Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: We have airlines in focus today after Delta withdrew financial
Speaker 2: guidance because of global trade uncertainty. Let's keep that conversation
Speaker 2: going now with Ben Smith Air France klm CEO. Great
Speaker 2: to have you in studio, Ben.
Speaker 1: Well, thanks for having me.
Speaker 2: So this isn't a conversation strictly about Terrace, but it's
Speaker 2: pretty related. Of course, Delta not really able to have
Speaker 2: any visibility at least when it comes to the US
Speaker 2: given all of this trade uncertainty, the effect on consumers.
Speaker 2: What are you seeing from where you sit?
Speaker 1: Yeah, so we're based in Europe, we don't have a
Speaker 1: domestic market, and on the Transatlantic we're seeing relative stability
Speaker 1: in the premium cabins and we're seeing slight softness in
Speaker 1: the economy cabins, but nothing as of today which is
Speaker 1: causing us to shift any capacity.
Speaker 3: I want to double down on this. What does relative
Speaker 3: stability mean? Because at what point? And investors around the
Speaker 3: world are watching every airline right now to see when
Speaker 3: that starts to break in confidence. When you talk to
Speaker 3: higher and consumers, when you talk to businesses, what would
Speaker 3: cause them to stop spending on air well always.
Speaker 1: Have a recession, would you know travel is one of
Speaker 1: the first industries to get hit. I think after COVID
Speaker 1: we've seen travel reposition itself on the priorities of many
Speaker 1: many consumers. But you know, with fuel being down at
Speaker 1: least for us, and we look at you know, how
Speaker 1: could this uncertain time play out on our bottom line? Relatively?
Speaker 1: We're we're always in crisis mode our business. You know,
Speaker 1: in Europe we haven't had the record profits that US
Speaker 1: carriers have enjoyed for a long time. So since even
Speaker 1: before COVID, we you know, we've had to transform, transform, transform,
Speaker 1: bring costs down. So it's you know, this is this
Speaker 1: is a different, uncharted territory for us, but we are
Speaker 1: used to CHRISTI it's in particular in France when it
Speaker 1: comes to transport.
Speaker 4: So in terms of costs, things are looking better, right.
Speaker 4: I imagine fuel and labor are your two biggest cost inputs,
Speaker 4: and neither of those things is rising. In fact, you say,
Speaker 4: fuels coming down, what's labor look like so far?
Speaker 1: Okay, you know we've we haven't reduced our capacity and
Speaker 1: we haven't got big, big demands from our employees for
Speaker 1: wage increases. So you know that's a relatively steady and
Speaker 1: fuel coming down. That's a big win for us. I
Speaker 1: mean hopefully it'll I haven't seen it this low in
Speaker 1: a long time, so that's good news for us.
Speaker 2: Yeah, it's been wild to watch what's unfolding in these
Speaker 2: energy markets. I do want to talk about this anti
Speaker 2: American sentiment that we're seeing developed across some industries. I
Speaker 2: promise you're not going to hurt my feelings here, but
Speaker 2: Airic Canada has already seen a drop in US travel.
Speaker 2: Are you seeing something similar when it comes to your France?
Speaker 1: Well, I just mentioned, you know, premium cabins. You know,
Speaker 1: New York is still very attractive for for regions, for
Speaker 1: French people, for Europeans from you know what I see
Speaker 1: the people i've spoken to today. Still, I don't know
Speaker 1: if you guys have any trips planned to Paris, but no,
Speaker 1: it's a you know, I think it's we're hoping that
Speaker 1: it remains a stable like we are today now. As
Speaker 1: I said, in the economy cabins, we're seeing some softness,
Speaker 1: but we're able to fill it with lower pricing. But
Speaker 1: watching it very very closely.
Speaker 3: You know, one thing I'm interested from where you sit
Speaker 3: is do you look around and say, well, maybe this
Speaker 3: is a good time to play some offense as a CEO.
Speaker 3: Are there deals in this market that you might be
Speaker 3: willing to strike in terms of stakes in other carriers
Speaker 3: or even full on acquisitions given the weakness in the market.
Speaker 1: Well, I'm here today. Yesterday we flew in on our
Speaker 1: brand new La Premiere first class product. We launched it
Speaker 1: on our route to New York on a Boweing Triple
Speaker 1: seven airplane, and I spent some time walking around the
Speaker 1: plane to talk to various customers, and it was a
Speaker 1: you know, I was pleased that, you know, it's a
Speaker 1: big willingness to continue to fly and our new product.
Speaker 1: There was a lot of excitement around it. It is
Speaker 1: what I believe is the best in the world, at
Speaker 1: least from my perspective, and we're we're trying to position
Speaker 1: it that way to have a private jet feel five
Speaker 1: windows at each seat. You know, in French know how
Speaker 1: to you know they call grete wines, great champagne, great food,
Speaker 1: and half of our cabins are filled by Americans.
Speaker 4: Let me ask about getting planes. There was a time
Speaker 4: when that would have been my first question if I
Speaker 4: talked to Gimpori of of the big the only other
Speaker 4: big planemaker Airbus. I would have said, you know, are
Speaker 4: you able to produce these?
Speaker 1: Is it?
Speaker 4: Is it no longer that time when you're worried about
Speaker 4: getting more capacity.
Speaker 1: Well, our you know, our plans for the next one, two, three,
Speaker 1: four or five five years. We we were not counting
Speaker 1: on growing our capacity significantly. You know, there are a
Speaker 1: lot of carriers in developing regions of the world that
Speaker 1: have got massive orders of new airplanes. Now we have
Speaker 1: a lot of airplanes in order to replace existing existing
Speaker 1: planes in our fleet, and if we have to take
Speaker 1: some further delays on those, we'll maintain our older airplanes longer,
Speaker 1: so you know, it will have higher expense on those airplanes.
Speaker 1: We won't have the fuel savings that we're expecting, but
Speaker 1: we've got the capacity that we'll need to keep in
Speaker 1: the marketplace to keep our budgets going.
Speaker 2: All right, Ben, it's really great to get some time
Speaker 2: with you. Hope you come back to New York soon
Speaker 2: and join us again on set. That is Ben Smith.
Speaker 2: He is the CEO of Air France KLM