1 00:00:00,160 --> 00:00:06,800 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:07,080 --> 00:00:09,800 Speaker 2: It is well documented that Boeing is having problems with 3 00:00:09,920 --> 00:00:12,440 Speaker 2: its seven three seven Max. However, there's another issue which 4 00:00:12,440 --> 00:00:15,319 Speaker 2: has been hitting this industry very hard as well, and 5 00:00:15,320 --> 00:00:19,320 Speaker 2: that affects airbus aircraft. Not all airbus aircraft, some airbus aircraft, 6 00:00:19,400 --> 00:00:24,120 Speaker 2: and it concerns the RTX Pratt and Whitney geared turbofan engine. Now, 7 00:00:24,160 --> 00:00:26,400 Speaker 2: if you buy an A three twenty today, you are 8 00:00:26,400 --> 00:00:28,840 Speaker 2: given two engine options. You can either buy the CFM 9 00:00:28,880 --> 00:00:32,720 Speaker 2: which easy Jet bought, or you can buy the jet 10 00:00:32,800 --> 00:00:35,760 Speaker 2: engine that comes from RTX. And that latter engine has 11 00:00:35,800 --> 00:00:38,800 Speaker 2: been having major problems which has been hitting our next 12 00:00:38,880 --> 00:00:42,879 Speaker 2: guest very very hard, and that is Joseph Variety. He 13 00:00:43,000 --> 00:00:47,400 Speaker 2: is the CEO of with Air. His engines are RTX 14 00:00:47,440 --> 00:00:50,080 Speaker 2: engines and they're having a major impact on his ability 15 00:00:50,120 --> 00:00:52,600 Speaker 2: to provide capacity to the market. Josephs with us this morning. 16 00:00:52,640 --> 00:00:55,279 Speaker 2: You've got numbers out this morning. Topline looks pretty much 17 00:00:55,320 --> 00:00:58,120 Speaker 2: in line with expectations. New income. You've beaten there. But 18 00:00:58,200 --> 00:01:00,840 Speaker 2: this is a this isn't a carrier. The moment is, 19 00:01:00,840 --> 00:01:02,840 Speaker 2: in some ways in survival mode, is you try and 20 00:01:02,920 --> 00:01:06,759 Speaker 2: manage to do this problem which Withney engine issue. How 21 00:01:06,840 --> 00:01:09,440 Speaker 2: hard is it hitting you right now? When is the 22 00:01:09,440 --> 00:01:12,120 Speaker 2: peak of this problem going to manifest itself? And when 23 00:01:12,160 --> 00:01:14,080 Speaker 2: are you going to start preparing for the kind of 24 00:01:14,080 --> 00:01:15,760 Speaker 2: the growth phase when all the engines are back. 25 00:01:16,240 --> 00:01:18,679 Speaker 3: No, absolutely, I mean this is a significant issue we 26 00:01:18,760 --> 00:01:20,720 Speaker 3: have been dealing we can be a continue to deal 27 00:01:20,720 --> 00:01:22,680 Speaker 3: with in the next few years. So this is not 28 00:01:22,800 --> 00:01:26,520 Speaker 3: something you can resolve overnight. Good news, we are going 29 00:01:26,560 --> 00:01:30,600 Speaker 3: to receive the first engine with no problems, clean up 30 00:01:30,640 --> 00:01:34,280 Speaker 3: all of these issues as of next months, and from 31 00:01:34,360 --> 00:01:36,920 Speaker 3: that on this situation we start improving. So we are 32 00:01:36,959 --> 00:01:40,560 Speaker 3: probably peaking on the problem as we speak. By the 33 00:01:40,600 --> 00:01:43,200 Speaker 3: time we're going to be completing the worst cycle of inspections, 34 00:01:43,200 --> 00:01:46,160 Speaker 3: it's another two years to go off the speaking, but 35 00:01:46,280 --> 00:01:49,520 Speaker 3: now we will start seeing some improvements. So this issue 36 00:01:49,520 --> 00:01:52,640 Speaker 3: has been dragging us over the last six to twelve months, 37 00:01:52,680 --> 00:01:55,480 Speaker 3: but now we are starting to sign up recovery and 38 00:01:55,520 --> 00:01:57,760 Speaker 3: I think we're going to get better going from here. 39 00:01:57,880 --> 00:02:00,000 Speaker 4: Okay, how many engines you've got out now? 40 00:02:00,000 --> 00:02:02,360 Speaker 2: Now when you get them all back, how much extra 41 00:02:02,400 --> 00:02:04,360 Speaker 2: capacity you're going to have? What are you going to 42 00:02:04,400 --> 00:02:06,320 Speaker 2: do with that capacity? We need to start thinking about 43 00:02:06,400 --> 00:02:09,160 Speaker 2: next year and what you're going to do with the business. 44 00:02:09,240 --> 00:02:11,400 Speaker 4: Then yeah, maybe the best way to look at this. 45 00:02:11,639 --> 00:02:14,200 Speaker 3: Today we are a two hundred aircraft airline two hundred 46 00:02:14,200 --> 00:02:17,000 Speaker 3: and nine. Precisely three years now from now, we're going 47 00:02:17,040 --> 00:02:19,160 Speaker 3: to be more than a three hundred aircraft. Some of 48 00:02:19,200 --> 00:02:22,360 Speaker 3: our aircraft are grounded as we speak. We have forty 49 00:02:22,400 --> 00:02:26,000 Speaker 3: seven aircraft on ground right now. Those will be recovered 50 00:02:26,040 --> 00:02:29,840 Speaker 3: completely within the course of the next two years or so, 51 00:02:29,840 --> 00:02:33,560 Speaker 3: so we will be back into gross overround twenty five 52 00:02:33,560 --> 00:02:37,119 Speaker 3: to thirty percent of year after this year. So it's 53 00:02:37,160 --> 00:02:39,120 Speaker 3: going to be a bit of a roller coaster. So 54 00:02:39,240 --> 00:02:41,760 Speaker 3: right now we are flat on capacity. We are protecting it, 55 00:02:42,040 --> 00:02:43,440 Speaker 3: but in the next two years you're going to be 56 00:02:43,440 --> 00:02:46,000 Speaker 3: seeing growth in excess of twenty twenty five. 57 00:02:45,880 --> 00:02:48,680 Speaker 5: Percent years A good morning. Have you been losing market 58 00:02:48,680 --> 00:02:50,560 Speaker 5: share there in some places as a results of this 59 00:02:50,600 --> 00:02:52,639 Speaker 5: and are you so? Are you confident that you can 60 00:02:52,680 --> 00:02:55,280 Speaker 5: get some of that back with the capacity plan that 61 00:02:55,320 --> 00:02:55,919 Speaker 5: you describe. 62 00:02:56,040 --> 00:02:59,360 Speaker 3: I think I just said it that effectively we are 63 00:02:59,400 --> 00:03:02,800 Speaker 3: protected by or the supply chain issues because we are 64 00:03:02,880 --> 00:03:04,520 Speaker 3: unable to run at the moment, but no one else 65 00:03:04,560 --> 00:03:07,440 Speaker 3: is able to run because they all have their own problem. 66 00:03:07,480 --> 00:03:10,160 Speaker 3: So I think it's a rather like statusco in the market. 67 00:03:10,160 --> 00:03:13,600 Speaker 3: So we are not losing market share, we are protecting capacity. 68 00:03:14,040 --> 00:03:16,400 Speaker 3: We are flying exactly the same number of seats this 69 00:03:16,520 --> 00:03:18,240 Speaker 3: year as last year. 70 00:03:18,200 --> 00:03:19,720 Speaker 4: So we that regard we are fine. 71 00:03:20,120 --> 00:03:22,440 Speaker 3: But most importantly, you know now we need to look 72 00:03:22,480 --> 00:03:25,040 Speaker 3: at the future because growth is coming. We need to 73 00:03:25,040 --> 00:03:27,720 Speaker 3: start setting ourselves off for that from a market standpoint, 74 00:03:27,919 --> 00:03:30,280 Speaker 3: detre between pilots and kevin crew to make sure that 75 00:03:30,280 --> 00:03:31,800 Speaker 3: we're going to be able to deliver it. 76 00:03:31,919 --> 00:03:33,760 Speaker 5: What can you tell us about pricing. We spoke to 77 00:03:33,760 --> 00:03:35,600 Speaker 5: the easy Jet boss recently and he was saying it's 78 00:03:35,640 --> 00:03:38,160 Speaker 5: too soon really to say too much about the pricing 79 00:03:38,160 --> 00:03:40,040 Speaker 5: outlook for the summer. What are you seeing. 80 00:03:40,320 --> 00:03:42,520 Speaker 3: Yeah, First of all, we are seeing a very robust 81 00:03:42,560 --> 00:03:45,920 Speaker 3: market out there. We are operating across geographies, investing Europe, 82 00:03:45,960 --> 00:03:48,200 Speaker 3: in Centralistian Europe, in the Middle East, and we are 83 00:03:48,200 --> 00:03:51,280 Speaker 3: seeing a very consistent picture. The consumer is fine, demand 84 00:03:51,360 --> 00:03:52,800 Speaker 3: is fine, the market is fine. 85 00:03:52,920 --> 00:03:54,200 Speaker 4: There are no issues. Now. 86 00:03:54,200 --> 00:03:56,920 Speaker 3: The problems some of the allies have that they overcharge 87 00:03:56,960 --> 00:03:59,400 Speaker 3: the consumer last year and they cannot just keep doing 88 00:03:59,440 --> 00:04:01,320 Speaker 3: it every year. So of course that is a plateau 89 00:04:01,360 --> 00:04:03,720 Speaker 3: to it. But we said, is in the cost business. 90 00:04:03,720 --> 00:04:06,400 Speaker 3: We are very much focused on unit costs to make 91 00:04:06,440 --> 00:04:09,440 Speaker 3: sure that we are actually loading our cost of operations. 92 00:04:09,640 --> 00:04:12,280 Speaker 3: We are in the business of commodities, in commodities lowest 93 00:04:12,280 --> 00:04:12,880 Speaker 3: cost previous. 94 00:04:13,080 --> 00:04:14,560 Speaker 4: This is what we are focused. 95 00:04:14,240 --> 00:04:16,400 Speaker 3: On, and we are very happy with the pricing environment 96 00:04:16,480 --> 00:04:17,320 Speaker 3: we are seeing out there. 97 00:04:18,000 --> 00:04:19,320 Speaker 1: Tell us a little bit about some of the kind 98 00:04:19,360 --> 00:04:21,800 Speaker 1: of black swan events that we're watching, which Jet has 99 00:04:21,800 --> 00:04:25,279 Speaker 1: to been operating in Israel, for example, if that conflict escalates, 100 00:04:25,800 --> 00:04:29,320 Speaker 1: are you prepared to gain or deploy or get that 101 00:04:29,360 --> 00:04:31,599 Speaker 1: market share back in other parts of the world. 102 00:04:32,240 --> 00:04:34,680 Speaker 3: I think we are prepared for everything. By now, I 103 00:04:34,680 --> 00:04:37,760 Speaker 3: mean going through the last three to four years. One 104 00:04:37,760 --> 00:04:40,520 Speaker 3: of the things we certainly have learned how to deal 105 00:04:40,600 --> 00:04:44,279 Speaker 3: with blackstone events because we have had a lot of them. 106 00:04:44,920 --> 00:04:48,000 Speaker 3: With regard to reshuffling capacity and that is a conflict 107 00:04:48,080 --> 00:04:51,279 Speaker 3: or there is, you know, any big issues affecting the business, 108 00:04:51,360 --> 00:04:53,080 Speaker 3: we have learned how to do that. We are a 109 00:04:53,160 --> 00:04:56,039 Speaker 3: very flexible organization. Simply what you do is that you 110 00:04:57,040 --> 00:04:59,919 Speaker 3: play according to market. You play according to the situation. 111 00:05:00,120 --> 00:05:02,600 Speaker 3: So if you are contained with regard to flying, you 112 00:05:02,720 --> 00:05:05,839 Speaker 3: just move capacity over to somebody else. Let's not forget 113 00:05:05,839 --> 00:05:08,360 Speaker 3: that we have a huge network footprint. By now, we 114 00:05:08,400 --> 00:05:14,039 Speaker 3: are operating a two hundred countries. We have options to 115 00:05:14,160 --> 00:05:15,320 Speaker 3: go for when we have to do that. 116 00:05:15,960 --> 00:05:17,360 Speaker 1: Talk to us a little bit as well about labor 117 00:05:17,360 --> 00:05:19,440 Speaker 1: issues that seems to come up every summer, in terms 118 00:05:19,480 --> 00:05:22,360 Speaker 1: of capacity at airports, in terms of negotiations with fight 119 00:05:22,400 --> 00:05:25,320 Speaker 1: attendant pilots, et cetera. Your visibility on the labor story. 120 00:05:26,600 --> 00:05:27,960 Speaker 4: Again, we are we are good. 121 00:05:28,000 --> 00:05:31,040 Speaker 3: I mean, let's not forget that we are structurally a 122 00:05:31,080 --> 00:05:32,040 Speaker 3: growth business. 123 00:05:32,080 --> 00:05:33,240 Speaker 4: We are growing the company. 124 00:05:33,240 --> 00:05:35,360 Speaker 3: As a result of that, we continue to create carrier 125 00:05:35,400 --> 00:05:38,640 Speaker 3: opportunities for our people. You may be a pilot, you 126 00:05:38,680 --> 00:05:43,360 Speaker 3: may be cabinettendant, you may be in a manicheri role. 127 00:05:43,560 --> 00:05:46,160 Speaker 3: So people come to work for this on the one hand, 128 00:05:46,240 --> 00:05:47,919 Speaker 3: for the spirit of the business, but also for the 129 00:05:47,920 --> 00:05:52,000 Speaker 3: carrier opportunities that growth continues to create. So we are 130 00:05:52,360 --> 00:05:55,680 Speaker 3: very attractive to the market. We actually never had labor 131 00:05:55,760 --> 00:05:59,040 Speaker 3: issues ourselves. We have been dealing with lavery issues of others. 132 00:06:00,120 --> 00:06:01,880 Speaker 3: Us in the situation is a lot better this year 133 00:06:01,880 --> 00:06:03,360 Speaker 3: than what it was last year. 134 00:06:03,880 --> 00:06:07,200 Speaker 2: Why are supply chain issues still hitting this industry as 135 00:06:07,240 --> 00:06:09,640 Speaker 2: hard as they are? How long are they going to last. 136 00:06:09,839 --> 00:06:12,400 Speaker 2: You talk to the OEMs US and bye. They still 137 00:06:12,440 --> 00:06:15,279 Speaker 2: talk about their supply chains. They still talk about problems 138 00:06:15,480 --> 00:06:18,960 Speaker 2: where years in the pandemic they haven't resolved it. How 139 00:06:19,000 --> 00:06:21,840 Speaker 2: long is it going to hit this issue? How long 140 00:06:21,880 --> 00:06:24,520 Speaker 2: can we expect capacity problems? How long can we expect 141 00:06:24,800 --> 00:06:27,280 Speaker 2: that to impact fares personally? 142 00:06:27,360 --> 00:06:30,520 Speaker 3: I think supply chain issues will affect the operations of 143 00:06:30,560 --> 00:06:33,719 Speaker 3: the industry over the next three to five years. Again, 144 00:06:33,839 --> 00:06:36,040 Speaker 3: this is not something you can fix overnight. And if 145 00:06:36,040 --> 00:06:39,400 Speaker 3: you look at the root causes of these supply chain issues, 146 00:06:39,520 --> 00:06:43,400 Speaker 3: I think they are two forward. One, the whole industry 147 00:06:43,480 --> 00:06:46,680 Speaker 3: has been structurally growing a lot more than it was expected. 148 00:06:47,080 --> 00:06:49,680 Speaker 3: And two COVID was such a big hit and such 149 00:06:49,720 --> 00:06:53,240 Speaker 3: a setback for the whole setup that the industry is 150 00:06:53,279 --> 00:06:56,640 Speaker 3: theory covering from that in terms of getting labored back 151 00:06:57,480 --> 00:07:00,960 Speaker 3: into work, get focused on some of the issues which 152 00:07:01,000 --> 00:07:04,359 Speaker 3: you let go during the COVID times. And this is 153 00:07:04,400 --> 00:07:07,400 Speaker 3: a very robust industry. It takes time to move again. 154 00:07:07,960 --> 00:07:09,560 Speaker 3: I think it's years still out. 155 00:07:09,440 --> 00:07:10,800 Speaker 4: There, all right. 156 00:07:10,920 --> 00:07:13,320 Speaker 1: Joseph Varady, the CEO of wizare joining us this morning 157 00:07:13,360 --> 00:07:15,520 Speaker 1: on SAT talking about a variety of issues from a 158 00:07:15,520 --> 00:07:17,240 Speaker 1: supply chain story to the labor story. We thank you 159 00:07:17,360 --> 00:07:18,680 Speaker 1: so much for joining the program.