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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am

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Speaker 1: Eastern on Apple, Cocklay and Android Auto with the Bloomberg

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Speaker 1: Business app. Listen on demand wherever you get your podcasts,

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Speaker 1: or watch us live on YouTube.

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Speaker 2: LEAs Matteo and Paul Sweeney live here in the Bloomberg

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Speaker 2: Inaract the Broker Studio in Midtown Manhattan, streaming live on

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Speaker 2: YouTube as well.

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Speaker 3: So I check us out there.

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Speaker 2: You can search Bloomberg Live Radio all right. Uber is

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Speaker 2: partnering with Lucid neuro to launch robotaxis in twenty twenty six.

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Speaker 2: I'll do a ROBOTAXI I mean, I get into car

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Speaker 2: every morning with a dude I do not know, true,

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Speaker 2: and I trust him to get me from point.

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Speaker 4: But there's someone behind the wheel.

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Speaker 2: Yeah, but I don't know who this dude is. But

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Speaker 2: I mean, I don't know. There's like twenty seven thousand

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Speaker 2: censors on these things. It's I don't know, man deep

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Speaker 2: saying he knows he does this stuff. Senior tech industry

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Speaker 2: analis for Bloomberg Intelligence. What's Uber strategy for robotaxes? Because

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Speaker 2: you could argue that boy that would totally impact their

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Speaker 2: business model Uber if I don't need to share my

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Speaker 2: money with them.

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Speaker 5: I mean Uber's strategy under this CEO, Dara Koshershahi, ever

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Speaker 5: since he has taken over, is to build scale when

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Speaker 5: it comes to both supply and that translates into adding

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Speaker 5: more services. So that's why they expanded on their delivery

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Speaker 5: side in such a big way. You know, they added

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Speaker 5: food delivery, grocery delivery. It was all.

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Speaker 2: About drizzly which is the.

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Speaker 5: Look. And now they're doing the same way the adonomous

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Speaker 5: vehicles supply. So they have a partnership with Weimo in

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Speaker 5: two cities, but then they are at the mercy of

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Speaker 5: either a Weimo or Tesla partnering with them. What they're

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Speaker 5: doing here is because they don't have their own av

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Speaker 5: efforts really doing this minority investment in Lucid that makes

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Speaker 5: about hoousand vehicles a year, Premium evs and also Neuro

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Speaker 5: which is software maker similar to Wevemo in terms of

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Speaker 5: you know, autonomous driving. They provide the actual technology and

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Speaker 5: sensors and software for the vehicle to drive itself on

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Speaker 5: its own. And it seems to be a sound strategy,

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Speaker 5: you know, just to hedge their bets. What if the

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Speaker 5: Weymo partnership doesn't pan out or get bigger as they

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Speaker 5: hope to be. And that's where you know, having this

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Speaker 5: investment does make a lot of sense.

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Speaker 4: So how does this deal all work? I mean break

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Speaker 4: it down for it's certain like SUV Lucids, Like, how

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Speaker 4: does it?

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Speaker 5: Yeah, I mean look Lucid, like I said, compare that

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Speaker 5: to Tesla making one point eight million cars a year.

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Speaker 5: Lucid makes ten thousand vehicles a year, so it's a

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Speaker 5: much smaller company in terms of the number of vehicles.

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Speaker 5: But at the same time, everyone who owns a Lucid,

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Speaker 5: they like the experience. It's one of that premium EV

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Speaker 5: cars that never took off. And that's why adding that

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Speaker 5: sensor technology for autonomous driving on top of Lucid does

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Speaker 5: make sense. Because Uber, like I said, it's all about

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Speaker 5: adding more supply. They want to cater to every segment,

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Speaker 5: premium segment who wants to use AVY vehicles as part

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Speaker 5: of their daily routine. And that's where you know they

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Speaker 5: are thinking long term, Okay, do we have AVY supply

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Speaker 5: for all types of segments and this could be something

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Speaker 5: that we have an investment in. And I think it's

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Speaker 5: not a big amount. It's not an outright acquisition that

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Speaker 5: they're making.

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Speaker 4: Well, you know, Paul, they said the Lucid was the

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Speaker 4: car the Hamptons, Like, that's really now? Yes, yes, well you.

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Speaker 2: Never know, very good. I'm not sure what the car

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Speaker 2: the Jersey sure is. It's the vestment you see me

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Speaker 2: cruising on.

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Speaker 3: All right.

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Speaker 2: The market cap of Uber Technologies one hundred and eighty

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Speaker 2: eight billion dollars, it's up fifty percent this year. What's

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Speaker 2: driving that?

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Speaker 5: I mean remember the time when Lyft used to be

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Speaker 5: thirty percent of Uber. That has changed completely. Now Lift

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Speaker 5: is like three percent of Uber's market cap. So that's

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Speaker 5: where that scale strategy under the CEO has worked for them.

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Speaker 5: That really has been the key differentiator between Uber and Lyft.

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Speaker 5: And what explains that, you know, almost two hundred billion

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Speaker 5: dollars in market cap for Uber And look, I think

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Speaker 5: they're doing the right thing here by adding more scale,

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Speaker 5: because otherwise you run the risk of getting disintermediated, especially

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Speaker 5: at Tesla, which wants to go on its own. They

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Speaker 5: don't want to partner with anyone, all right.

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Speaker 2: Darrek Kastoshahi, the CEO of Uber, he got his twenty

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Speaker 2: most recent year comp four point two million cash compensation,

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Speaker 2: thirty nine point eight million of non cash competition each

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Speaker 2: stock that stock since he got that is up twenty

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Speaker 2: three point eight million. So is current pay value for

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Speaker 2: that year sixty eight million dollars. This dude's worth every penny,

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Speaker 2: right the shareholders. I mean, I'll pay this guy whatever

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Speaker 2: he wants.

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Speaker 5: Right, Well, his fartues have really turned around this year

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Speaker 5: up until twenty twenty four. This dot in do that well,

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Speaker 5: so really this year with Bill Ackman taking a steak

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Speaker 5: and you know about that. So there have been a

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Speaker 5: lot of catalysts that have played out in favor of Uber,

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Speaker 5: and like I said, Lift not performing because of their

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Speaker 5: lack of scale really validated Uber strategies. So I do

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Speaker 5: think he has had a good run. Yeah.

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Speaker 4: Well, Paul makes fun of me because I only have

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Speaker 4: the Uber app, I don't have the list, and he

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Speaker 4: kalls me all the time. The quick thirty seconds that

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Speaker 4: we have here left ROBOTAXI fleets. We don't know where

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Speaker 4: this one is going to take off?

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Speaker 6: Right?

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Speaker 4: Can something like this work in New York City? Robotaxis?

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Speaker 5: Well, Weimo is trying to get up permit here, So

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Speaker 5: in my mind, you know Uber wants to fill in

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Speaker 5: the gaps where they don't have a partnership with Wemo.

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Speaker 5: So right now, Uber has a partnership with Vemo only

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Speaker 5: in two cities, Austin and Atlanta, not in San Francisco,

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Speaker 5: Phoenix and other cities where Vemo operates in. So this

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Speaker 5: allows them to add more heavy vehicles than cities where

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Speaker 5: Vemo doesn't want to partner with Uber.

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Speaker 2: Right, would you get in a heavy bit in a way?

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Speaker 5: I have? Yes? I love the experience, really yes.

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Speaker 2: So you get in the back, there's no budding in

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Speaker 2: the front and the car just goes.

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Speaker 5: Yeah, I mean, and the car is reliable in the

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Speaker 5: city is where they all pray vingel now has one

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Speaker 5: hundred million miles driven mild So how much validation do

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Speaker 5: you need?

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Speaker 2: You're right, all right, you sold me. I'll give it

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Speaker 2: a shot. I mean, I don't know. Maybe not in Manhattan, No.

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Speaker 4: I saw I'm in San Francisco.

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Speaker 3: I thought about it, but he didn't do it.

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Speaker 2: But right, Mendy, thank you so much. Always always are

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Speaker 2: great talks, Mendeep seeing senior tech analysts, you know, driverless

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Speaker 2: card dude who knew that.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us Live

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Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android

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Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 4: Donlease Matteo alongside Paul Sweeney. United Airlines right they narrow

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Speaker 4: it narrowed its profit range for the first for the

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Speaker 4: of the year, but they do expect travel demand to

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Speaker 4: continue to rise. Now. Earlier this morning, CEO Scott Kirby

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Speaker 4: he sat down with Bloomberg's Lisa Brahmins and they talked

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Speaker 4: about United's earnings and also their outlook for the rest

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Speaker 4: of twenty twenty five.

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Speaker 7: This year, a lot of uncertainty in the first half

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Speaker 7: of the year at macro uncertainty and that led to

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Speaker 7: an impact on bookings and demand at United across the

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Speaker 7: whole industry. But it felt like there was a turning

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Speaker 7: point at the end of June where the tax bill

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Speaker 7: passed and the situation in the Middle East was calmer

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Speaker 7: and tariffs, while not certain, yet narrowing the range, and

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Speaker 7: it really felt like people felt enough confidence or lower

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Speaker 7: level of uncertainty that they kind of came off the

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Speaker 7: sidelines and were unfrozen.

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Speaker 4: All right, that was United CEO Scott Kirby. Let's bring

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Speaker 4: in the expert on all this, George Ferguson's Bloomber Intelligence

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Speaker 4: senior Aerospace, Defense and airlines analysts. George, thanks for joining us,

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Speaker 4: Scott Kirby. He seemed pretty confident, did he?

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Speaker 3: He does? But I guess he always sounds confident, right.

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Speaker 3: I think he's counting on some capacity cuts here in

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Speaker 3: the second half, and he talked about some of the

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Speaker 3: uncertainty going away, So I think it's a it'll get

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Speaker 3: better story. But yeah, too, c for him and for

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Speaker 3: Delta didn't look that great.

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Speaker 2: George, where's business travel today?

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Speaker 3: I'd like to tell you what the airlines try to

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Speaker 3: hide that, but you know, everything we can parse out

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Speaker 3: of sort of Delta and United earnings makes it sound

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Speaker 3: like it's lagging the leisure rebound and maybe back to

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Speaker 3: twenty nineteen levels, But that would again sort of still

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Speaker 3: be lagging. And so the sense I get is that

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Speaker 3: it hasn't come back as strongly as leisure, and these

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Speaker 3: airlines are more pointing to high end leisure as the

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Speaker 3: driver of their profitability.

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Speaker 4: George, I have to point out Newark Airport because I'm

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Speaker 4: a frequent visitor. There are a lot of issues there

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Speaker 4: right construction new there were outages, delays. When they asked,

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Speaker 4: you know, Scott Kirby about it, he said he was

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Speaker 4: kind of you know, optimistic about it, but he also

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Speaker 4: pointed out JFK would love to get in there. Has

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Speaker 4: this been kind of a sticking point for United.

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Speaker 3: Newark for sure, right because Newark they've got a strong

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Speaker 3: concentration of flights out of there. You know, he started

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Speaker 3: the call too today. You know, I get the sign

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Speaker 3: on for the first couple of minutes of it before

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Speaker 3: joining you, and you know, he was sort of alluding what

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Speaker 3: was going on at Newark Airport, and so you know,

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Speaker 3: I think it's I think we're starting to put behind

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Speaker 3: us the FAA problems. But Newark is always a challenging airport.

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Speaker 3: It has a lot of activity. You know, he said,

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Speaker 3: the FAA and the constituents there have gotten real about

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Speaker 3: the amount of throughput they could put around Newark. That

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Speaker 3: would be good because essentially Newark suffers from a whole

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Speaker 3: lot of throughput that's trying to get through that airport.

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Speaker 3: And then you get in the middle of summer and

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Speaker 3: you just have these weather events storms which we've been

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Speaker 3: having I think every day now in New Jersey, which

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Speaker 3: sort of royal the whole deal. So he sounded optimistic

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Speaker 3: that they've got a lot of the fix in place

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Speaker 3: for the airport.

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Speaker 2: George Ware, are we on air traffic controllers? I mean, now,

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Speaker 2: hard can this be? To staff this whole system up here?

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Speaker 2: I just don't get it. What's the status?

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Speaker 3: Yeah? So, I mean it just takes a long time

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Speaker 3: to train in air traffic control, longer than I would

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Speaker 3: have expected. I mean, the last numbers I've heard were

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Speaker 3: sort of over over a year. I think I want

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Speaker 3: to say it was like a year and a half,

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Speaker 3: but I have to go back and check my numbers

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Speaker 3: exactly on that one. You know, during the pandemic, you know,

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Speaker 3: we had people that probably not too jazzed about entering

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Speaker 3: that business because it was one of those where you

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Speaker 3: couldn't work from home. I think that worked from home

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Speaker 3: world is fading a bit now, But back again, during

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Speaker 3: the pandemic, it didn't seem that exciting. And I think

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Speaker 3: it has the problem that every other industry America, especially

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Speaker 3: the older industries, have, and that is there's a bunch

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Speaker 3: of baby boomers inside it. They're approaching retirement and actively

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Speaker 3: retiring at this point. And the backfill, again, it's not

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Speaker 3: the most exciting industry, I guess to go into. The

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Speaker 3: backfill has been harder. Recruitment has been harder, and when

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Speaker 3: you get behind them, recruitment and training takes a certain

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Speaker 3: amount of time. It takes a while to fill. And

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Speaker 3: so we're still in that attempt to refill phase again.

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Speaker 3: I think it's getting better as the economy maybe as

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Speaker 3: some of the labor market is not as white hot

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Speaker 3: as it was coming out of the pandemic, but we're

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Speaker 3: still behind the curve a bit, all right.

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Speaker 4: So we heard from United, We've also heard from Delta.

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Speaker 4: You know, all the numbers, But for me, what does

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Speaker 4: it mean for airline fares? Am I gonna have to

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Speaker 4: pay more for a ticket coming up?

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Speaker 3: You know? I think that there's going to be a

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Speaker 3: stabilization affairs here. But when we look at the second half,

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Speaker 3: we see capacity growth coming down. We still see capacity

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Speaker 3: growth though, and I think that we've seen it sort

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Speaker 3: of around GDP, and we kind of think that around

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Speaker 3: GDP levels of capacity growth doesn't firmfares and it doesn't

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Speaker 3: cut fares, and so I think you're you've seen some

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Speaker 3: cuts recently. I think you'll see this level of fair

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Speaker 3: going through the back half of the year and less

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Speaker 3: airlines cut more capacity, which would help them firmfares a

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Speaker 3: bit more. But again, we see growth that's right around

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Speaker 3: GDP growth, and so it doesn't look to me like

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Speaker 3: a scenario where you're going to see strong growth in

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Speaker 3: fares for the airlines.

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Speaker 2: George can't let you go without talking about Boeing because

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Speaker 2: for me, it's just kind of my quintessential great American company,

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Speaker 2: great engineering company, great manufacturing company, Seattle, Washington, won great

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Speaker 2: parts of the of the United States where they with

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Speaker 2: their seven thirty seven deliverables, because you've told us time

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Speaker 2: and time again over the years that that's really a

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Speaker 2: key metric for this company.

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Speaker 3: Yeah. So I think one of the great other American

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Speaker 3: companies gave us a little bit of insight this morning,

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Speaker 3: and that was GE. Right, and GE supplies the engines

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Speaker 3: to Boeing, and GE kind of guided down a bit

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Speaker 3: on margins for the back half of the year. Here,

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Speaker 3: I mean guided down like they're nice. Their commercial businesses

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Speaker 3: are like operating margins in the high twenties, right, which

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Speaker 3: is really super and they guided down to sort of

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Speaker 3: mid twenties. And that's a function of getting new engine

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Speaker 3: deliveries into Boeing engines for the triple seven engines for

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Speaker 3: seven thirty seven, Boeing has done a better job of delivering.

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Speaker 3: That's all about how they're going to win. And from

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Speaker 3: what I heard from Ge today, that's going to persist

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Speaker 3: through the back half of the of the year, which

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Speaker 3: is I think a strong positive for Boeing. Again, a

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Speaker 3: little bit of an EBB for Ge, but a strong

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Speaker 3: positive for Boeing.

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Speaker 2: George, thanks so much, appreciate it as always. George Ferguson,

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Speaker 2: Senior Aerospace, Defense and Airlines analysts for Bloomberg Intelligence or

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Speaker 2: at least a big question for you, and this is

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Speaker 2: going to tell me a lot about how who you

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Speaker 2: are as a personal boy isle or window seat on

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Speaker 2: the plane.

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Speaker 4: Oh i'le me too, yes, right, no, because I know,

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Speaker 4: but then if people have to get up and go

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Speaker 4: to the bathroom back and forth, that's kind of a pain.

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Speaker 2: But yeah, it depends. Like if I'm on a short flight,

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Speaker 2: I'll go window because I like the flying into New

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Speaker 2: York is always cool because fifty percent chance you're going

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Speaker 2: to get the view of the city and all that

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Speaker 2: kind of stuff. Okay, but it depends where I'm flying.

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Speaker 2: I'm flying somewhere cool. Maybe I'll try the windness set,

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Speaker 2: but buying large. I'm an aisle person like that. You

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Speaker 2: need to get up and you know, take care of

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Speaker 2: business you could do.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Applecarplay and Android Auto

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Speaker 1: with the Bloomberg Business app. Listen on demand wherever you

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Speaker 1: get your podcasts, or watch us live on YouTube.

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Speaker 4: This is Bloomberg Intelligence. I'm Lis Smith's Hayo alongside Paul Sweeney. PEPSI.

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Speaker 4: Their shares get a nice boot this morning. They're about

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Speaker 4: six percent international customers, a big part of their nice

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Speaker 4: earnings that just came out here with all the details,

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Speaker 4: KENNI say Bloomberg Intelligence senior Consumer Products analysts, Kenneth, thanks

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Speaker 4: for joining us. Positive results. This is pretty good for

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Speaker 4: them because it's the time when people are a little

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Speaker 4: bit more health conscience. Maybe you know, there's some negativity

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Speaker 4: around soda processed food, so this is pretty good news

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Speaker 4: for them.

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Speaker 6: Yeah, hih, Lisa, Yeah, I would ascribed today's rally in PepsiCo, though,

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Speaker 6: where do a relief rally. You know, sentiment has been

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Speaker 6: pretty low on Pepsi since our last report in the

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Speaker 6: first quarter, they lowered their guidance. Wasn't really strong report.

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Speaker 6: This one, I think was a report of stabilization. Organic

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Speaker 6: growth was about up two percent in the quarter. Wasn't great,

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Speaker 6: you know, but it was above the one percent expectation.

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Speaker 6: Operating margins widen analysts love to see that, and I

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Speaker 6: guess the last piece of good news is they gave

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Speaker 6: a good sense of good innovation that's coming in the

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Speaker 6: fourth quarter and first quarter next year in the area

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Speaker 6: of protein drinks and as we know, everybody on GLP

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Speaker 6: one drugs these days are looking for protein supplements and

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Speaker 6: that really is an on trend innovation. I think people

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Speaker 6: are getting excited about.

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Speaker 2: The can A lot of folks, including myself, have gone

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Speaker 2: to private label goods when shopping in the supermarket, trying

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Speaker 2: to you know, fight this inflation thing out there. Does

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Speaker 2: Pepsi with their brands, are they seeing that as a headwind, you.

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Speaker 6: Know, Paul not really not in their big freeedola a franchise.

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Speaker 6: This is a you know, the eight hundred pound guerrilla

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Speaker 6: in a snack aisle. It continues to gain share, believe

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Speaker 6: it or not, at least on volumes. I think some

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Speaker 6: of the problem with free delay foods I should say

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Speaker 6: they're overall food they combined quicker with free to lay

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Speaker 6: last quarter is that I think consumers are a little

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Speaker 6: more price weary to your point, but so I think

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Speaker 6: they've held the line a little bit with with things

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Speaker 6: like you know, bundle old package sizes and things like that.

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Speaker 6: But you know, the company says it's really turning its

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Speaker 6: attention more to productivity and costs to get that business going.

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Speaker 6: In the second quarter, comparable profits were around thirteen percent

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Speaker 6: in that business is not great showing. So fortunately for them,

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Speaker 6: though in this quarter, the international area and Pepsi beverages

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Speaker 6: did pretty well and more than I'll set that weakness.

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Speaker 5: Now.

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Speaker 4: You were talking before about GLP one, So yes, people

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Speaker 4: going for the more protein like how you said, but

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Speaker 4: also wanting to eat smaller portions, and that's something that

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Speaker 4: Pepsi is changing with its snacks, right, making the packaging smaller.

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Speaker 6: Is that correct, That's right, It's a trend. It's been

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Speaker 6: going for a while, and I think they were pleasantly

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Speaker 6: surprised as their competitors, Coca Cola and Carragure. When they

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Speaker 6: rolled out the mini cans years ago, there's let about

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Speaker 6: cry that you know, sugary drinks were adding too many calories,

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Speaker 6: so they came out with us smaller versions and kind

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Speaker 6: of like a portion control kind of thing. What they

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Speaker 6: probably underestimated was how much that contributed to price mixed

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Speaker 6: because obviously the unit prices are higher with those smaller cans,

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Speaker 6: and they've extended that same kind of concept to a

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Speaker 6: lot of their you know, snacks as well, whether it's

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Speaker 6: a Cheetos or feudal A and so on. To your point,

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Speaker 6: and a lot of the food package food items as well.

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Speaker 6: Smaller is also more convenient, so it also plays into

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Speaker 6: consumer trends for portability as much as it is for

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Speaker 6: calorie counts.

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Speaker 2: I like the smaller cans of soda. That's perfect for me.

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Speaker 2: The twelve ounces was too much. These things are just

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Speaker 2: perfect for me, So kudos to all those folks. So

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Speaker 2: what I like about a lot of the names that

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Speaker 2: Ken Shake covers is their big, nice, juicy dividend payers.

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Speaker 2: I'm looking at Pepsi just about a three almost a

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Speaker 2: four percent dividend yield here Ken, how do your companies,

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Speaker 2: like the Pepsis of the world, how did they think

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Speaker 2: about their dividend policy.

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Speaker 6: Well, they are very much committed to it. They know

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Speaker 6: that their shareholder base is very income oriented and so

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Speaker 6: and you know, it serves the company well to have

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Speaker 6: a policy like that. Buy and Lawrence is the dips

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Speaker 6: and you know, consumer spending goes up and down, you know,

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Speaker 6: depending on the whims of you know, economics. These are

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Speaker 6: businesses that are typically recession proof, cycle proof, and so

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Speaker 6: they take these steady cash flows and they do a

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Speaker 6: nice balancing act of reinvesting with innovation. They're always looking

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Speaker 6: for productivity improvements that bore fruit this quarter.

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Speaker 4: Uh.

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Speaker 6: And they take care of shareholders first two dividend and

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Speaker 6: then on a more selective basis, share buybacks. So they

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Speaker 6: have a lot of levers to pull to reward shareholders

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Speaker 6: with an income stream that predictable.

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Speaker 2: Yeah, I mean, I'm looking at the comp function for

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Speaker 2: Pepsi in the last five years. Compound and any return

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Speaker 2: about six perc for the stock. But then you throw

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Speaker 2: in that four percent dividend, Neil, that's a ten percent return.

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Speaker 2: It's not a bad way to make a living. So

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Speaker 2: that's how I think a lot of people look at

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Speaker 2: those Staples stocks out there. Kenscha covers them all. He's

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Speaker 2: a senior Consumer Product Sannels for Bloomberg Intelligence. He's down

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Speaker 2: there in our Princeton office, although I'm guessing he's probably

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Speaker 2: working from home because that is a thing now for

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Speaker 2: a lot of folks.

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