1 00:00:02,520 --> 00:00:07,040 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:07,960 --> 00:00:11,280 Speaker 2: I'm here with the Man of the Moment CEO Ed Baston, 3 00:00:11,400 --> 00:00:15,840 Speaker 2: CEO of Delta, on the one hundredth centennial celebration here 4 00:00:15,880 --> 00:00:18,520 Speaker 2: at the New York Stock Exchange. It's also a wonderful day, 5 00:00:18,720 --> 00:00:21,080 Speaker 2: not just because of that Ed and welcome, it's also 6 00:00:21,160 --> 00:00:22,279 Speaker 2: there seems to be a light at the end of 7 00:00:22,280 --> 00:00:24,400 Speaker 2: the tunnel. How relief are you about what's going on 8 00:00:24,400 --> 00:00:25,079 Speaker 2: in Washington, DC? 9 00:00:25,480 --> 00:00:28,520 Speaker 1: Well, more importantly, I'm glad we got to our one 10 00:00:28,560 --> 00:00:31,400 Speaker 1: hundredth centennial and so proud of our people. First US 11 00:00:31,440 --> 00:00:34,600 Speaker 1: airline to reach one hundred years of age. But yeah, 12 00:00:34,640 --> 00:00:38,320 Speaker 1: we're hoping that the vote comes back tonight and we 13 00:00:38,360 --> 00:00:43,640 Speaker 1: get everybody paid. Most importantly, all those essential workers, controllers, 14 00:00:43,720 --> 00:00:47,120 Speaker 1: the security agents, the regulators, that everyone in the system. 15 00:00:47,400 --> 00:00:50,360 Speaker 1: They do such amazing work. They're heroes doing this for 16 00:00:50,960 --> 00:00:53,720 Speaker 1: a month and a half without pay, showing up every day, 17 00:00:53,760 --> 00:00:54,760 Speaker 1: and we appreciate them. 18 00:00:54,800 --> 00:00:56,560 Speaker 3: So I'm happy about that as well. 19 00:00:56,600 --> 00:00:58,760 Speaker 2: How long will it take before we don't see any 20 00:00:58,760 --> 00:01:02,880 Speaker 2: delays or any expected delays tied to the shutdown. 21 00:01:03,040 --> 00:01:04,600 Speaker 3: I think it'll happen pretty quickly. 22 00:01:04,800 --> 00:01:07,520 Speaker 1: I think once once people start getting paid, and I 23 00:01:07,600 --> 00:01:10,400 Speaker 1: know Secretary of Duffy is committed to getting those those 24 00:01:10,440 --> 00:01:13,839 Speaker 1: paychecks out right away. So over the next couple of days, 25 00:01:13,840 --> 00:01:15,759 Speaker 1: I think you'll see things starting to turn to normal. 26 00:01:16,120 --> 00:01:18,000 Speaker 1: Yesterday was actually a pretty good day. 27 00:01:18,080 --> 00:01:18,959 Speaker 3: The weekend was tough. 28 00:01:19,080 --> 00:01:21,640 Speaker 1: We had weather, We had a lot of staff shortages 29 00:01:21,680 --> 00:01:25,840 Speaker 1: and many of the ATC towers that cause delays and cancelations. 30 00:01:26,760 --> 00:01:29,240 Speaker 1: Looking ahead, you know, weather holes, and I think the 31 00:01:29,280 --> 00:01:31,559 Speaker 1: outlook for the weather is not too bad. It should 32 00:01:31,600 --> 00:01:33,280 Speaker 1: be by Friday, I think we should be back pretty 33 00:01:33,280 --> 00:01:33,880 Speaker 1: close to normal. 34 00:01:33,959 --> 00:01:35,920 Speaker 2: Do you think Thanksgiving we'll also be back to normal. 35 00:01:36,000 --> 00:01:37,039 Speaker 3: Thanksgiving will be great. 36 00:01:37,200 --> 00:01:41,040 Speaker 1: Okay, Listen, we know the importance of Christmas and Thanksgiving 37 00:01:41,080 --> 00:01:43,920 Speaker 1: and the holidays. That's our super Bowl and that's what 38 00:01:44,000 --> 00:01:45,880 Speaker 1: we rehearse and plan all year long. 39 00:01:46,080 --> 00:01:47,480 Speaker 3: We're going to be in really good shape for that. 40 00:01:47,560 --> 00:01:51,160 Speaker 2: Have you seen anybody make any cancelations or not make 41 00:01:51,240 --> 00:01:54,600 Speaker 2: plans anything that sort of highlights the concern around some 42 00:01:54,640 --> 00:01:56,880 Speaker 2: of the delays that we've seen from the government shutdown, 43 00:01:57,000 --> 00:01:58,280 Speaker 2: And it's understandable. 44 00:01:58,440 --> 00:02:02,280 Speaker 1: We've seen some reduction in bookings, not material, but you know, 45 00:02:02,320 --> 00:02:05,200 Speaker 1: maybe five to ten percent from where we would normally be. 46 00:02:05,840 --> 00:02:07,520 Speaker 3: The first, one of the frustrating things to. 47 00:02:07,480 --> 00:02:10,880 Speaker 1: Me is that heading into this period when they decided 48 00:02:10,960 --> 00:02:13,960 Speaker 1: on Thursday to start canceling. 49 00:02:13,520 --> 00:02:15,760 Speaker 3: Flights, we had tremendous momentum. 50 00:02:16,280 --> 00:02:23,120 Speaker 1: The revenue based business going double digits, Premium categories all going, 51 00:02:23,200 --> 00:02:26,120 Speaker 1: you know, double digits, if not more, We're going really strong. 52 00:02:26,160 --> 00:02:28,919 Speaker 1: And then you know, you get into this situation, all 53 00:02:28,960 --> 00:02:31,960 Speaker 1: those travelers say, well, maybe I'll wait and see what's 54 00:02:32,000 --> 00:02:35,120 Speaker 1: going to happen here. So we did see some refunds, 55 00:02:35,200 --> 00:02:37,800 Speaker 1: We did see some kind We were very flexible in refunds. 56 00:02:37,840 --> 00:02:38,680 Speaker 3: If people wanted their. 57 00:02:38,600 --> 00:02:41,360 Speaker 1: Money back, we were happy to, not happy to, but 58 00:02:41,360 --> 00:02:44,280 Speaker 1: we wanted to make sure they were being taken care of. 59 00:02:44,520 --> 00:02:46,480 Speaker 1: But I think as soon as people see it's ready 60 00:02:46,520 --> 00:02:47,919 Speaker 1: to go, they're going to come right back. 61 00:02:48,000 --> 00:02:49,799 Speaker 2: Do you think there's going to be any permanent hit 62 00:02:50,280 --> 00:02:54,000 Speaker 2: to the fourth quarter earnings because of the shutdown. 63 00:02:53,680 --> 00:02:56,840 Speaker 1: You can't make up one week of delta. We had 64 00:02:56,880 --> 00:03:00,320 Speaker 1: little over two thousand cancelations. You can't make that up 65 00:03:00,480 --> 00:03:03,079 Speaker 1: within the quarter. So yes, there was an impact, like 66 00:03:03,120 --> 00:03:05,399 Speaker 1: there's going to be in all the airlines. It's transitory. 67 00:03:06,120 --> 00:03:08,640 Speaker 1: I think everyone understands why it wasn't our doing it. 68 00:03:08,680 --> 00:03:10,360 Speaker 1: Was something that you know, we were used almost as 69 00:03:10,360 --> 00:03:13,400 Speaker 1: a political hostage to get the government back together, so 70 00:03:13,840 --> 00:03:17,400 Speaker 1: be it. But the good news is that the outlook 71 00:03:17,440 --> 00:03:20,640 Speaker 1: is really strong and the holidays will be a good. 72 00:03:20,440 --> 00:03:20,960 Speaker 3: Test of that. 73 00:03:21,200 --> 00:03:23,239 Speaker 2: You talked about how July you really started to see 74 00:03:23,240 --> 00:03:25,120 Speaker 2: things pick up and accelerate, and we've heard that from 75 00:03:25,120 --> 00:03:27,639 Speaker 2: a lot of the airlines. Do you have visibility into 76 00:03:27,639 --> 00:03:30,200 Speaker 2: the first quarter that this could continue and that this 77 00:03:30,320 --> 00:03:31,359 Speaker 2: is just gaining steam? 78 00:03:31,480 --> 00:03:31,679 Speaker 3: Yeah? 79 00:03:31,800 --> 00:03:34,800 Speaker 1: Yeah, our visibility is about ninety days out, so you're 80 00:03:34,840 --> 00:03:37,320 Speaker 1: going into January, so we would see the return traffic 81 00:03:37,400 --> 00:03:40,320 Speaker 1: from Christmas and New Year's looks really good. So I 82 00:03:40,400 --> 00:03:42,880 Speaker 1: see no reason to think that this thing is going 83 00:03:42,920 --> 00:03:45,760 Speaker 1: to slow down. And again, it's in our category, which 84 00:03:45,760 --> 00:03:47,880 Speaker 1: is our sweet spot, is our premium traveler. So whether 85 00:03:47,880 --> 00:03:50,800 Speaker 1: it's our international travel or business travel or a higher 86 00:03:50,880 --> 00:03:53,560 Speaker 1: end people that wanting a premium service and premium product. 87 00:03:53,760 --> 00:03:57,040 Speaker 1: We're in the experience economy, and the one thing we've 88 00:03:57,080 --> 00:03:59,240 Speaker 1: learned over the last several years is that the greater 89 00:03:59,320 --> 00:04:01,480 Speaker 1: the experience, the more people willing to pay for it, 90 00:04:01,600 --> 00:04:05,760 Speaker 1: and the demand is even higher. The more commodity your experiences, 91 00:04:05,920 --> 00:04:08,960 Speaker 1: the less people are willing to evaluate and so we're 92 00:04:09,000 --> 00:04:12,320 Speaker 1: in the sweet spot. We're leading the premium experience in 93 00:04:12,360 --> 00:04:14,720 Speaker 1: the airline category, and I think we're going to have 94 00:04:14,720 --> 00:04:15,720 Speaker 1: a really good next year. 95 00:04:15,840 --> 00:04:18,280 Speaker 2: I'm glad you mentioned that we often talk about Delta 96 00:04:18,320 --> 00:04:20,680 Speaker 2: and how this is the Delta economy, how you guys 97 00:04:20,680 --> 00:04:23,520 Speaker 2: are leading in the airline space. You also highlight how 98 00:04:23,560 --> 00:04:25,960 Speaker 2: different it is with respect to the premium offerings and 99 00:04:26,000 --> 00:04:28,880 Speaker 2: some of the profitability there versus the rest of the business. 100 00:04:28,920 --> 00:04:31,080 Speaker 2: I know that premium and loyalty account it for about 101 00:04:31,080 --> 00:04:35,000 Speaker 2: sixty percent of revenues so far this year versus fifty 102 00:04:35,040 --> 00:04:37,760 Speaker 2: seven percent last year. How far can this go? Is 103 00:04:37,800 --> 00:04:38,520 Speaker 2: this sustainable? 104 00:04:38,920 --> 00:04:42,000 Speaker 1: I think it is as long as you're giving people value, 105 00:04:42,360 --> 00:04:44,680 Speaker 1: and they get great value from us because we unlock 106 00:04:44,720 --> 00:04:47,599 Speaker 1: those opportunities, you know, as long as people want to 107 00:04:47,640 --> 00:04:50,520 Speaker 1: go and explore Riod where I was just at a 108 00:04:50,560 --> 00:04:52,400 Speaker 1: couple of weeks ago and were announced a direct flight 109 00:04:52,440 --> 00:04:56,039 Speaker 1: to Riod from Atlanta next year, or Australia or the 110 00:04:56,120 --> 00:04:59,240 Speaker 1: Maldives or anywhere you want to go within our country 111 00:04:59,320 --> 00:05:02,240 Speaker 1: to reunite with friends and families and have a getaway. 112 00:05:03,400 --> 00:05:05,960 Speaker 1: If you're a premium traveler, Delta is your first call 113 00:05:06,240 --> 00:05:07,200 Speaker 1: and we love that. 114 00:05:07,400 --> 00:05:09,719 Speaker 2: How much is international increasingly a part of that? I 115 00:05:09,760 --> 00:05:12,479 Speaker 2: know that Korea Air was something that Delta has a 116 00:05:12,520 --> 00:05:15,440 Speaker 2: partnership with, and increasingly these new routes are coming out. 117 00:05:15,480 --> 00:05:17,120 Speaker 2: How much is that the expansion planned? 118 00:05:17,160 --> 00:05:17,920 Speaker 3: Very much so well? 119 00:05:17,920 --> 00:05:20,600 Speaker 1: Today about two thirds of our revenues are US, one 120 00:05:20,640 --> 00:05:24,279 Speaker 1: third is international. In the second century, which starts to 121 00:05:25,160 --> 00:05:28,080 Speaker 1: January one, I think we're going to see that start 122 00:05:28,120 --> 00:05:30,520 Speaker 1: to get closer to fifty to fifty, and eventually international 123 00:05:30,520 --> 00:05:31,600 Speaker 1: will overtake. 124 00:05:31,480 --> 00:05:32,719 Speaker 3: The domestics system. 125 00:05:32,760 --> 00:05:34,520 Speaker 1: One of the things I tell people wherever I go 126 00:05:34,880 --> 00:05:37,520 Speaker 1: is that we're a growth industry. Only one in five 127 00:05:37,560 --> 00:05:40,240 Speaker 1: people in the world have ever set foot on an airplane. 128 00:05:40,560 --> 00:05:42,920 Speaker 1: When you think about that, it's pretty amazing. We take 129 00:05:42,960 --> 00:05:45,360 Speaker 1: it for granted here and if you told someone here 130 00:05:45,360 --> 00:05:46,840 Speaker 1: in the US you haven't been an airplane, they think 131 00:05:46,839 --> 00:05:50,080 Speaker 1: you're living in a cave somewhere, right, But the world 132 00:05:50,240 --> 00:05:52,760 Speaker 1: hasn't experienced air travel, and we got to find ways 133 00:05:52,760 --> 00:05:55,920 Speaker 1: make it affordable, to make it sustainable, to make it accessible, 134 00:05:56,120 --> 00:05:57,200 Speaker 1: and that's what we're focused on. 135 00:05:57,400 --> 00:05:59,960 Speaker 2: How much have you seen I know the international inbound 136 00:06:00,120 --> 00:06:01,640 Speaker 2: travel to the United States took a bit of a 137 00:06:01,680 --> 00:06:04,800 Speaker 2: dip after Liberation Day. Have you seen it really coming 138 00:06:04,839 --> 00:06:08,280 Speaker 2: back or is this primarily US travelers going overseas. 139 00:06:08,360 --> 00:06:11,719 Speaker 1: It's still mostly US travel heading overseas, and we supplemented 140 00:06:11,760 --> 00:06:13,640 Speaker 1: with more US point of sale over center, but the 141 00:06:13,640 --> 00:06:15,240 Speaker 1: international travelers are coming back. 142 00:06:15,520 --> 00:06:17,600 Speaker 3: People don't. People want to be here. 143 00:06:18,440 --> 00:06:21,800 Speaker 1: So I think once the trade uncertainties were starting to lift, 144 00:06:21,839 --> 00:06:25,360 Speaker 1: once people saw that, you know, what immigration was about 145 00:06:25,400 --> 00:06:30,000 Speaker 1: and where people you know, were potentially vulnerable as compared 146 00:06:30,040 --> 00:06:33,600 Speaker 1: to people that have passports and have normal business. Those 147 00:06:33,640 --> 00:06:35,400 Speaker 1: are the people we want coming into our country to 148 00:06:35,440 --> 00:06:37,640 Speaker 1: be able to spend time with them and invest in 149 00:06:37,680 --> 00:06:41,200 Speaker 1: our economy. People getting much much, much more comfortable. And 150 00:06:41,240 --> 00:06:43,120 Speaker 1: the place you see it the most, the most important 151 00:06:43,160 --> 00:06:46,000 Speaker 1: is in the international business, because international business is really. 152 00:06:45,920 --> 00:06:46,600 Speaker 3: Picking up a lot. 153 00:06:46,920 --> 00:06:50,039 Speaker 2: I love that you're celebrating one hundredth centennial because it 154 00:06:50,160 --> 00:06:52,200 Speaker 2: highlights how big of a moment of change we're in 155 00:06:52,240 --> 00:06:54,640 Speaker 2: currently too, And I would love to take some time 156 00:06:55,040 --> 00:06:57,919 Speaker 2: to look forward in the next two years, next five years, 157 00:06:57,960 --> 00:07:01,520 Speaker 2: next ten years, next century, what air travel is going 158 00:07:01,520 --> 00:07:04,039 Speaker 2: to look like given some of the massive changes that 159 00:07:04,040 --> 00:07:07,600 Speaker 2: we're seeing just technologically as well as societally. 160 00:07:08,000 --> 00:07:10,960 Speaker 1: Well, I think you'll see the demand strength continue to build. 161 00:07:11,480 --> 00:07:15,000 Speaker 1: We know through our history people just want to travel. 162 00:07:15,040 --> 00:07:17,120 Speaker 1: They want to go as long as again you do 163 00:07:17,200 --> 00:07:20,600 Speaker 1: you make it accessible, affordable, sustainable, Those are priorities. 164 00:07:20,680 --> 00:07:21,480 Speaker 3: In order to do that. 165 00:07:21,680 --> 00:07:23,960 Speaker 1: It means the new planes need to come in much 166 00:07:24,000 --> 00:07:27,000 Speaker 1: more fuel fisient than the planes that we've taken. Looking 167 00:07:27,040 --> 00:07:29,160 Speaker 1: for new, new, new form factors in terms of what 168 00:07:29,200 --> 00:07:33,280 Speaker 1: that airplane looks and the the the body, the aerodynamics 169 00:07:33,600 --> 00:07:35,960 Speaker 1: of the planes of the future are. We're doing it 170 00:07:35,960 --> 00:07:38,400 Speaker 1: with a small carrier today called Jobi. You know, the 171 00:07:38,440 --> 00:07:41,560 Speaker 1: electric vehicle takeoff. It's not going to replace Delta, but 172 00:07:41,560 --> 00:07:44,160 Speaker 1: it's going to be able to get people moving quickly 173 00:07:44,360 --> 00:07:48,400 Speaker 1: from from home to airport to their destination. And that's 174 00:07:48,440 --> 00:07:51,040 Speaker 1: going to be I think with electric and battery power. 175 00:07:51,040 --> 00:07:53,240 Speaker 1: It's going to be an interesting innovation that we face. 176 00:07:53,520 --> 00:07:55,240 Speaker 1: We have, but we have so many ways in which 177 00:07:55,240 --> 00:07:56,800 Speaker 1: people want to continue to move and. 178 00:07:56,760 --> 00:07:59,600 Speaker 3: Continue to explore. We need to have the technology advance. 179 00:07:59,640 --> 00:08:01,600 Speaker 1: So a lot of time with Boeing and Airbus and 180 00:08:01,800 --> 00:08:04,239 Speaker 1: the engine manufacturers and understanding. 181 00:08:03,760 --> 00:08:06,840 Speaker 3: Where they're headed because they really drive those opportunities. 182 00:08:06,960 --> 00:08:09,520 Speaker 1: But then looking also at the partners were built with 183 00:08:09,680 --> 00:08:12,120 Speaker 1: Uber with which I'll be back here at the exchange 184 00:08:12,160 --> 00:08:14,760 Speaker 1: this afternoon. We got an exclusive relationship with them. 185 00:08:14,880 --> 00:08:15,720 Speaker 3: With YouTube TV. 186 00:08:15,720 --> 00:08:18,400 Speaker 1: We've announced this year an exclusive relationship with them with 187 00:08:18,560 --> 00:08:23,040 Speaker 1: DraftKings with Starbucks. So many brands kind of want to 188 00:08:23,080 --> 00:08:27,160 Speaker 1: sit next to the premier travel leader because we draw 189 00:08:27,440 --> 00:08:31,160 Speaker 1: hundreds of millions of people an opportunity, and we draft 190 00:08:31,240 --> 00:08:33,960 Speaker 1: off each other, and so you're building an ecosystem, and 191 00:08:34,000 --> 00:08:37,600 Speaker 1: that ecosystem will increasingly get and people love loyalty, they love. 192 00:08:37,520 --> 00:08:40,840 Speaker 3: Brand experience, they love their points, they love acknowledgment and 193 00:08:40,880 --> 00:08:42,480 Speaker 3: recognition on both platforms. 194 00:08:42,559 --> 00:08:44,679 Speaker 2: Do you think that there's room for more than the 195 00:08:44,720 --> 00:08:47,480 Speaker 2: handful of the premier airline brands at the top. Do 196 00:08:47,480 --> 00:08:49,840 Speaker 2: you think that for the low cost airlines there's enough 197 00:08:49,920 --> 00:08:52,480 Speaker 2: room in that future vision of the airline space? 198 00:08:52,520 --> 00:08:55,719 Speaker 3: Well, I know they're all trying to get there. This 199 00:08:56,320 --> 00:08:58,280 Speaker 3: is hard. This is hard, and it takes. 200 00:08:58,240 --> 00:09:02,560 Speaker 1: Years of investment and reliable product category, the consistency at 201 00:09:02,600 --> 00:09:04,599 Speaker 1: the service level. It's the people on the plane. I 202 00:09:04,600 --> 00:09:07,280 Speaker 1: always hope you we may have great hard product, it's 203 00:09:07,320 --> 00:09:09,920 Speaker 1: the soft product that matters, and it's the consistency and 204 00:09:09,920 --> 00:09:12,280 Speaker 1: the delivery that our people make that make the difference. 205 00:09:12,280 --> 00:09:14,720 Speaker 1: For the experience that's going to take years and no, 206 00:09:14,840 --> 00:09:17,199 Speaker 1: I think some of them will improve, but I think 207 00:09:17,240 --> 00:09:19,320 Speaker 1: it's I think it's a long so it's a tall 208 00:09:19,400 --> 00:09:22,240 Speaker 1: ask for some of the lower end carriers to find 209 00:09:22,320 --> 00:09:24,480 Speaker 1: price points where they can actually compete compete with us 210 00:09:24,480 --> 00:09:24,560 Speaker 1: on