47,000 --> 00:04:49,200 Speaker 3: So we heard from United, We've also heard from Delta. 95 00:04:49,320 --> 00:04:52,160 Speaker 3: You know all the numbers, But for me, what does 96 00:04:52,160 --> 00:04:55,120 Speaker 3: it mean for airline fares? Am I gonna have to 97 00:04:55,160 --> 00:04:58,000 Speaker 3: pay more for a ticket coming out? You know? 98 00:04:58,360 --> 00:05:02,719 Speaker 1: I think that there's going to be a stabilization affairs here. 99 00:05:03,080 --> 00:05:05,640 Speaker 1: But when we look at the second half, we see 100 00:05:06,080 --> 00:05:10,960 Speaker 1: capacity growth coming down. We still see capacity growth though, 101 00:05:11,680 --> 00:05:14,600 Speaker 1: and I think we've seen it sort of around GDP, 102 00:05:15,160 --> 00:05:18,400 Speaker 1: and we kind of think that around GDP levels of 103 00:05:18,440 --> 00:05:23,400 Speaker 1: capacity growth doesn't firmfares and it doesn't cut fares, and 104 00:05:23,480 --> 00:05:26,600 Speaker 1: so I think you've seen some cuts recently. I think 105 00:05:26,680 --> 00:05:30,400 Speaker 1: you'll see this level of fair going through the back 106 00:05:30,440 --> 00:05:34,880 Speaker 1: half of the year unless airlines cut more capacity, which 107 00:05:34,920 --> 00:05:37,360 Speaker 1: would help them firmfares a bit more, but again, we 108 00:05:37,440 --> 00:05:41,120 Speaker 1: see growth that's right around GDP growth, and so it 109 00:05:41,120 --> 00:05:43,880 Speaker 1: doesn't look to me like a scenario where you're going 110 00:05:43,920 --> 00:05:46,920 Speaker 1: to see strong growth in fares for the airlines. 111 00:05:47,240 --> 00:05:50,159 Speaker 5: George can't let you go without talking about Boeing because 112 00:05:50,200 --> 00:05:54,120 Speaker 5: for me, it's just kind of my quintessential great American company, 113 00:05:54,160 --> 00:05:59,080 Speaker 5: great engineering company, great manufacturing company, Seattle, Washington, won great 114 00:05:59,120 --> 00:06:01,599 Speaker 5: parts of the of the United States. Where are they 115 00:06:02,400 --> 00:06:05,520 Speaker 5: with their seven thirty seven deliverables? Because you've told us 116 00:06:05,560 --> 00:06:08,000 Speaker 5: time and time again over the years that that's really 117 00:06:08,000 --> 00:06:09,279 Speaker 5: a key metric for this company. 118 00:06:09,880 --> 00:06:10,080 Speaker 2: Yeah. 119 00:06:10,120 --> 00:06:12,800 Speaker 1: So I think one of the great other American companies 120 00:06:13,200 --> 00:06:14,960 Speaker 1: gave us a little bit of insight this morning, and 121 00:06:15,000 --> 00:06:18,960 Speaker 1: that was GE. Right, and GE supplies the engines to Boeing, 122 00:06:19,000 --> 00:06:22,240 Speaker 1: and GE kind of guided down a bit on margins 123 00:06:22,240 --> 00:06:24,720 Speaker 1: for the back half of the year here, I mean 124 00:06:24,760 --> 00:06:29,040 Speaker 1: guided down like they're nice. Their commercial businesses are like 125 00:06:29,080 --> 00:06:31,920 Speaker 1: operating margins in the high twenties, right, which is really 126 00:06:31,960 --> 00:06:34,640 Speaker 1: super and they guided down to sort of mid twenties. 127 00:06:35,040 --> 00:06:38,400 Speaker 1: And that's a function of getting new engine deliveries into 128 00:06:38,480 --> 00:06:43,119 Speaker 1: Boeing engines for the triple seven engines, for seven thirty seven. 129 00:06:43,880 --> 00:06:46,320 Speaker 1: Boeing has done a better job of delivering. That's all 130 00:06:46,360 --> 00:06:49,159 Speaker 1: about how they're going to win, and from what I 131 00:06:49,200 --> 00:06:51,760 Speaker 1: heard from Ge today, that's going to persist through the 132 00:06:51,800 --> 00:06:54,839 Speaker 1: back half of the of the year, which is I 133 00:06:54,839 --> 00:06:57,760 Speaker 1: think a strong positive for Boeing. Again, a little bit 134 00:06:57,760 --> 00:07:00,440 Speaker 1: of an eb for Ge, but a strong positive for Boeing. 135 00:07:00,839 --> 00:07:03,320 Speaker 5: George, thanks so much, appreciate it as always. George Ferguson, 136 00:07:03,360 --> 00:07:06,279 Speaker 5: Senior Aerospace, Defense and Airlines analysts for Bloomberg Intelligence. All right, 137 00:07:06,360 --> 00:07:08,080 Speaker 5: lista a big question for you, and this is going 138 00:07:08,120 --> 00:07:09,640 Speaker 5: to tell me a lot about who you are as 139 00:07:09,680 --> 00:07:12,840 Speaker 5: a person. Oh, boy Isle or window seat on the plane. 140 00:07:12,960 --> 00:07:17,000 Speaker 3: Oh, I'll me too, Yes, no, because I know. But 141 00:07:17,000 --> 00:07:18,200 Speaker 3: then if people have to get up and go to 142 00:07:18,240 --> 00:07:19,800 Speaker 3: the bathroom, back and forth, that's kind of a pain. 143 00:07:19,880 --> 00:07:25,360 Speaker 2: But yeah. The Stock Movers podcast from Bloomberg Radio. Check 144 00:07:25,440 --> 00:07:27,960 Speaker 2: back with us throughout the day for the latest roundup 145 00:07:27,960 --> 00:07:30,840 Speaker 2: of companies making news on Wall Street and for the 146 00:07:30,920 --> 00:07:35,280 Speaker 2: latest market moving headlines. Listen to Bloomberg Radio Live, catch 147 00:07:35,360 --> 00:07:38,480 Speaker 2: us on YouTube, Bloomberg dot com, and on Applecarplay and 148 00:07:38,480 --> 00:07:40,920 Speaker 2: Android Auto with the Bloomberg Business app.