Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: I am here in a Rio Degenario at iada's annual
Speaker 2: meeting with Peter Carter. He is the president of Delta Airlines.
Speaker 2: Thank you so much for being with us, Well.
Speaker 3: Thank you for having me.
Speaker 2: Good afternoon, Good afternoon. I want to start with the
Speaker 2: question that is on a lot of people's minds about
Speaker 2: consumer demand and how it's holding in given some of
Speaker 2: the increases and prices, given some of the questions around stress,
Speaker 2: howards all have consumer's been.
Speaker 4: We are seeing very strong demand, Lisa, in every region,
Speaker 4: every region.
Speaker 1: In the world, which has been very, very great to see.
Speaker 1: The consumer is strong. The economy is doing well.
Speaker 4: It's one of the things that we pay very close
Speaker 4: attention to. And whether it's the US economy, certain economies
Speaker 4: in Europe are doing better.
Speaker 3: We see that in our consumer.
Speaker 2: Certain economies in Europe that actually flies against what some
Speaker 2: people seem to think where you've seen sort of some
Speaker 2: of the numbers fly down. Where are you seeing actually
Speaker 2: growth in Europe there?
Speaker 3: Well, the UK is an example.
Speaker 4: They're doing a little better than they have in the past,
Speaker 4: for sure. And I also think that that the EU
Speaker 4: and light of their investment in defense. We're also seeing
Speaker 4: some subsigns there.
Speaker 2: So how have you be been able to pass along
Speaker 2: the increases in price from fuel to consumers? I mean,
Speaker 2: has it been pretty easy? Have you been surprised at
Speaker 2: how little pushback you've gotten?
Speaker 3: Our consumer is resilient.
Speaker 4: You know, we really focus on the premium customer, and
Speaker 4: you know, roughly forty to fifty percent of the increase
Speaker 4: in fuel costs we've been able to recapture through price,
Speaker 4: which really becomes about ten to fifteen percent on the
Speaker 4: price of a ticket, so.
Speaker 1: Fine is still affordable.
Speaker 4: And again we've we've seen strong demand despite the need
Speaker 4: to recover some of our costs.
Speaker 3: We also have a refinery which.
Speaker 4: Has been a terrificge for Delta through this because we
Speaker 4: pay less for jet fuel than any airlight in the world.
Speaker 2: Has there been any pushback at all higher prices?
Speaker 4: We really have it, I think in part because we
Speaker 4: haven't seen it. I think in part, Lisa, because when
Speaker 4: you look at inflation since COVID, it's roughly been about
Speaker 4: twenty five percent, But when you look at inflation around
Speaker 4: the price of an airfare.
Speaker 1: It hasn't been anywhere near twenty five percent.
Speaker 4: Even with this increase to recover fuel, so it's still
Speaker 4: very affordable and especially for the premium passengers, the premium
Speaker 4: leisure traveler, the corporate customer that we really focus on.
Speaker 4: So you know, this is going to be our busiest
Speaker 4: summer in the Transatlantic. We are doubling down on our
Speaker 4: global network and global expansion.
Speaker 3: We already have the world's I.
Speaker 4: Think, most connected network, but we're continuing to invest. We
Speaker 4: just launched our Hong Kong route yesterday with I guess
Speaker 4: today technically with our inaugural flight. So there's so many
Speaker 4: exciting things happening, and again we follow demand. You know,
Speaker 4: we launched seven new flights in Europe because our customers
Speaker 4: are saying they want to go to places like Porto
Speaker 4: and Malta and Sardinia, so we're taking.
Speaker 3: Advantage of that.
Speaker 2: How much are there certain places that you've identified that
Speaker 2: you want to create roots to that are harder to
Speaker 2: break into that might be really popular, but there are
Speaker 2: obstacles that have kind of emerged.
Speaker 3: Well.
Speaker 4: I think the best example of that right now is
Speaker 4: probably India because we cannot fly over Russian air space,
Speaker 4: but as we all know, India, it's the fastest growing economy,
Speaker 4: the biggest population, the largest democracy in the world, and
Speaker 4: someday we will serve India, but it's very difficult to
Speaker 4: serve India profitably without flying over Russian airspace.
Speaker 2: I know that later this year you are planning to
Speaker 2: launch a flight to reacdjetd.
Speaker 1: Is that still planned for later this year?
Speaker 4: It is planned for October twenty third. We're very excited.
Speaker 4: We met with Riad earlier today. If they're a partner
Speaker 4: in that region. We think that is such a strong
Speaker 4: growth market. It's a country that's gone from the Middle
Speaker 4: Ages to the Modern.
Speaker 1: Age in about a handful of years.
Speaker 4: Forty million people live in Saudi Arabia. It's a large
Speaker 4: geographic area. They've got a lot of business travel. Obviously,
Speaker 4: oil and gas is huge there.
Speaker 1: So we're going to start that flight.
Speaker 4: We know, obviously with what's happening in the Middle East
Speaker 4: that folks in America may not see that that necessarily
Speaker 4: is the place.
Speaker 3: They want to go right away.
Speaker 4: But as these new routes develop, it takes time, and
Speaker 4: we want to be there for when the day comes
Speaker 4: when they're ready to travel to Saudi Araia.
Speaker 2: You believe that there will be sort of a rejuvenation
Speaker 2: of some of the business demand and the business activity
Speaker 2: in the region that will be at the same level
Speaker 2: as before the war.
Speaker 4: Not only will there be rejuvenation at the same.
Speaker 1: Level, we think there'll be great growth.
Speaker 4: Remember, one of the things that they do really well
Speaker 4: in Saudi Arabia is they build things, and because of
Speaker 4: the war and what's happened in that region, we think
Speaker 4: there'll be tons of business flowing in to help rebuild
Speaker 4: what has.
Speaker 1: Been damaged during the conflict.
Speaker 4: And then, of course when you look at what Saudi
Speaker 4: Arabia is doing.
Speaker 3: When I was there last year.
Speaker 4: Looked out of my hotel room, I think I saw
Speaker 4: fifty cranes. It's incredible what they're doing in that country,
Speaker 4: and we want.
Speaker 3: To be a part of that.
Speaker 2: When you look around the world and you're looking at
Speaker 2: expanding your roots, how much are you looking at partnerships?
Speaker 2: Do you ever consider consolidation as well just an outright
Speaker 2: merger and acquisition.
Speaker 4: No, we're not in the consolidation business, but we have grown.
Speaker 1: Through partnerships. One of our real core competency.
Speaker 4: One of the things we do really well is we
Speaker 4: form jvs with airlines around the world. We have the
Speaker 4: best partners with the best brands and the best hubs,
Speaker 4: complementary networks that we can connect our customers to, which
Speaker 4: allows somebody to get on a flight anywhere in the
Speaker 4: US and fly almost anywhere.
Speaker 1: In the world that they would want to go.
Speaker 3: Korean is a great example.
Speaker 4: Korean is about to close their merger with Asiana. I
Speaker 4: think December seventeenth they will have a single certificate. We
Speaker 4: already have such a great joint venture with them across
Speaker 4: the trans Pacific. We're going to continue to grow that
Speaker 4: because with that merger there's going to be that much
Speaker 4: more connectivity throughout Asia.
Speaker 3: Very excited for that.
Speaker 4: And in Sean I don't know if you've been there,
Speaker 4: but it is I think among, if not the most
Speaker 4: efficient connecting hub in the world.
Speaker 3: Amazing experience.
Speaker 2: How do you sort of plan forward when there are
Speaker 2: these geopolitical concerns that keep coming to the fore. For example,
Speaker 2: business travel from the US to China's fallen off a cliff,
Speaker 2: a lot of tourist travel also, how do you plan
Speaker 2: for growth given the uncertainties between these two countries.
Speaker 3: I think we have belong view, Lisa.
Speaker 4: I think we remain focused in discipline with respect to
Speaker 4: our strategy, and we know that there will always be
Speaker 4: geopolitical noise, and we are very I think disciplined about
Speaker 4: trying to keep the noise out and continue to build forward,
Speaker 4: continue to make sure that we know that demand will
Speaker 4: come back to China someday, that some of the restrictions
Speaker 4: that are in place will be lifted.
Speaker 1: And we have the relationships there.
Speaker 3: We have a great.
Speaker 4: Partnership with China Eastern We saw them here as well,
Speaker 4: So we're ready when that economy.
Speaker 1: Is more open to you business and US business is.
Speaker 3: More open to that economy.
Speaker 4: This geopolitical i'll call it tension, or you said noise,
Speaker 4: I think it will pass.
Speaker 2: Well, it's noise, but not really noise.
Speaker 1: I mean it's also a country.
Speaker 2: It's real. I mean it's also sort of like the
Speaker 2: Middle East. It's noise, but it's not noise at all.
Speaker 2: It's conetically sure, And I just want to you know
Speaker 2: that everyone who I talk to you here is very
Speaker 2: worried about oil prices where they are. Do you have
Speaker 2: contingency plans should things go up significantly higher? I mean,
Speaker 2: what's your sort of scenario analysis?
Speaker 4: So we are Delta is built for durable, sustainable growth
Speaker 4: and part of that is we have the ability to
Speaker 4: manage through oil costs.
Speaker 1: We're very nimble, we have various tools available.
Speaker 4: We're very much focused and discipline on using those tools.
Speaker 4: And in many respects, when you have a strong balance
Speaker 4: sheet as we do and we have a refinery, we
Speaker 4: can do things like trim capacity off peak flying.
Speaker 3: We can focus on flying as.
Speaker 4: Efficiently as possible, right, that saves fuel.
Speaker 3: Of course, we do all of.
Speaker 4: The things we can do, and we're still expecting.
Speaker 1: To make around a billion dollars this quarter.
Speaker 4: So I think this is actually an opportunity for us
Speaker 4: to show how durable our business model is, and it's.
Speaker 3: A proof point.
Speaker 2: I just want to finish up with premium. It's been
Speaker 2: leading the charge for quite a while. I know that
Speaker 2: Delta's really leaned into a Delta one, the Delta one lounges.
Speaker 2: How far can that go? The idea of the demand
Speaker 2: for premium products, So.
Speaker 4: Lisa, we are finding that our consumer has an insatiable
Speaker 4: appetite for premium experiences and everything that we have introduced
Speaker 4: seems to just be truly inhaled by the consumer.
Speaker 3: And so we haven't seen it.
Speaker 4: And I'll give you a great example We opened a
Speaker 4: Delta Lounge in lax just a couple of years ago,
Speaker 4: and it's been wildly successful. And now we're building a
Speaker 4: second Delta one lounge in la because it is again
Speaker 4: one of these things where we underestimated how successful it
Speaker 4: would be. So I think consumers are really excited about
Speaker 4: spending money on premium experiences, and I feel very fortunate
Speaker 4: that Delta and our people could provide those experiences to them.
Speaker 2: I'm waiting for the super duper loyalty Delta one Extreme Lounge.
Speaker 3: Is that coming next? Who knows? Peter?
Speaker 2: Wonderful to speak with you, Peter Carter, the president of Delta.
Speaker 1: Thank you so much.
Speaker 3: Thank you, Lisa really appreciate it.