WEBVTT - Bloomberg Surveillance TV: December 17, 2024 0:00:00.080 --> 0:00:06.760 Boo, Bloomberg Audio Studios, Podcasts, radio news. 0:00:11.600 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.440 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.239 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.680 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.280 --> 0:00:33.919 anywhere else you listen, and as always on the Bloomberg 0:00:34.000 --> 0:00:37.560 Terminal and the Bloomberg Business app. Dan Greenhouse has solace 0:00:37.720 --> 0:00:40.920 seeing plenty of opportunity next year. It's been a tremendous 0:00:40.960 --> 0:00:44.040 year for both equity and credit, which understandably leaves many 0:00:44.040 --> 0:00:47.240 investors fearful of sounding too optimistic. Entering twenty twenty five, 0:00:47.400 --> 0:00:50.479 we feel differently. The economy is doing fine, inflation is 0:00:50.560 --> 0:00:54.279 largely normalized, and the consumer remains strong. Dan joins us 0:00:54.280 --> 0:00:55.520 now for more. Dan, It's good to see you. 0:00:55.560 --> 0:00:56.319 Good to see you, sir. 0:00:56.360 --> 0:00:59.040 Would you say the street is uncomfortably bullish then going 0:00:59.040 --> 0:01:01.720 into next year, because overwhelmingly it feels like people aren't 0:01:01.720 --> 0:01:04.560 bullish because they feel like what's the alternative, what else 0:01:04.560 --> 0:01:06.920 can they be? It's there some career risk associated with 0:01:07.000 --> 0:01:09.040 being slightly bearish at twenty twenty. 0:01:08.880 --> 0:01:10.560 Five, I think uncomfortably bullish is the right way to 0:01:10.560 --> 0:01:13.199 put it, at least my interpretation from talking to people 0:01:13.200 --> 0:01:15.679 around the street and watching Bloomberg TV at seven AM, 0:01:15.720 --> 0:01:19.280 as I do every morning. There after two years where 0:01:19.280 --> 0:01:21.880 the S and P is up twenty percent, high yield 0:01:23.040 --> 0:01:25.200 and loans and even the lower rated credits are up 0:01:25.240 --> 0:01:27.600 ten percent or so this year, and there's a feeling, well, 0:01:27.600 --> 0:01:30.760 this can't continue, and so there's a hesitancy to sort 0:01:30.760 --> 0:01:33.560 of embrace this. But in reality, I think, and you 0:01:33.600 --> 0:01:36.280 guys talk to people obviously for hours a day every day. 0:01:36.880 --> 0:01:39.240 I think there's been a whether you're listening or not 0:01:39.400 --> 0:01:40.319 list it's a separate story. 0:01:40.319 --> 0:01:43.920 But thanks for really beginning on a great note. 0:01:43.920 --> 0:01:44.280 Carry on. 0:01:44.440 --> 0:01:47.560 There's been a hesitancy to embrace the bullish tone of 0:01:47.600 --> 0:01:51.080 things for several quarters now, So in that sense, I 0:01:51.080 --> 0:01:52.080 don't think it's anything new. 0:01:52.200 --> 0:01:54.160 It's a difference between what people are saying and what 0:01:54.160 --> 0:01:56.480 they're doing. The fundamentage. Your survey out from Bank of 0:01:56.480 --> 0:01:59.640 America says things are tremendously bullish at the moment, cash 0:02:00.320 --> 0:02:03.280 record low, us ancuenty allocation record high. Do you sense 0:02:03.320 --> 0:02:05.840 things up that frothy sentiment? Is that high? 0:02:05.920 --> 0:02:07.360 Yeah? I got to ask the other day whether I 0:02:07.360 --> 0:02:10.960 thought this was euphoria, and no, I don't think it's euphoria. Clearly, 0:02:11.280 --> 0:02:13.440 the Bank of America data that you just reference plays 0:02:13.480 --> 0:02:18.080 into positioning data, which suggests that people are certainly invested, 0:02:18.520 --> 0:02:22.360 and depending on how you measure positioning at the upper 0:02:22.480 --> 0:02:24.960 end of the range that's prevailed let's say since the GFC, 0:02:25.440 --> 0:02:28.440 so people are certainly in the market and expecting it 0:02:28.480 --> 0:02:32.239 to continue. So I think it's euphoria, Listen, I don't. 0:02:33.320 --> 0:02:35.960 I guess The subsequent question there after becomes, well, what 0:02:36.040 --> 0:02:40.080 separates what we're experiencing now from euphoria? And I guess, 0:02:40.080 --> 0:02:42.960 thinking out loud here, there's still an acknowledgment. You mentioned 0:02:42.960 --> 0:02:45.880 the geopolitical risks on the way into this conversation. There's 0:02:45.880 --> 0:02:50.480 still an acknowledgment that things are not great. Incoming President 0:02:50.480 --> 0:02:54.560 elect Trump's policies could be inflationary, you could have a 0:02:54.600 --> 0:02:58.480 widening of the wars, etc. Etc. So I think euphoria 0:02:58.639 --> 0:03:00.760 is probably an environment in which all of that stuff 0:03:00.800 --> 0:03:04.080 is not even acknowledged, and I just I don't think 0:03:04.120 --> 0:03:04.960 that's where we are now. 0:03:05.040 --> 0:03:07.079 Vulnerable is another way to put it that at a 0:03:07.120 --> 0:03:09.679 certain point, it is a market that becomes increasingly vulnerable 0:03:09.680 --> 0:03:11.840 to a potential shock when everyone is in one trade 0:03:11.840 --> 0:03:13.560 and they feel like they've been pushed into that one 0:03:13.639 --> 0:03:16.720 trade because there is no alternative. Do you feel that 0:03:16.840 --> 0:03:20.640 vulnerability in some of these crowded trades where you know 0:03:20.720 --> 0:03:22.760 one thing could go wrong, it's unforeseen, and it could 0:03:22.800 --> 0:03:26.880 really torpedo a real mass mass trade that could pete 0:03:26.880 --> 0:03:27.519 to an exodus. 0:03:27.680 --> 0:03:29.440 I listen, and I don't think this is a particular 0:03:29.680 --> 0:03:32.080 secret or I'm certainly not breaking any headlines here, but 0:03:32.280 --> 0:03:34.600 if something happens on the AI demand side of things, 0:03:35.080 --> 0:03:37.880 my argument for a year has been when people talk 0:03:37.880 --> 0:03:41.120 about this, everyone's in the trade or we're susceptible or 0:03:41.200 --> 0:03:44.160 vulnerable to it. We have seen no evidence from virtually 0:03:44.160 --> 0:03:47.520 any of the company is involved in this technology development 0:03:47.800 --> 0:03:50.880 that demand is weakening at all. And when you look 0:03:50.920 --> 0:03:52.640 back to the to the and we talked about this 0:03:52.640 --> 0:03:53.960 the last few times I've been on. When you look 0:03:54.000 --> 0:03:58.400 to the nineties, Floyd Norris and The New York Times 0:03:58.440 --> 0:04:00.280 talked about the stock market being in a bubble in 0:04:00.360 --> 0:04:03.800 nineteen ninety five, greenspans a rational exuberant speech was nineteen 0:04:03.840 --> 0:04:06.080 ninety six, and obviously we still went on and had 0:04:06.160 --> 0:04:08.960 ninety seven, ninety eight, and certainly ninety nine. It wasn't 0:04:09.040 --> 0:04:11.440 until two thousand when you started to see those demand 0:04:11.440 --> 0:04:14.000 trends weakening. Everybody. It's not like we didn't know along 0:04:14.040 --> 0:04:16.080 the way that we were overbuilding. There was a story 0:04:16.120 --> 0:04:18.400 about the telecom cables could wrap around the earth a 0:04:18.440 --> 0:04:21.480 thousand times or whatever it was. We knew we were overbuilding, 0:04:21.839 --> 0:04:25.320 but it still took until those demand trends weakened for 0:04:25.480 --> 0:04:29.120 the broader environment to really to borrow the word. I 0:04:29.200 --> 0:04:31.480 just use weekend, and I think now, whether it's AI 0:04:31.800 --> 0:04:34.359 or Broadcom in the last two days, or any of 0:04:34.720 --> 0:04:38.200 the derivative trades, I haven't heard. And again I've said 0:04:38.200 --> 0:04:39.799 this one hundred times solo. This is not a particularly 0:04:39.880 --> 0:04:42.320 large tech investor, and we don't own any of these names. 0:04:42.560 --> 0:04:44.920 But I haven't seen any suggestion from anybody, either on 0:04:44.960 --> 0:04:47.320 the sell side or from the companies themselves, that demand 0:04:47.360 --> 0:04:50.520 trends are weakening. All I keep hearing is demand exceed 0:04:50.560 --> 0:04:52.640 supply from just about anybody who has any comment. 0:04:52.839 --> 0:04:55.480 One thing that SOLIS does have a pretty big footprint 0:04:55.480 --> 0:05:00.160 in is looking at the potential combinations of companies, particularly media, 0:05:00.440 --> 0:05:02.600 particularly in a couple of other industries. And this has 0:05:02.600 --> 0:05:04.040 been an area that a lot of people think is 0:05:04.080 --> 0:05:06.800 going to be really hot next year. How much you 0:05:06.880 --> 0:05:09.560 seeing that in sort of the ground up analysis of 0:05:09.600 --> 0:05:12.960 companies in different sectors and which sectors do you see 0:05:12.960 --> 0:05:14.479 the most active discussions? 0:05:14.839 --> 0:05:16.680 Well, it's when we had the lamb Western headlines the 0:05:16.720 --> 0:05:18.919 other day. I think I'm certainly in the camp that 0:05:18.960 --> 0:05:20.560 thinks next year is going to see a pickup in 0:05:20.720 --> 0:05:24.680 M and A activity. You see this emb the issuance 0:05:24.720 --> 0:05:28.479 trends are emblematic of this, and just CEO body language 0:05:28.520 --> 0:05:30.880 is emblematic of this. So I'd expect to see that. 0:05:31.120 --> 0:05:33.800 One area you mentioned SOLA is involvement in the media space. 0:05:34.080 --> 0:05:35.960 I would point, for instance, to what's going on with 0:05:36.000 --> 0:05:40.159 Comcast and Warner Brothers spinning out the linear let's oversimplify it, 0:05:40.200 --> 0:05:42.520 spinning out the linear networks. The assumption is they're going 0:05:42.560 --> 0:05:46.320 to combine, and there's a lot to do there. From 0:05:46.400 --> 0:05:49.160 our standpoint, I think when people think about high yield 0:05:49.160 --> 0:05:51.719 and credit and investing a lot of that conversation becomes 0:05:51.720 --> 0:05:54.880 about dish or all tease. But those are the types 0:05:54.920 --> 0:05:56.280 of things that we pay a lot of attention to. 0:05:56.360 --> 0:05:59.279 Solace as a twenty year track record of investing in 0:05:59.279 --> 0:06:02.159 the media space, and I think there's there's going to 0:06:02.160 --> 0:06:03.640 be a lot there to to t to do in 0:06:03.680 --> 0:06:04.440 that space, for sure. 0:06:04.720 --> 0:06:07.200 Are you expecting then a light regulatory touch? 0:06:07.760 --> 0:06:11.200 So I I think the the conversation is, well, Lena 0:06:11.279 --> 0:06:13.640 Khan's gone, so it's game on, and I I don't 0:06:13.640 --> 0:06:15.039 think that's the case. And I think you and I 0:06:15.040 --> 0:06:17.080 have talked about this in the past. I think when 0:06:17.080 --> 0:06:18.680 you really and I'm sure you're well aware of this, 0:06:18.720 --> 0:06:21.840 when you really dig into jd Vance's philosophy and the 0:06:21.880 --> 0:06:25.440 people around him, it's not a game on type philosophy. 0:06:25.480 --> 0:06:29.279 It's there's still gonna be a scrutiny of the big 0:06:29.320 --> 0:06:32.200 tech stocks in particular, of the T tech companies in particular. 0:06:32.680 --> 0:06:36.120 But I also don't think, I mean, listen, Josh Hawley, 0:06:36.680 --> 0:06:40.120 jd Vance, Tom Cotton are not gonna green light any 0:06:40.160 --> 0:06:42.800 merger so to speak, either either in the public domain 0:06:42.920 --> 0:06:46.160 or actually from the FTC standpoint. I think there's still 0:06:46.160 --> 0:06:47.839 gonna be a lot of scrutiny here. But but will 0:06:47.880 --> 0:06:50.479 it be lighter than what we've experienced the last couple 0:06:50.480 --> 0:06:52.039 of years. I think that's unquestionably a Yes. 0:06:52.160 --> 0:06:53.960 You were with us on election night. Do you think 0:06:54.520 --> 0:06:57.400 this idea of the Trump trade is just overrun? Though? 0:06:58.880 --> 0:07:03.120 No, no, l And I think, well, I guess maybe yes, 0:07:03.440 --> 0:07:08.400 half no, half yes, yes, So there no is Listen, 0:07:08.520 --> 0:07:11.920 we're going to have a friendlier business climate. The CEO confidence. 0:07:11.960 --> 0:07:14.200 The Bloomberg is a story this morning about CEO confidence 0:07:14.200 --> 0:07:16.320 spiking up. You saw it in a small business survey. 0:07:16.520 --> 0:07:19.600 Small businessmen are apparently all Republicans because that numbers spiked 0:07:19.680 --> 0:07:22.760 up to the highest level. Yeah, it's political bias in 0:07:22.760 --> 0:07:24.880 some of these services, certainly political bias in some of 0:07:24.920 --> 0:07:26.680 these surveys, and by some of these surveys, we mean 0:07:26.720 --> 0:07:29.760 all of these surveys. But so in that sense, no, 0:07:29.960 --> 0:07:32.840 this is going to be two years at least until 0:07:32.840 --> 0:07:36.160 the mid terms, of probably four years of a more 0:07:36.280 --> 0:07:39.400 right leaning business friendly climate. And so that's going to persist. 0:07:39.920 --> 0:07:42.440 At the same time, I think there's and I'd be 0:07:42.480 --> 0:07:44.320 curious of your thought on this, there's a lot of 0:07:44.480 --> 0:07:48.080 enthusiasm and optimism about what this administration can accomplish. And 0:07:48.120 --> 0:07:50.840 I'm a little more skeptical. I think, obviously the TCGA 0:07:50.920 --> 0:07:53.000 is going to get extended, but can you also afford 0:07:53.560 --> 0:07:56.320 no tax on tips? Can you also afford a further 0:07:56.360 --> 0:07:58.840 lowering of the corporate tax rate. I'm a little skeptical 0:07:58.840 --> 0:07:59.920 that this Congress is going to have. 0:08:00.240 --> 0:08:02.400 So you're skeptical of the good stuff that would be 0:08:02.400 --> 0:08:04.760 beneficial to the market and the business climate, but what 0:08:04.880 --> 0:08:08.240 about tariffs and things that can actually have a negative impact. 0:08:08.560 --> 0:08:13.160 Yeah, I enjoy this conversation a lot. I think that 0:08:13.360 --> 0:08:17.760 the talk around tariffs is just so universally bearish and bad. 0:08:18.160 --> 0:08:20.600 And listen, I don't want to give away my free 0:08:20.600 --> 0:08:24.160 market bona feeds here, Like, certainly tariffs are not optimal, 0:08:24.640 --> 0:08:26.640 but I also look back in the period in which 0:08:26.640 --> 0:08:31.080 we had tariffs and I don't remember them being dystopian 0:08:31.120 --> 0:08:34.320 in any meaningful way. I mean, obviously everyone likes to 0:08:34.320 --> 0:08:36.400 point to the headline index there was no meaningful jump 0:08:36.400 --> 0:08:39.040 in inflation, But when you dig into the core goods data, 0:08:39.200 --> 0:08:41.400 there was a reversal of the downward the multi year 0:08:41.400 --> 0:08:44.920 downward trend. So core goods prices certainly did respond. But 0:08:44.960 --> 0:08:48.640 if we can simultaneously get the currency to move. If 0:08:48.679 --> 0:08:52.640 we can simultaneously get oil prices lower, maybe present incoming 0:08:52.640 --> 0:08:55.040 President Trump is a little friendlier with the Saudis and 0:08:55.080 --> 0:08:57.280 we can maybe get a million barrels back on the 0:08:57.280 --> 0:08:59.200 market and we can get oil down into the fifties 0:08:59.720 --> 0:09:01.000 that that will help compensate. 0:09:01.080 --> 0:09:03.599 And so just a little to that when US companies 0:09:03.640 --> 0:09:06.080 are actually pulling back like Chevron at the Permian, there 0:09:06.280 --> 0:09:09.320 needs to be a higher price to actually incentifize American 0:09:09.360 --> 0:09:11.280 companies to want to continue driply listen, I. 0:09:11.280 --> 0:09:13.439 Mean we're pumping thirteen and a half million barrels right now, 0:09:13.520 --> 0:09:16.680 essentially a record high. So output in the United States 0:09:16.760 --> 0:09:19.040 is not the issue. Obviously, you've got the voluntary c 0:09:19.200 --> 0:09:23.160 talments across opek several million barrels spare capacities in the 0:09:23.880 --> 0:09:26.560 million barrels. Obviously they keep trying to bring that back on, 0:09:26.679 --> 0:09:28.559 but we're worried about Chinese demand and so there's a 0:09:28.600 --> 0:09:31.640 lot of moving parts here. But I also think geopolitically, 0:09:31.640 --> 0:09:33.760 if you're President Trump, your goal is going to be 0:09:33.800 --> 0:09:36.000 the lower prices, and what is the easiest way to 0:09:36.040 --> 0:09:37.880 do that. It's going to be much harder to spur 0:09:37.960 --> 0:09:40.360 additional production of the Permian than it would be to 0:09:40.400 --> 0:09:43.280 just somehow get the Saudis to agree to pump a 0:09:43.280 --> 0:09:45.720 little bit more oil, which they might not. If you 0:09:45.720 --> 0:09:50.240 can compensate that by lowering Iranian output, then for Russian 0:09:50.760 --> 0:09:53.400 or Russian Iranians, probably easier, because the Iranians are back 0:09:53.440 --> 0:09:56.920 up over three million barrels right now. That is up 0:09:56.960 --> 0:10:00.240 a lot from the day President Trump left office. If 0:10:00.280 --> 0:10:03.480 I'm President Trump, optimally you get a million Iranian barrels 0:10:03.480 --> 0:10:07.160 off the market, you compensate that with a million Saudi barrels. 0:10:07.960 --> 0:10:10.440 Maybe you depress oil prices a little bit in that environment, 0:10:10.520 --> 0:10:11.520 win win run. 0:10:11.559 --> 0:10:13.320 They clearly want to run this hot. Just a final 0:10:13.400 --> 0:10:14.040 question to you. 0:10:14.480 --> 0:10:16.000 They won't just started. How is it final? 0:10:16.040 --> 0:10:19.720 Already here about five minutes into the segment, High christ, 0:10:20.000 --> 0:10:24.280 low inflation, disciplined on Fisco. Out of those three, which 0:10:24.320 --> 0:10:25.760 one do you think will be more difficult for the 0:10:25.800 --> 0:10:27.160 incoming administration to achieve? 0:10:27.280 --> 0:10:27.880 High growth? 0:10:28.160 --> 0:10:31.480 Love inflation, disciplined on fiscal. 0:10:31.559 --> 0:10:33.520 There's no one in Washington, and this is a parlor 0:10:33.559 --> 0:10:36.560 game that we've played for decades now. There's no one's 0:10:36.600 --> 0:10:38.600 cutting spending. Spending never gets cut. 0:10:39.440 --> 0:10:40.200 Is Alan watching? 0:10:41.000 --> 0:10:43.520 I hope he'll listen. I'm happy I mentioned last time. 0:10:43.679 --> 0:10:45.959 I'll go work for Doze. Not full time, but I'll 0:10:46.000 --> 0:10:49.240 go work for Doze. This is not brain surgery. The 0:10:49.320 --> 0:10:52.000 CBO puts out a report all the time, all the 0:10:52.000 --> 0:10:55.120 different ways you can fix the deficit. Former Senator Tom 0:10:55.200 --> 0:10:58.280 Coburn now Ran Paul puts up the I Forget the watebook. 0:10:58.280 --> 0:11:00.800 It's called all different ways that you can cut. This 0:11:00.840 --> 0:11:03.880 is not brain surgery. There's the famous movie, not famous. 0:11:03.920 --> 0:11:06.440 There was the movie Dave where the fake president comes 0:11:06.440 --> 0:11:09.320 in and he brings in I forget who it was, 0:11:10.760 --> 0:11:13.000 Charles Grodon, and Charles Groden's his friend. He's inn the 0:11:13.080 --> 0:11:14.520 coountant and he sits down and he looks at the 0:11:14.520 --> 0:11:16.240 Government of Books and he goes, this is the worst 0:11:16.280 --> 0:11:19.120 looking thing I've ever seen. If you put five Republican 0:11:19.160 --> 0:11:23.640 economists or or government fiscal people in a room with 0:11:23.760 --> 0:11:26.400 five Democrats, they can solve the problem over lunch. The 0:11:26.480 --> 0:11:28.360 problem is no one knows how to get elected once 0:11:28.400 --> 0:11:30.920 they fix the problem. It's straight, which is why nothing's 0:11:30.920 --> 0:11:31.320 getting done. 0:11:31.400 --> 0:11:32.839 Good to say, it's why you know it's a still 0:11:33.200 --> 0:11:34.640 not the four percent on a tenure. 0:11:34.760 --> 0:11:36.480 Thank you for having me back on in the seven hour, 0:11:36.559 --> 0:11:37.320 not at six thirty. 0:11:37.360 --> 0:11:39.760 Okay, we're gonna keep that going down. Worry you want 0:11:39.800 --> 0:11:42.000 the sevenite, the sevenite right. 0:11:42.760 --> 0:11:44.640 Wherever you have me to come out and thank you. 0:11:44.679 --> 0:11:47.559 Okay, Dank Greenhouse so solos Aultentive, Assi Masterms. Have a 0:11:47.640 --> 0:11:48.240 very happy. 0:11:48.040 --> 0:11:48.880 Christmas and you as well. 0:11:48.880 --> 0:12:01.920 I'm merry Christmas. Thank you. Turning to consumer spending, Jet 0:12:01.920 --> 0:12:04.640 Blue planning to expend its first class offerings in twenty 0:12:04.760 --> 0:12:08.480 twenty six as passengers continue to pay up for premium options. 0:12:08.520 --> 0:12:12.440 The carrier also cutting capacity to increase fares and focus 0:12:12.440 --> 0:12:15.720 on East Coast leisure destinations. Joining us now to discuss 0:12:15.800 --> 0:12:18.720 is the Jet Blue CEO Joanna Garretteeanna, good to see you. 0:12:18.760 --> 0:12:19.720 Thanks thanks for having me. 0:12:19.760 --> 0:12:21.439 The demand for premium is through the roof and a 0:12:21.480 --> 0:12:23.920 lot of people are trying to provide the capacity for it. 0:12:24.040 --> 0:12:26.760 What gives you the impression the confidence that that demand's 0:12:26.760 --> 0:12:27.480 going to stick around? 0:12:27.640 --> 0:12:29.560 I mean Jet Blue has been doing premium for ten years. 0:12:29.600 --> 0:12:32.080 We introduced our Mint product ten years ago. This is 0:12:32.200 --> 0:12:34.679 just continuing to round out the suite of products that 0:12:34.720 --> 0:12:36.800 we have. We have a great coach experience, we have 0:12:36.800 --> 0:12:39.440 even more space, Mint Life Flat and now more of 0:12:39.440 --> 0:12:42.920 a domestic Mint and domestic business class seat that we're 0:12:42.920 --> 0:12:45.240 going to be introducing in twenty twenty six. Very excited 0:12:45.240 --> 0:12:46.800 to bring it to customers and leisure markets. 0:12:46.920 --> 0:12:49.719 Food is best in class on your behalf. I've done 0:12:49.760 --> 0:12:53.160 the flight and Mint to California and to London as well. 0:12:53.200 --> 0:12:55.080 Where does that come from? How expensive is it to 0:12:55.080 --> 0:12:56.040 provide that kind of product? 0:12:56.200 --> 0:12:58.439 Yeah, I mean, we really look to provide a differentiated 0:12:58.480 --> 0:13:00.960 experience and we lean in uncertain So food has been 0:13:00.960 --> 0:13:03.319 an area that we focus on. Comfort is another area 0:13:03.360 --> 0:13:04.640 that we spend a lot of time with. We have 0:13:04.720 --> 0:13:06.960 a great a great partnership with Tought and Needle, and 0:13:07.000 --> 0:13:09.320 as we think about our new domestic first class, comfort 0:13:09.360 --> 0:13:10.840 is going to be the area that we lean in 0:13:10.920 --> 0:13:13.720 on there as well, with some interesting features of our 0:13:13.760 --> 0:13:15.880 seat product that provide a bit more comfort to customers. 0:13:15.880 --> 0:13:18.040 How difficult is it to thread a needle with the 0:13:18.160 --> 0:13:21.120 likes of business class given the fact that Jet Blue 0:13:21.120 --> 0:13:25.440 traditionally has been an airline that caters to pleasure travel, 0:13:25.480 --> 0:13:28.040 sure to the idea of traveling with the family to 0:13:28.160 --> 0:13:31.600 warm places in the winter time, how much does that 0:13:31.679 --> 0:13:33.520 kind of create a conflict for you? 0:13:33.280 --> 0:13:35.360 You know, we don't think it creates a conflict because 0:13:35.440 --> 0:13:38.240 everybody's a leisure customer and when you think about what 0:13:38.280 --> 0:13:40.120 you like to do on a vacation, sometimes you want 0:13:40.160 --> 0:13:42.920 an elevated travel experience as well. So we want to 0:13:42.960 --> 0:13:44.960 make sure that we have an offering for every type 0:13:45.000 --> 0:13:47.440 of leisure customer. One of the things we have done 0:13:47.440 --> 0:13:50.520 recently is kind of retrenched in the Northeast, really focusing 0:13:50.559 --> 0:13:53.720 on serving the best leisure markets out of the Northeast Europe, 0:13:54.160 --> 0:13:56.240 the West Coast down in the Caribbean, and there's a 0:13:56.280 --> 0:13:58.000 real market for that premium seat. 0:13:58.120 --> 0:13:59.959 I guess another way to say this is businesses are 0:14:00.000 --> 0:14:02.240 willing to pay more on their expense accounts than individuals, 0:14:02.320 --> 0:14:04.640 especially when they're going on vacation. How difficult is it 0:14:05.000 --> 0:14:08.319 to charge the rates that make it worthwhile Given the 0:14:08.360 --> 0:14:10.320 fact that as people going on vacation and they typically 0:14:10.360 --> 0:14:11.440 have bledget's. 0:14:11.040 --> 0:14:13.240 We're not focused on charging rates at are akin to 0:14:13.280 --> 0:14:15.440 what a business customer and a business would charge. We 0:14:15.480 --> 0:14:18.880 really want to make the premium experience affordable to leisure customers. 0:14:18.920 --> 0:14:21.560 When we introduced Mint ten years ago, we did just that. 0:14:21.600 --> 0:14:23.960 We reduced fares to the West Coast, we introduced a 0:14:23.960 --> 0:14:26.320 better product, a better service, and that's what we're looking 0:14:26.320 --> 0:14:28.720 to do here. It's really important for jet Blue to 0:14:28.720 --> 0:14:31.200 make sure that we have affordable fares and that all 0:14:31.200 --> 0:14:33.520 of our products are accessible to the leisure customers. So 0:14:33.560 --> 0:14:35.760 that's the customer that we're targeting, somebody willing to pay 0:14:35.760 --> 0:14:38.200 a bit more, but not at the size that you 0:14:38.200 --> 0:14:39.000 would for a business. 0:14:39.080 --> 0:14:41.440 You've been tasked with turning around the balance sheet of 0:14:41.480 --> 0:14:44.040 jet Blue, and you've made progress in that front. You 0:14:44.120 --> 0:14:46.880 just reported earnings that were positive and really pointed toward 0:14:46.880 --> 0:14:50.760 progress in that How much are you able to raise 0:14:50.840 --> 0:14:54.480 prices at a time where you see increasing consumer pushback, 0:14:55.200 --> 0:14:56.760 But at the same time, there seems to still be 0:14:56.800 --> 0:14:58.080 that ongoing demand for travel. 0:14:58.120 --> 0:15:00.280 There's very healthy demand in the peak and that's where 0:15:00.440 --> 0:15:03.000 leisure travel is great. So as we think about you know, 0:15:03.040 --> 0:15:05.520 the holidays, we think about the summertime frame. You know, 0:15:05.560 --> 0:15:07.800 that's where I think jet Blue does its best because 0:15:07.800 --> 0:15:09.680 we fly to some of these great destinations. Troughs are 0:15:09.680 --> 0:15:12.800 definitely more challenging. We've seen some pricing pressure in the troughs. 0:15:12.960 --> 0:15:14.480 We've reduced a lot of flying in the troughs. So 0:15:14.520 --> 0:15:16.640 it's really about balancing out that year and making sure 0:15:16.680 --> 0:15:19.320 that you know, when demand is high, you're focused on 0:15:19.400 --> 0:15:21.680 trying to capture your share of that demand, and then 0:15:21.680 --> 0:15:23.520 the troughs really reducing the losses. 0:15:23.840 --> 0:15:26.760 So do you expect to increase fares this year? 0:15:26.880 --> 0:15:29.640 We're hopeful that we can keep fares affordable that reflect 0:15:29.640 --> 0:15:32.440 the cost of service. It's more expensive to travel now 0:15:32.440 --> 0:15:35.440 because there are costs. Airport costs have gone up, labor 0:15:35.480 --> 0:15:38.280 costs have gone up, so there's meaningful inflationary pressure for 0:15:38.320 --> 0:15:40.440 the airlines as well. Our great food comes at a cost. 0:15:40.520 --> 0:15:42.920 When you start seeing the grocery costs go up, that 0:15:42.960 --> 0:15:44.480 means the food and an aircraft is going to go 0:15:44.560 --> 0:15:46.560 up too. So we're really trying to balance it and 0:15:46.600 --> 0:15:49.400 make sure that relative to the other travel out there, 0:15:49.440 --> 0:15:52.560 that Jet Blue is an affordable fare for customers, inaccessible 0:15:52.560 --> 0:15:53.280 for a leisure customer. 0:15:53.280 --> 0:15:55.360 Well, there's also been other constraints on the airline industry 0:15:55.360 --> 0:15:57.400 when it comes to getting the parts they need, comes 0:15:57.440 --> 0:16:00.640 to actually getting the planes they need to fly. And 0:16:00.680 --> 0:16:02.480 then next year a lot of people are talking about, well, 0:16:02.520 --> 0:16:05.080 we might get tariffs and potentially that might impact the 0:16:05.120 --> 0:16:05.720 supply chain. 0:16:05.760 --> 0:16:06.840 How are you preparing for all of that? 0:16:06.960 --> 0:16:08.800 Yeah, I mean Jet Blue has a unique situation with 0:16:08.800 --> 0:16:10.480 Pratt and Whitney. Right now, we have a number of 0:16:10.480 --> 0:16:12.480 aircraft sitting on the ground that we're paying for, but 0:16:12.520 --> 0:16:14.320 we're not able to fly because they're due for an 0:16:14.360 --> 0:16:17.640 engine inspection and there's not enough capacity to do those inspections. 0:16:17.680 --> 0:16:20.200 So that's definitely a headwind for Jet Blue. As you 0:16:20.200 --> 0:16:22.920 think about tariffs, it's a bit too soon to tell. 0:16:22.960 --> 0:16:24.400 I think the good news for Jeblo's. We take a 0:16:24.400 --> 0:16:26.920 lot of our aircraft from Alabama, but you know, depending 0:16:26.920 --> 0:16:28.920 on how tariffs get put in. We do have exposure 0:16:29.000 --> 0:16:30.800 in Europe and in Canada because some of our aircraft 0:16:30.880 --> 0:16:31.360 come from there. 0:16:32.000 --> 0:16:35.920 Of course, the Jet Blue Spirit Airlines potential merger was blocked. 0:16:36.080 --> 0:16:39.440 Are you potentially thinking about going at it again in 0:16:39.480 --> 0:16:41.920 the next four years in this space more mergers and 0:16:41.960 --> 0:16:46.200 acquisitions because there might be a lighter regulatory touch in Washington, 0:16:46.240 --> 0:16:46.440 d C. 0:16:46.640 --> 0:16:49.240 We're really focused on delivering our new plan, Jet Forward. 0:16:49.600 --> 0:16:51.880 We want to see Jet Blue thrive as a successful 0:16:51.880 --> 0:16:55.120 standalone company. We have a brand that customers love, We've 0:16:55.160 --> 0:16:57.840 got a great product, a great service. We're focus on 0:16:57.920 --> 0:16:59.760 flying in the places that people know us. So we're 0:16:59.760 --> 0:17:02.000 really focus on our standalone plan jet Forward right now. 0:17:02.040 --> 0:17:04.000 Okay, so you might not dip your toes back into 0:17:04.040 --> 0:17:06.400 that space, But do you think that this is going 0:17:06.440 --> 0:17:10.800 to be a more welcoming administration when it comes to 0:17:10.840 --> 0:17:12.480 things like mergers and acquisitions. 0:17:12.520 --> 0:17:15.320 It's hard to speculate because we don't know exactly what 0:17:15.440 --> 0:17:17.240 the com plan's going to be, but it's hard to 0:17:17.240 --> 0:17:19.720 see an administration that's going to be worse than the 0:17:19.720 --> 0:17:21.760 administration we had around antitrust. 0:17:22.200 --> 0:17:24.560 In the meantime, you have announced a number of changes 0:17:24.600 --> 0:17:27.560 in terms of the Jet Forward, including closing down certain 0:17:27.640 --> 0:17:30.840 operations in a number of cities. I believe that they 0:17:31.240 --> 0:17:34.359 are going to cut You're going to cut some fifty routes. Correct, 0:17:34.520 --> 0:17:36.080 Is it done? Are there more to come? 0:17:36.440 --> 0:17:39.120 The network is always something that's evolving, So the majority 0:17:39.119 --> 0:17:41.080 of the changes are done. But you know, we're not 0:17:41.080 --> 0:17:43.240 going to rest on our laurels. If a particular market 0:17:43.280 --> 0:17:45.280 is not producing results, then we're going to take a 0:17:45.280 --> 0:17:47.280 good hard look at it see if we can improve it, 0:17:47.320 --> 0:17:49.280 and if not, then we're going to point those planes 0:17:49.320 --> 0:17:51.000