WEBVTT - Daybreak Weekend: Nvidia Earnings, Europe Airlines, Japan GDP 0:00:00.240 --> 0:00:07.720 Bloomberg Audio Studios, Podcasts, radio news. 0:00:10.400 --> 0:00:12.960 This is Bloomberg day Break Weekend, our global look at 0:00:12.960 --> 0:00:15.000 the top stories in the coming week from our Daybreak 0:00:15.040 --> 0:00:18.320 anchors all around the world. Straight Ahead on the program, 0:00:18.440 --> 0:00:21.840 look ahead to earnings from chip giant Nvidia, along with 0:00:21.840 --> 0:00:24.639 some of the biggest US retailers. I'm John Tucker in 0:00:24.680 --> 0:00:25.079 New York. 0:00:25.280 --> 0:00:28.080 I'm Caroline Hebge here in London, where we're looking at 0:00:28.080 --> 0:00:32.000 the upcoming earnings test for Europe's low cost airlines. 0:00:32.360 --> 0:00:35.680 I'm Dog Krisner looking at whether Japan's economy will show 0:00:35.760 --> 0:00:37.560 improvement in the first quarter. 0:00:38.159 --> 0:00:42.200 That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 0:00:42.240 --> 0:00:45.920 eleven three year, New York, Bloomberg ninety nine to one, Washington, DC, 0:00:46.440 --> 0:00:51.559 Bloomberg ninety two nine, Boston, DAB Digital Radio, London, Syrias 0:00:51.720 --> 0:00:54.880 XM one twenty one, and around the world on Bloomberg 0:00:54.960 --> 0:00:57.520 Radio dot Com and the Bloomberg Business app. 0:01:02.720 --> 0:01:05.360 And good day to everybody. I'm John Tucker. Let's start 0:01:05.400 --> 0:01:09.440 today's program with the company founded in a Denny's restaurant 0:01:09.520 --> 0:01:13.280 in East San Jose, California, Wednesday, after the close of 0:01:13.360 --> 0:01:16.959 regular trading. The biggest company, in Vidia opening its books 0:01:16.959 --> 0:01:19.839 to investors. It's going to preview and walk you through 0:01:19.880 --> 0:01:23.039 all the details. We're joined by Bloomberg Technology co anchor 0:01:23.600 --> 0:01:27.120 Ed Ludlow. Ed, I got to start with a China question. 0:01:27.720 --> 0:01:31.440 Which of Nvidia's future results are going to reflect purchases 0:01:31.760 --> 0:01:32.480 from China? 0:01:33.080 --> 0:01:33.880 Nobody knows. 0:01:34.240 --> 0:01:38.280 That is the great That's why we bring you on board, Ed, That. 0:01:38.680 --> 0:01:42.000 Is the great mystery and mystique of Nvidia, because you know, 0:01:42.080 --> 0:01:46.280 for all the headlines and the discussion of what Nvidia 0:01:46.400 --> 0:01:49.120 can or cannot sell to Chinese companies, you know, with 0:01:49.240 --> 0:01:53.040 Jensen Wang alongside President Trump in China, there's a big 0:01:53.400 --> 0:01:56.400 misunderstanding of how it actually works. So like the US 0:01:56.520 --> 0:02:00.400 government will say we have approved Nvidia to sell a 0:02:00.400 --> 0:02:05.160 certain generation of chip to a certain group of Chinese companies. Great, fantastic, 0:02:05.760 --> 0:02:08.240 and Jensen one will go on stage as he's done 0:02:08.280 --> 0:02:10.320 many times in twenty twenty six so far, and say 0:02:10.800 --> 0:02:14.160 good news, guys, like we have orders from Chinese companies 0:02:14.240 --> 0:02:16.360 for the H two hundred, which is the generation of 0:02:16.400 --> 0:02:19.160 chip they're permitted to sell, really good like real orders. 0:02:19.200 --> 0:02:21.200 And so as a result of those orders, we're going 0:02:21.240 --> 0:02:23.040 to ramp up. We're going to go to our suppliers 0:02:23.280 --> 0:02:26.040 make sure that we have those chips. But nobody actually 0:02:26.120 --> 0:02:30.239 knows if China's okay with this. And you know, it's 0:02:30.280 --> 0:02:33.920 really interesting because to his credit, Gensmong has always been 0:02:33.960 --> 0:02:36.480 really consistent with me when I've discussed it with him. 0:02:36.760 --> 0:02:40.680 When they negotiate this stuff, they don't actually themselves negotiate 0:02:40.720 --> 0:02:44.600 with the Chinese government. If Chinese tech companies are allowed 0:02:44.639 --> 0:02:48.280 to buy their chips, they will, they'll place orders, and 0:02:48.320 --> 0:02:52.000 that we should infer from that means that the Chinese 0:02:52.040 --> 0:02:54.480 government said it was okay. And so the only way 0:02:54.480 --> 0:02:56.880 of knowing is if it shows up on the income statement. 0:02:56.919 --> 0:03:00.280 That's the joy of covering earnings and public companies, it's 0:03:00.320 --> 0:03:01.800 either there in black and white or it's not. 0:03:02.720 --> 0:03:04.760 Yeah, you know, it's it's kind of hard for me 0:03:05.400 --> 0:03:08.919 when I go home in the afternoon, said to pass 0:03:09.400 --> 0:03:13.120 someplace that doesn't have a data center under construction. What's 0:03:13.240 --> 0:03:16.320 the where's the growth going to come from? For in video? 0:03:16.440 --> 0:03:19.280 Is it those data centers that are popping up seemingly everywhere. 0:03:19.760 --> 0:03:22.760 Well, look, I really want to have some fun and 0:03:23.000 --> 0:03:25.880 make this like just digestible for the audience. All you 0:03:25.919 --> 0:03:28.800 need to know is that wherever it's coming from, the 0:03:29.000 --> 0:03:32.560 video numbers are really big. You know this story. You 0:03:32.880 --> 0:03:36.960 mentioned Denny's right in April nineteen ninety three. When this 0:03:37.000 --> 0:03:38.680 company was found in Denny's, I was less than a 0:03:38.760 --> 0:03:43.560 year and for most of the company's initial history it 0:03:43.680 --> 0:03:47.320 made chips that powered video games consoles and no one. 0:03:47.160 --> 0:03:50.880 Really can the GPUs work, right, Yeah, gpu. 0:03:50.920 --> 0:03:54.520 The origin of the GPPU, the graphics processing unit, is 0:03:54.520 --> 0:03:57.240 that it's very good at running multiple computations at the 0:03:57.280 --> 0:03:59.480 same time, which for the layman means when you're playing 0:03:59.480 --> 0:04:02.440 a video game, all those pixels appear on the screen. 0:04:02.800 --> 0:04:04.800 You know, that's what its origin was. Now fast forward 0:04:04.800 --> 0:04:08.120 to present day. You know they are still growing revenues 0:04:08.280 --> 0:04:11.600 at near to eighty percent year on year. You know, actually, 0:04:11.680 --> 0:04:14.760 what we'll see is revenue growth accelerate into this quarter. 0:04:15.240 --> 0:04:18.080 Their margins are at seventy five percent. Like margins at 0:04:18.120 --> 0:04:21.080 seventy five percent for a company that sells chips, it's 0:04:21.120 --> 0:04:23.440 just bonkers. It's just nuts, That's all you need to know. 0:04:24.360 --> 0:04:28.320 And they do it with massive profits and cash generation, 0:04:28.560 --> 0:04:31.720 and so in this quarter that's not changing. But here's 0:04:31.760 --> 0:04:33.720 the to answer your actual question, where does it all 0:04:33.720 --> 0:04:36.800 come from it's still the big cloud computing companies what 0:04:36.800 --> 0:04:40.559 we call hyperscalers, that account for more than fifty percent 0:04:40.600 --> 0:04:44.120 of those revenues. But that's why the timing of earnings 0:04:44.200 --> 0:04:46.000 is really interesting. You know, if you're a real nerd 0:04:46.120 --> 0:04:48.080 like me, you look at the calendar and you're like, 0:04:48.160 --> 0:04:52.120 oh wow, in video reports earnings mad twentieth. But the 0:04:52.200 --> 0:04:55.000 reason that I stress that is that all of nvda's 0:04:55.000 --> 0:04:58.080 biggest customers have already done earnings and they've told us 0:04:58.080 --> 0:04:59.800 how much they're going to spend on chips this year. 0:05:00.120 --> 0:05:04.279 So it always kind of logical, and it all results 0:05:04.279 --> 0:05:05.000 in video winning. 0:05:05.080 --> 0:05:08.440 Frankly, it's still safe to say in video pretty much 0:05:08.440 --> 0:05:10.520 as a near monopoly in this film. 0:05:10.880 --> 0:05:14.320 Yeah, well, just to make sure that we're covered and 0:05:14.360 --> 0:05:18.000 I adhere to my own and Bloomberg's high standards. A 0:05:18.040 --> 0:05:21.360 technical monopoly is where you have more than seventy percent 0:05:21.480 --> 0:05:26.240 market share. And what's happening in AI right now is 0:05:26.400 --> 0:05:29.400 a very big shift from a period of time where 0:05:29.440 --> 0:05:34.840 all of the computers, and we're talking about computers right GPUs, clusters, 0:05:35.360 --> 0:05:38.800 data centers, what you're talking about is absolutely ginormous computers. 0:05:39.520 --> 0:05:42.240 Until this point, what those computers were largely doing was 0:05:42.320 --> 0:05:46.120 training the models, taking really vast volumes of data and 0:05:46.200 --> 0:05:50.480 training models on that data. Now people are using them. 0:05:50.720 --> 0:05:54.400 They're running the models either through prompts that generate a 0:05:54.400 --> 0:05:57.120 text response, it can be an image response. That's what 0:05:57.120 --> 0:05:59.880 we call inference. And when we get to that in 0:06:00.040 --> 0:06:02.440 Prince phase and video looks over its shoulder a little 0:06:02.480 --> 0:06:06.200 bit more because there are more custom silicon. Different car 0:06:06.279 --> 0:06:08.280 companies have their own chips. There are other chips on 0:06:08.320 --> 0:06:11.120 the market that would claim to be better than in 0:06:11.200 --> 0:06:14.919 videos in that sense, but there's not yet any evidence 0:06:15.000 --> 0:06:18.160 that they've sort of had their market dominance chipped away 0:06:18.200 --> 0:06:19.640 at by any of these would bees. 0:06:19.960 --> 0:06:21.960 You're going to pour over those earnings as they come 0:06:22.000 --> 0:06:25.600 across Wednesday after the close of regular trading. All right, 0:06:25.600 --> 0:06:29.320 thanks to Bloomberg Technology co anchor Ed Ludlow, Let's take 0:06:29.320 --> 0:06:31.120 a look now at some of the stocks making news 0:06:31.240 --> 0:06:35.039 in the week ahead. I'm John Tucker along with Isabel Lee, 0:06:35.240 --> 0:06:40.000 the Bloomberg Cross Asset reporter. The parade of earnings continues, 0:06:40.080 --> 0:06:42.800 and we're going to start with the biggest retailer in 0:06:42.839 --> 0:06:46.320 the world, Walmart. What's the expectation there? 0:06:46.839 --> 0:06:50.760 Walmart ticker WMT earnings will be on May twenty. First, 0:06:50.800 --> 0:06:53.360 that's a Thursday, which I checked right before we came 0:06:53.400 --> 0:06:55.320 on because you said we had to know the day. 0:06:55.400 --> 0:06:57.080 It's Thursday, seven am. 0:06:57.200 --> 0:07:01.240 ET earnings call is eight am, so early wake up 0:07:01.279 --> 0:07:04.680 if you really want to know more about Walmart revenue expected. 0:07:04.720 --> 0:07:08.239 The consensus estimates is seven hundred and forty eight billion dollars. 0:07:08.520 --> 0:07:12.200 Adjust the diluted EPs two dollars and niney three cents 0:07:12.240 --> 0:07:15.160 and deluted EPs two dollars and ninety three cents. So 0:07:15.200 --> 0:07:17.560 I could bore you with the numbers, but key themes 0:07:17.560 --> 0:07:20.760 to watch definitely market share gains. We know Walmart is 0:07:20.840 --> 0:07:24.760 positioned to benefit from its value and convenience proposition with 0:07:24.960 --> 0:07:26.960 sustained e commerce momentum. 0:07:27.080 --> 0:07:30.360 Maybe not in New York. I really can't relate whenever, Yeah, you. 0:07:30.280 --> 0:07:33.120 Know, I would love to go to I've never been 0:07:33.160 --> 0:07:33.480 to one. 0:07:33.600 --> 0:07:35.600 Oh my gosh, they're not around here. 0:07:35.880 --> 0:07:38.600 I think I may have been to one, or maybe. 0:07:38.320 --> 0:07:40.800 I'm making it up, but which makes us more than 0:07:40.880 --> 0:07:41.960 qualified to talk about. 0:07:42.120 --> 0:07:44.160 It's a once in a lifetime thing for me. I 0:07:44.160 --> 0:07:47.560 would love to go to. You and I can go 0:07:47.600 --> 0:07:48.800 on a field trip there we. 0:07:48.760 --> 0:07:52.160 Go, We can expense. It Now, when I talk about Walmart, 0:07:52.680 --> 0:07:54.840 I said that the world's largest retailer, but it's also 0:07:54.880 --> 0:07:57.000 the world's largest grocery chain too. 0:07:57.480 --> 0:07:58.840 Is a lot of people shop there. 0:07:59.240 --> 0:08:03.800 So according to Jennifer bartist Huss of Bloomberg Intelligence, she's 0:08:03.840 --> 0:08:06.640 going to be looking at online profitability. They're going to 0:08:06.640 --> 0:08:10.040 see whether e commerce margins have improved. Same Star sales 0:08:10.120 --> 0:08:13.160 Ana wealet revenue gains of four to five percent are anticipated, 0:08:13.560 --> 0:08:15.240 And of course you're going to see consumer health. 0:08:15.240 --> 0:08:16.720 I mean we have all heard this. 0:08:16.800 --> 0:08:18.720 Yeah, this is kind of a bell weather in terms 0:08:18.760 --> 0:08:23.120 of economic performance for do I dare say the lower 0:08:23.200 --> 0:08:23.760 end consumer. 0:08:23.960 --> 0:08:26.440 Yes, so you're going to see that. And we've heard 0:08:26.600 --> 0:08:28.720 time and again and all the radio shows the K 0:08:28.880 --> 0:08:31.440 shaped economy. I just read again a note today that 0:08:31.600 --> 0:08:34.319 travel is going to see heightened K shape economy. And 0:08:34.360 --> 0:08:37.600 I thought, obviously, I mean, the higher income will be 0:08:37.600 --> 0:08:40.640 in private jets and I will be in economy. 0:08:40.720 --> 0:08:41.240 You know, So. 0:08:41.640 --> 0:08:44.920 Okay, let's move on. This is one store I have 0:08:45.080 --> 0:08:48.559 been in, actually put an Anderson window there. It's expensive, 0:08:48.600 --> 0:08:51.600 but I'm talking home depot. One of the things I'm 0:08:51.880 --> 0:08:54.760 seeing more and more at home depot, more and more 0:08:54.960 --> 0:08:59.160 like professionals, carpenters, whatever, show up and it's not just 0:08:59.320 --> 0:09:01.440 you know, people bozos like me. 0:09:02.360 --> 0:09:05.840 So okay, Home Depot ticker is HD. You are not 0:09:06.000 --> 0:09:06.480 a bozo. 0:09:06.720 --> 0:09:08.720 But I think home Depot is the kind of place 0:09:08.800 --> 0:09:12.640 that you're welcome on. I think it's the kind of 0:09:12.679 --> 0:09:16.760 place that you just have what you If you need something, 0:09:16.800 --> 0:09:19.280 it's there Because I go to Home Depot guess for 0:09:19.400 --> 0:09:21.000 what plans? 0:09:21.320 --> 0:09:21.720 Really? 0:09:21.920 --> 0:09:24.480 Yeah, they have you see, you never noticed because that's 0:09:24.480 --> 0:09:27.240 not what you need. I never noticed the carpentry because 0:09:27.240 --> 0:09:29.840 I live in the tiny New York apartment. But Home 0:09:29.880 --> 0:09:32.720 Depot is also going to report earnings May nineteen. That's 0:09:32.760 --> 0:09:35.600 a Tuesday. Oh, this is even earlier. The release will 0:09:35.600 --> 0:09:38.559 be at six am ET earning is called will be 0:09:38.679 --> 0:09:42.040 nine am, so you can have breakfast in between. Revenue 0:09:42.080 --> 0:09:45.400 expected is one hundred and seventy eight billion dollars. Adjusted 0:09:45.400 --> 0:09:49.360 diluted EPs is sixteen dollars and thirty one cents, gap 0:09:49.440 --> 0:09:53.280 diluted EPs fifteen dollars and ninety eight cents, and that's 0:09:53.320 --> 0:09:57.360 earning sixteen billions. So again key themes to watch your also, 0:09:57.360 --> 0:10:02.240 consumer confidence, I mean uncertainty, inflation and job security has really. 0:10:03.120 --> 0:10:06.880 I guess the hed people from making large home improvements. 0:10:06.960 --> 0:10:09.320 Why will you remodel your kitchen when you think you're well. 0:10:09.360 --> 0:10:12.280 The other thing is the mortgage rates and what the 0:10:12.360 --> 0:10:14.920 ten year going out, the thirty year the long bond 0:10:14.960 --> 0:10:19.320 that was hovering right around five percent with the latest 0:10:19.360 --> 0:10:23.720 economic figures, that feeds through mortgage rates home expenses one 0:10:23.760 --> 0:10:24.319 hundred percent. 0:10:24.360 --> 0:10:25.080 That's a great point. 0:10:25.120 --> 0:10:27.480 And I think another key theme to watch is we 0:10:27.520 --> 0:10:31.720 have management indicating they've learned to manage tariff, so we'll 0:10:31.720 --> 0:10:34.320 see how that plays out. I feel like tariff we 0:10:34.520 --> 0:10:36.440 kind of forgot about it. When I say forgot, like 0:10:37.160 --> 0:10:40.160 new headlines have kind of dominated the market, but it's 0:10:40.160 --> 0:10:42.280 still very alive and well. 0:10:42.280 --> 0:10:46.079 Okay, let's finish up with the last stock on your list. 0:10:46.520 --> 0:10:51.840 And I'm just hoping there's some intersection between artificial intelligence 0:10:52.240 --> 0:10:55.120 and John Deere. I mean, they're building all these data 0:10:55.160 --> 0:10:59.040 centers everywhere they are, and Deer makes stuff that you 0:10:59.120 --> 0:11:02.920 can build data with, like tractors and stuff like that. 0:11:03.040 --> 0:11:09.160 I guess, yeah, that's actually no tickers. The they have 0:11:09.200 --> 0:11:13.360 earnings also made twenty one Thursday six am. Earnings call 0:11:13.440 --> 0:11:15.880 is ten am, so you get a longer breakfast in between. 0:11:15.960 --> 0:11:18.440 Net sales is estimated to be forty one billion, total 0:11:18.480 --> 0:11:21.600 revenue forty seven billion dollars net come four point eight 0:11:21.640 --> 0:11:24.920 billion dollars, et cetera. So they're expected to post a 0:11:24.920 --> 0:11:28.640 better than expected fullier twenty twenty six results. Again, to 0:11:28.720 --> 0:11:32.240 your point, it's driven by maybe agricultural equipment makers and 0:11:32.440 --> 0:11:35.040 the and the momentum in building construction. 0:11:35.440 --> 0:11:38.200 Well, you know the farmer, you know, we call it 0:11:38.280 --> 0:11:41.320 farm again, and what's happening on next ye right now? Well, yeah, no, 0:11:41.440 --> 0:11:45.000 it's been a very difficult time, especially with the tariffs 0:11:45.440 --> 0:11:50.079 and the planting season. So you know, again dear something 0:11:50.080 --> 0:11:51.800 of a bill weather for the Yuba's economy. 0:11:52.000 --> 0:11:52.840 Yeah, tarriff. 0:11:52.920 --> 0:11:55.760 Also, you're right is a key risk and used inventory 0:11:56.000 --> 0:12:00.000 overhang because there's an elevated use tractor inventories which can 0:12:00.000 --> 0:12:02.120 continue to weigh a new equipment demand in pricing. I 0:12:02.120 --> 0:12:06.280 guess where do you store these things? They're so gigantic and. 0:12:06.240 --> 0:12:09.280 They're trust me, they're expensive too. I can imagine I 0:12:09.280 --> 0:12:13.600 know from firsthand experience. Wow, Isabelle, thank you for showing 0:12:13.640 --> 0:12:16.840 up today. Appreciate it. Isabelle Lee is our Bloomberg Cross 0:12:16.880 --> 0:12:20.240 asset reporter. Coming up on Bloomberg day Break weekend, we're 0:12:20.280 --> 0:12:22.680 going to take a look at the upcoming earnings test 0:12:22.800 --> 0:12:27.240 for Europe's low cost airlines. I'm John Tucker, and this 0:12:27.600 --> 0:12:42.199 is Bloomberg. This is Bloomberg day Break weekend to our 0:12:42.240 --> 0:12:44.600 global look ahead at the top stories for investors in 0:12:44.600 --> 0:12:47.160 the coming week. I'm John Tucker in New York. Up 0:12:47.240 --> 0:12:49.120 later in the program, we're going to look ahead to 0:12:49.200 --> 0:12:54.000 some key economic data in Japan. But first, Europe's largest 0:12:54.000 --> 0:12:57.200 low cost airlines report earnings in the coming days. And 0:12:57.240 --> 0:13:00.240 this comes against a backdrop of rising ut certainly jet 0:13:00.280 --> 0:13:02.959 fuel costs driven by the war in Iran. Let's get 0:13:02.960 --> 0:13:06.520 more now from Bloomberg Daybreak Europe anchor Caroline Hepger. 0:13:06.559 --> 0:13:10.120 John, we will get into an uncertain airline business as 0:13:10.160 --> 0:13:13.920 we approach peak travel season here in Europe. Willie Walsh, 0:13:14.000 --> 0:13:17.400 the industry veteran of the Director General of the International 0:13:17.440 --> 0:13:22.000 Air Transport Association, has worn recently that airlines can't keep 0:13:22.080 --> 0:13:25.960 absorbing the additional costs that they're seeing. The war in Iran, 0:13:26.000 --> 0:13:31.200 which began in February, has upended the industry. London's Teithow Airport, 0:13:31.200 --> 0:13:33.920 one of the major hubs in Europe reported a drop 0:13:33.960 --> 0:13:37.400 in passenger numbers in April of five point three percent 0:13:37.440 --> 0:13:40.559 from a year earlier, and that's down to six point 0:13:40.640 --> 0:13:44.679 seven million passengers. As the Middle East war has disrupted 0:13:44.679 --> 0:13:48.760 global air travel. The airport's CEO called it though a 0:13:48.960 --> 0:13:53.640 short term disruption now. Bloomberg Intelligence forecasts that the big 0:13:53.679 --> 0:13:58.600 European carriers like IAG and Air France CARELM are going 0:13:58.640 --> 0:14:01.600 to see their fuel costs go up by twenty seven 0:14:01.640 --> 0:14:05.000 percent for LIFTANND so that figure is twenty two percent 0:14:05.040 --> 0:14:09.840 for twenty twenty six, so creating a big challenge for profitability. 0:14:10.480 --> 0:14:13.719 Others cast doubt on the risk of jet fuel shortages, 0:14:13.800 --> 0:14:18.120 seeing them as an excuse to cut unprofitable flights of 0:14:18.200 --> 0:14:22.200 the low cost carriers reporting in the next week or so. 0:14:22.360 --> 0:14:27.360 Ryanair is relatively well protected by fuel hedging, but it 0:14:27.400 --> 0:14:32.440 remains exposed to potential supply disruptions and pressure on consumer spending. 0:14:33.040 --> 0:14:35.840 Easy Jet meanwhile has warned that the war in the 0:14:35.840 --> 0:14:39.600 Middle East will widen its first half loss and weigh 0:14:39.720 --> 0:14:44.520 on summer demand. Overall, investors will be watching very closely 0:14:44.800 --> 0:14:48.280 for further cuts to full year guidance for both of 0:14:48.360 --> 0:14:49.360 these airlines. 0:14:49.880 --> 0:14:50.000 Well. 0:14:50.080 --> 0:14:53.800 Joining us now is Danny Lee, Aviation and transport reporter 0:14:53.920 --> 0:14:57.120 based in Asia. Danny good to speak to you how 0:14:57.200 --> 0:15:01.160 much is air travel currently being affected by the impact 0:15:01.480 --> 0:15:04.400 of wars Well Caroline. 0:15:04.440 --> 0:15:08.000 The airline industry is grappling with a more than doubling 0:15:08.000 --> 0:15:11.800 in fuel costs and the counting of that cost is 0:15:11.920 --> 0:15:16.200 resulting in multiples of billions and higher fuel bills. And 0:15:16.640 --> 0:15:20.000 right now we've only seen a fraction of that be 0:15:20.360 --> 0:15:23.840 reported by the airline industry through at least one month 0:15:23.920 --> 0:15:27.000 of earnings that has filtered through. But it's now into 0:15:27.000 --> 0:15:29.680 the second and the third quarter where we are seeing 0:15:29.920 --> 0:15:33.160 the volatility and the surge and jet fuel costs which 0:15:33.200 --> 0:15:37.640 is absolutely wrecking airline balance sheets across the piece, and 0:15:37.880 --> 0:15:41.240 in particular, when you see airlines grappling with higher fuel costs, 0:15:41.480 --> 0:15:45.240 they are now thinking about how they can mitigate those losses, 0:15:45.320 --> 0:15:48.240 in particular having to cut the number of flights they 0:15:48.240 --> 0:15:50.920 operate because simply there are flights out there which are 0:15:51.080 --> 0:15:53.880 just not profitable. So there is a balance to be 0:15:53.960 --> 0:16:00.280 brought between operating profitably and being being generally conserved. Even 0:16:00.440 --> 0:16:04.040 how they approach this, this ongoing war we have seen 0:16:05.080 --> 0:16:07.480 stretching into almost three months now, and this is a 0:16:07.560 --> 0:16:10.680 challenge for aliens. How do they grapple with a surge 0:16:10.680 --> 0:16:13.800 and fuel costs and when they have to pass on 0:16:13.840 --> 0:16:17.520 the alans have to pass on the costs onto customers. 0:16:17.720 --> 0:16:20.560 How much are passengers willing to bear? And this is 0:16:20.600 --> 0:16:23.000 a challenge for airlines to figure out, and particularly if 0:16:23.000 --> 0:16:26.120 your low cost carrier, where you are trying to stimulate 0:16:26.160 --> 0:16:29.200 demand with lower prices, all of a sudden those prices 0:16:29.200 --> 0:16:30.080 become a lot higher. 0:16:30.600 --> 0:16:33.200 Yeah, So then what do we expect to hear from 0:16:33.320 --> 0:16:36.240 Ryan Air an easy Jet in terms of their results, 0:16:36.280 --> 0:16:39.920 because they are obviously the big low cost carriers in Europe. 0:16:40.200 --> 0:16:43.480 Yeah, easy Jet has already braced investors for bad news. 0:16:43.920 --> 0:16:46.800 So the UK low cost carrier expects a headline loss 0:16:46.840 --> 0:16:49.080 of between five hundred and forty to five hundred and 0:16:49.040 --> 0:16:52.560 sixty million pounds. It tends to be the weaker period, 0:16:53.200 --> 0:16:55.520 those first six months of the year, and it's the 0:16:56.240 --> 0:16:58.440 earnings period which captures only a month of the year 0:16:58.520 --> 0:17:01.560 round war. But so far the airline says it has 0:17:01.600 --> 0:17:04.320 added twenty five million pounds to its fuel bill. So 0:17:04.359 --> 0:17:07.600 as volatility in Jeff does settle down a little bit, 0:17:08.320 --> 0:17:10.480 it's still going to be more than counting the costs. 0:17:10.560 --> 0:17:12.760 That doubling of costs of pressure is only going to 0:17:12.760 --> 0:17:15.000 be felt in the later quarters. And I think it's 0:17:15.000 --> 0:17:18.840 that kind of clarity from CEO Kent and Javis which 0:17:19.240 --> 0:17:23.760 we'll be able to understand just what impact the Iran 0:17:23.840 --> 0:17:27.000 war is having on the likes of the locals Carricer 0:17:27.119 --> 0:17:30.840 and easy Jet in particular, because they just cannot pass 0:17:30.880 --> 0:17:34.680 on the full amount of higher jet field costs on 0:17:34.720 --> 0:17:37.680 to price sensitive passengers. So I think the key question 0:17:37.840 --> 0:17:40.800 is how much is that down arrow story going to 0:17:40.840 --> 0:17:46.480 extend into its kind of forecasts in future and how 0:17:46.560 --> 0:17:48.440 will it be able to recoup as much of the 0:17:48.600 --> 0:17:51.520 fares as it can pay airlines and not able to 0:17:51.520 --> 0:17:53.479 do it so much in the near term, but it's 0:17:53.520 --> 0:17:55.119 towards the later end of view that they will be 0:17:55.160 --> 0:17:57.639 able to. As for Ryan, it will post its for 0:17:57.800 --> 0:18:00.880 year earnings and it has already guided towards very healthy 0:18:01.720 --> 0:18:05.440 profit architects of two point three billion euro But Riina 0:18:05.520 --> 0:18:08.880 has been cautious in the large about its full year 0:18:08.880 --> 0:18:14.399 targets and whether its fiscal year ahead will change materially 0:18:14.520 --> 0:18:17.840 in terms of how it's thinking about demand, the amount 0:18:17.880 --> 0:18:21.400 of flight to operate and even being able to carry 0:18:21.440 --> 0:18:25.239 as mess and many passengers that can. However, just like 0:18:25.320 --> 0:18:28.680 with easy Jet Rhine, they may well be beneficiaries from 0:18:28.680 --> 0:18:31.280 the war in as much as the fact that passengers 0:18:31.280 --> 0:18:34.159 may not choose to fly long haul because of the 0:18:34.240 --> 0:18:37.840 costs and because of various other risk factors and may 0:18:37.880 --> 0:18:40.800 stick to Europe. So this could still be an upside 0:18:40.840 --> 0:18:44.359 momentum when people think about booking their travels this summer 0:18:44.400 --> 0:18:44.959 and beyond. 0:18:45.880 --> 0:18:48.800 Yes, I think that's really interesting. I mean, consumers in 0:18:48.880 --> 0:18:51.760 many parts of the world are under a lot of pressure, 0:18:51.800 --> 0:18:54.560 aren't they. So what do you think the airlines are 0:18:54.560 --> 0:18:58.480 going to say about summer bookings? As you know, consumers 0:18:58.880 --> 0:19:04.159 are facing her petrol prices inflation affecting lots of goods 0:19:04.200 --> 0:19:06.560 that they might be buying, including holidays. 0:19:07.160 --> 0:19:10.960 Well, the airline industry by and large has seen that 0:19:11.200 --> 0:19:15.160 level of demand keep up with pace, and so airlines 0:19:15.160 --> 0:19:19.720 are seeing booking levels largely about the same. However, easy 0:19:19.800 --> 0:19:25.280 Jet has worn that the conflict situation has resulted in 0:19:25.720 --> 0:19:30.199 a kind of denting of booking's momentum, So they are 0:19:30.240 --> 0:19:32.200 seeing a little bit of a hit easy Jet, And 0:19:32.280 --> 0:19:35.920 I think the question is does that continue, so that 0:19:35.920 --> 0:19:38.320 would be very key for the CEO Kenson Javis to 0:19:38.359 --> 0:19:41.720 spell out. But also that kind of elasticity really the 0:19:42.320 --> 0:19:45.960 ability for customers to be willing to pay more off 0:19:46.000 --> 0:19:50.240 for airfas because ultimately the higher oil prices doesn't just 0:19:50.280 --> 0:19:54.080 affect airfares, It affects a whole facet of the economy 0:19:54.320 --> 0:19:57.639 and for households from goods to services, particularly into the 0:19:57.680 --> 0:20:01.439 shopping baskets, So that extra cost is coming everywhere, and 0:20:01.520 --> 0:20:04.240 I think people will be thinking about what do they 0:20:04.240 --> 0:20:06.040 prioritize in spending in the near term. 0:20:07.160 --> 0:20:11.480 What is the state of jet fuel supplies? Are the 0:20:11.520 --> 0:20:16.320 shortages real? Are they particularly affecting Europe? I know where 0:20:16.359 --> 0:20:20.520 you are in Asia, it's been a very pointed issue. 0:20:21.280 --> 0:20:24.560 Yeah, the jet fuel shortage is still a live and 0:20:24.680 --> 0:20:28.000 real issue. We've heard a lot from airlines talking about 0:20:28.440 --> 0:20:33.120 being covered in jet fuel needs for March, April, May 0:20:33.240 --> 0:20:37.160 into June, but there is limited visibility and given the 0:20:37.200 --> 0:20:40.600 Straits of hor Moos is still largely blocked to an 0:20:40.640 --> 0:20:44.399 extent a pre key critical waterway. You know, there's been 0:20:44.400 --> 0:20:46.960 a lot of scrambling to find all terms of sources, 0:20:47.040 --> 0:20:50.320 particularly from the US. We haven't really heard too much 0:20:50.400 --> 0:20:54.760 more in terms of deep concerns that airlines have we 0:20:54.920 --> 0:20:58.600 already have seen out and start to cut schedules just 0:20:58.680 --> 0:21:02.040 to make sure that where they're there are more challenged 0:21:02.440 --> 0:21:06.400 airports where fuel supply maybe a question, they will focus 0:21:06.200 --> 0:21:10.720 on a higher priority bookings and airports where there is 0:21:10.840 --> 0:21:13.600 bigger business. I don't think we've seen too much more 0:21:13.640 --> 0:21:17.040 in terms of shortage concerns out there, but as we 0:21:17.080 --> 0:21:20.480 get into the peak summer season that dynamic may start 0:21:20.520 --> 0:21:22.639 to change a little bit more. But the Europe and 0:21:22.720 --> 0:21:25.920 Asia are the big areas to watch when it comes 0:21:25.920 --> 0:21:29.160 to fuel availability because of the reliance of the imports 0:21:29.240 --> 0:21:29.960 of jet fuel. 0:21:31.440 --> 0:21:35.320 What about the cost of flying? We know that consumers 0:21:35.320 --> 0:21:39.879 are thinking about this. If you look at surveys of consumers, 0:21:40.240 --> 0:21:43.200 what are we actually seeing in terms of ticket prices? 0:21:44.440 --> 0:21:47.119 Well, ticket prices are going up by and large, and 0:21:48.000 --> 0:21:53.119 some industry surveys point to a doubling of airfares and 0:21:53.200 --> 0:21:57.040 even in the recent months so into May and June 0:21:57.400 --> 0:22:02.040 that fair airfare is about fifty sent higher then from 0:22:02.040 --> 0:22:04.439 then last year. Because of what we have seen with 0:22:04.600 --> 0:22:09.159 the around more impact on jet fuel prices, on the 0:22:09.200 --> 0:22:13.920 disruption in demand, because of the impact in the Middle East, 0:22:14.000 --> 0:22:18.080 so there is seeming a tendency that airfares will stay 0:22:18.160 --> 0:22:21.160 higher for longer. Not great, but at the same time, 0:22:21.440 --> 0:22:25.639 airlines still feel fairly optimistic in the near to longer 0:22:25.720 --> 0:22:29.520