Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: I'm here with the Man of the Moment CEO Ed Baston,
Speaker 2: CEO of Delta, on the one hundredth centennial celebration here
Speaker 2: at the New York Stock Exchange. It's also a wonderful day,
Speaker 2: not just because of that Ed and welcome, it's also
Speaker 2: there seems to be a light at the end of
Speaker 2: the tunnel. How relief are you about what's going on
Speaker 2: in Washington, DC?
Speaker 1: Well, more importantly, I'm glad we got to our one
Speaker 1: hundredth centennial and so proud of our people. First US
Speaker 1: airline to reach one hundred years of age. But yeah,
Speaker 1: we're hoping that the vote comes back tonight and we
Speaker 1: get everybody paid. Most importantly, all those essential workers, controllers,
Speaker 1: the security agents, the regulators, that everyone in the system.
Speaker 1: They do such amazing work. They're heroes doing this for
Speaker 1: a month and a half without pay, showing up every day,
Speaker 1: and we appreciate them.
Speaker 3: So I'm happy about that as well.
Speaker 2: How long will it take before we don't see any
Speaker 2: delays or any expected delays tied to the shutdown.
Speaker 3: I think it'll happen pretty quickly.
Speaker 1: I think once once people start getting paid, and I
Speaker 1: know Secretary of Duffy is committed to getting those those
Speaker 1: paychecks out right away. So over the next couple of days,
Speaker 1: I think you'll see things starting to turn to normal.
Speaker 1: Yesterday was actually a pretty good day.
Speaker 3: The weekend was tough.
Speaker 1: We had weather, We had a lot of staff shortages
Speaker 1: and many of the ATC towers that cause delays and cancelations.
Speaker 1: Looking ahead, you know, weather holes, and I think the
Speaker 1: outlook for the weather is not too bad. It should
Speaker 1: be by Friday, I think we should be back pretty
Speaker 1: close to normal.
Speaker 2: Do you think Thanksgiving we'll also be back to normal.
Speaker 3: Thanksgiving will be great.
Speaker 1: Okay, Listen, we know the importance of Christmas and Thanksgiving
Speaker 1: and the holidays. That's our super Bowl and that's what
Speaker 1: we rehearse and plan all year long.
Speaker 3: We're going to be in really good shape for that.
Speaker 2: Have you seen anybody make any cancelations or not make
Speaker 2: plans anything that sort of highlights the concern around some
Speaker 2: of the delays that we've seen from the government shutdown,
Speaker 2: And it's understandable.
Speaker 1: We've seen some reduction in bookings, not material, but you know,
Speaker 1: maybe five to ten percent from where we would normally be.
Speaker 3: The first, one of the frustrating things to.
Speaker 1: Me is that heading into this period when they decided
Speaker 1: on Thursday to start canceling.
Speaker 3: Flights, we had tremendous momentum.
Speaker 1: The revenue based business going double digits, Premium categories all going,
Speaker 1: you know, double digits, if not more, We're going really strong.
Speaker 1: And then you know, you get into this situation, all
Speaker 1: those travelers say, well, maybe I'll wait and see what's
Speaker 1: going to happen here. So we did see some refunds,
Speaker 1: We did see some kind We were very flexible in refunds.
Speaker 3: If people wanted their.
Speaker 1: Money back, we were happy to, not happy to, but
Speaker 1: we wanted to make sure they were being taken care of.
Speaker 1: But I think as soon as people see it's ready
Speaker 1: to go, they're going to come right back.
Speaker 2: Do you think there's going to be any permanent hit
Speaker 2: to the fourth quarter earnings because of the shutdown.
Speaker 1: You can't make up one week of delta. We had
Speaker 1: little over two thousand cancelations. You can't make that up
Speaker 1: within the quarter. So yes, there was an impact, like
Speaker 1: there's going to be in all the airlines. It's transitory.
Speaker 1: I think everyone understands why it wasn't our doing it.
Speaker 1: Was something that you know, we were used almost as
Speaker 1: a political hostage to get the government back together, so
Speaker 1: be it. But the good news is that the outlook
Speaker 1: is really strong and the holidays will be a good.
Speaker 3: Test of that.
Speaker 2: You talked about how July you really started to see
Speaker 2: things pick up and accelerate, and we've heard that from
Speaker 2: a lot of the airlines. Do you have visibility into
Speaker 2: the first quarter that this could continue and that this
Speaker 2: is just gaining steam?
Speaker 3: Yeah?
Speaker 1: Yeah, our visibility is about ninety days out, so you're
Speaker 1: going into January, so we would see the return traffic
Speaker 1: from Christmas and New Year's looks really good. So I
Speaker 1: see no reason to think that this thing is going
Speaker 1: to slow down. And again, it's in our category, which
Speaker 1: is our sweet spot, is our premium traveler. So whether
Speaker 1: it's our international travel or business travel or a higher
Speaker 1: end people that wanting a premium service and premium product.
Speaker 1: We're in the experience economy, and the one thing we've
Speaker 1: learned over the last several years is that the greater
Speaker 1: the experience, the more people willing to pay for it,
Speaker 1: and the demand is even higher. The more commodity your experiences,
Speaker 1: the less people are willing to evaluate and so we're
Speaker 1: in the sweet spot. We're leading the premium experience in
Speaker 1: the airline category, and I think we're going to have
Speaker 1: a really good next year.
Speaker 2: I'm glad you mentioned that we often talk about Delta
Speaker 2: and how this is the Delta economy, how you guys
Speaker 2: are leading in the airline space. You also highlight how
Speaker 2: different it is with respect to the premium offerings and
Speaker 2: some of the profitability there versus the rest of the business.
Speaker 2: I know that premium and loyalty account it for about
Speaker 2: sixty percent of revenues so far this year versus fifty
Speaker 2: seven percent last year. How far can this go? Is
Speaker 2: this sustainable?
Speaker 1: I think it is as long as you're giving people value,
Speaker 1: and they get great value from us because we unlock
Speaker 1: those opportunities, you know, as long as people want to
Speaker 1: go and explore Riod where I was just at a
Speaker 1: couple of weeks ago and were announced a direct flight
Speaker 1: to Riod from Atlanta next year, or Australia or the
Speaker 1: Maldives or anywhere you want to go within our country
Speaker 1: to reunite with friends and families and have a getaway.
Speaker 1: If you're a premium traveler, Delta is your first call
Speaker 1: and we love that.
Speaker 2: How much is international increasingly a part of that? I
Speaker 2: know that Korea Air was something that Delta has a
Speaker 2: partnership with, and increasingly these new routes are coming out.
Speaker 2: How much is that the expansion planned?
Speaker 3: Very much so well?
Speaker 1: Today about two thirds of our revenues are US, one
Speaker 1: third is international. In the second century, which starts to
Speaker 1: January one, I think we're going to see that start
Speaker 1: to get closer to fifty to fifty, and eventually international
Speaker 1: will overtake.
Speaker 3: The domestics system.
Speaker 1: One of the things I tell people wherever I go
Speaker 1: is that we're a growth industry. Only one in five
Speaker 1: people in the world have ever set foot on an airplane.
Speaker 1: When you think about that, it's pretty amazing. We take
Speaker 1: it for granted here and if you told someone here
Speaker 1: in the US you haven't been an airplane, they think
Speaker 1: you're living in a cave somewhere, right, But the world
Speaker 1: hasn't experienced air travel, and we got to find ways
Speaker 1: make it affordable, to make it sustainable, to make it accessible,
Speaker 1: and that's what we're focused on.
Speaker 2: How much have you seen I know the international inbound
Speaker 2: travel to the United States took a bit of a
Speaker 2: dip after Liberation Day. Have you seen it really coming
Speaker 2: back or is this primarily US travelers going overseas.
Speaker 1: It's still mostly US travel heading overseas, and we supplemented
Speaker 1: with more US point of sale over center, but the
Speaker 1: international travelers are coming back.
Speaker 3: People don't. People want to be here.
Speaker 1: So I think once the trade uncertainties were starting to lift,
Speaker 1: once people saw that, you know, what immigration was about
Speaker 1: and where people you know, were potentially vulnerable as compared
Speaker 1: to people that have passports and have normal business. Those
Speaker 1: are the people we want coming into our country to
Speaker 1: be able to spend time with them and invest in
Speaker 1: our economy. People getting much much, much more comfortable. And
Speaker 1: the place you see it the most, the most important
Speaker 1: is in the international business, because international business is really.
Speaker 3: Picking up a lot.
Speaker 2: I love that you're celebrating one hundredth centennial because it
Speaker 2: highlights how big of a moment of change we're in
Speaker 2: currently too, And I would love to take some time
Speaker 2: to look forward in the next two years, next five years,
Speaker 2: next ten years, next century, what air travel is going
Speaker 2: to look like given some of the massive changes that
Speaker 2: we're seeing just technologically as well as societally.
Speaker 1: Well, I think you'll see the demand strength continue to build.
Speaker 1: We know through our history people just want to travel.
Speaker 1: They want to go as long as again you do
Speaker 1: you make it accessible, affordable, sustainable, Those are priorities.
Speaker 3: In order to do that.
Speaker 1: It means the new planes need to come in much
Speaker 1: more fuel fisient than the planes that we've taken. Looking
Speaker 1: for new, new, new form factors in terms of what
Speaker 1: that airplane looks and the the the body, the aerodynamics
Speaker 1: of the planes of the future are. We're doing it
Speaker 1: with a small carrier today called Jobi. You know, the
Speaker 1: electric vehicle takeoff. It's not going to replace Delta, but
Speaker 1: it's going to be able to get people moving quickly
Speaker 1: from from home to airport to their destination. And that's
Speaker 1: going to be I think with electric and battery power.
Speaker 1: It's going to be an interesting innovation that we face.
Speaker 1: We have, but we have so many ways in which
Speaker 1: people want to continue to move and.
Speaker 3: Continue to explore. We need to have the technology advance.
Speaker 1: So a lot of time with Boeing and Airbus and
Speaker 1: the engine manufacturers and understanding.
Speaker 3: Where they're headed because they really drive those opportunities.
Speaker 1: But then looking also at the partners were built with
Speaker 1: Uber with which I'll be back here at the exchange
Speaker 1: this afternoon. We got an exclusive relationship with them.
Speaker 3: With YouTube TV.
Speaker 1: We've announced this year an exclusive relationship with them with
Speaker 1: DraftKings with Starbucks. So many brands kind of want to
Speaker 1: sit next to the premier travel leader because we draw
Speaker 1: hundreds of millions of people an opportunity, and we draft
Speaker 1: off each other, and so you're building an ecosystem, and
Speaker 1: that ecosystem will increasingly get and people love loyalty, they love.
Speaker 3: Brand experience, they love their points, they love acknowledgment and
Speaker 3: recognition on both platforms.
Speaker 2: Do you think that there's room for more than the
Speaker 2: handful of the premier airline brands at the top. Do
Speaker 2: you think that for the low cost airlines there's enough
Speaker 2: room in that future vision of the airline space?
Speaker 3: Well, I know they're all trying to get there. This
Speaker 3: is hard. This is hard, and it takes.
Speaker 1: Years of investment and reliable product category, the consistency at
Speaker 1: the service level. It's the people on the plane. I
Speaker 1: always hope you we may have great hard product, it's
Speaker 1: the soft product that matters, and it's the consistency and
Speaker 1: the delivery that our people make that make the difference.
Speaker 1: For the experience that's going to take years and no,
Speaker 1: I think some of them will improve, but I think
Speaker 1: it's I think it's a long so it's a tall
Speaker 1: ask for some of the lower end carriers to find
Speaker 1: price points where they can actually compete compete with us
Speaker 1: on