Speaker 1: Bloomberg Audio Studios podcasts, radio news, The.
Speaker 2: Stock Movers podcast, your roundup of companies making moves in
Speaker 2: the stock market, harnessing the power of Bloomberg Data.
Speaker 3: I'm Lise Matteo alongside Paul Sweeney. United Airline now it
Speaker 3: it's profit range for the rest of the year, but
Speaker 3: they do expect travel demand to continue to rise. Now
Speaker 3: CEO Scott Kirby, he sat down with Bloomberg's Lisa Brahmins
Speaker 3: and they talked about United's earnings and also their outlook
Speaker 3: for the rest of twenty twenty five.
Speaker 4: This year, a lot of uncertainty in the first half
Speaker 4: of the year at Macro uncertainty and that led to
Speaker 4: an impact on bookings and demand at United across the
Speaker 4: whole industry. But it felt like there was a turning
Speaker 4: point at the end of June where the tax bill
Speaker 4: passed and the situation in the Middle East was calmer
Speaker 4: and tariffs, while not certain, yet narrowing the range, and
Speaker 4: it really felt like people felt enough confidence or enough
Speaker 4: lower level of uncertainty that they kind of came off
Speaker 4: the sidelines and were unfrozen.
Speaker 2: All right.
Speaker 3: That was United CEO Scott Kirby. Let's bring in the
Speaker 3: expert on all this, George Ferguson. He's Bloomber Intelligence senior Aerospace,
Speaker 3: defense and airlines analysts. George, thanks for joining us. Scott Kirby,
Speaker 3: he seemed pretty confident, did he?
Speaker 1: He does, but I guess he always sounds confident, right.
Speaker 1: I think he's counting on some capacity cuts here in
Speaker 1: the second half, and he talked about some of the
Speaker 1: uncertainty going away, So I think it's a it'll get
Speaker 1: better story. But yeah, too cu for him and for
Speaker 1: Delta didn't look that great.
Speaker 5: George, where's business travel today?
Speaker 1: I'd like to tell you what the airlines try to
Speaker 1: hide that, but you know, everything we can parse out
Speaker 1: of sort of Delta and United earnings makes it sound
Speaker 1: like it's lagging the leisure rebound and maybe back to
Speaker 1: twenty nineteen levels, but that would again sort of still
Speaker 1: be lagging. And so the sense I get is that
Speaker 1: it hasn't come back as strongly as leisure, and these
Speaker 1: airlines are more pointing to high end leisure as the
Speaker 1: driver of their of their profitability.
Speaker 4: George.
Speaker 3: I have to point out Newark Airport because I'm a
Speaker 3: frequent visitor. There are a lot of issues there right
Speaker 3: construction Newark Liberty, there were outages, delays. When they asked,
Speaker 3: you know, Scott Kirby about it, he said he was
Speaker 3: kind of, you know, optimistic about it, but he also
Speaker 3: pointed out JFK would love to get in there. Has
Speaker 3: this been kind of a sticking point for United Newark for.
Speaker 1: Sure, right because Newark they've got a strong concentration of
Speaker 1: flights out of there. You know, he started the call,
Speaker 1: and you know, he was sort of alluding what was going
Speaker 1: on at Newark Airport, and so, you know, I think
Speaker 1: it's I think we're starting to put behind us the
Speaker 1: FAA problems, but Newark is always a challenging airport. It
Speaker 1: has a lot of activity, you know, he said, the
Speaker 1: FAA and the constituents there have gotten real about the
Speaker 1: amount of throughput they could put around Newark. That would
Speaker 1: be good because essentially Newark suffers from a whole lot
Speaker 1: of throughput that's trying to get through that airport. And
Speaker 1: then you get in the middle of summer and you
Speaker 1: just have these weather events thunderstorms, which we've been having
Speaker 1: i think every day now in New Jersey, which sort
Speaker 1: of royal the whole deal. So he sounded optimistic that
Speaker 1: they've got a lot of the fix in place for
Speaker 1: the airport.
Speaker 5: George Ware, are we on air traffic controllers? I mean, now,
Speaker 5: hard can this be? To staff this whole system up here?
Speaker 5: I just don't get it.
Speaker 1: Yeah, So, I mean, it just takes a long time
Speaker 1: to train in air traffic control, longer than I would
Speaker 1: have expected. I mean, the last numbers I've heard were
Speaker 1: sort of over over a year. I think, I want
Speaker 1: to say it was like a year and a half,
Speaker 1: but I have to go back and check my numbers
Speaker 1: exactly on that one. You know, during the pandemic, you know,
Speaker 1: we had people that probably not too jazzed about entering
Speaker 1: that business because it was one of those where you
Speaker 1: couldn't work from home. I think that worked from home
Speaker 1: world is fading a bit now. But back again, during
Speaker 1: the pandemic, it didn't seem that exciting. And I think
Speaker 1: it has the problem that every other industry in America,
Speaker 1: especially the older industries have, and that is there's a
Speaker 1: bunch of baby boomers inside it. They're approaching retirement and
Speaker 1: actively retiring at this point, and the backfill. Again, it's
Speaker 1: not the most exciting industry. I guess to go into
Speaker 1: the backfill has been harder. Recruitment has been harder, and
Speaker 1: when you get behind the recruitment and training takes a
Speaker 1: certain amount of time, it takes a while to fill.
Speaker 1: And so we're still in that attempt to refill phase again.
Speaker 1: I think it's getting better as the economy, maybe as
Speaker 1: some of the labor market is not as white hot
Speaker 1: as it was coming out of the pandemic. But we're
Speaker 1: still behind the curve a bit, all right.
Speaker 3: So we heard from United, We've also heard from Delta.
Speaker 3: You know all the numbers, But for me, what does
Speaker 3: it mean for airline fares? Am I gonna have to
Speaker 3: pay more for a ticket coming out? You know?
Speaker 1: I think that there's going to be a stabilization affairs here.
Speaker 1: But when we look at the second half, we see
Speaker 1: capacity growth coming down. We still see capacity growth though,
Speaker 1: and I think we've seen it sort of around GDP,
Speaker 1: and we kind of think that around GDP levels of
Speaker 1: capacity growth doesn't firmfares and it doesn't cut fares, and
Speaker 1: so I think you've seen some cuts recently. I think
Speaker 1: you'll see this level of fair going through the back
Speaker 1: half of the year unless airlines cut more capacity, which
Speaker 1: would help them firmfares a bit more, but again, we
Speaker 1: see growth that's right around GDP growth, and so it
Speaker 1: doesn't look to me like a scenario where you're going
Speaker 1: to see strong growth in fares for the airlines.
Speaker 5: George can't let you go without talking about Boeing because
Speaker 5: for me, it's just kind of my quintessential great American company,
Speaker 5: great engineering company, great manufacturing company, Seattle, Washington, won great
Speaker 5: parts of the of the United States. Where are they
Speaker 5: with their seven thirty seven deliverables? Because you've told us
Speaker 5: time and time again over the years that that's really
Speaker 5: a key metric for this company.
Speaker 2: Yeah.
Speaker 1: So I think one of the great other American companies
Speaker 1: gave us a little bit of insight this morning, and
Speaker 1: that was GE. Right, and GE supplies the engines to Boeing,
Speaker 1: and GE kind of guided down a bit on margins
Speaker 1: for the back half of the year here, I mean
Speaker 1: guided down like they're nice. Their commercial businesses are like
Speaker 1: operating margins in the high twenties, right, which is really
Speaker 1: super and they guided down to sort of mid twenties.
Speaker 1: And that's a function of getting new engine deliveries into
Speaker 1: Boeing engines for the triple seven engines, for seven thirty seven.
Speaker 1: Boeing has done a better job of delivering. That's all
Speaker 1: about how they're going to win, and from what I
Speaker 1: heard from Ge today, that's going to persist through the
Speaker 1: back half of the of the year, which is I
Speaker 1: think a strong positive for Boeing. Again, a little bit
Speaker 1: of an eb for Ge, but a strong positive for Boeing.
Speaker 5: George, thanks so much, appreciate it as always. George Ferguson,
Speaker 5: Senior Aerospace, Defense and Airlines analysts for Bloomberg Intelligence. All right,
Speaker 5: lista a big question for you, and this is going
Speaker 5: to tell me a lot about who you are as
Speaker 5: a person. Oh, boy Isle or window seat on the plane.
Speaker 3: Oh, I'll me too, Yes, no, because I know. But
Speaker 3: then if people have to get up and go to
Speaker 3: the bathroom, back and forth, that's kind of a pain.
Speaker 2: But yeah. The Stock Movers podcast from Bloomberg Radio. Check
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