WEBVTT - Delta CEO Ed Bastian Talks Travel Disruption

0:00:02.520 --> 0:00:07.040
<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

0:00:07.960 --> 0:00:11.280
<v Speaker 2>I'm here with the Man of the Moment CEO Ed Baston,

0:00:11.400 --> 0:00:15.840
<v Speaker 2>CEO of Delta, on the one hundredth centennial celebration here

0:00:15.880 --> 0:00:18.520
<v Speaker 2>at the New York Stock Exchange. It's also a wonderful day,

0:00:18.720 --> 0:00:21.080
<v Speaker 2>not just because of that Ed and welcome, it's also

0:00:21.160 --> 0:00:22.279
<v Speaker 2>there seems to be a light at the end of

0:00:22.280 --> 0:00:24.400
<v Speaker 2>the tunnel. How relief are you about what's going on

0:00:24.400 --> 0:00:25.079
<v Speaker 2>in Washington, DC?

0:00:25.480 --> 0:00:28.520
<v Speaker 1>Well, more importantly, I'm glad we got to our one

0:00:28.560 --> 0:00:31.400
<v Speaker 1>hundredth centennial and so proud of our people. First US

0:00:31.440 --> 0:00:34.600
<v Speaker 1>airline to reach one hundred years of age. But yeah,

0:00:34.640 --> 0:00:38.320
<v Speaker 1>we're hoping that the vote comes back tonight and we

0:00:38.360 --> 0:00:43.640
<v Speaker 1>get everybody paid. Most importantly, all those essential workers, controllers,

0:00:43.720 --> 0:00:47.120
<v Speaker 1>the security agents, the regulators, that everyone in the system.

0:00:47.400 --> 0:00:50.360
<v Speaker 1>They do such amazing work. They're heroes doing this for

0:00:50.960 --> 0:00:53.720
<v Speaker 1>a month and a half without pay, showing up every day,

0:00:53.760 --> 0:00:54.760
<v Speaker 1>and we appreciate them.

0:00:54.800 --> 0:00:56.560
<v Speaker 3>So I'm happy about that as well.

0:00:56.600 --> 0:00:58.760
<v Speaker 2>How long will it take before we don't see any

0:00:58.760 --> 0:01:02.880
<v Speaker 2>delays or any expected delays tied to the shutdown.

0:01:03.040 --> 0:01:04.600
<v Speaker 3>I think it'll happen pretty quickly.

0:01:04.800 --> 0:01:07.520
<v Speaker 1>I think once once people start getting paid, and I

0:01:07.600 --> 0:01:10.400
<v Speaker 1>know Secretary of Duffy is committed to getting those those

0:01:10.440 --> 0:01:13.839
<v Speaker 1>paychecks out right away. So over the next couple of days,

0:01:13.840 --> 0:01:15.759
<v Speaker 1>I think you'll see things starting to turn to normal.

0:01:16.120 --> 0:01:18.000
<v Speaker 1>Yesterday was actually a pretty good day.

0:01:18.080 --> 0:01:18.959
<v Speaker 3>The weekend was tough.

0:01:19.080 --> 0:01:21.640
<v Speaker 1>We had weather, We had a lot of staff shortages

0:01:21.680 --> 0:01:25.840
<v Speaker 1>and many of the ATC towers that cause delays and cancelations.

0:01:26.760 --> 0:01:29.240
<v Speaker 1>Looking ahead, you know, weather holes, and I think the

0:01:29.280 --> 0:01:31.559
<v Speaker 1>outlook for the weather is not too bad. It should

0:01:31.600 --> 0:01:33.280
<v Speaker 1>be by Friday, I think we should be back pretty

0:01:33.280 --> 0:01:33.880
<v Speaker 1>close to normal.

0:01:33.959 --> 0:01:35.920
<v Speaker 2>Do you think Thanksgiving we'll also be back to normal.

0:01:36.000 --> 0:01:37.039
<v Speaker 3>Thanksgiving will be great.

0:01:37.200 --> 0:01:41.040
<v Speaker 1>Okay, Listen, we know the importance of Christmas and Thanksgiving

0:01:41.080 --> 0:01:43.920
<v Speaker 1>and the holidays. That's our super Bowl and that's what

0:01:44.000 --> 0:01:45.880
<v Speaker 1>we rehearse and plan all year long.

0:01:46.080 --> 0:01:47.480
<v Speaker 3>We're going to be in really good shape for that.

0:01:47.560 --> 0:01:51.160
<v Speaker 2>Have you seen anybody make any cancelations or not make

0:01:51.240 --> 0:01:54.600
<v Speaker 2>plans anything that sort of highlights the concern around some

0:01:54.640 --> 0:01:56.880
<v Speaker 2>of the delays that we've seen from the government shutdown,

0:01:57.000 --> 0:01:58.280
<v Speaker 2>And it's understandable.

0:01:58.440 --> 0:02:02.280
<v Speaker 1>We've seen some reduction in bookings, not material, but you know,

0:02:02.320 --> 0:02:05.200
<v Speaker 1>maybe five to ten percent from where we would normally be.

0:02:05.840 --> 0:02:07.520
<v Speaker 3>The first, one of the frustrating things to.

0:02:07.480 --> 0:02:10.880
<v Speaker 1>Me is that heading into this period when they decided

0:02:10.960 --> 0:02:13.960
<v Speaker 1>on Thursday to start canceling.

0:02:13.520 --> 0:02:15.760
<v Speaker 3>Flights, we had tremendous momentum.

0:02:16.280 --> 0:02:23.120
<v Speaker 1>The revenue based business going double digits, Premium categories all going,

0:02:23.200 --> 0:02:26.120
<v Speaker 1>you know, double digits, if not more, We're going really strong.

0:02:26.160 --> 0:02:28.919
<v Speaker 1>And then you know, you get into this situation, all

0:02:28.960 --> 0:02:31.960
<v Speaker 1>those travelers say, well, maybe I'll wait and see what's

0:02:32.000 --> 0:02:35.120
<v Speaker 1>going to happen here. So we did see some refunds,

0:02:35.200 --> 0:02:37.800
<v Speaker 1>We did see some kind We were very flexible in refunds.

0:02:37.840 --> 0:02:38.680
<v Speaker 3>If people wanted their.

0:02:38.600 --> 0:02:41.360
<v Speaker 1>Money back, we were happy to, not happy to, but

0:02:41.360 --> 0:02:44.280
<v Speaker 1>we wanted to make sure they were being taken care of.

0:02:44.520 --> 0:02:46.480
<v Speaker 1>But I think as soon as people see it's ready

0:02:46.520 --> 0:02:47.919
<v Speaker 1>to go, they're going to come right back.

0:02:48.000 --> 0:02:49.799
<v Speaker 2>Do you think there's going to be any permanent hit

0:02:50.280 --> 0:02:54.000
<v Speaker 2>to the fourth quarter earnings because of the shutdown.

0:02:53.680 --> 0:02:56.840
<v Speaker 1>You can't make up one week of delta. We had

0:02:56.880 --> 0:03:00.320
<v Speaker 1>little over two thousand cancelations. You can't make that up

0:03:00.480 --> 0:03:03.079
<v Speaker 1>within the quarter. So yes, there was an impact, like

0:03:03.120 --> 0:03:05.399
<v Speaker 1>there's going to be in all the airlines. It's transitory.

0:03:06.120 --> 0:03:08.640
<v Speaker 1>I think everyone understands why it wasn't our doing it.

0:03:08.680 --> 0:03:10.360
<v Speaker 1>Was something that you know, we were used almost as

0:03:10.360 --> 0:03:13.400
<v Speaker 1>a political hostage to get the government back together, so

0:03:13.840 --> 0:03:17.400
<v Speaker 1>be it. But the good news is that the outlook

0:03:17.440 --> 0:03:20.640
<v Speaker 1>is really strong and the holidays will be a good.

0:03:20.440 --> 0:03:20.960
<v Speaker 3>Test of that.

0:03:21.200 --> 0:03:23.239
<v Speaker 2>You talked about how July you really started to see

0:03:23.240 --> 0:03:25.120
<v Speaker 2>things pick up and accelerate, and we've heard that from

0:03:25.120 --> 0:03:27.639
<v Speaker 2>a lot of the airlines. Do you have visibility into

0:03:27.639 --> 0:03:30.200
<v Speaker 2>the first quarter that this could continue and that this

0:03:30.320 --> 0:03:31.359
<v Speaker 2>is just gaining steam?

0:03:31.480 --> 0:03:31.679
<v Speaker 3>Yeah?

0:03:31.800 --> 0:03:34.800
<v Speaker 1>Yeah, our visibility is about ninety days out, so you're

0:03:34.840 --> 0:03:37.320
<v Speaker 1>going into January, so we would see the return traffic

0:03:37.400 --> 0:03:40.320
<v Speaker 1>from Christmas and New Year's looks really good. So I

0:03:40.400 --> 0:03:42.880
<v Speaker 1>see no reason to think that this thing is going

0:03:42.920 --> 0:03:45.760
<v Speaker 1>to slow down. And again, it's in our category, which

0:03:45.760 --> 0:03:47.880
<v Speaker 1>is our sweet spot, is our premium traveler. So whether

0:03:47.880 --> 0:03:50.800
<v Speaker 1>it's our international travel or business travel or a higher

0:03:50.880 --> 0:03:53.560
<v Speaker 1>end people that wanting a premium service and premium product.

0:03:53.760 --> 0:03:57.040
<v Speaker 1>We're in the experience economy, and the one thing we've

0:03:57.080 --> 0:03:59.240
<v Speaker 1>learned over the last several years is that the greater

0:03:59.320 --> 0:04:01.480
<v Speaker 1>the experience, the more people willing to pay for it,

0:04:01.600 --> 0:04:05.760
<v Speaker 1>and the demand is even higher. The more commodity your experiences,

0:04:05.920 --> 0:04:08.960
<v Speaker 1>the less people are willing to evaluate and so we're

0:04:09.000 --> 0:04:12.320
<v Speaker 1>in the sweet spot. We're leading the premium experience in

0:04:12.360 --> 0:04:14.720
<v Speaker 1>the airline category, and I think we're going to have

0:04:14.720 --> 0:04:15.720
<v Speaker 1>a really good next year.

0:04:15.840 --> 0:04:18.280
<v Speaker 2>I'm glad you mentioned that we often talk about Delta

0:04:18.320 --> 0:04:20.680
<v Speaker 2>and how this is the Delta economy, how you guys

0:04:20.680 --> 0:04:23.520
<v Speaker 2>are leading in the airline space. You also highlight how

0:04:23.560 --> 0:04:25.960
<v Speaker 2>different it is with respect to the premium offerings and

0:04:26.000 --> 0:04:28.880
<v Speaker 2>some of the profitability there versus the rest of the business.

0:04:28.920 --> 0:04:31.080
<v Speaker 2>I know that premium and loyalty account it for about

0:04:31.080 --> 0:04:35.000
<v Speaker 2>sixty percent of revenues so far this year versus fifty

0:04:35.040 --> 0:04:37.760
<v Speaker 2>seven percent last year. How far can this go? Is

0:04:37.800 --> 0:04:38.520
<v Speaker 2>this sustainable?

0:04:38.920 --> 0:04:42.000
<v Speaker 1>I think it is as long as you're giving people value,

0:04:42.360 --> 0:04:44.680
<v Speaker 1>and they get great value from us because we unlock

0:04:44.720 --> 0:04:47.599
<v Speaker 1>those opportunities, you know, as long as people want to

0:04:47.640 --> 0:04:50.520
<v Speaker 1>go and explore Riod where I was just at a

0:04:50.560 --> 0:04:52.400
<v Speaker 1>couple of weeks ago and were announced a direct flight

0:04:52.440 --> 0:04:56.039
<v Speaker 1>to Riod from Atlanta next year, or Australia or the

0:04:56.120 --> 0:04:59.240
<v Speaker 1>Maldives or anywhere you want to go within our country

0:04:59.320 --> 0:05:02.240
<v Speaker 1>to reunite with friends and families and have a getaway.

0:05:03.400 --> 0:05:05.960
<v Speaker 1>If you're a premium traveler, Delta is your first call

0:05:06.240 --> 0:05:07.200
<v Speaker 1>and we love that.

0:05:07.400 --> 0:05:09.719
<v Speaker 2>How much is international increasingly a part of that? I

0:05:09.760 --> 0:05:12.479
<v Speaker 2>know that Korea Air was something that Delta has a

0:05:12.520 --> 0:05:15.440
<v Speaker 2>partnership with, and increasingly these new routes are coming out.

0:05:15.480 --> 0:05:17.120
<v Speaker 2>How much is that the expansion planned?

0:05:17.160 --> 0:05:17.920
<v Speaker 3>Very much so well?

0:05:17.920 --> 0:05:20.600
<v Speaker 1>Today about two thirds of our revenues are US, one

0:05:20.640 --> 0:05:24.279
<v Speaker 1>third is international. In the second century, which starts to

0:05:25.160 --> 0:05:28.080
<v Speaker 1>January one, I think we're going to see that start

0:05:28.120 --> 0:05:30.520
<v Speaker 1>to get closer to fifty to fifty, and eventually international

0:05:30.520 --> 0:05:31.600
<v Speaker 1>will overtake.

0:05:31.480 --> 0:05:32.719
<v Speaker 3>The domestics system.

0:05:32.760 --> 0:05:34.520
<v Speaker 1>One of the things I tell people wherever I go

0:05:34.880 --> 0:05:37.520
<v Speaker 1>is that we're a growth industry. Only one in five

0:05:37.560 --> 0:05:40.240
<v Speaker 1>people in the world have ever set foot on an airplane.

0:05:40.560 --> 0:05:42.920
<v Speaker 1>When you think about that, it's pretty amazing. We take

0:05:42.960 --> 0:05:45.360
<v Speaker 1>it for granted here and if you told someone here

0:05:45.360 --> 0:05:46.840
<v Speaker 1>in the US you haven't been an airplane, they think

0:05:46.839 --> 0:05:50.080
<v Speaker 1>you're living in a cave somewhere, right, But the world

0:05:50.240 --> 0:05:52.760
<v Speaker 1>hasn't experienced air travel, and we got to find ways

0:05:52.760 --> 0:05:55.920
<v Speaker 1>make it affordable, to make it sustainable, to make it accessible,

0:05:56.120 --> 0:05:57.200
<v Speaker 1>and that's what we're focused on.

0:05:57.400 --> 0:05:59.960
<v Speaker 2>How much have you seen I know the international inbound

0:06:00.120 --> 0:06:01.640
<v Speaker 2>travel to the United States took a bit of a

0:06:01.680 --> 0:06:04.800
<v Speaker 2>dip after Liberation Day. Have you seen it really coming

0:06:04.839 --> 0:06:08.280
<v Speaker 2>back or is this primarily US travelers going overseas.

0:06:08.360 --> 0:06:11.719
<v Speaker 1>It's still mostly US travel heading overseas, and we supplemented

0:06:11.760 --> 0:06:13.640
<v Speaker 1>with more US point of sale over center, but the

0:06:13.640 --> 0:06:15.240
<v Speaker 1>international travelers are coming back.

0:06:15.520 --> 0:06:17.600
<v Speaker 3>People don't. People want to be here.

0:06:18.440 --> 0:06:21.800
<v Speaker 1>So I think once the trade uncertainties were starting to lift,

0:06:21.839 --> 0:06:25.360
<v Speaker 1>once people saw that, you know, what immigration was about

0:06:25.400 --> 0:06:30.000
<v Speaker 1>and where people you know, were potentially vulnerable as compared

0:06:30.040 --> 0:06:33.600
<v Speaker 1>to people that have passports and have normal business. Those

0:06:33.640 --> 0:06:35.400
<v Speaker 1>are the people we want coming into our country to

0:06:35.440 --> 0:06:37.640
<v Speaker 1>be able to spend time with them and invest in

0:06:37.680 --> 0:06:41.200
<v Speaker 1>our economy. People getting much much, much more comfortable. And

0:06:41.240 --> 0:06:43.120
<v Speaker 1>the place you see it the most, the most important

0:06:43.160 --> 0:06:46.000
<v Speaker 1>is in the international business, because international business is really.

0:06:45.920 --> 0:06:46.600
<v Speaker 3>Picking up a lot.

0:06:46.920 --> 0:06:50.039
<v Speaker 2>I love that you're celebrating one hundredth centennial because it

0:06:50.160 --> 0:06:52.200
<v Speaker 2>highlights how big of a moment of change we're in

0:06:52.240 --> 0:06:54.640
<v Speaker 2>currently too, And I would love to take some time

0:06:55.040 --> 0:06:57.919
<v Speaker 2>to look forward in the next two years, next five years,

0:06:57.960 --> 0:07:01.520
<v Speaker 2>next ten years, next century, what air travel is going

0:07:01.520 --> 0:07:04.039
<v Speaker 2>to look like given some of the massive changes that

0:07:04.040 --> 0:07:07.600
<v Speaker 2>we're seeing just technologically as well as societally.

0:07:08.000 --> 0:07:10.960
<v Speaker 1>Well, I think you'll see the demand strength continue to build.

0:07:11.480 --> 0:07:15.000
<v Speaker 1>We know through our history people just want to travel.

0:07:15.040 --> 0:07:17.120
<v Speaker 1>They want to go as long as again you do

0:07:17.200 --> 0:07:20.600
<v Speaker 1>you make it accessible, affordable, sustainable, Those are priorities.

0:07:20.680 --> 0:07:21.480
<v Speaker 3>In order to do that.

0:07:21.680 --> 0:07:23.960
<v Speaker 1>It means the new planes need to come in much

0:07:24.000 --> 0:07:27.000
<v Speaker 1>more fuel fisient than the planes that we've taken. Looking

0:07:27.040 --> 0:07:29.160
<v Speaker 1>for new, new, new form factors in terms of what

0:07:29.200 --> 0:07:33.280
<v Speaker 1>that airplane looks and the the the body, the aerodynamics

0:07:33.600 --> 0:07:35.960
<v Speaker 1>of the planes of the future are. We're doing it

0:07:35.960 --> 0:07:38.400
<v Speaker 1>with a small carrier today called Jobi. You know, the

0:07:38.440 --> 0:07:41.560
<v Speaker 1>electric vehicle takeoff. It's not going to replace Delta, but

0:07:41.560 --> 0:07:44.160
<v Speaker 1>it's going to be able to get people moving quickly

0:07:44.360 --> 0:07:48.400
<v Speaker 1>from from home to airport to their destination. And that's

0:07:48.440 --> 0:07:51.040
<v Speaker 1>going to be I think with electric and battery power.

0:07:51.040 --> 0:07:53.240
<v Speaker 1>It's going to be an interesting innovation that we face.

0:07:53.520 --> 0:07:55.240
<v Speaker 1>We have, but we have so many ways in which

0:07:55.240 --> 0:07:56.800
<v Speaker 1>people want to continue to move and.

0:07:56.760 --> 0:07:59.600
<v Speaker 3>Continue to explore. We need to have the technology advance.

0:07:59.640 --> 0:08:01.600
<v Speaker 1>So a lot of time with Boeing and Airbus and

0:08:01.800 --> 0:08:04.239
<v Speaker 1>the engine manufacturers and understanding.

0:08:03.760 --> 0:08:06.840
<v Speaker 3>Where they're headed because they really drive those opportunities.

0:08:06.960 --> 0:08:09.520
<v Speaker 1>But then looking also at the partners were built with

0:08:09.680 --> 0:08:12.120
<v Speaker 1>Uber with which I'll be back here at the exchange

0:08:12.160 --> 0:08:14.760
<v Speaker 1>this afternoon. We got an exclusive relationship with them.

0:08:14.880 --> 0:08:15.720
<v Speaker 3>With YouTube TV.

0:08:15.720 --> 0:08:18.400
<v Speaker 1>We've announced this year an exclusive relationship with them with

0:08:18.560 --> 0:08:23.040
<v Speaker 1>DraftKings with Starbucks. So many brands kind of want to

0:08:23.080 --> 0:08:27.160
<v Speaker 1>sit next to the premier travel leader because we draw

0:08:27.440 --> 0:08:31.160
<v Speaker 1>hundreds of millions of people an opportunity, and we draft

0:08:31.240 --> 0:08:33.960
<v Speaker 1>off each other, and so you're building an ecosystem, and

0:08:34.000 --> 0:08:37.600
<v Speaker 1>that ecosystem will increasingly get and people love loyalty, they love.

0:08:37.520 --> 0:08:40.840
<v Speaker 3>Brand experience, they love their points, they love acknowledgment and

0:08:40.880 --> 0:08:42.480
<v Speaker 3>recognition on both platforms.

0:08:42.559 --> 0:08:44.679
<v Speaker 2>Do you think that there's room for more than the

0:08:44.720 --> 0:08:47.480
<v Speaker 2>handful of the premier airline brands at the top. Do

0:08:47.480 --> 0:08:49.840
<v Speaker 2>you think that for the low cost airlines there's enough

0:08:49.920 --> 0:08:52.480
<v Speaker 2>room in that future vision of the airline space?

0:08:52.520 --> 0:08:55.719
<v Speaker 3>Well, I know they're all trying to get there. This

0:08:56.320 --> 0:08:58.280
<v Speaker 3>is hard. This is hard, and it takes.

0:08:58.240 --> 0:09:02.560
<v Speaker 1>Years of investment and reliable product category, the consistency at

0:09:02.600 --> 0:09:04.599
<v Speaker 1>the service level. It's the people on the plane. I

0:09:04.600 --> 0:09:07.280
<v Speaker 1>always hope you we may have great hard product, it's

0:09:07.320 --> 0:09:09.920
<v Speaker 1>the soft product that matters, and it's the consistency and

0:09:09.920 --> 0:09:12.280
<v Speaker 1>the delivery that our people make that make the difference.

0:09:12.280 --> 0:09:14.720
<v Speaker 1>For the experience that's going to take years and no,

0:09:14.840 --> 0:09:17.199
<v Speaker 1>I think some of them will improve, but I think

0:09:17.240 --> 0:09:19.320
<v Speaker 1>it's I think it's a long so it's a tall

0:09:19.400 --> 0:09:22.240
<v Speaker 1>ask for some of the lower end carriers to find

0:09:22.320 --> 0:09:24.480
<v Speaker 1>price points where they can actually compete compete with us

0:09:24.480 --> 0:09:24.560
<v Speaker 1>on