Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along
Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day
Speaker 2: for insight from the best in markets, economics, and geopolitics
Speaker 2: from our global headquarters in New York City. We are
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Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or
Speaker 2: anywhere else you listen, and as always on the Bloomberg
Speaker 2: Terminal and the Bloomberg Business app. We begin with deepig issue,
Speaker 2: kicking off June, following the best month for stock since February.
Speaker 2: Cameron Dawson of New Wegs Wealth remaining cautious, saying this,
Speaker 2: we've seen large cap equities experiencing volatility in the short term.
Speaker 2: Given fading momentum and breadth, there is plenty of room
Speaker 2: for investors to be disappointed or caught flat footed in
Speaker 2: the short run. Cameron, please to say, joined us now
Speaker 2: for more camera, go monitor, you come winning, It's going
Speaker 2: to see you. What are you advocating for this morning,
Speaker 2: for this quarter?
Speaker 1: Patience?
Speaker 3: I think patients in the very near term, just because
Speaker 3: you've had that deterioration and breadth deterioration momentum. It's not fatal.
Speaker 3: It's not to say that markets can't continue to rise.
Speaker 3: We know that liquidity and trend are still very positive things.
Speaker 3: But there has been this fraying under the surface enough
Speaker 3: to say expect a little volatility as long as growth
Speaker 3: estimates hold in which I think is the most important part,
Speaker 3: then that volatility is viable, meaning any kind of correction short,
Speaker 3: shallow and viable.
Speaker 2: You say, patients, there has been impatience for a rotation
Speaker 2: that's never come about. Now you've been quite in green day,
Speaker 2: over the weekend, or at least the team has What
Speaker 2: was it when I come around? Yeah?
Speaker 4: Is it coming around? No? Will it be a boulevard
Speaker 4: of broken dreams?
Speaker 5: Oh?
Speaker 1: I think probably? It seems like more of a very
Speaker 1: nice I feel like an American idiot.
Speaker 3: So the challenge with small caps is that they are
Speaker 3: so unloved and so under owned. Is that you could
Speaker 3: see a very sharp rally over the short period of
Speaker 3: time that can be ephemeral. Look at the November and
Speaker 3: December rallies. They were very short but very powerful. But
Speaker 3: if you look over the medium to longer term, you
Speaker 3: still have really weak fundamental conditions within small caps. So
Speaker 3: you have forty percent of debt in small caps is
Speaker 3: floating rate. They hate higher for longer. They have fifty
Speaker 3: percent more debt than large caps. So we know that
Speaker 3: higher rates are weighing on these small caps, but appreciate
Speaker 3: that small caps are trading at a new relative low
Speaker 3: versus the market. So don't be surprised if you have
Speaker 3: one of those face ripping kind of counter trend rallies.
Speaker 1: So wake me up when September ends.
Speaker 5: I mean, this is basically what we're looking at at
Speaker 5: a time when we can't really game out when the
Speaker 5: Fed's going to start cutting rates and what the implication
Speaker 5: is going to be for risk acts. Are you saying
Speaker 5: that if there is weakness and.
Speaker 1: The FED does cut rates.
Speaker 5: That is a viable dip, particularly in small caps.
Speaker 3: It depends what you are doing with growth forecasts. We
Speaker 3: wonder if gone are the days of the world where
Speaker 3: we are having a FED that's cutting rates simply because
Speaker 3: inflation is moderating. If the FED moves to cut rates
Speaker 3: or we start pricing them in, is it because of
Speaker 3: a bad reason, Is it because growth is coming and weaker.
Speaker 3: Appreciate that economic surprises have plunged over the last month.
Speaker 3: Look at real personal spending last week coming in much
Speaker 3: weaker than expected. We're watching PMIS really closely. We were
Speaker 3: hoping to see some reacceleration in PMIS that did not
Speaker 3: happen in April. So if we continue to see this
Speaker 3: weakening of data, what it calls into question is consensus
Speaker 3: forecasts that have moved up materially. They're up two hundred
Speaker 3: basis points for twenty twenty four GDP.
Speaker 1: Over the last year.
Speaker 3: That means that nobody's pricing in a recession, which means
Speaker 3: we have to ask the question what.
Speaker 1: Could surprise us?
Speaker 5: So just to plug ism manufacturer coming out today at
Speaker 5: ten am, I am watching.
Speaker 1: That closely, as are you, as is John. Let's put
Speaker 1: some numbers on this.
Speaker 5: If Andrew Hollenhors over at City Group is correct and
Speaker 5: we get one hundred and forty thousand for the headline
Speaker 5: numbers on payrolls on Friday, will there be a sell
Speaker 5: off in the equity market in tandem with a rally
Speaker 5: in bonds.
Speaker 3: I think potentially we still think that bad news is
Speaker 3: bad news, simply because you have to have the context
Speaker 3: of the starting point of estimates. If estimates were expecting
Speaker 3: a recession, you could get bad news, and it still
Speaker 3: wouldn't be that bad because you're already pricing in weaker growth.
Speaker 3: You're not pricing in any weak growth in this economy
Speaker 3: or in the market. Gdpesmates again are at two point
Speaker 3: four percent, but consider EPs estimates for twenty twenty four.
Speaker 3: They're set to be up thirteen percent next year to
Speaker 3: two hundred and seventy seven dollars a share.
Speaker 1: If you start asking.
Speaker 3: The question if that's too high, that's when bad news
Speaker 3: would become bad news.
Speaker 4: How relevant is the election this year to your call?
Speaker 3: I think that the election is relevant in the context
Speaker 3: of yields, mostly because of treasuries and the fact that
Speaker 3: neither party is talking about austerity. Neither party is talking
Speaker 3: about balanced budgets, which means that all this concern about
Speaker 3: treasury auctions likely continues given the fact that you aren't
Speaker 3: going to see any movement to pull back on deficit spending.
Speaker 2: So fiscal policy is a basket case regardless if he
Speaker 2: wins in November.
Speaker 1: We're still doing the Green Day.
Speaker 4: Thank just that what we're doing.
Speaker 3: Yeah, yeah, sure, I think yes, because you're not seeing
Speaker 3: any sign that you're going to move to more fiscal balance,
Speaker 3: which just means that we should get used to more deficits,
Speaker 3: more high high treasury auctions in the fact that yields
Speaker 3: could be pressured higher on the long end.
Speaker 1: Of the curve.
Speaker 5: At what point is it a computative for stocks, Because
Speaker 5: we've been able to live with it for a.
Speaker 3: While, it becomes punitive if you start questioning the growth story.
Speaker 1: You can forgive a lot of things.
Speaker 3: If growth is remaining resilient, you can shake off a
Speaker 3: tighter FED, you can shake off higher interest rates. But
Speaker 3: if you start cutting growth estimates, which really relies on
Speaker 3: the consumer at seventy percent of GDP, that's.
Speaker 1: When you have the punitive action. You said you advise patients.
Speaker 5: How receptive are people to that recommendation considering the fact
Speaker 5: that that doesn't really work for the DNA of most
Speaker 5: people on Wall Street.
Speaker 3: Yeah, I think that there's still is FOMO. I mean,
Speaker 3: look at GameStop this morning, and you've certainly seen a
Speaker 3: big appetite to Russian to risk. Think, when we think
Speaker 3: about patients, you have to consider positioning and sentiment. Sentiment
Speaker 3: is in the ninetieth percentile, meaning that bullishness is broad based,
Speaker 3: as well as the fact that when you look at positioning,
Speaker 3: you can see that aaii positioning is only about one
Speaker 3: hundred and fifty basis points off its twenty twenty two highs.
Speaker 3: People are positioned for strong equity markets. So what we
Speaker 3: look at with clients is we say, if you've enjoyed
Speaker 3: this rally, you need liquidity some kind of patients before
Speaker 3: adding back into the market is definitely warranted.
Speaker 4: You mentioned game stock.
Speaker 2: Can we just finish on that this stock is up
Speaker 2: in the pre market by seventy five percent?
Speaker 4: Speaking of relevancy, how relevant is this?
Speaker 2: I always hear a lot of people every time we
Speaker 2: get a move like this, they try and say this
Speaker 2: means this, This is a signal for whatever their boss
Speaker 2: was yesterday coming into this move. What does it mean
Speaker 2: to you? If anything, It probably means nothing.
Speaker 3: But if we can try to gain anything from it,
Speaker 3: it would be a measure of sentiment and risk appetite
Speaker 3: as well as liquidity, meaning that if you batch all
Speaker 3: of the mean kind of speculative things together, that is
Speaker 3: a reflection of risk appetite in the market. The thing,
Speaker 3: of course that's missing, though, is that some of your
Speaker 3: riskiest parts of the market, small caps have been completely
Speaker 3: sitting out of this rally, so there's a lot of
Speaker 3: conflicting data points.
Speaker 2: Cameron, this was great. Cameron Dawson at New h RAN.
Speaker 2: It's around the table in New York. Is the international
Speaker 2: president and CEO, Tony Capuano.
Speaker 4: Tony, good morning to here morning.
Speaker 2: We've heard from the airlines very mixed reviews and you
Speaker 2: welcome back anytime American having some problems executing United in
Speaker 2: down to say things are okay in the hotel business,
Speaker 2: summer travel. Just walk us through things and how they
Speaker 2: look regionally at the moment.
Speaker 6: Well, it's interesting listening to the airline CEOs because where
Speaker 6: they're consistent is about the strength of demand. And we
Speaker 6: see the same thing in our business. When we looked
Speaker 6: at Q one results across geographies and across segments, we
Speaker 6: saw strong and steady growth. Now Here in the US,
Speaker 6: our biggest mort we are seeing demands start to normalize
Speaker 6: a little bit. We had global RevPAR of about four
Speaker 6: point two percent. It was only about one and a
Speaker 6: half percent here in the US, eleven percent internationally and
Speaker 6: sixteen percent in Asia. Now there's still benefiting from some
Speaker 6: favorable comparisons, but we are seeing more rapid growth internationally today.
Speaker 2: See the same thing in the airline business that if
Speaker 2: you have this international exposure, you seem to be doing
Speaker 2: better right now. What is that about? Is that the
Speaker 2: affluent consumer traveling more?
Speaker 4: What is that? What explains that?
Speaker 7: Well?
Speaker 1: I think it's a few things.
Speaker 6: I think the strength of the dollar is driving lots
Speaker 6: of outbound US travel. In fact, we were looking at
Speaker 6: the numbers for this summer in Western Europe and this
Speaker 6: is off the back of a record twenty twenty three.
Speaker 6: Our forward booking revenue is up about seven percent going
Speaker 6: into destinations like France, Italy, Spain, Greece, and I think
Speaker 6: the same is true for Asia. There was a study
Speaker 6: that just came out that said, for outbound US travelers,
Speaker 6: among the most desirable destinations Tokyo. And I think you
Speaker 6: talked a little about exchange.
Speaker 4: Rates study en one to sixty house exactly.
Speaker 6: The strength of the dollar is certainly driving that travel pattern.
Speaker 5: I want to just sit on the idea of what
Speaker 5: the characteristics of some of these consumers are. Is there
Speaker 5: a feeling that wealthier consumers are going to keep traveling
Speaker 5: and keep spending and the more you can capture them
Speaker 5: with an international offering, the better you are versus say,
Speaker 5: mid and lower income.
Speaker 6: Well, I think for us, we're trying to capture at
Speaker 6: both ends of that spectrum. So we're lucky enough to
Speaker 6: have the industry's largest luxury portfolio. We announced a few
Speaker 6: more conversions just this morning, resorts like Turtle Bay on
Speaker 6: Oahu and Pelican Hill out in California. So we continue
Speaker 6: to see really strong demand and pricing power in the
Speaker 6: luxury tier. At the same time, at the other end
Speaker 6: of the spectrum. Over the last year, we have for
Speaker 6: the first time in our ninety seven year history, moved
Speaker 6: into the mid scale tier, and that is a more
Speaker 6: value focused customer, and they are absolutely traveling. They're just
Speaker 6: looking for a better value proposition.
Speaker 5: You talk about international travel, there is this feeling that
Speaker 5: companies that go international struggle with respect to some of
Speaker 5: the international relations that have been fraying and some of
Speaker 5: the battles therein Are you.
Speaker 1: Finding that that that's become an issue.
Speaker 6: Well, I think we're a bit insulated for that from
Speaker 6: that because of our business model. We've got about nine
Speaker 6: thousand hotels globally and almost the entirety of the portfolio
Speaker 6: is owned by third party owners and franchisees, and so
Speaker 6: in most of those markets, our owner base is a
Speaker 6: local market base and they're based locally. So you go
Speaker 6: to China, for instance, where we're operating more than five
Speaker 6: hundred hotels today, almost the entirety of that portfolio is
Speaker 6: owned by Chinese ownership, and so that maybe insulates us
Speaker 6: a bit from some of the friction that you describe.
Speaker 4: Is that deliberate or is that just one of the outcomes.
Speaker 6: I think it's largely deliberate. The real estate at its
Speaker 6: core is a local business, and so aligning with partners
Speaker 6: that have deep connections both in the public and private sector,
Speaker 6: that understand local business practices, that have existing relationships with
Speaker 6: lenders in those markets has served us quite well.
Speaker 2: You remember the President in the last month, right I did?
Speaker 2: How did that go?
Speaker 8: Great?
Speaker 6: You know, I was lucky enough to be invited for
Speaker 6: a second time. I applaud the administration for engaging the
Speaker 6: business community, and it gave me a short window to
Speaker 6: describe what the administration can do to support the constituents.
Speaker 4: We can you share some of that with us, of course.
Speaker 6: So I started with our associates, our employees, and I
Speaker 6: talked about, particularly in seasonal destinations, the help we need
Speaker 6: from the administration to expand the number of temporary work
Speaker 6: visas to try and fill in some of the gaps
Speaker 6: in high demand markets. As it relates to our owners
Speaker 6: and franchisees. I really talked about some of the constriction
Speaker 6: we see in the debt markets today. Many of the
Speaker 6: regional banks who have been big, big lenders into the
Speaker 6: hospitality sector are kind of sitting on the sidelines waiting
Speaker 6: to see what BUSL III has to offer in mid
Speaker 6: twenty five and what sort of burden that will put
Speaker 6: on their balance sheets. And so I know in our
Speaker 6: pipeline we've got hundreds of shovel ready projects, which the
Speaker 6: Administration was keen to hear about because of both temporary
Speaker 6: construction job creation and permanent operating job creation. But we
Speaker 6: need some help loosening up the debt markets. And then
Speaker 6: for guests, we really spend a lot of time talking
Speaker 6: about visa weight times. And so you've got a market
Speaker 6: like India. I saw this morning their stock markets going
Speaker 6: to all time record highs. That growing middle class has
Speaker 6: a ravenous appetite for travel. But if you're an Indian
Speaker 6: national trying to get visa to come to the US.
Speaker 6: The current weight time is over four hundred days.
Speaker 1: Let's just dissect some of that.
Speaker 5: Let's start of the first part, the idea that you're
Speaker 5: looking for more workers to come to the US to
Speaker 5: help you out. How much does that change under what
Speaker 5: administration versus the other.
Speaker 1: After the election? Yeah, it's a great question. I'm not
Speaker 1: sure we know.
Speaker 8: Right.
Speaker 6: We have seen support from the Biden administration in terms
Speaker 6: of working with Department of Homeland Security to expand some
Speaker 6: of the temporary worker visas. We'll have to see if
Speaker 6: there's an administration change what their posture will be.
Speaker 5: Immigration has been actually one thing that a lot of
Speaker 5: economists who come on the show talk about. This has
Speaker 5: been the big surprise. Has kept wages down and sort
Speaker 5: of kept inflation from spiraling while continuing to allow growth
Speaker 5: to expand. How much have you seen that on a
Speaker 5: practical level in your own business?
Speaker 6: So coming out of the pandemic, obviously we saw very
Speaker 6: strong wage growth here in the US, our biggest market.
Speaker 6: We're starting to see that more normalize, kind of align
Speaker 6: a little better with inflation.
Speaker 5: But if there wasn't as much immigration, much more difficult
Speaker 5: would it be for your business?
Speaker 1: It would be challenging at this point going forward.
Speaker 5: How much are you seeing wage inflation continued to keep
Speaker 5: pace given the fact that it is challenging based on
Speaker 5: what you're saying to get the number of workers.
Speaker 6: Yeah, as I said, it's sort of moderated a bit.
Speaker 6: We're never fully staffed at the hotel level in a
Speaker 6: pre pandemic world. In any given time in the US,
Speaker 6: we might have had four or five thousand open positions
Speaker 6: during the pandemic and the early days of the recovery
Speaker 6: that swelled to twelve fourteen thousand. It's back down to
Speaker 6: around four or five thousand, and as a result of
Speaker 6: feeling as fully staffed as we might be, some of
Speaker 6: that wage pressure has been moderated.
Speaker 2: You mentioned the debt markets. Let's talk about a debt market. Sure,
Speaker 2: or it depends who you are. If you're a big
Speaker 2: company right now, it is wide open for financing issue.
Speaker 2: Debt will street will eat it up. It doesn't matter
Speaker 2: where you are pounding here right now. But if you're
Speaker 2: at the bottom of stacks. To your point, if you're
Speaker 2: local and you're trying to get financing from a medium
Speaker 2: sized regional lender and you've got a couple of hot hoels,
Speaker 2: whatever your business might be, it's a struggle. How are
Speaker 2: you going to help them?
Speaker 6: How do you so it's again, it's not corporate debt,
Speaker 6: it is project specific construction financing debt. We actually see
Speaker 6: plentiful debt available for existing assets, but if you're trying
Speaker 6: to put a shovel on the ground and get a
Speaker 6: construction mini perm loan, that is quite challenging. And the
Speaker 6: irony is when you talk to many of the lenders
Speaker 6: and they look across their commercial real estate portfolios, they say,
Speaker 6: our hospitality loans are the best performing sector. But because
Speaker 6: we've got this uncertainty into mid twenty five about what
Speaker 6: balance sheet requirements we might have, often unfortunately they're saying
Speaker 6: call us middle of next year.
Speaker 5: What I find fascinating is it seems like your business
Speaker 5: is thriving. You're still seeing a lot of travel. It's
Speaker 5: not like people aren't traveling, but that it could be
Speaker 5: even better if rates were lower. Are you basically saying
Speaker 5: that the economy would just be growing at a much
Speaker 5: faster clip, that you would see that much more expansion
Speaker 5: if rates for lower, But that it's not necessarily hampering
Speaker 5: your business and you're a billion pro Now.
Speaker 6: It's a great question, I think for when you look
Speaker 6: at our owner community, the vast majority of them are
Speaker 6: long term investors in the sector, and so they understand
Speaker 6: they've chosen a real estate sector that is cyclical by
Speaker 6: its nature. They are less impeded by the current interest
Speaker 6: rate environment and more impeded by just the sheer availability
Speaker 6: of new origination for construction depth.
Speaker 2: I want to get to these three hotels, sure and
Speaker 2: us this morning? Can I just cite Razilla Pelican Hill.
Speaker 2: There's going to be a whole team over at PIMCO
Speaker 2: waking up this morning and know that hotel very well
Speaker 2: over in Newport Beach. How exciting you about these three
Speaker 2: names this morning you've announced.
Speaker 1: Yeah, all three.
Speaker 6: Early in my career I ran development in the West
Speaker 6: and so I was in Newport Beach when that hotel
Speaker 6: was developed. As you point out, it is an iconic asset.
Speaker 6: Donald Brinn and the Irvine Company have built a generational
Speaker 6: asset there and we are extraordinarily proud that they've selected
Speaker 6: us and the Saint Regis brand for that hotel. It'll
Speaker 6: be a terrific addition to the portfolio.
Speaker 2: How do things change when you do things like this
Speaker 2: incredibly successful resort, very much loved in the area. Do
Speaker 2: you put us in Regis brand on it and it
Speaker 2: changes overnight? What does that look like?
Speaker 6: Yeah, I mean we're still working through some of those specifics.
Speaker 6: I think the Saint Regis brand will maybe be kind
Speaker 6: of underneath the Pelican Hill Resort name. It is such
Speaker 6: an iconic name and there's so much equity in that name.
Speaker 6: This would be a good question for the folks at
Speaker 6: Irvine Company, But I think from their perspective, among the
Speaker 6: things that attracted them to us, the power of our
Speaker 6: revenue engines, the reach of our global loyalty program, and
Speaker 6: the strength we're seeing in the group segment, which is
Speaker 6: an important part of the demand picture.
Speaker 2: There are you going to tell me which luxury hotown
Speaker 2: in New York on Friday?
Speaker 4: On Friday?
Speaker 1: If you have me back, I'll be happy to all right.
Speaker 4: You give us a cool Tony. It's good to see you.
Speaker 1: Nice to see it.
Speaker 2: Thank you, Let's catch up soon. Tony Kawakuana, the Internet
Speaker 2: nor President and c e O.
Speaker 7: John, thank you very much. Indeed, if you look at
Speaker 7: the ir for data, what it will tell you is
Speaker 7: that a lot of the profitability in this sector is
Speaker 7: coming from the United States, and within the United States,
Speaker 7: it's coming from the big carriers. As you say, we're
Speaker 7: joined by one of those now, the CEO of United
Speaker 7: Scott Kirby. Nice to see, sir, Thanks for eving. We
Speaker 7: saw a little hiccup a few days back. American comes out,
Speaker 7: it changes its guidance, the industry reacts, share prices go down.
Speaker 7: You're very quick, very quick to come out and reconfirm
Speaker 7: your guidance on the back of that.
Speaker 4: But are you seeing.
Speaker 7: Any indication that the consumer is softening at the moment?
Speaker 9: You know, it's demand for us is steady as she
Speaker 9: goes in a way kind of boring over the last
Speaker 9: couple of years.
Speaker 8: I think boring is good.
Speaker 9: But it really is not getting a lot stronger, but
Speaker 9: not getting weaker.
Speaker 8: It really is pretty steady.
Speaker 7: And what changes that? Does anything change that? Does the
Speaker 7: fact that the labor market maybe started to show a
Speaker 7: few little cracks, the fact that maybe rates stay higher
Speaker 7: for longer. Do any of these factors impact that that
Speaker 7: strong consumer that was saying to you it could.
Speaker 9: But we spent the last two years talking about the
Speaker 9: risk of recession and the consumer just keeps plowing ahead
Speaker 9: and keeps going, and so I think that's likely going
Speaker 9: to continue. The bigger thing, the more likely change for aviation,
Speaker 9: I think is on.
Speaker 8: The supply side.
Speaker 9: We're at a peak and where the number of seats
Speaker 9: is growing a whole lot faster than the demand in
Speaker 9: the United States. But as we move into the third
Speaker 9: and fourth quarter, those numbers are scheduled to come to
Speaker 9: back down. Lie So I think the supply balance will
Speaker 9: counteract even if there was some seats going through.
Speaker 7: Because is it with you guys at the upper end,
Speaker 7: the full service carriers, I'm suiting really across.
Speaker 9: The board, right, you know, Southwest is probably the biggest
Speaker 9: thrower of seats, but it's really it really is across
Speaker 9: the board. We're growing, others will growing kind of across
Speaker 9: the board.
Speaker 8: Just the peak.
Speaker 9: This is a lot of still recovery from COVID, and
Speaker 9: this was the time that people were getting all their
Speaker 9: ability to grow back in place.
Speaker 8: So second quarters piece, I.
Speaker 7: Can see that capacity in some ways making sense of
Speaker 7: your end of the market. Does it make sense at
Speaker 7: the bottom end of the market, do you think all
Speaker 7: of those low cost carriers survive?
Speaker 9: No, it doesn't make sense, and we can look, we
Speaker 9: do do the route p and ls really accurately for everyone,
Speaker 9: and you know everyone that's you know, as Martin's Lord
Speaker 9: of Us has a big chunk of their route network
Speaker 9: that loses money. The low cost and ultra low cost
Speaker 9: carriage in particular lose.
Speaker 8: An awful lot of money. It's just it's a fatally
Speaker 8: flawed business model.
Speaker 4: So some of them are going to go.
Speaker 8: I think that they're going to struggle to survive.
Speaker 7: Okay, that's about as far as I think I'm going
Speaker 7: to get used to say. That just makes the American issue.
Speaker 7: They pushed the corporate market very hard. Did you benefit
Speaker 7: from them?
Speaker 9: You know, there's a probably a small benefit in market
Speaker 9: share that we watched the data pretty closely, and while
Speaker 9: they we got a little bit of market share from them,
Speaker 9: we thought that they were making up close to one
Speaker 9: hundred percent of their revenue change in terms of distribution expenses.
Speaker 9: And so I think it's gotten a lot of press,
Speaker 9: but we certainly thought it was a marginal issue, both
Speaker 9: for them and for us.
Speaker 7: You talk about the supply side. The industry though, is
Speaker 7: supply constrained. Right now, You've got an issue with the
Speaker 7: prime Whinney engines that are going on three twenty's. You've
Speaker 7: got issues with the Max and the White of Boeing
Speaker 7: issues right now? Is your sense that we are past
Speaker 7: the worst of that there's worse still to come. Come
Speaker 7: and just give us to say to something.
Speaker 9: You know, I think we are past the worst. I
Speaker 9: think we've acknowledged the problems by and large. You know,
Speaker 9: you talked about two of the big manufacturers that are issues,
Speaker 9: Pratt and Boeing. I think that we're we're probably moving
Speaker 9: up from here. It's not going to be overnight. They're
Speaker 9: not going to get back to one hundred percent, you know, quickly.
Speaker 8: But that's okay.
Speaker 9: Like you know, particularly when I took them Boeing, you know,
Speaker 9: like I'm not worried about the next twelve to eighteen months.
Speaker 9: I want to get structural the structure and they want
Speaker 9: to also, and then get them back to delivering high quality,
Speaker 9: delivering on time, delivering on schedule.
Speaker 8: And that's the path that's most important.
Speaker 4: Talk.
Speaker 7: So when you thought a would be five years a Boeing, yeah,
Speaker 7: I think that's a realistic number.
Speaker 9: I think it'll be faster than five years, but it
Speaker 9: depends on them really making the kinds of cultural changes
Speaker 9: that they need to make. If they make the cultural changes,
Speaker 9: I think Boeing gets fixed or gets back, gets their
Speaker 9: mojo back quicker. If they don't make cultural changes, they're
Speaker 9: not going to get their mojo back.
Speaker 7: If you was to give advice to the chair on
Speaker 7: what kind of a person needs to sit in that
Speaker 7: cease of CEO, what kind of advice.
Speaker 4: Would you give?
Speaker 9: So you know, what I hope they do is somebody
Speaker 9: that focuses on the culture of Boeing and letting the
Speaker 9: one hundred and forty thousand only has one hundred and
Speaker 9: forty thousand great people, engineers, mechanics. Let them go build,
Speaker 9: design great products, build great technology, and focus on that
Speaker 9: and not focus on the short term financials.
Speaker 8: I think that's the.
Speaker 9: Biggest Issueocus on the upfront. Build great airplanes, great products,
Speaker 9: and the financials will take care of themselves.
Speaker 8: Don't try to manage the back end. Manage it upfront.
Speaker 7: Start from that. Let's stay with the FAA. You've been
Speaker 7: under review by the FAA. Any indication kind of how
Speaker 7: long that process is going to last?
Speaker 8: Where are we?
Speaker 9: Yeah, everything in that process has gone well so far,
Speaker 9: no major findings.
Speaker 8: I think the FA would tell you that. I know,
Speaker 8: the FA would tell you the same thing if they
Speaker 8: answer the question. You know, we feel good, we think it. Actually,
Speaker 8: we've taken this as an opportunity.
Speaker 9: Really we had a great safety foundation, but we did
Speaker 9: have a number of events that happened. But take that
Speaker 9: as an opportunity to make not just safety number one,
Speaker 9: but top of mind awareness all the time. And you know,
Speaker 9: I for the rest of my career, for example, every
Speaker 9: time I talk to employees, you know, I'm going to
Speaker 9: talk about keeping safety top of mind. We've all believed
Speaker 9: it's number one in aviation, but keeping it top of
Speaker 9: mind when everything is going great, you know, still focus
Speaker 9: on that all the little things because all the little
Speaker 9: things matter.
Speaker 7: What do you want to see from the next administration?
Speaker 7: What do you want to see from the next incoming
Speaker 7: the White House?
Speaker 8: What helps this industry?
Speaker 7: What helps America?
Speaker 8: Well, it's more about help America and help the world.
Speaker 9: You know, I think the United States is I think
Speaker 9: it's it's the greatest country in the history of the planet.
Speaker 8: But what makes us.
Speaker 9: Great is positivity, optimism, vision for the future. And I
Speaker 9: want us to get back to being positive, being optimistic,
Speaker 9: looking to the future and how to make things better
Speaker 9: and focusing on that, and I think we need that
Speaker 9: in the United States. I think people would respond positively
Speaker 9: to that. The world needs it, and we can make
Speaker 9: the country in the world a better place.
Speaker 7: You are by far and away the most international of
Speaker 7: the US major carriers. Do you think a Trump administration
Speaker 7: makes your job harder being an international carrier? Do you
Speaker 7: think we're going to see more fragmentation? I guess the
Speaker 7: question that I'm really asking you.
Speaker 9: Know, I don't think it really affects demand or our
Speaker 9: ability to fly around the world in any measurable way,
Speaker 9: one way or another.
Speaker 7: Great to see you, Thanks very to see Thank you, Scott,
Speaker 7: Thank you very much, indeed, Scott Kirby John of the
Speaker 7: United here at the IARTA AGM in Dubai.
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