WEBVTT - Ryanair CEO Michael O’Leary Talks Airlines, Fuel Risks

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news, Join us.

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<v Speaker 2>Now, legend of the industry, the ran Eboss Michael Leary, Michael,

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<v Speaker 2>good morning and see it.

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<v Speaker 3>Come with your friends. Wow, you're alone part of the industry.

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<v Speaker 3>How would you describe yourself? Old fat, old fart? I think, yeah,

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<v Speaker 3>I think it's fat. Seeing dinosaur.

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<v Speaker 2>You've seen it, O, sat Have you seen something like

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<v Speaker 2>this before? The situation from five.

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<v Speaker 4>Years ago, the Russians invaded Ukraine twenty years ago, the

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<v Speaker 4>second goal for the first golf for War nine to eleven. Yeah,

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<v Speaker 4>this happens regularly within our industry. That's why in Ryan

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<v Speaker 4>here we typically had eighty percent of our fuel. We're

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<v Speaker 4>eighty percent hedged out to March twenty seven, sixty seven

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<v Speaker 4>books of Barrow. We're in great shape, apart from the

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<v Speaker 4>find our share price is tanked in the last two

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<v Speaker 4>weeks because they.

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<v Speaker 3>Were oh they're in their line. No got the hell.

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<v Speaker 1>We're just reported record full your results, two hundred eight

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<v Speaker 1>million passengers, two point two six billion euros profit after attacks,

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<v Speaker 1>spitting off cash to shareholders, share.

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<v Speaker 3>Buybacks and with a bit of a look if this continues.

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<v Speaker 1>Although you know, we can all have a debate how

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<v Speaker 1>long we think this will continue in the Middle East

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<v Speaker 1>over the straight and foremost some of the flaky competitors

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<v Speaker 1>in Europe will get taken out in carrier baskets by

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<v Speaker 1>about September October because they're not edged on oil.

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<v Speaker 3>And they're borrowed up to the Rye balls in net debt.

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<v Speaker 2>Are you runny to buy?

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<v Speaker 3>We are certainly rated by cheap aircraft.

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<v Speaker 1>If you've got any cheap aircraft, I'm really excited. We

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<v Speaker 1>are about to get the first ten of our Max

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<v Speaker 1>ten aircraft fifth first fifteen of our Max ten aircraft

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<v Speaker 1>from Boeing in the spring of twenty twenty seven. Twenty

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<v Speaker 1>percent more seats per plane, burns twenty percent less oil.

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<v Speaker 1>Like the technological efficiency of the new engines is remarkable,

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<v Speaker 1>and we will take we're ordered. We've ordered three hundred

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<v Speaker 1>of those from Boeing. We priced them during COVID, so

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<v Speaker 1>we've basically stolen them and they will transform even our

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<v Speaker 1>operating economics in Europe for the next decade.

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<v Speaker 5>So are you interested though, in buying a carrier in

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<v Speaker 5>its entirety aside from just their aircraft.

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<v Speaker 1>There is nothing in Europe you would want to buy

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<v Speaker 1>a crap You know it will go bust, you know,

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<v Speaker 1>in the not too distant future. Europe is inexorably, you know,

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<v Speaker 1>moving the same direction the US did twenty years ago.

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<v Speaker 1>Three large connecting carriers BA Lufthansat Air France KLM. They

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<v Speaker 1>are making out like bandits at the moment because all

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<v Speaker 1>the long haul connecting traffic has switched off the golf

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<v Speaker 1>carriers and is going on those legacy guys shorthold. Ryanair

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<v Speaker 1>will continue to dominate the short hold space in Europe

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<v Speaker 1>because we have much lower fares and much lower costs.

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<v Speaker 1>We're the only really low fare, low cost carry in Europe.

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<v Speaker 1>There's a few other low fare not so low cost

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<v Speaker 1>carriers in Europe, but they're all good to They're all

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<v Speaker 1>going to go the same way as spiriting from Tire

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<v Speaker 1>in the States.

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<v Speaker 3>That's what I wanted to ask.

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<v Speaker 5>It seems like the model in the US is really struggling.

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<v Speaker 5>We had Spirrigo bankrupt. There's talk of mass consolidation among

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<v Speaker 5>some of the other low cost carriers and this idea

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<v Speaker 5>that every consumer is expecting higher quality and that that

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<v Speaker 5>is what's generating a lot of the revenues. How does

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<v Speaker 5>Ryanair succeed in that environment in that demand backdrop.

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<v Speaker 3>I mean the.

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<v Speaker 1>Problem for the last twenty years of this States is

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<v Speaker 1>there's really been no low cost carriers anymore. I mean

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<v Speaker 1>we copied out this formula reguly from Southwest back in

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<v Speaker 1>the late nineteen eighties when Herb Keller, he was in

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<v Speaker 1>each pomp, you know, Southwest of charging ten dollars fares.

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<v Speaker 1>Now Southwest average fair last year was one hundred and

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<v Speaker 1>forty bucks.

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<v Speaker 3>It's not a low fair carrier anymore.

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<v Speaker 1>If you had a real low fair carrier here in

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<v Speaker 1>the States, as Ryan Air is in the US, our

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<v Speaker 1>average fair last year was forty bucks, there would still

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<v Speaker 1>be very strong demand because the main airlines here, I

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<v Speaker 1>mean they've had control of the amount of supplying the

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<v Speaker 1>market for the last twenty.

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<v Speaker 3>Years, and they've been pricing up.

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<v Speaker 1>The cost of air travel in the States is incredibly high,

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<v Speaker 1>particularly given that you don't pay for ATC.

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<v Speaker 3>Could you expand into the US, No, absolutely not.

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<v Speaker 1>We're too busy expanding in Europe and then those countries

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<v Speaker 1>around Europe.

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<v Speaker 3>There is so much growth available to us in Europe.

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<v Speaker 3>You looked at it.

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<v Speaker 1>Last year we grew four percent, were the biggest airline

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<v Speaker 1>in Europe. We grew to four percent to two hundred

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<v Speaker 1>eight million pastors. This year had grown another four percent

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<v Speaker 1>two hundred and sixteen million pastors. And in the next

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<v Speaker 1>decade with these Max ten aircraft, I'm going to go

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<v Speaker 1>to three hundred million passengers all in Europe. I mean,

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<v Speaker 1>Europe is the best playground for low cost airund that

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<v Speaker 1>you could possibly imagine a couple of big, useless legacy

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<v Speaker 1>airlines charging more, you know, charging annual salaries for their

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<v Speaker 1>long haul travel, but nobody able to do the low

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<v Speaker 1>cost stuff. We do the low cost stuff. Well, we're

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<v Speaker 1>cheap irish guys, you know, and so we do it

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<v Speaker 1>well with the with a with an order for three

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<v Speaker 1>hundred really fantastic aircraft.

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<v Speaker 2>Used to be sig Maine back in the night, which

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<v Speaker 2>used to be sim Maine, it was Brudshald, remember that.

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<v Speaker 3>Well, we were never brutal, we were cheap and less.

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<v Speaker 3>We were cheap and mean.

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<v Speaker 1>Now we're just cheap and cheerful new aircraft on time flights,

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<v Speaker 1>huge coman last year, our customer were record customer service metrics.

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<v Speaker 1>Customer service satisfaction were done for eighty sixty to eighty

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<v Speaker 1>nine percent. I never thought I'd see the day when

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<v Speaker 1>I got more than fifty percent customer satisfaction.

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<v Speaker 3>But he who knew.

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<v Speaker 5>Can I ask you, where are Europeans traveling to this

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<v Speaker 5>summer for vacation?

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<v Speaker 3>Do they want to come to America anymore? No?

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<v Speaker 1>No, I mean that's not yes, they do, but the

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<v Speaker 1>problem is that the cost of longhol travels got very expensive,

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<v Speaker 1>so you know, there isn't much competition across the Atlantic

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<v Speaker 1>between the European legacies and the US majors. The Gulf

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<v Speaker 1>carriers were the real disruptors for the last twenty years,

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<v Speaker 1>and they have you know, their capacity has been halved

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<v Speaker 1>in recent months. So a huge amount of Europeans will

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<v Speaker 1>holiday at home in Europe this year, in Portugal and

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<v Speaker 1>Spain and Italy and Greece. A lot of Americans are

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<v Speaker 1>still coming to Europe for the quality, for the sunshine,

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<v Speaker 1>the culture and the alcohol, and along with they continue

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<v Speaker 1>to travel. But I think there's a real seed change

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<v Speaker 1>this year of people who would historically have gone to

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<v Speaker 1>the Middle East or using the Middle East carriers to

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<v Speaker 1>connect to long haul probably going to stay at home

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<v Speaker 1>in Europe this summer.

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<v Speaker 3>When we're Europe run out.

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<v Speaker 1>Of fuel, it won't There was a real concern. I

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<v Speaker 1>think back in April, you know, there was real worries

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<v Speaker 1>over supply jet supply. The jet supply has now. We

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<v Speaker 1>met with all of our fuel suppliers in Paris last week.

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<v Speaker 1>There's no issues over jet fuel supply right now through

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<v Speaker 1>to the end of September.

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<v Speaker 3>One issue in the UK. Q eight, which is the

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<v Speaker 3>subsidiary of the state of Q eight, have.

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<v Speaker 1>About thirty percent market share some of the airports in

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<v Speaker 1>the UK even they now we are resourcing that supply.

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<v Speaker 1>Most of Europe' Jeta one supply comes from West Africa,

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<v Speaker 1>the America is Norway, and the lifting of Russian sanctions

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<v Speaker 1>has also eased the supply Jet one into Eastern European countries.

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<v Speaker 5>So you don't seem concerned with what's going on right

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<v Speaker 5>now with the conflict in Iran.

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<v Speaker 1>I'm very concerned about the price of oil, but I

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<v Speaker 1>don't believe the conflict in Iran will have any disruption

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<v Speaker 1>on European jet supplies.

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<v Speaker 3>I do.

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<v Speaker 1>The question for US is how long will the straight

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<v Speaker 1>sufform moves remain closed.

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<v Speaker 3>I mean, you know, we gave guidance this morning.

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<v Speaker 1>If it remains closed till March twenty twenty seven, our

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<v Speaker 1>unit because of our on head twenty percent, our unit

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<v Speaker 1>costs might rise, you know, mid single diges this year.

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<v Speaker 3>Nobody believes what do you have that too?

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<v Speaker 2>You can you just explain your current edge and strategy

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<v Speaker 2>where you've.

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<v Speaker 3>Had that fuel. We have bought eighty percent of our

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<v Speaker 3>jet fuel requirements.

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<v Speaker 1>John out to March twenty twenty seven at sixty seven

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<v Speaker 1>dollars a barrow. So we're sitting you know, we're in

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<v Speaker 1>great je position, great position. But no nobody really believes

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<v Speaker 1>that the Straights Forum moves is going to stay closed

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<v Speaker 1>until March of next year. It's just we don't know

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<v Speaker 1>when they're going to reopen. Iran is going to starve

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<v Speaker 1>if they don't get it ready. The Straightsform moves reopened

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<v Speaker 1>to the next couple of months. The midterm election season

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<v Speaker 1>kicks off in Memorial Day at the end of May.

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<v Speaker 1>You know, Trump is going to lose the House and

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<v Speaker 1>the Senate if he doesn't get this result and reopened.

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<v Speaker 3>But the timing is none of us know when the

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<v Speaker 3>timing will be. But you know, I hope it's sooner

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<v Speaker 3>rather than later.

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<v Speaker 1>But if it stays, if it becomes later, say it's

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<v Speaker 1>stay out for something.

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<v Speaker 3>Happens to none of us.

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<v Speaker 1>The expect the straight stay closed in September, October, November.

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<v Speaker 1>Then we are looking at our unit costs will be

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<v Speaker 1>up about five percent. But you'll be looking at kind

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<v Speaker 1>of airlines failing all over Europe on the way who's well,

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<v Speaker 1>I can't really name them, but you know some of

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<v Speaker 1>our low fare but not so low cost COMPETITIVESZ I

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<v Speaker 1>don't think Easy Yet will fail. I mean, I don't

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<v Speaker 1>think they make any money this year with him could

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<v Speaker 1>well be a candidate for failure.

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<v Speaker 3>Air Baltic, which was recently.

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<v Speaker 1>Built out by the Latvian government, gave it a thirty

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<v Speaker 1>million loan to get them from June through to August,

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<v Speaker 1>but they have to repay the loan in August. I mean,

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<v Speaker 1>good luck with the lasteans trying to get that repaid

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<v Speaker 1>at the end of August.

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<v Speaker 3>So I think there will be casualties, But again a lot.

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<v Speaker 1>Depends on how I mean, you know more about this

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<v Speaker 1>than how long the streets film remains remain closed. When

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<v Speaker 1>can Trump declear a victory and you know, kick off

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<v Speaker 1>the midterms, And I suspect it's probably going to be

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<v Speaker 1>the end of May, maybe early June, but but I mean,

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<v Speaker 1>if I was any if if my predictions were any good,

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<v Speaker 1>I wouldn't be working in the airline business, in a

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<v Speaker 1>proper functioning business like Bluemberg.

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<v Speaker 3>I'll get it right with falk Star salaries.

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<v Speaker 2>I'll get it right this time. Michael Larry Out start

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<v Speaker 2>at the end, administry Buster, Ryan and Michael going to

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<v Speaker 2>see about it.

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<v Speaker 3>Thanks to se