Speaker 1: Ed Bastian here in Dubai tonight. He's going to receive
Speaker 1: the AT twenty twenty four Airline of the Year award.
Speaker 1: That's why he's here. He's also here as well for
Speaker 1: the eightieth i Arta AGM, which is going to be
Speaker 1: taking place here at the start of next week. But John,
Speaker 1: you bring up you bring up a couple of stories.
Speaker 1: Actually you bring up what's happening with Boeing, but you
Speaker 1: also bring up the issue that we had earlier on
Speaker 1: in the week with the American numbers and the impact
Speaker 1: that that had on the rest of the sector.
Speaker 2: Ed.
Speaker 1: Great to see you, congratulations on the award. First of all, oh,
Speaker 1: thank you guys. It's good to be with you.
Speaker 2: It's good to be in Dubai, and really proud of
Speaker 2: our team have their ability to continue delivering outstanding results
Speaker 2: for our customers. This is what makes these awards, first
Speaker 2: of all, very humbling to receive, but hungry to continue
Speaker 2: to win them.
Speaker 1: Yep, you've got to keep it up.
Speaker 2: Don't go to keep it up.
Speaker 1: Let's talk a little bit about kind of what is
Speaker 1: happening in the market right now and those customers that
Speaker 1: you talk about. We did see the American downgrade in
Speaker 1: terms of its guidance a few days back. I'm not
Speaker 1: going to ask you a comment on what is happening
Speaker 1: over at American, but really just to kind of get
Speaker 1: a comments on whether you're comfortable with your current guidance.
Speaker 2: Yeah, the demand has been really strong. I think that
Speaker 2: was the issue that were the American numbers, and you
Speaker 2: know the quarter, as we've indicated all along cerads the
Speaker 2: last several years, that consumer demand and that priority to
Speaker 2: invest in experience continues to be really, really healthy. June
Speaker 2: for US is always the largest travel month of the
Speaker 2: year of the calendar, so we still have to see
Speaker 2: how June's going to go, but I'm confident it will
Speaker 2: be a good result for the full quarter, and we'll
Speaker 2: see how June runs out.
Speaker 1: Are you seeing any evidence that inflation and its inflation
Speaker 1: day We're going to be watching those numbers that inflation
Speaker 1: is starting maybe to hit the middle class traveler. The
Speaker 1: middle class traveler is beginning to rethink maybe the attitude
Speaker 1: towards travel, which has been really strong over the.
Speaker 2: Last few years. I don't see it. You know, our
Speaker 2: consumer tends to be at upper end of the income scale.
Speaker 2: Our traveler tends to go internationally. Our consumer is prioriti
Speaker 2: is in travel above things. So while you may be
Speaker 2: hearing from a number of industrial sectors trade downs occurring,
Speaker 2: we're not seeing that in our numbers.
Speaker 1: Do you think you will see that at some point?
Speaker 1: Do we go to a more normal? Is this the
Speaker 1: new normal in terms of what travel is going to
Speaker 1: look like? Will this continue to persist? The store market
Speaker 1: continues to do very well. We're obviously seeing an upper
Speaker 1: end consumer that is still fairly flushed with cash. Is
Speaker 1: that something that lasts years?
Speaker 2: I think it's going to continue for quite a few
Speaker 2: years to come. One of the factors people don't give
Speaker 2: enough consideration to is our industry's capacity is lower that
Speaker 2: it's been given the constraints around OEMs, whether it's Boeing
Speaker 2: or engine issues. So our economy is a lot larger
Speaker 2: than we were historically, go back pre pandemic, Yet the
Speaker 2: amount of capacity that we're all able to fly is
Speaker 2: significantly constrained, and that's what's keeping demand as well as
Speaker 2: pricing pretty so.
Speaker 1: So okay, pricing, so fares is still fairly robust, don't you.
Speaker 2: Prepares on balance are about twenty percent higher than they
Speaker 2: were pre pandemic.
Speaker 1: You bring up business travel as well. Is that something
Speaker 1: that it has come back. It's maybe come back significantly
Speaker 1: more slowly than we've seen in terms of the retail story,
Speaker 1: But is that coming back and ultimately given that bigger economy,
Speaker 1: is that a bigger number someway down the road.
Speaker 2: Well, business business travel this year, particularly in twenty twenty four,
Speaker 2: has really stepped up. As we went through the return
Speaker 2: from the pandemic. In twenty two and twenty three, business
Speaker 2: travelers were still a bit sluggish, largely because they weren't
Speaker 2: back in their offices and they were still working from
Speaker 2: various remote locations. Once companies have finally laid the edict down,
Speaker 2: you needed to get back and particularly as some of
Speaker 2: those businesses started to getting a little challenge themselves, people
Speaker 2: wanted to be back in the office that opened up.
Speaker 2: They need to travel for consultancies to go visit clients,
Speaker 2: for people to get back out on the road to
Speaker 2: see their own people. So we've seen business We saw
Speaker 2: about a ten point increase in business travel at the
Speaker 2: start of the year and net's continuing to climb.
Speaker 1: Middle of the top line. Okay, so we talked about
Speaker 1: that it can get middle. What's happening in the middle
Speaker 1: of the P and L. You still seeing What kind
Speaker 1: of inflation are you seeing in the business.
Speaker 2: We're seeing inflation, but it's starting to moderate a bit.
Speaker 2: For us. The biggest part of our inflation story is wages.
Speaker 2: Is our people, which is the best type of inflation
Speaker 2: we can have, and our people continue to grow wages
Speaker 2: in the four to five percent per animal rate. We're
Speaker 2: continuing to work on productivity and efficiency so we can
Speaker 2: take some of those rates and make certain that their
Speaker 2: productive increases other parts of the supply chain. You know
Speaker 2: where the supply chain is still not where it needs
Speaker 2: to be. We talked about the engine issues. We still
Speaker 2: don't how much is not holding you back. Well, it's
Speaker 2: significantly against not just delta, it's the industry and the
Speaker 2: turntimes are longer. You now have turntimes on planes that
Speaker 2: could extend up to months rather than weeks, which they
Speaker 2: should be. Parts are higher than ever, material costs are growing.
Speaker 2: You know, the manufacturers across the industry are having challenges.
Speaker 1: This doesn't sound like an economy that you'll describing that
Speaker 1: that needs needs rate cuts right now.
Speaker 2: Well, it's it's an economy right now from I standpoint,
Speaker 2: that's doing well. But there's not just one consumer out there. Okay.
Speaker 2: Our consumer again tends to be in the upper end.
Speaker 2: Our consumer generate a tremendous amount of wealth and continues
Speaker 2: just to have that wealth through the pandemic. The markets
Speaker 2: up real estates are. Unemployment is extraordinarily.
Speaker 1: I don't need more help, is basically what you're saying.
Speaker 2: The lower end, Yeah, I think there's I think there's
Speaker 2: some challenges. So that's something that the FED will will
Speaker 2: look at all the data. I don't think an airline
Speaker 2: is necessarily the.
Speaker 1: Pretty You've got a pretty good view of what's happening
Speaker 1: in the economy.
Speaker 2: Our business is doing quite well. Okay. You bring up Boeing.
Speaker 1: You talk about what's happening with the with the OEM's
Speaker 1: Boeing and Airbus, but it's also the engines, as you
Speaker 1: mentioned the and Whitney engine issues that we've been seeing.
Speaker 1: How long does this last? How long? How much of
Speaker 1: a struggle is it to get hold of the kit
Speaker 1: that you need right now?
Speaker 2: How much?
Speaker 1: How long do you think the problems that we're seeing
Speaker 1: at Boeing and Airbus and Pratt and Whitney are going
Speaker 1: to be lasting for well.
Speaker 2: Right now, we have no Boeing orders that were anticipating
Speaker 2: up delivery on in the next several years. So from
Speaker 2: our standpoint, it's really an Airbus story. Airbus has been
Speaker 2: a great partner and Airbus continues to provide us the
Speaker 2: planes and the technology that we've been expecting for them,
Speaker 2: and they were right through the pandemic. The engines are
Speaker 2: going to be a bigger issue, particularly for us the
Speaker 2: gear turbo fan that's slowing down a little bit about
Speaker 2: the amount of new deliveries that we can take us
Speaker 2: more engines than it is planes. And what is causing
Speaker 2: us to do is maintain the existing fleet we have
Speaker 2: a little bit longer. So that's another cost to the business.
Speaker 1: You are well known for keeping your fleet for longer
Speaker 1: it had. The age of the average aircraft has come
Speaker 1: down a little bit over the last few years. But
Speaker 1: does that strategy work in an environment where the sustainability
Speaker 1: question comes in? If you fly all the planes, they
Speaker 1: inherently tend to be less efficient. Is that something? Is
Speaker 1: that a problem that you're going to come across at
Speaker 1: some point?
Speaker 2: I don't think so. Again, I think this is transitory.
Speaker 2: I think the OEMs will get their parts. I think
Speaker 2: they will get the transition all. A lot of this
Speaker 2: is about labor and the fact that many of the
Speaker 2: engine not just the Tier one, but down into the
Speaker 2: tier three and tier four of the supply gen let
Speaker 2: a lot of people go, so it's experienced, it's staffing
Speaker 2: its rates. I mean, it's a very complex story, but
Speaker 2: long term, I feel good about our sustainability story. We're
Speaker 2: taking our overall footprint down in the range of one
Speaker 2: to two percent per year every year, and that's going
Speaker 2: to continue to go on and as we get new planes,
Speaker 2: those numbers are going to go down faster.
Speaker 1: Politics is going to become a bigger and bigger issue
Speaker 1: over the next few weeks and months as we approach November.
Speaker 1: When you think about who goes next to the White House?
Speaker 1: What if the next administration need to do to keep
Speaker 1: the aviation market that you've just described, this buoyant market,
Speaker 1: this market with momentum, keep it going. What do you
Speaker 1: need to see from the next administration to keep it
Speaker 1: on track?
Speaker 2: Most important thing is infrastructure investment. Maintaining the current structure
Speaker 2: is challenging, and they need to continue to modernize the technologies.
Speaker 2: They continue to need to get air traffic controllers staffed
Speaker 2: and hired and in position to enable us to grow,
Speaker 2: and from an investment standpoint, that's where we were very
Speaker 2: happy to see the FAA reauthorization bill finally come about.
Speaker 2: It took unfortunately months, if not a year or year
Speaker 2: overdue in its delivery, but it's here now and we're
Speaker 2: going to work closely with the FAA to make that happen.
Speaker 1: Just to wrap the conversation up, you feel like you
Speaker 1: are on the front foots at the moment. This is
Speaker 1: an airline that is growing. What is the capacity constraint
Speaker 1: that you are seeing right now that is going to
Speaker 1: slow your race of growth down? If I'm gonna invest
Speaker 1: in looking at Delta, is this as good as it gets?
Speaker 1: What does it get better?
Speaker 2: From hand? We're doing well on campacity growth. This year.
Speaker 2: We expect to grow our top line in the mid
Speaker 2: single digits, you know that foward to six seven percent range,
Speaker 2: which I think is healthy growth considering particularly the growth
Speaker 2: we've had over these last handful of years. This year
Speaker 2: will be the highest revenues in our company's history. Support
Speaker 2: are sixty billion dollars plus, remind us, and the outlook
Speaker 2: I think is strong because I think think the supply
Speaker 2: chain and the extreends are only going to get a
Speaker 2: little bit better as we move forward.
Speaker 1: At Congratulations on the award, the ATW award that you'll
Speaker 1: be getting here a Dubai this evening. Great to see
Speaker 1: you here in Dubai. Thanks for stopping by to see
Speaker 1: us here. Thanks guys Blimberg. Great to be with it.
Speaker 1: Thank you very much.