WEBVTT - Bloomberg Surveillance TV: May 18th, 2026 0:00:02.360 --> 0:00:06.720 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.640 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.840 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.919 anywhere else you listen, and as always on the Bloomberg 0:00:34.000 --> 0:00:37.280 Terminal and the Bloomberg Business app Under Savannahs this morning, 0:00:37.280 --> 0:00:39.120 the President's nuclear red line. 0:00:40.760 --> 0:00:43.479 The only thing that matters when I'm talking about Iran. 0:00:43.840 --> 0:00:45.760 They can't have a new blue weapon. I don't think 0:00:45.760 --> 0:00:50.400 about americans financial situation, I don't think about anybody. I 0:00:50.440 --> 0:00:54.120 think about one thing. We cannot let Iran have a 0:00:54.160 --> 0:00:54.880 new blue weapon. 0:00:54.920 --> 0:00:55.319 There's all. 0:00:55.680 --> 0:00:58.040 So here's the lass this morning, President Trump issuing a 0:00:58.040 --> 0:01:00.200 warning to Iran, saying the quote clock is tick for 0:01:00.240 --> 0:01:03.120 Tehran to make a deal to build on this. Terry 0:01:03.160 --> 0:01:06.120 Haynes of Pangaea Policy, Terry, welcome back to the program. 0:01:06.160 --> 0:01:06.920 Let's set the stage. 0:01:06.959 --> 0:01:09.880 You're a Republican in a tight race facing down a 0:01:09.920 --> 0:01:12.679 midterm election. What are you thinking about the messaging coming 0:01:12.680 --> 0:01:13.360 from the president. 0:01:14.520 --> 0:01:17.479 I think the I think the quote's unfortunate, of course, 0:01:17.560 --> 0:01:20.959 but the context can be built on if I'm if 0:01:20.959 --> 0:01:25.160 I'm that person. You know. The President's ultimate point here 0:01:25.280 --> 0:01:29.199 is that kind of tightly bound around the quote in question, 0:01:29.760 --> 0:01:32.039 is that you can't have you can't let around have 0:01:32.080 --> 0:01:36.360 a nuclear weapon. Republicans are forcewhare behind the president in that, 0:01:37.480 --> 0:01:41.720 and so I think you can make that case and 0:01:41.480 --> 0:01:44.479 and and push with voters number one, number two, there's 0:01:44.520 --> 0:01:47.000 only you know a handful of races a dozen or 0:01:47.360 --> 0:01:51.040 that are that are genuinely competitive. So the vast majority 0:01:51.080 --> 0:01:53.480 of those Republicans may see this as an irritant, but 0:01:53.560 --> 0:01:57.280 not as some sort of an existential setback, and they're 0:01:57.280 --> 0:01:58.680 for their own political futures. 0:01:59.080 --> 0:02:01.600 Terry, though, are potentially at risk of making the same 0:02:01.640 --> 0:02:03.600 mistakes that Biden administration made. 0:02:04.720 --> 0:02:08.000 Oh sure, always, I think it's much less likely that 0:02:08.040 --> 0:02:11.400 they make that sort of they make those sorts of 0:02:11.760 --> 0:02:16.280 errors principally because they understand better than the Biden people 0:02:16.360 --> 0:02:18.680 did that they're going to that they're going to go 0:02:18.720 --> 0:02:21.840 need to make the economic case. Number one and it's 0:02:21.919 --> 0:02:26.400 linked to geopolitics. And number two that people by and 0:02:26.480 --> 0:02:30.080 large aren't convinced. The Biden people kind of like to 0:02:30.080 --> 0:02:33.760 concuone themselves and talk about how, you know, as other 0:02:33.800 --> 0:02:37.960 administrations did too in the past, that if only you know, 0:02:38.000 --> 0:02:40.320 people understood a little bit better, and sure they will 0:02:40.360 --> 0:02:42.280 and all the rest, and kind of relying on faith. 0:02:42.560 --> 0:02:44.480 These folks aren't going to rely on faith. I think 0:02:44.520 --> 0:02:45.600 that's a bit of a difference. 0:02:45.919 --> 0:02:48.400 Terry, how are they doing geopolitically? The Treasury secretaries at 0:02:48.440 --> 0:02:51.359 the G seven Finance ministers meeting, and he came out 0:02:51.400 --> 0:02:53.440 and he said that they call upon G seven and 0:02:53.480 --> 0:02:54.840 all their allies and the rest of the world to 0:02:54.840 --> 0:02:57.680 follow sanctioned regimes. At the same time, when the President 0:02:57.760 --> 0:03:01.280 left Beijing, he said he was going to consider lifting 0:03:01.440 --> 0:03:05.000 sanctions on Chinese firms that are buying a running crude. 0:03:05.400 --> 0:03:06.040 Which is it? 0:03:09.080 --> 0:03:12.440 You know, I'm a big believer in Emerson's consistency is 0:03:12.480 --> 0:03:15.640 the hobgoblin of little minds when it comes to politics, 0:03:16.080 --> 0:03:18.880 And in this case, I think it might be a 0:03:18.919 --> 0:03:21.320 little bit of both. Of Course, what the President's doing 0:03:21.400 --> 0:03:25.160 is carrot and stick, whereas what Besson is doing is 0:03:25.200 --> 0:03:26.840 a little bit more stick to try to get the 0:03:26.919 --> 0:03:28.000 allies to stick together. 0:03:28.200 --> 0:03:30.720 How important is it that the US clarifies it stands 0:03:30.840 --> 0:03:33.880 on Taiwan after the President said that he might think 0:03:33.919 --> 0:03:37.040 about delaying some of the sales that the US has 0:03:37.040 --> 0:03:38.880 promised to the nation the region. 0:03:40.000 --> 0:03:43.280 You know, I think I think Taiwan's right to be nervous. 0:03:43.320 --> 0:03:45.840 But I think Taiwan's right to be nervous at least 0:03:45.880 --> 0:03:49.920 since Biden pulled the United States out of Afghanistan, frankly, 0:03:50.000 --> 0:03:54.600 because that led to perceptions of a power vacuum in 0:03:54.600 --> 0:03:57.200 the Asia Pacific region that are still with US today. 0:03:57.320 --> 0:04:00.720 So I'm not blaming Biden, like I'm not what about here. 0:04:00.800 --> 0:04:03.600 I'm just saying this goes back years. This isn't a 0:04:03.640 --> 0:04:07.880 situation the president is creating. So I think Taiwan's entirely 0:04:07.960 --> 0:04:10.119 right to be nervous. At the same time, I think 0:04:10.160 --> 0:04:14.920 the president of the President's a little bit less, a 0:04:14.960 --> 0:04:18.080 little bit more ambiguous, frankly, rather than less, because you've 0:04:18.080 --> 0:04:21.279 got a situation here where there's no there's no change 0:04:21.279 --> 0:04:24.120 to the bottom line. And number one number two that 0:04:24.200 --> 0:04:28.120 what the President's doing is saying what people already knew 0:04:28.120 --> 0:04:31.200 to be true, that he's considering a particular arm sales. 0:04:31.279 --> 0:04:34.440 So we'll see where this goes. But I point out 0:04:34.480 --> 0:04:37.279 that there's a linkage here between what goes on in 0:04:37.320 --> 0:04:39.960 the straight of horn moves China's ability to tell its 0:04:40.000 --> 0:04:42.800 client state Iran, look, you better cool it and open 0:04:42.839 --> 0:04:47.359 the straight and you know exactly how things proceed, whether 0:04:47.400 --> 0:04:50.000 it be on Taiwan or trade and tech for that matter. 0:04:50.120 --> 0:04:53.040 Do per sense who within the cabinet of President Trump 0:04:53.279 --> 0:04:55.040 is the guiding light right now in all of this 0:04:55.400 --> 0:04:57.599 or is it really President Trump? I mean, does anyone 0:04:57.680 --> 0:04:59.800 have an edge and what the overall goal is or 0:05:00.040 --> 0:05:01.080 the overall strategy. 0:05:02.400 --> 0:05:05.480 Look, I looked the best at economically, I looked to 0:05:05.560 --> 0:05:10.839 Rubio as as far as the diplomacy goes. But you know, 0:05:10.920 --> 0:05:14.560 but this is very much, very much the president, you know, 0:05:14.680 --> 0:05:19.120 with those particular whispers on board and kind of helping. 0:05:18.839 --> 0:05:19.880 To guide Terry. 0:05:19.920 --> 0:05:21.520 What did we get out of the China summit? I 0:05:21.560 --> 0:05:24.000 spoke to Ambassador Career there. He said he gives China 0:05:24.000 --> 0:05:26.240 a passing grade when it comes to rare Earth's but 0:05:26.440 --> 0:05:29.400 still admitted to what I said we hear from companies, 0:05:29.400 --> 0:05:31.920 which is that China continues to drag its feet, What 0:05:31.960 --> 0:05:34.080 did the United States actually walk away with? 0:05:35.240 --> 0:05:37.320 You know, I think what they want, but I think 0:05:37.320 --> 0:05:40.080 we don't know yet. And because and that's why I 0:05:40.120 --> 0:05:44.520 say that markets need to watch the Strait really because 0:05:44.800 --> 0:05:46.839 for for trade and tech as much as for oil. 0:05:48.520 --> 0:05:50.760 China has made much in the past three to four 0:05:50.800 --> 0:05:53.000 weeks about saying that they think the Strait should be 0:05:53.040 --> 0:05:58.640 open iron it's client state. You can't put too fine 0:05:58.680 --> 0:06:02.839 a point on that. And as a result, what you 0:06:03.040 --> 0:06:06.000 end up with is a situation where either China could 0:06:06.040 --> 0:06:08.560 tell around that it needs to come to some sort 0:06:08.600 --> 0:06:11.039 of an understanding or not, and that's going to be 0:06:11.040 --> 0:06:16.200 a directional signal for the entire China United States competitive relationship, 0:06:16.240 --> 0:06:20.679 whether it be geopolitically or frankly in terms of whether 0:06:20.800 --> 0:06:24.279 the summit result is some sort of a continuation of 0:06:24.320 --> 0:06:27.360 a colder truce that's existed for more than a year, 0:06:27.680 --> 0:06:30.080 or whether we're going to get to something that's that's 0:06:30.120 --> 0:06:31.600 a little more directionally positive. 0:06:31.680 --> 0:06:33.680 Terry, you suggesting that might be an agreement here that's 0:06:33.680 --> 0:06:35.200 just not been talked about publicly yet. 0:06:35.760 --> 0:06:40.479 Oh sure, yeah, yeah, I'm suggesting saying that absolutely out loud. 0:06:41.240 --> 0:06:43.240 You know, you get a lot of people on your air, 0:06:43.360 --> 0:06:48.160 other air, you know from past administrations, kind of you know, John, 0:06:48.160 --> 0:06:50.440 I'll speak English English for a minute, kind of boffins 0:06:50.480 --> 0:06:55.200 who you know work work in trade or somewhere saying, well, 0:06:55.240 --> 0:06:56.880 you know, it's not like the old days where there 0:06:57.000 --> 0:07:00.200 used to be agreements and whatever else before the the 0:07:00.279 --> 0:07:04.560 leaders met. Well that's true, but uh, but what's happening here, 0:07:04.600 --> 0:07:07.800 I think is a world where the lack of agreements, 0:07:07.839 --> 0:07:12.440 the lack of progress over periods of years over trade deals, 0:07:12.440 --> 0:07:17.120 for example, led to the kind of difficulties geopolitically and 0:07:17.360 --> 0:07:22.080 geoeconomically that we see today. Leaders of all stripes want 0:07:22.080 --> 0:07:25.120 to speed that up. And because they've speed that up, 0:07:25.320 --> 0:07:27.400 you know, it's kind of a situation where you know, 0:07:27.520 --> 0:07:31.160 their their behavior at the summits and agreements at the 0:07:31.200 --> 0:07:34.880 summits dictate future performance in the markets rather than the 0:07:34.880 --> 0:07:35.640 other way around. 0:07:36.240 --> 0:07:39.720 Stay with us mult Bloomberg Surveillance. Coming up after this, 0:07:48.840 --> 0:07:52.120 Let's talk about Ryan Ashares rising after posting a record 0:07:52.160 --> 0:07:55.080 full year profit, the budget carrier warning of rising costs 0:07:55.120 --> 0:07:58.280 this year from guess what higher fuel prices joining us 0:07:58.280 --> 0:08:01.280 now legend of the industry, The run Boss, Michael Leary, 0:08:01.400 --> 0:08:04.200 Michael good morning and see come with you friends very well. 0:08:04.360 --> 0:08:07.400 You're a part of the industry. How would you describe yourself? 0:08:07.600 --> 0:08:11.400 Fat old fart? I think, yeah, I think it's fasting dinosaur. 0:08:11.640 --> 0:08:14.080 You've seen it, o, sat have you seen something like 0:08:14.120 --> 0:08:16.080 this before? The situation from five. 0:08:16.080 --> 0:08:19.560 Years ago the Russians invaded Ukraine twenty years ago, the 0:08:19.560 --> 0:08:21.760 second goal Forard the first golf War nine to eleven. 0:08:22.440 --> 0:08:24.600 This happens regularly within our industry. 0:08:24.960 --> 0:08:27.400 That's why in Ryan here we typically hedge eighty percent 0:08:27.400 --> 0:08:29.760 of our fuel. We're eighty percent heged out to March 0:08:29.800 --> 0:08:33.480 twenty seven, sixty seven bucks a barrow. We're in great shape, 0:08:33.720 --> 0:08:35.640 apart from the find our share prices tanked in the 0:08:35.720 --> 0:08:36.760 last two weeks because they were. 0:08:36.760 --> 0:08:39.199 Oh they're their line. Got the hell? 0:08:39.840 --> 0:08:42.400 We're just reported record full your results, two hundred eight 0:08:42.440 --> 0:08:46.640 million passengers, two point two six billion euros profit after attacks, 0:08:46.679 --> 0:08:49.880 spitting off cash to shareholders, share buybacks and with a 0:08:49.880 --> 0:08:52.560 bit of look if this continues, although you know, we 0:08:52.600 --> 0:08:54.480 can all have a debate how long we think this 0:08:54.520 --> 0:08:56.680 will continue in the Middle East over the straight's foremost, 0:08:57.520 --> 0:09:00.199 some of the flaky competitors in Europe will get taken 0:09:00.200 --> 0:09:04.400 out in carrier baskets by about September October because they're 0:09:04.400 --> 0:09:08.000 not edged on oil and they're borrowed up to the ryeballs. 0:09:07.480 --> 0:09:08.080 In net debt. 0:09:08.160 --> 0:09:09.000 Are you ready to buy? 0:09:10.480 --> 0:09:12.679 We are certainly rated by cheap aircraft. If anyone got 0:09:12.679 --> 0:09:15.800 any cheap aircraft. I'm really excited. We are about to 0:09:15.840 --> 0:09:18.640 get the first ten of our Max ten aircraft fifth 0:09:18.679 --> 0:09:20.600 verse fifteen of our Max ten aircraft from Boeing in 0:09:20.640 --> 0:09:23.240 the spring of twenty twenty seven. Twenty percent more seats 0:09:23.280 --> 0:09:26.559 per plane, burns twenty percent less oil. Like, the technological 0:09:26.880 --> 0:09:31.319 efficiency of the new engines is remarkable, and we will. 0:09:31.080 --> 0:09:34.360 Take we're ordered. We've ordered three hundred of those from Boeing. 0:09:34.679 --> 0:09:37.840 We priced them during COVID, so we've basically stolen them, 0:09:38.800 --> 0:09:42.640 and they will transform even our operating economics in Europe 0:09:42.640 --> 0:09:43.439 for the next decade. 0:09:43.520 --> 0:09:45.960 So are you interested, though, in buying a carrier in 0:09:46.000 --> 0:09:48.520 its entirety, aside from just their aircraft. 0:09:48.120 --> 0:09:50.000 There is nothing in Europe you would want to buy. 0:09:50.080 --> 0:09:55.040 It's all crap. You know, it will go bust, you 0:09:55.080 --> 0:09:58.160 know in the not too distant future. Europe is inexorably 0:09:58.400 --> 0:10:01.160 you know, moving the same direction US did twenty years 0:10:01.200 --> 0:10:05.760 ago three large connecting carriers BA loffans at Air France KLM. 0:10:05.920 --> 0:10:08.080 They are making out like bandits at the moment because 0:10:08.120 --> 0:10:10.680 all the long haul connecting traffic has switched off the 0:10:10.679 --> 0:10:14.359 golf carriers and is going on those legacy guys shorthold. 0:10:14.559 --> 0:10:16.880 Ryanair will continue to dominate the short hold space in 0:10:16.920 --> 0:10:19.480 Europe because we have much lower fares and much lower costs. 0:10:19.640 --> 0:10:22.200 We're the only really low fare, low cost carry in Europe. 0:10:22.280 --> 0:10:24.600 There's a few other low fare not so low cost 0:10:24.600 --> 0:10:26.560 carriers in Europe, but they're all good to They're all 0:10:26.600 --> 0:10:28.880 going to go the same way as spiriting from Tire 0:10:28.880 --> 0:10:29.319 in the States. 0:10:29.440 --> 0:10:30.360 That's what I wanted to ask. 0:10:30.440 --> 0:10:32.720 It seems like the model in the US is really struggling. 0:10:32.760 --> 0:10:33.920 We had Spirrigo bankrupt. 0:10:34.000 --> 0:10:36.439 There's talk of mass consolidation among some of the other 0:10:36.480 --> 0:10:39.280 low cost carriers and this idea that every consumer is 0:10:39.320 --> 0:10:42.800 expecting higher quality and that that is what's generating a 0:10:42.800 --> 0:10:46.840 lot of the revenues. How does Ryanair succeed in that environment, 0:10:46.920 --> 0:10:48.079 in that demand backdrop. 0:10:48.440 --> 0:10:50.320 I mean, the problem for the last twenty years in 0:10:50.360 --> 0:10:52.840 the States is there's really been no low cost carriers anymore. 0:10:52.840 --> 0:10:55.440 I mean, we copied out this formula originally from Southwest 0:10:55.800 --> 0:10:58.000 back in the late nineteen eighties when herb Keller her 0:10:58.000 --> 0:11:02.160 within each pomp, you know, Southwestern charging ten dollars fares. 0:11:02.520 --> 0:11:05.000 Now Southwest average fair last year one hundred and forty bucks. 0:11:05.080 --> 0:11:07.560 It's not a low fair carrier anymore. If you had 0:11:07.559 --> 0:11:09.640 a real low fair carrier here in the States, as 0:11:09.720 --> 0:11:12.000 Ryan Air is in the US, our average fair last 0:11:12.040 --> 0:11:15.640 year was forty bucks, they would still be very strong 0:11:15.679 --> 0:11:19.000 demand because the main airlines here, I mean, they've had 0:11:19.040 --> 0:11:20.840 control of the amount of supplying the market for the 0:11:20.880 --> 0:11:23.400 last twenty years, and they've been pricing up. The cost 0:11:23.400 --> 0:11:26.600 of air travel in the States is incredibly high, particularly 0:11:26.640 --> 0:11:27.920 given that you don't pay for ATC. 0:11:28.160 --> 0:11:30.720 Could you expand into the US, No, absolutely not. 0:11:31.080 --> 0:11:33.600 We're too busy expanding in Europe and then those countries 0:11:33.640 --> 0:11:34.480 around Europe. 0:11:34.520 --> 0:11:36.559 There is so much growth available to US in Europe. 0:11:36.559 --> 0:11:37.000 You look at it. 0:11:37.160 --> 0:11:39.640 Last year we grew four percent with the biggest airline 0:11:39.640 --> 0:11:41.480 in Europe, we grew four percent to two hundred eight 0:11:41.520 --> 0:11:43.600 million pastors. This year I grow another four percent two 0:11:43.679 --> 0:11:46.199 hundred and sixteen million pastors. And in the next decade 0:11:46.240 --> 0:11:48.360 with these max ten aircraft. I'm going to go to 0:11:48.400 --> 0:11:51.959 three hundred million passengers all in Europe. I mean, Europe 0:11:52.040 --> 0:11:54.160 is the best playground for low cost around that you 0:11:54.200 --> 0:11:58.480 could possibly imagine a couple of big, useless legacy airlines 0:11:58.880 --> 0:12:03.120 charging more, charging annual salaries for their long haul travel, 0:12:03.400 --> 0:12:05.640 but nobody able to do the low cost stuff. We 0:12:05.679 --> 0:12:08.920 do the low cost stuff. Well, we're cheap irish guys, 0:12:08.960 --> 0:12:11.560 you know, and so we do it well with the 0:12:12.080 --> 0:12:15.760 with a with an order for three hundred really fantastic aircraft. 0:12:16.320 --> 0:12:18.200 Used to be sig Maine back in the night, which 0:12:18.480 --> 0:12:19.960 used to be sim Maine, it was Brudesald. 0:12:19.960 --> 0:12:23.559 Remember that we were never brutal. The were cheap and less. 0:12:23.640 --> 0:12:24.760 We were cheap and mean. 0:12:24.880 --> 0:12:28.320 Now we're just cheap and cheerful new aircraft on time 0:12:28.360 --> 0:12:32.280 flights huge com Last year, our customer were record customer 0:12:32.320 --> 0:12:35.280 service metrics. Customer service satisfaction were done for eighty six 0:12:35.320 --> 0:12:37.520 to eighty nine percent. I never thought I'd see the 0:12:37.559 --> 0:12:40.079 day when I got more than fifty percent customer satisfaction, 0:12:40.160 --> 0:12:41.240 but hey, who knew? 0:12:41.360 --> 0:12:44.160 Can I ask you where are Europeans traveling to this 0:12:44.200 --> 0:12:45.160 summer for vacation? 0:12:45.400 --> 0:12:47.800 Do they want to come to America? Anymore. No, No, 0:12:47.880 --> 0:12:49.400 I mean that's not truly. 0:12:49.480 --> 0:12:52.280 Yes, they do, but the problem is that the cost 0:12:52.280 --> 0:12:54.760 of long hold travels got very expensive, so you you know, 0:12:54.800 --> 0:12:57.920 there isn't much competition across the Atlantic between the European 0:12:57.960 --> 0:13:01.120 legacies and the US majors. The Gulf carriers were the 0:13:01.160 --> 0:13:03.280 real disruptors for the last twenty years, and they have 0:13:03.600 --> 0:13:05.800 you know, their capacity has been halved in recent months, 0:13:05.880 --> 0:13:08.800 so a huge amount of Europeans who will holiday at 0:13:08.840 --> 0:13:11.000 home in Europe this year, in Portugal and Spain and 0:13:11.080 --> 0:13:13.520 Italy and Greece. A lot of Americans are still coming 0:13:13.520 --> 0:13:18.480 to Europe for the quality, for the sunshine, the culture 0:13:18.679 --> 0:13:21.680 and the alcohol, and along with they continue to travel. 0:13:22.000 --> 0:13:24.400 But I think there's a real seed change this year 0:13:24.440 --> 0:13:26.559 of people who would historically have gone to the Middle 0:13:26.559 --> 0:13:29.040 East or using the Middle East carriers to connect to 0:13:29.080 --> 0:13:31.760 long haul probably going to stay at home in Europe 0:13:31.800 --> 0:13:32.719 this summer. 0:13:32.360 --> 0:13:35.400 When we'll e're up run out of fuel jet fuel 0:13:35.720 --> 0:13:36.360 in won't. 0:13:36.240 --> 0:13:38.280 There was a real concern. I think back in April, 0:13:38.360 --> 0:13:42.080 you know, there was real worries over supply jet supply. 0:13:42.320 --> 0:13:44.400 The jet supply has now we met with all of 0:13:44.400 --> 0:13:47.080 our fueld suppliers in Paris last week. There's no issues 0:13:47.080 --> 0:13:49.240 over jet fuel supply right now through to the end 0:13:49.240 --> 0:13:49.920 of September. 0:13:50.240 --> 0:13:51.840 There's one issue in the UK. 0:13:52.040 --> 0:13:54.880 Q eight, which is the subsidiary of the state of Qaight, 0:13:55.120 --> 0:13:57.360 have about thirty percent market share some of the airports 0:13:57.400 --> 0:14:00.520 in the UK even they now are resourcing that supply. 0:14:00.920 --> 0:14:03.440 Most of Europe's Jeta one supply comes from West Africa, 0:14:03.480 --> 0:14:06.280 the America is Norway, and the lifting of Russian sanctions 0:14:06.280 --> 0:14:09.480 has also easy to supply Jet one into Eastern European countries. 0:14:09.559 --> 0:14:11.600 So you don't seem concerned with what's going on right 0:14:11.640 --> 0:14:13.079 now with the conflict in Iran. 0:14:13.800 --> 0:14:17.080 I'm very concerned about the price of oil, but I 0:14:17.120 --> 0:14:19.240 don't believe the conflict in Iran will have any disruption 0:14:19.280 --> 0:14:20.520 on European jet supplies. 0:14:20.920 --> 0:14:21.160 I do. 0:14:21.400 --> 0:14:23.800 The question for US is how long will the straightsuform 0:14:23.800 --> 0:14:24.720 moves remain closed. 0:14:25.040 --> 0:14:27.560 I mean, you know, we gave guidance this morning. 0:14:27.640 --> 0:14:31.040 If it remains closed till March twenty twenty seven, our 0:14:31.160 --> 0:14:33.360 unit because of our on head twenty percent, our unit 0:14:33.400 --> 0:14:36.000 costs might rise, you know, mid single diges this year. 0:14:36.280 --> 0:14:38.040 Nobody believes what are you gonna stand too? You can 0:14:38.040 --> 0:14:40.280 you just explain your current hedge and strategy where you've. 0:14:40.160 --> 0:14:41.080 Had that fuel. 0:14:41.120 --> 0:14:43.200 We have bought eighty percent of our jet fuel requirements 0:14:43.280 --> 0:14:45.520 John out to March twenty twenty seven at sixty seven 0:14:45.560 --> 0:14:48.000 dollars a barrow. So we're sitting you know, we're in 0:14:48.080 --> 0:14:51.520 great quite position, great position. But nobody really believes that 0:14:51.520 --> 0:14:54.080 the Straightsform moves are going to stay closed until March 0:14:54.120 --> 0:14:55.840 of next year. It's just we don't know when they're 0:14:55.840 --> 0:14:58.320 going to reopen. Iran is going to starve if they 0:14:58.320 --> 0:15:00.760 don't get it ready. The Straightsform moves reopened to the 0:15:00.800 --> 0:15:04.720 next couple of months. The midterm election season kicks off 0:15:04.720 --> 0:15:06.760 in Memorial Day at the end of May. You know, 0:15:06.800 --> 0:15:08.800 Trump is going to lose the House and the Senate 0:15:08.920 --> 0:15:12.120 if he doesn't get this result and reopened. But the 0:15:12.160 --> 0:15:14.360 timing is none of us know when the timing will be. 0:15:14.760 --> 0:15:16.640 But you know, I hope it's sooner rather than later. 0:15:17.000 --> 0:15:19.200 But if it stays, if it becomes later, say it's 0:15:19.200 --> 0:15:22.240 stay out for something happens to None of us expect 0:15:22.480 --> 0:15:25.840 the straight stay closed to September, October November. Then we 0:15:25.880 --> 0:15:28.280 are looking at our unit cost will be up about 0:15:28.280 --> 0:15:30.960 five percent. But you'll be looking at kind of airlines 0:15:30.960 --> 0:15:35.520 failing all over Europe on the way. Well, I can't 0:15:35.560 --> 0:15:37.920 really name them, but you know some of our low 0:15:37.960 --> 0:15:40.320 fare but not so low cost competitors, wiz. 0:15:40.800 --> 0:15:42.600 I don't think easy yet will fail. 0:15:42.960 --> 0:15:45.280 I mean, I don't make any money this year with him, 0:15:45.320 --> 0:15:47.520 could well be a candidate for failure. Air Baltic, which 0:15:47.560 --> 0:15:49.760 was recently built out by the Latvian government gave it 0:15:49.760 --> 0:15:52.440 a thirty million loan to get them from June through 0:15:52.440 --> 0:15:55.000 to August, but they have to repay the loan in August. 0:15:55.000 --> 0:15:56.880 I mean, good luck with the Latvians trying to get 0:15:56.920 --> 0:15:58.280 that repaid at the end of August. 0:15:58.640 --> 0:16:00.560 So I think there will be asualties. 0:16:00.640 --> 0:16:03.240 But again a lot depends on how I mean, you 0:16:03.280 --> 0:16:05.440 know more about this than how long the streets film 0:16:05.640 --> 0:16:09.480 remains remain closed. When can Trump declear a victory and 0:16:09.520 --> 0:16:11.760 you know, kick off the midterms, And I suspect it's 0:16:11.760 --> 0:16:12.640 probably going to be the end of. 0:16:12.680 --> 0:16:13.600 May, maybe early June. 0:16:13.680 --> 0:16:16.160 But but I mean, if I was any if if 0:16:16.240 --> 0:16:18.120 my prediction is really good, I wouldn't be working in 0:16:18.120 --> 0:16:21.720 the airline business. In a proper functioning business like Bloomberg, 0:16:21.960 --> 0:16:23.760 I'll get it right with star salary. 0:16:23.920 --> 0:16:26.800 I'll get it right this time. Stay with us. More 0:16:26.840 --> 0:16:39.320 Bloomberg surveillance coming up after this. Can this fat cut 0:16:39.400 --> 0:16:42.440 rights not once, not twice, but maybe three times this year? 0:16:42.520 --> 0:16:45.360 Veronica Clark of City thinks so gradual wakening in demand 0:16:45.400 --> 0:16:47.840 will lead to a rising unemployment right in the summer months. 0:16:47.840 --> 0:16:50.240 For Anica joins us now for more Veronica, good morning, 0:16:50.280 --> 0:16:54.320 good morning. Each passing day. This sounds more and more contrarian, 0:16:54.400 --> 0:16:55.280 just laying out your argument. 0:16:55.280 --> 0:16:57.720 For no, it definitely, you know, to get seventy five 0:16:57.760 --> 0:16:59.480 bays points about. To get any cuts at all, it 0:16:59.480 --> 0:17:01.880 does have to start with the labor market data, right 0:17:02.480 --> 0:17:04.520 and right now. Yeah, nothing really looks like it's breaking 0:17:04.520 --> 0:17:06.280 in the labor market. We even had a stronger jobs 0:17:06.320 --> 0:17:10.000 report last month. I would take the payroll numbers with 0:17:10.040 --> 0:17:13.359 a bit of caution. They are very volatile now, and 0:17:13.400 --> 0:17:15.600 I'm not really encouraged by what we see in the 0:17:15.680 --> 0:17:19.119 unemployment rate. We've had this big slowing and labor supply, 0:17:19.200 --> 0:17:21.560 labor force participation rate has come down, and the unemployment 0:17:21.640 --> 0:17:24.000 rate is still stuck at four point three four point 0:17:24.040 --> 0:17:27.480 four percent. That means that demand got worse, and that's 0:17:27.520 --> 0:17:29.359 ahead of the summer months when you usually hire a 0:17:29.400 --> 0:17:31.960 lot of people, when you get students entering the labor force, 0:17:32.040 --> 0:17:34.760 new graduates. And it's been the summer when we've seen 0:17:34.760 --> 0:17:36.720 the unemployment rate rise the last couple of years. Is 0:17:36.760 --> 0:17:38.880 the reason that is cut in September. For the last 0:17:38.880 --> 0:17:40.760 two years, it's when we see the summer data. 0:17:40.640 --> 0:17:42.720 You've got unemployment coming up, then yeah, why have you 0:17:42.800 --> 0:17:43.400 got inflation? 0:17:43.920 --> 0:17:45.280 It needs to look better? 0:17:45.440 --> 0:17:45.680 Right? 0:17:46.119 --> 0:17:49.760 So the inflation focused right now, it's still uncomfortable. Right, 0:17:50.119 --> 0:17:52.960 So even the May data I think will look uncomfortably strong. 0:17:53.560 --> 0:17:57.440 But I think if we see monthly inflation readings for June, July, 0:17:57.560 --> 0:18:00.560 August data that we'll have before that September meeting, if 0:18:00.560 --> 0:18:04.160 those monthly reports look better, annual inflation will still be high. 0:18:04.680 --> 0:18:06.639 But you do need inflation, at least on a monthly 0:18:06.680 --> 0:18:08.880 basis slowing for the Fed to be comfortable. 0:18:08.440 --> 0:18:10.560 Cutting What would you have to say to change your view. 0:18:11.280 --> 0:18:14.560 Stickier inflation for longer? Not seeing the seasonality in the 0:18:14.680 --> 0:18:17.119 labor market data. Really within the next couple weeks, that 0:18:17.440 --> 0:18:20.720 seasonality starts to first play out in initial jobless claims. 0:18:21.240 --> 0:18:23.120 Once you get around the start of the summer Memorial 0:18:23.160 --> 0:18:26.680 Day holiday mid May. Certainly by June you do see 0:18:26.720 --> 0:18:29.080 claims starting to trend higher. So that's the first thing 0:18:29.280 --> 0:18:32.240 I'm watching for. If that doesn't happen within the next 0:18:32.280 --> 0:18:34.400 month or two, then okay, maybe the labor market has 0:18:34.560 --> 0:18:35.600 durably gotten better. 0:18:36.359 --> 0:18:39.160 Isn't there a bit of a stress on this entire 0:18:39.200 --> 0:18:42.080 equation because it might not be as hinged to the 0:18:42.160 --> 0:18:43.959 labor market as it has been in the past, That 0:18:44.000 --> 0:18:47.760 inflation could be stickier even without the participation of the 0:18:47.800 --> 0:18:51.440 labor economity, just based on all the spending coming from hyperscalers. 0:18:51.560 --> 0:18:54.920 Yeah, I mean, I'm certainly worried about that AI related inflation. 0:18:55.040 --> 0:18:57.760 That actually does get a big part, a big weight 0:18:57.800 --> 0:19:01.600 in core pcees and with computer software really components. So yeah, 0:19:01.600 --> 0:19:04.520 we are getting inflation there. But you know, the demand driven, 0:19:04.880 --> 0:19:07.639