1 00:00:00,840 --> 00:00:03,840 Speaker 1: Ed Bastian here in Dubai tonight. He's going to receive 2 00:00:03,880 --> 00:00:07,200 Speaker 1: the AT twenty twenty four Airline of the Year award. 3 00:00:07,240 --> 00:00:09,800 Speaker 1: That's why he's here. He's also here as well for 4 00:00:09,840 --> 00:00:12,440 Speaker 1: the eightieth i Arta AGM, which is going to be 5 00:00:12,440 --> 00:00:15,360 Speaker 1: taking place here at the start of next week. But John, 6 00:00:15,360 --> 00:00:17,040 Speaker 1: you bring up you bring up a couple of stories. 7 00:00:17,040 --> 00:00:19,119 Speaker 1: Actually you bring up what's happening with Boeing, but you 8 00:00:19,160 --> 00:00:22,079 Speaker 1: also bring up the issue that we had earlier on 9 00:00:22,120 --> 00:00:24,520 Speaker 1: in the week with the American numbers and the impact 10 00:00:24,560 --> 00:00:26,920 Speaker 1: that that had on the rest of the sector. 11 00:00:27,400 --> 00:00:27,440 Speaker 2: Ed. 12 00:00:27,840 --> 00:00:31,120 Speaker 1: Great to see you, congratulations on the award. First of all, oh, 13 00:00:31,160 --> 00:00:32,479 Speaker 1: thank you guys. It's good to be with you. 14 00:00:32,560 --> 00:00:34,880 Speaker 2: It's good to be in Dubai, and really proud of 15 00:00:34,920 --> 00:00:38,400 Speaker 2: our team have their ability to continue delivering outstanding results 16 00:00:38,440 --> 00:00:41,160 Speaker 2: for our customers. This is what makes these awards, first 17 00:00:41,159 --> 00:00:43,760 Speaker 2: of all, very humbling to receive, but hungry to continue 18 00:00:43,800 --> 00:00:44,400 Speaker 2: to win them. 19 00:00:44,479 --> 00:00:46,800 Speaker 1: Yep, you've got to keep it up. 20 00:00:46,800 --> 00:00:47,720 Speaker 2: Don't go to keep it up. 21 00:00:48,400 --> 00:00:49,920 Speaker 1: Let's talk a little bit about kind of what is 22 00:00:49,920 --> 00:00:52,360 Speaker 1: happening in the market right now and those customers that 23 00:00:52,400 --> 00:00:55,720 Speaker 1: you talk about. We did see the American downgrade in 24 00:00:55,760 --> 00:00:59,040 Speaker 1: terms of its guidance a few days back. I'm not 25 00:00:59,080 --> 00:01:00,720 Speaker 1: going to ask you a comment on what is happening 26 00:01:00,720 --> 00:01:02,600 Speaker 1: over at American, but really just to kind of get 27 00:01:02,640 --> 00:01:05,480 Speaker 1: a comments on whether you're comfortable with your current guidance. 28 00:01:05,600 --> 00:01:08,399 Speaker 2: Yeah, the demand has been really strong. I think that 29 00:01:08,520 --> 00:01:11,160 Speaker 2: was the issue that were the American numbers, and you 30 00:01:11,200 --> 00:01:14,080 Speaker 2: know the quarter, as we've indicated all along cerads the 31 00:01:14,120 --> 00:01:17,800 Speaker 2: last several years, that consumer demand and that priority to 32 00:01:17,920 --> 00:01:22,440 Speaker 2: invest in experience continues to be really, really healthy. June 33 00:01:22,480 --> 00:01:25,200 Speaker 2: for US is always the largest travel month of the 34 00:01:25,280 --> 00:01:27,319 Speaker 2: year of the calendar, so we still have to see 35 00:01:27,319 --> 00:01:29,039 Speaker 2: how June's going to go, but I'm confident it will 36 00:01:29,040 --> 00:01:31,440 Speaker 2: be a good result for the full quarter, and we'll 37 00:01:31,440 --> 00:01:32,480 Speaker 2: see how June runs out. 38 00:01:32,800 --> 00:01:36,480 Speaker 1: Are you seeing any evidence that inflation and its inflation 39 00:01:36,600 --> 00:01:39,200 Speaker 1: day We're going to be watching those numbers that inflation 40 00:01:39,440 --> 00:01:42,880 Speaker 1: is starting maybe to hit the middle class traveler. The 41 00:01:42,920 --> 00:01:46,640 Speaker 1: middle class traveler is beginning to rethink maybe the attitude 42 00:01:46,640 --> 00:01:49,280 Speaker 1: towards travel, which has been really strong over the. 43 00:01:49,240 --> 00:01:51,920 Speaker 2: Last few years. I don't see it. You know, our 44 00:01:51,960 --> 00:01:55,640 Speaker 2: consumer tends to be at upper end of the income scale. 45 00:01:56,040 --> 00:01:59,840 Speaker 2: Our traveler tends to go internationally. Our consumer is prioriti 46 00:02:00,120 --> 00:02:03,960 Speaker 2: is in travel above things. So while you may be 47 00:02:04,040 --> 00:02:07,840 Speaker 2: hearing from a number of industrial sectors trade downs occurring, 48 00:02:08,160 --> 00:02:09,600 Speaker 2: we're not seeing that in our numbers. 49 00:02:09,680 --> 00:02:11,079 Speaker 1: Do you think you will see that at some point? 50 00:02:11,160 --> 00:02:13,640 Speaker 1: Do we go to a more normal? Is this the 51 00:02:13,720 --> 00:02:16,480 Speaker 1: new normal in terms of what travel is going to 52 00:02:16,520 --> 00:02:19,120 Speaker 1: look like? Will this continue to persist? The store market 53 00:02:19,120 --> 00:02:22,680 Speaker 1: continues to do very well. We're obviously seeing an upper 54 00:02:22,800 --> 00:02:25,679 Speaker 1: end consumer that is still fairly flushed with cash. Is 55 00:02:25,960 --> 00:02:27,200 Speaker 1: that something that lasts years? 56 00:02:27,280 --> 00:02:29,840 Speaker 2: I think it's going to continue for quite a few 57 00:02:29,919 --> 00:02:32,240 Speaker 2: years to come. One of the factors people don't give 58 00:02:32,360 --> 00:02:37,679 Speaker 2: enough consideration to is our industry's capacity is lower that 59 00:02:37,800 --> 00:02:41,520 Speaker 2: it's been given the constraints around OEMs, whether it's Boeing 60 00:02:41,639 --> 00:02:46,000 Speaker 2: or engine issues. So our economy is a lot larger 61 00:02:46,000 --> 00:02:49,680 Speaker 2: than we were historically, go back pre pandemic, Yet the 62 00:02:49,720 --> 00:02:52,440 Speaker 2: amount of capacity that we're all able to fly is 63 00:02:52,480 --> 00:02:55,520 Speaker 2: significantly constrained, and that's what's keeping demand as well as 64 00:02:55,520 --> 00:02:56,200 Speaker 2: pricing pretty so. 65 00:02:56,320 --> 00:02:59,160 Speaker 1: So okay, pricing, so fares is still fairly robust, don't you. 66 00:02:59,440 --> 00:03:01,920 Speaker 2: Prepares on balance are about twenty percent higher than they 67 00:03:01,919 --> 00:03:03,040 Speaker 2: were pre pandemic. 68 00:03:03,840 --> 00:03:06,040 Speaker 1: You bring up business travel as well. Is that something 69 00:03:06,080 --> 00:03:09,000 Speaker 1: that it has come back. It's maybe come back significantly 70 00:03:09,000 --> 00:03:11,840 Speaker 1: more slowly than we've seen in terms of the retail story, 71 00:03:12,000 --> 00:03:14,760 Speaker 1: But is that coming back and ultimately given that bigger economy, 72 00:03:14,840 --> 00:03:17,000 Speaker 1: is that a bigger number someway down the road. 73 00:03:17,080 --> 00:03:20,000 Speaker 2: Well, business business travel this year, particularly in twenty twenty four, 74 00:03:20,080 --> 00:03:23,400 Speaker 2: has really stepped up. As we went through the return 75 00:03:23,440 --> 00:03:26,200 Speaker 2: from the pandemic. In twenty two and twenty three, business 76 00:03:26,280 --> 00:03:29,480 Speaker 2: travelers were still a bit sluggish, largely because they weren't 77 00:03:29,520 --> 00:03:31,680 Speaker 2: back in their offices and they were still working from 78 00:03:31,720 --> 00:03:36,320 Speaker 2: various remote locations. Once companies have finally laid the edict down, 79 00:03:36,360 --> 00:03:38,600 Speaker 2: you needed to get back and particularly as some of 80 00:03:38,600 --> 00:03:41,640 Speaker 2: those businesses started to getting a little challenge themselves, people 81 00:03:41,680 --> 00:03:44,520 Speaker 2: wanted to be back in the office that opened up. 82 00:03:44,840 --> 00:03:47,680 Speaker 2: They need to travel for consultancies to go visit clients, 83 00:03:47,960 --> 00:03:49,800 Speaker 2: for people to get back out on the road to 84 00:03:49,800 --> 00:03:52,320 Speaker 2: see their own people. So we've seen business We saw 85 00:03:52,360 --> 00:03:55,560 Speaker 2: about a ten point increase in business travel at the 86 00:03:55,560 --> 00:03:57,840 Speaker 2: start of the year and net's continuing to climb. 87 00:03:57,760 --> 00:03:59,800 Speaker 1: Middle of the top line. Okay, so we talked about 88 00:03:59,800 --> 00:04:01,720 Speaker 1: that it can get middle. What's happening in the middle 89 00:04:01,720 --> 00:04:03,640 Speaker 1: of the P and L. You still seeing What kind 90 00:04:03,640 --> 00:04:05,280 Speaker 1: of inflation are you seeing in the business. 91 00:04:05,400 --> 00:04:08,720 Speaker 2: We're seeing inflation, but it's starting to moderate a bit. 92 00:04:09,360 --> 00:04:12,720 Speaker 2: For us. The biggest part of our inflation story is wages. 93 00:04:12,920 --> 00:04:15,600 Speaker 2: Is our people, which is the best type of inflation 94 00:04:15,680 --> 00:04:18,480 Speaker 2: we can have, and our people continue to grow wages 95 00:04:18,520 --> 00:04:22,240 Speaker 2: in the four to five percent per animal rate. We're 96 00:04:22,279 --> 00:04:25,400 Speaker 2: continuing to work on productivity and efficiency so we can 97 00:04:25,760 --> 00:04:27,760 Speaker 2: take some of those rates and make certain that their 98 00:04:27,920 --> 00:04:31,320 Speaker 2: productive increases other parts of the supply chain. You know 99 00:04:31,360 --> 00:04:33,560 Speaker 2: where the supply chain is still not where it needs 100 00:04:33,600 --> 00:04:36,839 Speaker 2: to be. We talked about the engine issues. We still 101 00:04:36,839 --> 00:04:38,880 Speaker 2: don't how much is not holding you back. Well, it's 102 00:04:38,920 --> 00:04:43,400 Speaker 2: significantly against not just delta, it's the industry and the 103 00:04:43,440 --> 00:04:45,960 Speaker 2: turntimes are longer. You now have turntimes on planes that 104 00:04:45,960 --> 00:04:49,200 Speaker 2: could extend up to months rather than weeks, which they 105 00:04:49,240 --> 00:04:54,000 Speaker 2: should be. Parts are higher than ever, material costs are growing. 106 00:04:54,120 --> 00:04:57,400 Speaker 2: You know, the manufacturers across the industry are having challenges. 107 00:04:57,480 --> 00:05:00,080 Speaker 1: This doesn't sound like an economy that you'll describing that 108 00:05:00,080 --> 00:05:02,520 Speaker 1: that needs needs rate cuts right now. 109 00:05:03,000 --> 00:05:06,080 Speaker 2: Well, it's it's an economy right now from I standpoint, 110 00:05:06,320 --> 00:05:09,359 Speaker 2: that's doing well. But there's not just one consumer out there. Okay. 111 00:05:09,560 --> 00:05:11,360 Speaker 2: Our consumer again tends to be in the upper end. 112 00:05:11,360 --> 00:05:14,799 Speaker 2: Our consumer generate a tremendous amount of wealth and continues 113 00:05:14,880 --> 00:05:17,880 Speaker 2: just to have that wealth through the pandemic. The markets 114 00:05:17,960 --> 00:05:21,280 Speaker 2: up real estates are. Unemployment is extraordinarily. 115 00:05:21,480 --> 00:05:23,279 Speaker 1: I don't need more help, is basically what you're saying. 116 00:05:23,560 --> 00:05:25,839 Speaker 2: The lower end, Yeah, I think there's I think there's 117 00:05:25,839 --> 00:05:28,960 Speaker 2: some challenges. So that's something that the FED will will 118 00:05:29,160 --> 00:05:31,120 Speaker 2: look at all the data. I don't think an airline 119 00:05:31,160 --> 00:05:32,080 Speaker 2: is necessarily the. 120 00:05:32,600 --> 00:05:34,240 Speaker 1: Pretty You've got a pretty good view of what's happening 121 00:05:34,240 --> 00:05:34,960 Speaker 1: in the economy. 122 00:05:35,360 --> 00:05:39,000 Speaker 2: Our business is doing quite well. Okay. You bring up Boeing. 123 00:05:39,040 --> 00:05:41,200 Speaker 1: You talk about what's happening with the with the OEM's 124 00:05:41,200 --> 00:05:43,120 Speaker 1: Boeing and Airbus, but it's also the engines, as you 125 00:05:43,160 --> 00:05:45,599 Speaker 1: mentioned the and Whitney engine issues that we've been seeing. 126 00:05:46,200 --> 00:05:48,600 Speaker 1: How long does this last? How long? How much of 127 00:05:48,600 --> 00:05:50,560 Speaker 1: a struggle is it to get hold of the kit 128 00:05:50,640 --> 00:05:51,719 Speaker 1: that you need right now? 129 00:05:51,920 --> 00:05:52,279 Speaker 2: How much? 130 00:05:52,520 --> 00:05:54,680 Speaker 1: How long do you think the problems that we're seeing 131 00:05:54,720 --> 00:05:57,560 Speaker 1: at Boeing and Airbus and Pratt and Whitney are going 132 00:05:57,600 --> 00:05:58,600 Speaker 1: to be lasting for well. 133 00:05:58,680 --> 00:06:01,680 Speaker 2: Right now, we have no Boeing orders that were anticipating 134 00:06:01,760 --> 00:06:03,720 Speaker 2: up delivery on in the next several years. So from 135 00:06:03,720 --> 00:06:06,600 Speaker 2: our standpoint, it's really an Airbus story. Airbus has been 136 00:06:06,600 --> 00:06:10,159 Speaker 2: a great partner and Airbus continues to provide us the 137 00:06:10,200 --> 00:06:13,600 Speaker 2: planes and the technology that we've been expecting for them, 138 00:06:13,839 --> 00:06:16,400 Speaker 2: and they were right through the pandemic. The engines are 139 00:06:16,400 --> 00:06:18,680 Speaker 2: going to be a bigger issue, particularly for us the 140 00:06:18,680 --> 00:06:22,400 Speaker 2: gear turbo fan that's slowing down a little bit about 141 00:06:22,400 --> 00:06:24,880 Speaker 2: the amount of new deliveries that we can take us 142 00:06:24,920 --> 00:06:27,640 Speaker 2: more engines than it is planes. And what is causing 143 00:06:27,680 --> 00:06:29,919 Speaker 2: us to do is maintain the existing fleet we have 144 00:06:30,520 --> 00:06:32,960 Speaker 2: a little bit longer. So that's another cost to the business. 145 00:06:33,320 --> 00:06:35,640 Speaker 1: You are well known for keeping your fleet for longer 146 00:06:37,120 --> 00:06:39,720 Speaker 1: it had. The age of the average aircraft has come 147 00:06:39,720 --> 00:06:42,520 Speaker 1: down a little bit over the last few years. But 148 00:06:42,720 --> 00:06:45,960 Speaker 1: does that strategy work in an environment where the sustainability 149 00:06:46,040 --> 00:06:48,160 Speaker 1: question comes in? If you fly all the planes, they 150 00:06:48,320 --> 00:06:51,440 Speaker 1: inherently tend to be less efficient. Is that something? Is 151 00:06:51,480 --> 00:06:52,920 Speaker 1: that a problem that you're going to come across at 152 00:06:52,920 --> 00:06:53,200 Speaker 1: some point? 153 00:06:53,240 --> 00:06:55,279 Speaker 2: I don't think so. Again, I think this is transitory. 154 00:06:55,440 --> 00:06:59,040 Speaker 2: I think the OEMs will get their parts. I think 155 00:06:59,080 --> 00:07:01,120 Speaker 2: they will get the transition all. A lot of this 156 00:07:01,320 --> 00:07:03,520 Speaker 2: is about labor and the fact that many of the 157 00:07:03,880 --> 00:07:06,359 Speaker 2: engine not just the Tier one, but down into the 158 00:07:06,400 --> 00:07:08,720 Speaker 2: tier three and tier four of the supply gen let 159 00:07:08,760 --> 00:07:11,920 Speaker 2: a lot of people go, so it's experienced, it's staffing 160 00:07:12,080 --> 00:07:14,960 Speaker 2: its rates. I mean, it's a very complex story, but 161 00:07:15,080 --> 00:07:17,840 Speaker 2: long term, I feel good about our sustainability story. We're 162 00:07:17,840 --> 00:07:21,360 Speaker 2: taking our overall footprint down in the range of one 163 00:07:21,400 --> 00:07:24,360 Speaker 2: to two percent per year every year, and that's going 164 00:07:24,400 --> 00:07:27,200 Speaker 2: to continue to go on and as we get new planes, 165 00:07:27,360 --> 00:07:28,960 Speaker 2: those numbers are going to go down faster. 166 00:07:30,520 --> 00:07:32,920 Speaker 1: Politics is going to become a bigger and bigger issue 167 00:07:33,160 --> 00:07:35,720 Speaker 1: over the next few weeks and months as we approach November. 168 00:07:37,000 --> 00:07:39,440 Speaker 1: When you think about who goes next to the White House? 169 00:07:39,680 --> 00:07:42,920 Speaker 1: What if the next administration need to do to keep 170 00:07:43,000 --> 00:07:45,840 Speaker 1: the aviation market that you've just described, this buoyant market, 171 00:07:45,880 --> 00:07:48,280 Speaker 1: this market with momentum, keep it going. What do you 172 00:07:48,280 --> 00:07:51,080 Speaker 1: need to see from the next administration to keep it 173 00:07:51,080 --> 00:07:51,480 Speaker 1: on track? 174 00:07:51,560 --> 00:07:56,080 Speaker 2: Most important thing is infrastructure investment. Maintaining the current structure 175 00:07:56,240 --> 00:08:01,000 Speaker 2: is challenging, and they need to continue to modernize the technologies. 176 00:08:01,000 --> 00:08:04,440 Speaker 2: They continue to need to get air traffic controllers staffed 177 00:08:04,480 --> 00:08:07,000 Speaker 2: and hired and in position to enable us to grow, 178 00:08:07,520 --> 00:08:11,200 Speaker 2: and from an investment standpoint, that's where we were very 179 00:08:11,520 --> 00:08:15,880 Speaker 2: happy to see the FAA reauthorization bill finally come about. 180 00:08:15,960 --> 00:08:18,760 Speaker 2: It took unfortunately months, if not a year or year 181 00:08:18,800 --> 00:08:22,120 Speaker 2: overdue in its delivery, but it's here now and we're 182 00:08:22,120 --> 00:08:24,120 Speaker 2: going to work closely with the FAA to make that happen. 183 00:08:25,120 --> 00:08:28,320 Speaker 1: Just to wrap the conversation up, you feel like you 184 00:08:28,400 --> 00:08:30,120 Speaker 1: are on the front foots at the moment. This is 185 00:08:30,120 --> 00:08:33,319 Speaker 1: an airline that is growing. What is the capacity constraint 186 00:08:33,440 --> 00:08:35,120 Speaker 1: that you are seeing right now that is going to 187 00:08:35,160 --> 00:08:37,160 Speaker 1: slow your race of growth down? If I'm gonna invest 188 00:08:37,160 --> 00:08:39,280 Speaker 1: in looking at Delta, is this as good as it gets? 189 00:08:39,559 --> 00:08:40,600 Speaker 1: What does it get better? 190 00:08:40,600 --> 00:08:43,000 Speaker 2: From hand? We're doing well on campacity growth. This year. 191 00:08:43,040 --> 00:08:46,080 Speaker 2: We expect to grow our top line in the mid 192 00:08:46,440 --> 00:08:50,000 Speaker 2: single digits, you know that foward to six seven percent range, 193 00:08:50,520 --> 00:08:53,040 Speaker 2: which I think is healthy growth considering particularly the growth 194 00:08:53,080 --> 00:08:55,480 Speaker 2: we've had over these last handful of years. This year 195 00:08:55,520 --> 00:08:59,160 Speaker 2: will be the highest revenues in our company's history. Support 196 00:08:59,160 --> 00:09:02,360 Speaker 2: are sixty billion dollars plus, remind us, and the outlook 197 00:09:02,360 --> 00:09:04,240 Speaker 2: I think is strong because I think think the supply 198 00:09:04,320 --> 00:09:06,120 Speaker 2: chain and the extreends are only going to get a 199 00:09:06,160 --> 00:09:07,839 Speaker 2: little bit better as we move forward. 200 00:09:08,080 --> 00:09:10,600 Speaker 1: At Congratulations on the award, the ATW award that you'll 201 00:09:10,640 --> 00:09:12,400 Speaker 1: be getting here a Dubai this evening. Great to see 202 00:09:12,400 --> 00:09:14,959 Speaker 1: you here in Dubai. Thanks for stopping by to see 203 00:09:15,000 --> 00:09:17,120 Speaker 1: us here. Thanks guys Blimberg. Great to be with it. 204 00:09:17,480 --> 00:09:18,280 Speaker 1: Thank you very much.