Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Yes, I'm very pleased
Speaker 1: to be in Napa Valley. It's a tough life for
Speaker 1: some at the CONCLLO Sparks summit here with Edbastian, the
Speaker 1: CEO of Delta, and this entire event is about leadership,
Speaker 1: and boy are we being confronted for moments of leadership
Speaker 1: right now. Two leaders of the world, the two key
Speaker 1: economies meeting at the moment. And I'm interested as to
Speaker 1: how you see us China and weather impacts your business
Speaker 1: very much.
Speaker 2: First of all, thank you for having me, and it
Speaker 2: is fabulous to be out here. I think it's on
Speaker 2: everyone's top of mind right now in our business in transportation,
Speaker 2: it's actually interesting. It's the one market of the world
Speaker 2: where travel actually has not returned to post COVID levels.
Speaker 2: In fact, it's less than half of what it had
Speaker 2: been because the two countries, not just economies, have been
Speaker 2: decoupling a little bit. So it's so important the fact
Speaker 2: that we have our leaders of both countries together talking
Speaker 2: about how we can start back again to start building
Speaker 2: trust and creating better relationships now that coupling.
Speaker 1: In many ways, the conversation has been around a geopolitical
Speaker 1: moment of anxiety when it comes to conflict in the
Speaker 1: Middle East.
Speaker 3: That has big implications for your business.
Speaker 4: Absolutely.
Speaker 1: Now, can you remind our audience TV and radio how
Speaker 1: much you've seen jet fuel increase.
Speaker 3: For the business and how you've managed to weather it.
Speaker 1: Because you put plans in place over the years that
Speaker 1: you've been running this business tventually, you can really weather
Speaker 1: such shops.
Speaker 2: Yeah, so several things. First, jet fuels prices have doubled
Speaker 2: just since.
Speaker 4: The start of the conflicts.
Speaker 2: Over the last thirty sixty days, we've had at Delta
Speaker 2: over two billion dollars of higher costs in the current quarter.
Speaker 2: On a run rate basis is almost ten billion dollars
Speaker 2: a year, so huge.
Speaker 4: Amount of money.
Speaker 2: The way we've managed that first is building a brand
Speaker 2: that is resilient that people understand if fuel prices are up,
Speaker 2: we're gonna have to find ways to cover it. We
Speaker 2: have a consumer base that is willing to pay a
Speaker 2: higher coast. Now we're not covering the whole thing, but
Speaker 2: in the current quarter we're expecting to cover relatively half
Speaker 2: of the increase in price and relative short period time,
Speaker 2: which is pretty good. The second thing we did over
Speaker 2: a decade ago, we bought our own refinery on the
Speaker 2: East coast and the Delaware River outside of Philadelphia a foresight,
Speaker 2: and in this quarter alone, we expect to save somewhere
Speaker 2: between two and three hundred million dollars of cost fuel cost,
Speaker 2: which is more than twice what we paid for it.
Speaker 1: So you're able to in many ways try and mitigate
Speaker 1: it for a consumer, but a consumer that you have
Speaker 1: very thoughtfully tailored yourself towards being more premium. Ultimately, how
Speaker 1: are you thinking about Delta leaning into that?
Speaker 3: As we continue to.
Speaker 1: See remarkably resilient consumer, its willingness to spend and travel.
Speaker 2: Well, there's several consumers out in the marketplace.
Speaker 4: People talk about the consumer.
Speaker 2: Our consumer is a higher end consumer and is incredibly resilient.
Speaker 2: We have seen the demand strength right throughout the year.
Speaker 2: In fact, when the war started, it seemed like it
Speaker 2: even ticked up another notch. So we're seeing significant growth
Speaker 2: and we're continue and you see significant.
Speaker 3: Growth take up another notch. Suddenly people were like, I
Speaker 3: need to buy now.
Speaker 2: I think there's a little bit of that. I think
Speaker 2: more important that people understand. Typically when wars happen, people
Speaker 2: pull back and sit back We've been through so much change,
Speaker 2: so much disruption. There's so many things coming at people,
Speaker 2: and I think some of this is the post COVID
Speaker 2: effect because I'm not going to sit and wait to
Speaker 2: see what the next headline is going to be.
Speaker 4: I'm going to go now.
Speaker 2: I'm going to go as long as I feel safe
Speaker 2: and be willing to invest in myself, invest in our experience,
Speaker 2: see the people and the places I.
Speaker 4: Need to be at.
Speaker 1: You've been willing to invest in even new routes just
Speaker 1: in the last week or so announcing that you're going
Speaker 1: to be going to certain parts of Europe, so Transatlantic
Speaker 1: routes because it's dining off a moment of sport and football.
Speaker 1: But how do you decide which routes are working for
Speaker 1: you right now? Which ones you open, which ones you
Speaker 1: sew down?
Speaker 2: Well, our routes to the Atlantic to Europe are doing
Speaker 2: very very well now. I would say exit Europe travelers.
Speaker 2: Point of sale into the US has been down a bit,
Speaker 2: but that's a trend that we've seen for several years.
Speaker 2: But Americans specifically are going to Europe. We're launching just
Speaker 2: in the next week to Sardinia, were launching to Malta
Speaker 2: were launching to Porto just in the three three brand
Speaker 2: new routes for us in the midst of everything going on.
Speaker 2: So that tells you where the consumers want to be
Speaker 2: and who they are, and they're principally Americans wanting to
Speaker 2: invest in their experiences.
Speaker 1: We are with Adbastian, the CEO of Delta, for our
Speaker 1: TV and radio audiences at Bloomberg. I'm interested in how
Speaker 1: you also invest in your people. Because you've actually increased
Speaker 1: wages in this inflationary environment and a time where you're
Speaker 1: just saying you've got two billion more in costs of
Speaker 1: jet fuel.
Speaker 3: How tough is that to do for you or is
Speaker 3: it just a no brainer?
Speaker 2: On the surface, you would think it would be difficult,
Speaker 2: But when you understand our strategy, when I talk about
Speaker 2: our asset, our most important asset are our people. It's
Speaker 2: our culture protecting the people that get us through tough times.
Speaker 4: It's an even more important time to invest in them.
Speaker 2: So we were pleased to announce a weeks ago that
Speaker 2: we'll be increasing everyone's wages the company by four percent
Speaker 2: starting June first. That's our typical schedule every year, sometime
Speaker 2: in the spring that we announce the increases, and it's
Speaker 2: the most important investment I make. You know, there's a
Speaker 2: lot of things about this business that cost a lot
Speaker 2: of capital, but human capital is the most important capital
Speaker 2: that we have, and particularly in times of trouble, because
Speaker 2: they're the ones that are keeping customers coming back and
Speaker 2: providing that premium experience and opportunity for our brand to
Speaker 2: continue to rise.
Speaker 1: In times of trouble comes opportunity, particularly when you're on
Speaker 1: such solid footing. Look in many ways, do you look
Speaker 1: at talent that now comes on the market very sadly
Speaker 1: because of what's happened with Spirit, Or are you thinking
Speaker 1: about the way in which the industry is going to
Speaker 1: change around you, because we might see consolidation might not
Speaker 1: be from you, but it might be more broadly the
Speaker 1: way the market has to go.
Speaker 2: Well, you're seeing rationalization. Whether it's consolidation or not, I
Speaker 2: don't know, but you're seeing rationalization because when the fuel
Speaker 2: prices at this level, companies such as Spirit, by the way,
Speaker 2: which wasn't didn't go out of business because of fuel prices.
Speaker 2: They went out of business with a bad product that
Speaker 2: people did was a bad strategy. Good people with a
Speaker 2: bad strategy and we've hired a fair number of the
Speaker 2: Spirit people as many of the other airlines are bringing
Speaker 2: their equipment in. Our industry continues to rationalize itself, and
Speaker 2: if you've got a good product that people want to
Speaker 2: pay for it, you can grow. And you see at
Speaker 2: the lower end of the marketplace those airlines that don't
Speaker 2: have the quality of the experience, even though they're a
Speaker 2: lower price point, they can't afford to offer the lower prices.
Speaker 4: In the environment which we're in, with.
Speaker 1: That pressure on prices, there might be this worry that
Speaker 1: companies are more anxious about innovating investing in innovation now
Speaker 1: and time and time again. We have you actually on
Speaker 1: our tech show because you're so aligned with the tech area, Jobe,
Speaker 1: I think if the way in which you've thought about
Speaker 1: the future of travel, you're also though thinking about the
Speaker 1: future of premium flights and wheels up is another area
Speaker 1: in which you've worked with. How are you thinking about
Speaker 1: innovation at this moment in time?
Speaker 2: Innovations are likelig airlines. People think about it as a
Speaker 2: transportation company. Airlines are a technology company. And whether it's
Speaker 2: the app and the ability to give consumers better control
Speaker 2: their experience, better information, better displays, whether it's our own
Speaker 2: people having better data to make better information, whether it's
Speaker 2: the engine technologies we deploy. We're in the high tech
Speaker 2: business fundamentally, but it's tech for human sake, and I
Speaker 2: think that's the other thing in this AI world. A
Speaker 2: lot of people get confused about tech for tech. Techno
Speaker 2: is tech to make our people smarter. I love to
Speaker 2: call AI augmented intelligence. I don't know why we have
Speaker 2: to call it artificial. It should give people tools to
Speaker 2: do a better job, and then it gives them the
Speaker 2: opportunity to preserve and grow their development, not actually limit
Speaker 2: their opportunity.
Speaker 3: You've actually just made a commencement speech.
Speaker 1: I believe where you use AI initially to paybe put
Speaker 1: thoughts to paper. What you were going to say and
Speaker 1: then you ripped it up, is that I have to
Speaker 1: use a pencil here. What was it that you feel
Speaker 1: that AI can bring to you as an individual, AI
Speaker 1: can bring to your employees augmented what is it that.
Speaker 2: They can't Well, I did that, and it was more
Speaker 2: out of curiosity. I was never intending, but I was
Speaker 2: just curious because I was in the middle of writing it,
Speaker 2: and so I've never done that before in terms of
Speaker 2: used AI for something like that. So let me say,
Speaker 2: you and I've done convincence in the past, and it
Speaker 2: came out that there was, but it was very sterile.
Speaker 2: It wasn't my voice. Then people wanted to hear me
Speaker 2: and who I am, the soul of the warmth the appreciation,
Speaker 2: not some algorithm of me and so.
Speaker 4: And by the way, I thought the speech went quite well.
Speaker 2: That got the biggest applause from everyone in the room
Speaker 2: because there is such lack of trust in the technology.
Speaker 3: But there's also anxiety.
Speaker 1: There's a whole world of new graduates who are worrying
Speaker 1: about jobs that they're going to get worried about AI
Speaker 1: dispacing them.
Speaker 3: How are you talking about your employees about doing that?
Speaker 1: Because I'm sure you're using AI to benefit ensure that
Speaker 1: we're more productive, But does that come at the cost
Speaker 1: of actual people that you hire.
Speaker 4: Well, no, not necessarily. I think that over time it's
Speaker 4: going to make us better.
Speaker 2: It's going to make us smarter, not less, a bit
Speaker 2: better able to serve customers, be able to provide more
Speaker 2: attention to needs, give better information to support. No, So
Speaker 2: I do not believe that AI in our industry is
Speaker 2: principally a cost saving measure. It's an opportunity to develop
Speaker 2: better service. And if you have better service, you're going
Speaker 2: to have better growth and better revenues.
Speaker 1: And thinking of innovation, many have hoped that we'd see
Speaker 1: innovations solve some of our climate issues, some of that
Speaker 1: cleaner jet fuel for example.
Speaker 3: How are you able to balance that in this moment
Speaker 3: as well?
Speaker 2: A Well, we're still paying attention to it. Sustainable aviation
Speaker 2: fuels is our pathway. It's hard, it's expensive, there's not
Speaker 2: a lot of technology that's being deployed. We're continuing to
Speaker 2: invest in it. We need all stakeholders around the table.
Speaker 2: We need government, we need customers, we need the energy
Speaker 2: companies to participate. Impressed, we're seeing improvements there, but it's
Speaker 2: been very slow and you.
Speaker 1: Are able to remain committed for your stakeholders in a
Speaker 1: transition to a cleaner output from the aviation.
Speaker 4: Yeah.
Speaker 2: And I think the biggest thing that people miss is
Speaker 2: not just the sustainable fuels. It's the better engine technologies.
Speaker 2: It's about being able to forecast the skies, the turbulence
Speaker 2: and whatnot so that we can provide safer, more reliable,
Speaker 2: actually cleaner service. Through the air using technology. They're looking
Speaker 2: at new forms of transportation and JED zero is a
Speaker 2: company that we've been involved with where they have the
Speaker 2: opportunity to reduce fuel missions by fifty percent, and I
Speaker 2: think over the next decade you will see planes flying
Speaker 2: with such a significant amount less amount of fuel being utilized.
Speaker 4: Those are the moonshots. So sustainable aviation fuel is going
Speaker 4: to take long time.
Speaker 2: That's the ground war, But actually the opportunities are in
Speaker 2: the sky and.
Speaker 1: The opportunities are with leadership, and that's exactly what we're
Speaker 1: talking about throughout this day at the Concello Spark Summit
Speaker 1: at Bastian.
Speaker 3: What a joy to have you with us.