Bloomberg Daybreak Weekend: Retail, Scholz, Asia Travel

are they going and who stands to benefit? That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg eleven, FREEO New York, Bloomberg ninety nine one, Washington, DC, Bloomberg one oh six one, Boston, Bloomberg nine sixty, San Francisco, DAB Digital Radio London, Sirius XM one nineteen and around the world on Bloomberg Radio dot com and via the Bloomberg

Business App. A day to you. I'm Tom Buzzby, and we begin today's program with a flood of earnings reports about to come out from some of the nation's biggest retailers. And joining me now to give us some insight into what to expect and what it all means for the economy. Bloomberg retail reporter Brendan Case. Brendan, thank you so much for joining us, Hey, thanks for having me on well.

With inflation still rising, borrowing rates high and expected to move even higher, it has been a tough time for consumers and for retailers. And last week, boy, we got some pretty disappointing outlooks for the year ahead from two retail giants, both Dow components. So, Brendon, let's start with Walmart, the world's largest retailer. In Brendan, Walmart's CFO John Rainey told us this past week that value, proposition and convenience, as he calls it, is something consumers are liking. But

and it's a big butt. There's a lot of macro uncertainty as as we look across the consumers across the globe, but certainly here in the US, balance sheets are getting thinner. You're seeing saving rates decline, and we really haven't been in a position where we've seen the fed titan at this rate. And so as we look forward and give guidance for the full year, we're adopting a cautious outlook, and we want to make sure that we're responsive to

whatever environment that we're going to find ourselves. So Brended of Walmart is being cautious, as is Home Depot, the other big retailer that reported last week. Do other retailers share this caution and broader concerns about the economy right now?

The ones that Rainy is talking about, Yes, they really do, Tom And just to hear that from Walmart, you know, if you think about the broad trends, the big picture out there is that if you're in retail, you want to be selling at very you know, the lowest possible prices and selling basic goods. Right now, Walmart has a reputation for doing both, and even it's taking such a

cautious tone. When you think about some of the companies about to report, Target, Coal's, Macy's, you're talking a lot more about discretionary items, and I think we'll probably hear a similar tone of caution for their outlooks this year. Now. On another note, Millard Drexler, he's own proprietor of clothing retailer Alex mill told us consumers are stressed by inflation and higher prices. And despite the unemployment rate at more than fifty year low, right now, people should worry that

the robust labor market is starting to change. Here's another monkey ranch. A lot more jobs may be at risk. Let's hear from Drexler. Now, they have jobs, but I think the huge amount of layoffs and the publicity and they get has to have people worried about their job security. And there's so many unknowns going on in the world today, you know, internationally in America. All right, So, Brendan, is this another big problem that's going to weigh on retailers?

The ones you know that we're expecting to hear from this coming week time will tell. I think from the retailer's perspective, that's more of kind of a good news bad news kind of thing. You know. The bad news is that, certainly we've heard a lot of layoff announcements from tech companies, bang, some of the most powerful companies in the economy. It looks a little different from the retailer's perspective because you know, employment is still very high.

You know, people have jobs and wages are going up. Both Walmart and home Depot over the last few weeks have said they're going to be raising wages, which are sort of a signal that they're having trouble hiring people at their at their current wages, and that they need to be boosting them just to be able to fill the jobs they have. Now, you know, if the Fed keeps tightening, is the economy going to get to a situation where overall unemployment starts to rise, people start losing jobs,

you know, in across different industries. Time will tell if that happens, that's going to be a whole new ballgame for the retailers, all right, Brendon. Now, there's also the post pandemic reopening, a lot of pent ump demand for travel, for dining out, for experience, ential spending on concert, sporting events, the like. None of that comes cheaply. That means all those things are also competing with retailers for our money.

Now at the same time, of course, you need to buy clothes, you have to eat, you have to go out every now and again. So where does this leave retailers right now? Given that, like we just heard Drexler say, people are worried. You know, the retailers last year they started struggling with this shift that you're talking about last year, and in fact, it happened a lot more quickly than

they were expecting. The effect was that companies like Walmart, Target, they ended up with a whole lot more inventory than they thought they were going to need. You know, you're talking about home goods, you're talking about kitchen appliances. That stuff was just you know, stacking up in their warehouses and they ended up having to liquidate it market down, you know, pretty heavy discounts that took a big toll on profits last year, and this year it's a pretty

similar outlook. Now, well, let's dig a little deeper into some of the names that are reporting, and some of them have navigated the pandemic better than others, some of them have bounced back better than others. But let's talk about some of the big use. We'll start with the discounters Dollar Tree, Dollar General. I mean, these stores have

seen tremendous ups, tremendous downs. Where do they stand right now? Yeah, So Dollar Tree is going to be reporting next week, and that's going to be an interesting test because just on February twenty third, Dollar General issued a profit warning. It said it got hit pretty bad from the impact of the winter storms that we had right before Christmas. It also came out with a pretty underwhelming outlook for this year, and you know, one thing that they flagged

was increased interest expense. But kind of lurking in the background, there is the concern that maybe lower income consumers, which is kind of their bread and butter, you know, maybe those people are really starting to you know, run out

of gas in terms of their spending ability. They're getting squeezed by whole range of costs, and you know, are they going to be able to keep spending the way they've been spending For companies like Dollar Tree and Dollar General to you know, continue making the gains that they have been in terms of sales, that's a that's a big question going into these earnings reports. Let's talk about now the middle income, the targets, the coals, how do they stand. So Target is going to be the first

one to report. They go on on Tuesday, and they actually have a whole investor day planned as well, so they're going to be getting into the details of their other outlook for this year, and that's going to be really interesting. You know, Target does sell a lot of food and basic goods, but the proportion of those goods as in terms of their total sales, it's much smaller than Walmart, and Target, you know, by contrast, is quite a bit stronger than Walmart in terms of the percentage

of discretionary items itselves. And so its outlook is going to tell us a lot about what, by all accounts, is a very well managed retailer. What does a company like that see in terms of their demand trends for this year after being kind of upended last year and speaking of upended Cole's competitor in a lot of ways

to Target, how does it look for Coals? Yeah? See, and there again with Coals, with Macy's, you're talking about all of the discretionary exposure that Target has, but with much less of the kind of basic essentials that Target also sells. So I think if you're looking at a company like Coals, you're looking at Macy's, you're talking about a company that is trying to convince customers that, you know, they should buy stuff. Do they really need it? You know,

people's definition varies. You can't put off buy and clothes forever. But that's a real question mark, and I think there's a lot of concern about whether the outlook for those companies is going to be quite weak this year as consumers continue to struggle with inflation and just try to cut back on all of their non essential spending. And speaking of non essential, let's talk warehouse clubs. Now, we

heard from Walmart and of course they own Sam's. But this week we hear from Costco the Biggie and after that BJ's. They have really had to be nimble and navigate through the pandemic. What's the outlook on Costco the Biggie? So Costco has been a big winner during the pandemic. This is a company with a clientele that skews higher income and it's a company with a reputation for selling

very competitively priced goods. It also sells a lot of food, and so it's getting people in the door with food sales. And once they're in the door, you know, a lot of them, especially those higher income levels, maybe have a little more money to spend. They're finding a lot more to buy in Costco than they did before. And so Costco's comparable sales had a little gip in November. There was a lot of concern that that was that was a signal of a big slowdown, but since then December

January have been quite good for Costco. We'll find out more about their outlook when they report earnings, but by all accounts, they've been a big winner from the pandemic and it would be a surprise if they come in with a particularly weak outlook. So that'll be a big watch item. Well, Brendon, that is a lot to digest, and I want to thank you. That's Bloomberg retail reporter

Brendan Case. And coming up on Bloomberg Daybreak Weekend, we go to London to learn about veteran investor Helena Morrissey and how she is setting out to tackle the lack of female fund managers in the UK. I'm Tom Busby, and this is Bloomberg. This is Bloomberg Daybreak Weekend, our global look ahead at the top story for investors in the coming week. I'm Tom Busby in New York. Up later in our program and look at some of the

challenges the Biden administration is facing right now. But first we go to London and Bloomberg daybreakhost Caroline Hepger to learn more about veteran investor Helena Morrissey and how she's setting out to tackle the lack of female fund managers in the UK Caroline Gender diversity efforts here in the UK have stalled. The proportion of female money managers is stuck at twelve percent that according to City was Alpha Female Report for twenty twenty two. Helena Morrissey is the

chair of the diversity projects. She is hoping to change that with a new Pathway program training sixty women from thirty three companies to take their top jobs in money management. Now. I sat down with Morrissey to discuss the issue and firstly, just why the numbers are still so low for women at the top of finance is quite a mystery, to be honest, because as my own career suggests, you know, it's a great career for anybody who wants to be

measured on results. I just spoke at a law firm where the women were saying, you know why they're so few female fum managers, and I said, it's it's particularly mystery when I'm talking to you where you've got fifty percent plus lawyers at the intake level anyway, and fund managers. You know, we've stayed very very though it's not really moved for the seven or eight years since people collected

the data. I do think there's an image problem that people look and they think, oh, fun management, it's not for me. It would be very isolated to be a woman. It's kind of macho environment. And some of this is not really true. And we've got to get out more and explain that actually, fun management it's great career, you know, if you want to be judged on your ultimate results. If you like an analyst, you know, analysis, that's great

for lots of women love analyzing companies and things. So we've got to just get out and tell the story. I think that's really interesting because I mean, surely, if all the industries, the finance industry, with all of its metrics, would be the most merited crack it. One might think that you would actually find the industry very obsessed with facts and figures and data that they we would promote

beautiful performance. Well exactly. I mean I remember when I was you know, I have a lot of children, and when i'd come back from return to leave, you know, if I still had great performance numbers, then no one really could criticize. I mean, obviously I was investing for the long term as well. I didn't always have great numbers, of course, but that's not possible if you run Monday

for many years. But it was a great testament to one's ability to have performance data that was completely indisputable, just completely objective. Do you still meet men, I know that you must meet so many people in the city of London. Do you still meet men in the city of London who don't believe that, who question whether women are as good at managing money as men? Well, I don't think anyone would ever admit at these days. And I think there is still though a bit of a

sort of cultural impediment as well. I think men, many men now and especially in our industry, really are just as frustrated as the women that we're not seeing more progress on this. So there are great allies. But I do also know that some people think this is, you know, irrelevant, you know, it's all about you know, they just don't see it that actually women might actually bring something new to the table, that we might add something, And in fact the data does suggest that mixed gender teams are

the best performing. I don't think that's any great shock to anybody. Really, we bring different things to the table. So I'm afraid yes, one or two, I don't think dinosaurs anymore, but certainly pockets where you're like, oh, I don't really think they're on board with this idea. Yeah, because certainly the story in private equity, for example, is that the case is still very much having to be

made either to invest in women lead businesses. You know that the decision makers about where the money is allocated is often very skewed, and so you know that cases. Yeah, we think of it as being all fashioned, but it might not be. And I'm at this stage thinking, let's not put a business case because obviously we've had business cases going back decades now. You know, McKinsey did a great business case on why it would better to have more women on boards than not to have any, showing

the financial impact. I think we now have to make a personal case, you know, actually say your team will be better, your business will be better, You'll have more connection with your clients. You know. It's it's more of

a motive case. I'm actually want to win over hearts and minds now, because I see again I see people saying, oh, sure we'd love to have more women, but not actually doing things, for example, managing people inclusively, sort of assuming everybody's got the same sort of lives and we need to just shake that up completely, I think, and say as she's in your interest to encourage more women into

the industry and to stay. I think that's really interesting to talk about winning over hearts and minds, because this project to me feels much more muscular. This feels like getting results on the ground. It feels like a more muscular diversity project than we've seen before, which has been talk maybe topped down. This is very much bottom up. It is. I mean, we have a great advisory council which is CEO level, and you know we need their leadership as well. We need them to say, actually, this

is more than peripheral to our business. This is important. We need the regulators to be really pushing this agenda as well and saying actually it's important around conduct, around what it means to be a great person in the finance industry, about making sure our reputation sell that. But we do need bottom up and what we've seen at the Diversity Project and we now have fifteen different work streams.

Our most recent is the fifty plus group. Not that I'm behind that even though it asson see to have that, but we have these groups that are really led by the underrepresented people. So you know, the talk about black group is led mainly by black people. Now, I think then you get the passion, you get the absolute drive, you get absolute determination. But we can't do it alone people.

You know, I learned from the thirty percent Club experience that was an initiative to create better gender balance on boards at least thirty percent women. We only made headway when we involved men in that, and so we do need to be I love your expression, Karlin muscular, because you know, it should feel very robust. It should be like a You've got a business objective here, Let's improve

diversity of talent. Let's make sure that people are included when they join if they're diverse, and let's achieve better results for our clients. That's a very business oriented approach, but yeah, it needs a bit of everybody involvement, nuts and bolts. You mentioned differing reports, so I'll clarify. It's either thirty two or thirty three or thirty four companies that are taking apart thirty three this year in the year thirty three? Got it clear? Is it the biggest

fund managers? Is it the big players? Or are they smaller companies. It's actually at all sizes and there isn't really a theme. So first out the gates, I want to give them credit where it's due were Schroeder's. So Peter Harrison, CEO of Shrona, has gone in touch with me the day I just dropped an email to the Advisor Council saying we've got this idea of a pathway program female fund managers, just a very targeted intervention, he wrote. Within a minute, I think back saying that yes we

need this, and the numbers are quite quite remarkable. I mean, currently in the UK's estimated fewer than two hundred women female fund managers in Britain as a whole. If you've got sixty people on the program, you know that's very very sizeable. Do you have targets specifically for the number of women that you would like to see become senior fund managers as a result of this? So yes, I'm going to take the word senior to mean you're a

named fund manager on an account. And that's sometimes where the confusion lies because people think, oh, I'm part of a fund management team. I've got the job description fund manager, but I'm not named on an account, and that's the prestigious role. You've just summarized it, Karen. I mean, sixty women. They're not all going to make it, presumably, but if we run this program three or four years, we could

double the proportion of female fund managers. I mean that's assuming we take all the jobs, which might not be quite plausible. But you know, if you add sixty to the numerator and the denominators, roughly three and a half percent increasing. So this is where I'm really excited about what the Pathway program can do. This is not just sort of you know, whistling in the dark or having some sort of vague hope. This is saying we'll put this number of women through it and we'll make sure

that they get fund management roles. So Helena Morrissey Fair speaking to me at Bloomberg headquarters here in London. She's the chair of the Diversity Project, talking about her Pathway program initiative. If it is successful, it could in just three years double the number of female fund managers in Britain. I'm Carolyn Hebger here in London. You can catch us every weekday morning for Bloomberg Daybreak. You're at beginning at six am in London. That's one am on Wall Street. Tom,

there you Carolina, coming up on Bloomberg Daybreak weekend. Are things getting even dicier for President Biden? Internationally? I'm Tom Busby and this is Bloomberg broadcasting live from the Bloomberg

Interactive Broker Studio in New York. Bloomberg eleven three oh to Washington, DC, Bloomberg ninety nine one to Boston, Bloomberg one oh six one to San Francisco, Bloomberg nine sixteen to the country, Sirius XM Channel one nineteen to London DAB Digital Radio, and around the globe the Bloomberg Business app and Bloomberg Radio dot Com. This is Bloomberg day Break Weekend, hight Tom Busby in New York with your global look ahead at the top stories for investors in

the coming week. Russia's invasion of Ukraine will continue to be in sharp focus this coming week with a state visit to the White House by Germany's Chancellor. For more, let's to our Bloomberg ninety nine one newsroom in Washington, our sound on host Joe Matthew. Tom. Thanks, it's a very high profile visit and the timing of Oloff Schultzon's trip is particularly important. Joining us now to talk about a Bloomberg Whitehouse reporter Josh Wingrove, Josh, it's great to

see you. Thanks for joining us. Thank you. This is an important visit. But I want to back up to kind of set the foundation for why it's even happening. As President Biden returns from his trip to Ukraine marking the one year anniversary, the first anniversary of this war effort, how important was it for him to actually show up in person for this occasion, a big surprise trip. You know, they've sort of been suggesting he might not even be

able to go, the security be too brutal. So he sort of popped up there out of nowhere, you know, a big show of support for Ukraine as well as for the president, mister Zelinski. And you know, Biden seemed we had a thrilled, candidly to be able to get there. And then he went for his previously planned trip to Poland, where he gave a speech trying to hold together solidarity.

You know, what is clear is that Joe Biden is trying to head off sort of weakening knees or fatigue among NATO in the West more broadly when it comes to supporting Ukraine in this fight, and he's sort of warned in that Poland speech like, Hey, this is not going to be over tomorrow. You know, we are going to have to dig in here for the long haul. Because it looks like Vladimir Putin is digging in for the long haul. So he's just trying to sort of

hold it together. And it was sort of a very momentous occasion, and you know, the G seven on Friday spoke about this as well. So the big question will be sort of like what next will come in terms of support, And I think that's the context for Chancellor Schultz is a visit to Washington in the coming week. Here. Secretary of State Anthony Blinkoln this week says Ukraine will win this. Putin's first objective was to erase Ukraine from the map to a racist identity, to absorb it into Russia.

That has failed and we'll never succeed. Now there's a fierce battle going on for the territory that Russia has seized. Ukraine's gotten about fifty percent of what Russia has taken since last February in order for Ukraine to win the war. The US needs Germany's support. This next visit, as we mentioned olof Schultz this week will be critically important. Is it Is it all about Ukraine? It seems to be

pretty heavily about Ukraine. White House hasn't given us full rundown yet, but you know, the Germany and the US have been sort of the two pronged head of the question of what arms and what types of arms you

give to Ukraine. And remember go back a year or even a little less in a year, and there were a lot of nerves in the West about if we give this type of tank, for instance, or this type of weapon or this type of missile, will that be seen as escalatory and necessarily will putin seize on that and use it as cover fire to escalate even further. So instead they've tried to just do a slow boil,

you know, slowly adding different types of stuff. And now the crossroads that they're at is the question of fighter jets. Where President Hyden was in Europe, you know, face calls and protests demanding F sixteen jets, are asking for them, I guess I should say, and this is a big question right now, So I think that'll hang in the air. The Germans also have had similar concerns about being too escalatory, when when it comes to this stuff, the other stuff

is just more basic blocking and tackling Joe. Where like in terms of ammunition, the US is like concerned that they don't want to leave the Ukrainians with weapons that don't have anything to shoot out of them. And you know, I think we're starting to get to a place where the US military, like industrial production lines, are starting to raise questions about, you know what, what can we produce, what do other allies have in their stocks? Have we

emptied the cupboard? And if we've emptied the cupboard, are we making enough stuff, you know, to start rolling off lines to keep keep the Ukrainians armed. So I think

we're getting into a little bit of that sphere. It is less flashy than Okay, we're going to give tanks for the first time, which of course the US and Germany agreed to do recently, or we may or may not give fighter for the first time, but it's just as important, and I think I think it's fair to expect that that's going to be a big part of that conversation between the President and Chancellor dedmtro Kalaba, the Ukrainian Minister of Foreign Affairs, talked about the list, the

wish list that you're referring to, communition tanks, the long range Masal's plans. They are the most wanted weapons on the list, the most wanted weapons on the list. Of course, they're going to take whatever they can get. And by the way, they've been asking for fighter jets for the better part of a year, right, we were talking about mid twenty nine. Potentially at the beginning of this they

haven't gotten them. Tanks may be rolling, but you wonder at this point if that's ever going to happen or is it inevitable, And that we've seen this conversation where we kind of first start by saying no, then we say, well, that wouldn't be effective, and then we end up giving them exactly what they're asking for. Right. Right, It's like a parent who doesn't want to give a place to

another kid. Right, It's like no, no, may wait till you're eight, wish you no. It does feel like the dial has moved steadily, So the question is will Joe Biden stop moving the dial? And he's been pretty categorical he's not been saying, I don't know, but F sixteens maybe you know, we're gonna have conversations with their allies. He's been saying, no, we're not going to give F sixteens. So he has not softened his position or left himself

elbow room to do a quick one eighty here. So if planes do arrive, the signals are that it won't be soon. Now that said, there are lots of people calling for it. Allies might change their mind, other countries might change and calling for training. You know, if you don't want to give them the jets, at least train them in case they get the jets right, which is a big part of the equation as well, and in particular will that training be done likely outside of Ukraine.

So it gets a little logistically tricky. What's the real worry though, that putin says fighter jets, how dare you let's start attacking Americans? Or the potential for creep that you know, hey, once we go in the air, borders start to mean less. What happens if somebody gets shot down over Poland or god forbid, missiles go in the wrong direction. Is that more of the concern which we almost had a case of fall, which was turned out to be a defensive missile that had landed in Poland.

But thought everyone's hackles up there, you know, I think that they're just worried that Putin would seize on it as like rhetorically, you know, as Biden has been very very clear and left no wiggle room on US boots on the ground in Ukraine. No one is talking about that right now, But the US equipment being provided to the Ukrainians for the Ukrainians to fly, it's you know,

if that is shot down, you lose the plane. The Ukrainian pile would die, but it wouldn't necessarily trigger crisis where American soldiers are dying, and now Biden is in a politically tricky position, it would they'll trigger crisis if if, if Joe Biden faces a situation where Vladimir Putin says, okay, this is now a bridge too far. Now they're flying your fighter jets, they're firing your missiles, they're firing your not so much in your tanks. I mean, how far

are you willing to go here? I now consider this US involvement. So that is why they're sort of tiptoeing down the hallway trying to find the board that doesn't creak. Wow, great line when Olaf Schultz is here. Is it Is this a thank you for cooperating or actually, mister Chancellor, we need a lot more from you. What's the conversation. I think it's a thank you. Joe Biden has been pretty quick to defend Germany. There've been other countries that think that Germany has been a little soft on the

hard military support. They've been more in this sort of sphere of financial support and that kind of stuff. Biden has really headed that off. He's really frankly moved to save face for Germany because I think Biden is of the mind that every country is going to be able to do what they're going to be able to do, subject to their own domestic political concerns. Right, So just like he doesn't want Germany finger wagging America about what it or will not do, Biden has really stopped short

of doing that. So I think it'll be a love in more or less. I mean, they are really in lockstep on a lot of these issues, to the extent that there are disagreements there. You know, show of solidarity, right, full show solidarity. So we'll see more and more and more and more of that. Remember, in the background of this wasn't too long ago we were talking about few crises in Europe and they still have lots of pressures in that regard. We could hear talk about that as well.

There's questions about whether the US can continue to sort of backfill Russian fossil fuels for Europe and for Germany in particular, in the infrastructure needed to do that. It's so complicated because of course the US doesn't build you know, LNG terminals or for terminals for instance, because Joe Biden tells them to, you know. So it's very complicated. But that that energy side of it is going to be a big one as well, in part because Republicans will

raise it. They want America to be sort of an energy superpower for Europe. Biden has been sort of trapped within his coalition to the Democratic Party where he kind of wants to keep gas prices low and help Europe keep the lights on, but also not be looking to go drill, baby, drill, you know. Bloomberg White House reporter Josh wind Grove with US on Daybreak weekend. I'm Joe Matthew and Washington. Tom back to you. Thanks Joe Bloomberg.

Joe Matthew, host of Sound On, reporting from our Bloomberg ninety nine one newsroom in Washington, and you can hear sound on live weekdays five to six pm right here on Bloomberg Radio. Coming up on Bloomberg Daybreak Weekend. Travel and leisure picking up in Asia as people in China start to get out of the house again as pandemic measures ease up, and that means opportunities for the airlines, but also some headaches. I'm Tom Busby, and this is Bloomberg.

This is Bloomberg Daybreak Weekend, our global look ahead at the top stories for investors in the coming week. I'm Tom Busby in New York. The lust for travel is picking up as pandemic measures ease in Asia, but there are still some hurdles and some regions in Asia will benefit more than others. For more, Let's go to Hong Kong and Bloomberg Daybreak Asia host Brian Curtis and his colleague Doug Chrisner. Tom Asian Airport so starting to see

a big lift in traffic. That's partly because Chinese travelers are now on the move with a country having finally opened up, but travel from many other countries in the region is also on the rise. And to break it down a little, a survey by Bloomberg Intelligence shows Japan Airport Terminal likely to benefit the most, especially Kansai. South Korea's Incheon Airport is also expected to be very busy.

Those two are expected to capture the bigger share of China's traffic than pre pandemic levels in terms of demand, The BI survey suggests that ninety two percent of residents in China plan to take at least one trip over the next three months. And what airlines would likely benefit the most. China's three biggest airlines are certainly among them, along with Korean Air and Ana. They all could receive a boost. Joining us now is Danny Lee, a Bloomberg

reporter on Asia transport. But I want to cover first some of the red tape issues like capacity for the airlines that's been a big problem, landing rights and even things like visas. How much will that set back? This whole boom really moved well. Boarders are opening up at a whole range of different times. No one really expected China to open up, so airlines have to plan and prepare.

Authorities have to plan and prepare. If you're an airline in particular, you need to make sure you have the staff. You need to make sure you have the planes ready. Nothing's going to go on at a flick of a switch. That's a very interesting point because during the pandemic, tens of thousands of pilots, flight crewel groundworkers, back office personnel they lost their jobs. How easy has it been for these major carriers to staff up. It's been a real problem.

And in Hong Kong, Cathay Pacific, the city's main airline, is waiting to two and a quarter years to see full recovery. They lost a lot of staff over COVID, and they've introduced pay cuts, permanent pay cuts, and that has decreased the interest of people willing to rejoin the industry overall, because they know they can earn money at a much higher price elsewhere, and especially during the cost

of living. And we've seen airports in Europe in the US who've struggled a staff up over the last summer, We've seen chaos at immigration, at baggage, and at customs because there are just not enough staff. Ultimately, so it's the ranking in terms of demand. The ranking for outbound trips for Chinese people, is it North Asia first, and then Southeast Asia and then Europe and maybe even after that the US. Yeah, that's right. It's much easier for

Chinese tourists to go close to home. North Asia was always very popular with Chinese outbound travelers, Southeast Asia equally too. But there's also the question of cost. Chinese consumers have been really hit hard over the past three years through COVID, so if you're wanting to take a trip to Europe to the US, it's very expensive right now. And whereas there's a lot more capacity, as in more seats available for shorter regional flights, so that makes it easier for

Chinese tourists to plan and book appropriately. But also you are having to deal with in the US and Europe lots more red tape, shall we say, Visa's documentation, So it's not very straightforward for this recovery to be broadspread. It's always going to be close to home, North Asia,

South Asia, Southeast Asia rather. One of our colleagues was speaking with June Bailleu of Trabecca Investment Partners, and she was quoted as saying Asian airlines are going to go through the roof aviation is investable Again, do we have a sense of the profits that carriers are going to deliver in twenty twenty three, Not yet, but we are seeing signs in twenty twenty two that twenty twenty was

a very good year for airlines. For example Singapore Airlines they saw record revenue and that was double the same period last year. Danny, thanks so much for joining us with your insights. Danny Lee, Bloomberg reporter on Asia Transport. I'm Brian Curtis along with Doug Krisner. You can catch us every weekday here for Bloomberg Daybreak Asia beginning at seven am in Hong Kong and six pm on Wall Street. Tom thank you, Brian and Doug. And that does it

for this edition of Bloomberg Daybreak Weekend. Join us again Monday morning at five am Wall Street time for the latest on markets overseas and the news you need to start your day. I'm Tom Busby. Stay with us. Top stories and global business headlines are coming up right now.