WEBVTT - Jefferies' Rubel Likes Boeing Long Term: Well Positioned(Audio)

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<v Speaker 1>Broadcasting live to New York, Bloomberg eleventh Rio to Washington,

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<v Speaker 1>d C. Bloomberg to Boston, Bloomberg twelve hundreds to San Francisco,

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<v Speaker 1>Bloomberg nine to the Country series Exam General one and

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<v Speaker 1>around the globe the Bloomberg Radio plus Japp and Bloomberg

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<v Speaker 1>Dot Gone. This is taking Stock. Coming up on taking stock.

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<v Speaker 1>We're going to take stock of the aerospace industry. We're

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<v Speaker 1>gonna take a look at Boeing, for example, Boeing announcing

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<v Speaker 1>today billions of dollars worth of new orders for aircraft

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<v Speaker 1>and maintenance plans at the Farnborough International Air Show. Seeking

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<v Speaker 1>with Howard you Bell from Jeffries. He's an aerospace and

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<v Speaker 1>defense electronics analysts. He's going to tell us about all

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<v Speaker 1>that and more. When it comes to the guys, I'm

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<v Speaker 1>gonna fly right over to Charlie Pellett. Now he's in

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<v Speaker 1>the Bloomberg Buos room with the Bloomberg Business Flash, and

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<v Speaker 1>I think you very much, Kathleen Hayes, thank you him.

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<v Speaker 1>Boeing shares their advancement right now by one and a

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<v Speaker 1>half percent. The a's the ticker it is at one

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<v Speaker 1>thirty two oh four. Stocks are climbing SMPT five hundred

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<v Speaker 1>index a trading at a record very close to a

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<v Speaker 1>record now up ten points back at thirty nine a

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<v Speaker 1>game there of five tenths of one percent. Stick around

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<v Speaker 1>for the close. Will the SMP five hundred index be

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<v Speaker 1>hitting a record down? Industrials up one oh one to

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<v Speaker 1>eighteen thousand, two hundred forty seven, a gain there of

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<v Speaker 1>six tents of one percent. The nastack Compositive Index up

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<v Speaker 1>thirty eight points. Nastack did trade above five thousand right

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<v Speaker 1>now up by eight tenths of one percent. Tenure down

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<v Speaker 1>twenty thirty seconds, yield there one point four two percent,

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<v Speaker 1>and we've got gold down three seventy ounce to twelve

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<v Speaker 1>thirteen fifty four, a drop there of three tents of

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<v Speaker 1>one percent. We are just about thirty minutes away from

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<v Speaker 1>al Coah's results. What should we be expecting? That question

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<v Speaker 1>for Anthony Young, he's a metals and mining analysts with mcquarie.

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<v Speaker 1>He was our guest just about an hour ago right

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<v Speaker 1>here on taking stock. Well, I mean, this quarter is

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<v Speaker 1>somewhat unique given the split at the company is going

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<v Speaker 1>to be occurring at the company. So the split and

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<v Speaker 1>will pay a major factor in this earnings release. UM

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<v Speaker 1>investors are looking for further details on that, but then

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<v Speaker 1>also fundamentally UM trying to figure out, you know, what's

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<v Speaker 1>going on with the aluminium business and what's going on

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<v Speaker 1>with the downstream or their industrial business, and looking at

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<v Speaker 1>the UM drivers that are impacting that and the profitability

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<v Speaker 1>that they're ample to generate in those two companies once

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<v Speaker 1>they split. And again ALCA after the bell shares up

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<v Speaker 1>now by two point one percent, recapping SMP up ten,

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<v Speaker 1>a gain of point five percent three two on Wall Street.

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<v Speaker 1>Now the other stories making news. Thank you, Charlie from

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<v Speaker 1>the Bloomberg news Room. I'm Jill Schneider. This news update

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<v Speaker 1>David Cameron says he will offer his resignation to the Queen.

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<v Speaker 1>prepared to make that case anywhere across Indiana and anywhere

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<v Speaker 1>For the second time this year, Manhattan Hinge will make

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<v Speaker 1>its appearance starting tonight. The solar spectacle is created when

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<v Speaker 1>glow just after eight p m. Global News twenty four

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<v Speaker 1>hours a day, powered by more than journalists and analysts

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<v Speaker 1>in more than one twenty countries. From the Bloomberg News Room.

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<v Speaker 1>I'm Jill Schneider, Charlie, and we thank you. What again recapping?

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<v Speaker 1>We do have equities trading higher SLM P five, How

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<v Speaker 1>did it index up nine to nine? That is a

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<v Speaker 1>gain of point four. I'm Charlie Pellett and that's a

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<v Speaker 1>Bloomberg business flash. This is taking stock with Pim's box,

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<v Speaker 1>and Kathleen has on Bloomberg Radio bowing growing more optimistic

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<v Speaker 1>about airplane orders, increasing its long term forecasts on the

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<v Speaker 1>expectation that demand for air travel the expanding around the globe,

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<v Speaker 1>led by China and though developing countries. Here to discuss

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<v Speaker 1>this is Howard your Bell, senior equity research channelists for

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<v Speaker 1>Aerospace and Defense Electronics at Jeffreys here in New York City.

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<v Speaker 1>How Ared, Welcome to the show. Well, it is interesting

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<v Speaker 1>that you know that I think that the the figure

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<v Speaker 1>of course that Boeing is looking at five point nine

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<v Speaker 1>trillion dollars over twenty years. That's a lot of money

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<v Speaker 1>and a lot of airplane orders, but the fact that

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<v Speaker 1>China and developing countries are going to be leading it

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<v Speaker 1>not totally. If that's been really continuation of a trend.

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<v Speaker 1>I think we've all forgotten there's a large and growing

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<v Speaker 1>middle class in China. Howard, I wonder if you could

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<v Speaker 1>speak a little bit more broadly about the Farnborough Air Show,

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<v Speaker 1>which actually closed early today because of a torrential downpour.

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<v Speaker 1>What's at stake there, I mean, taking place in Britain,

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<v Speaker 1>And what if you give us your thoughts about Brexit

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<v Speaker 1>the UK industry and orders for these international companies. That's

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<v Speaker 1>a mouthful. Yeah, well, that's why I give it to

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<v Speaker 1>you at a time. Oh I will well, I'm dodging

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<v Speaker 1>that bullet. But um, first, I'd say that Brexit is

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<v Speaker 1>an unfortunate event. But um, and it creates a little

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<v Speaker 1>bit of friction for air travel. Um. But but I'm

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<v Speaker 1>not sure it's going to be you know, a big

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<v Speaker 1>calamity over the long haul. I mean, if we look

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<v Speaker 1>at UK air travel, it's about two and a half

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<v Speaker 1>percent of global traffic. And if if you assume, um,

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<v Speaker 1>it takes maybe ten out at worst, it's just a

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<v Speaker 1>couple of percentage points of loss. Second, what happens is

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<v Speaker 1>it does make it cheaper to manufacture in the UK,

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<v Speaker 1>and over time, whether it's UM, Boeing or Airbus or whomever, UM,

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<v Speaker 1>Britain will become a bit more of an export economy

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<v Speaker 1>than than it's possibly been. And maybe the last point

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<v Speaker 1>I make in terms of Brexit, that's unfortunate, you know,

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<v Speaker 1>in terms of friction, um, it just now means um,

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<v Speaker 1>the Brits will have to be in the same line

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<v Speaker 1>going to the EU as the Americans. Well, a little

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<v Speaker 1>more competition maybe. But it's interesting that what the came

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<v Speaker 1>out of the air show this year is the industry

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<v Speaker 1>broadly expecting fewer aircraft orders. Were Boeing's talking up the

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<v Speaker 1>least the longer term view? Is that consistent? Yes, I

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<v Speaker 1>think so. I mean we we have down orders this year.

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<v Speaker 1>I mean when you have a seven year backlog in

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<v Speaker 1>some categories, it's hard to um, you know, wait, I

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<v Speaker 1>mean airlines want to be patients, they want to target deliveries,

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<v Speaker 1>they want to see exactly what their fleet fleets are

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<v Speaker 1>and and it's really a smart idea not to necessarily

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<v Speaker 1>buy a twenty or twenty five year asset based on

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<v Speaker 1>one year's worth of business. Howard, what is your thought

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<v Speaker 1>on investing in Boeing at the present time. I think

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<v Speaker 1>the stock is down about five five and a half

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<v Speaker 1>percent so far this year. Yes, um it was, it is,

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<v Speaker 1>but um it's actually it was actually up in the

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<v Speaker 1>last quarter despite all the volatility and the market just shade.

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<v Speaker 1>I we like it longer term when we have as

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<v Speaker 1>a buy. I think the you know, they've had a

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<v Speaker 1>couple of events this year that have been unfortunate. The

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<v Speaker 1>biggest has probably been um, you know, miss missing um

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<v Speaker 1>costs on the case for tanker, but I think they

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<v Speaker 1>have those risks understood. There's a substantial free cash flow

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<v Speaker 1>going forward. Um as the company continues to go down

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<v Speaker 1>on the improve on the learning curve, on building the

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<v Speaker 1>seven eight seven and the model mix works in their favor.

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<v Speaker 1>So in terms of the health of the company, the

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<v Speaker 1>bottom line, the revenues, where is bowing in its cycle? Now?

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<v Speaker 1>I grew up in Olympia, Washington, so I remember when

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<v Speaker 1>Boeing was fully ensconced in Washington State, and of course

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<v Speaker 1>it's it's spread its operations around the world. Where is

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<v Speaker 1>it now? Well? Still, the vast majority of production is

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<v Speaker 1>is in UM is in Seattle, and of course all

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<v Speaker 1>seven three sevens are built there today. UM there's a

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<v Speaker 1>split between South Carolina and UM Everett for the seven

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<v Speaker 1>eight sevens, and I think that's frankly, you know, healthy,

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<v Speaker 1>You create a little bit of sibling rivalry, rivalry if

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<v Speaker 1>you want to call it that. UM. The the ability

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<v Speaker 1>of bowing to now source from more places is good UM.

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<v Speaker 1>But I also think what's happened has been that with

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<v Speaker 1>recent wage agreements and other factors, the company is now

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<v Speaker 1>in a position to actually do more by excuse me,

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<v Speaker 1>do more make inside than by UM. The productivity of

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<v Speaker 1>the I AM is terrific and it's and it's making

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<v Speaker 1>people outside have to step up their game in order

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<v Speaker 1>to sell the Bolling Howard. I was noting over the

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<v Speaker 1>weekend that there're being, of course, many changes inside the

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<v Speaker 1>aircraft extended American Airlines, premium economy sections, the companies that

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<v Speaker 1>make the equipment that goes into the planes. Are there

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<v Speaker 1>any that you think investors would benefit from owning? Well,

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<v Speaker 1>we don't have a buy on B Aerospace, but they

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<v Speaker 1>are the premier provider of seats and cabin interiors. They

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<v Speaker 1>have a leading share of galleys, and I do agree

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<v Speaker 1>with you, Pim that UM as airlines have become more

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<v Speaker 1>full um load factors average or more. In many cases,

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<v Speaker 1>people realize there's no such thing as a free seat

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<v Speaker 1>where they can leave their stuff and work, and they

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<v Speaker 1>have to pay for it. And so what better way

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<v Speaker 1>to do it than um to offer better comfort with seats.

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<v Speaker 1>And that's been a big effort by both Boeing and Airbus,

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<v Speaker 1>but also by b Aerospace to do it right. Thank

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<v Speaker 1>you very much for spending time with us. Howard Rebel.

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<v Speaker 1>He is a senior equity research analyst aerospace in the

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<v Speaker 1>defense electronics industry and a managing director at Jeffreys and Company.

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<v Speaker 1>You're listening to taking stock and this is Bloomberg. This

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<v Speaker 1>is taking stock on. Kathleen Hayes a long with pim Fox.

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<v Speaker 1>So we're gonna be finding out next how to make

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<v Speaker 1>some income in a low deal, low growth environment.