Cowen's Becker Sees Demand Picking Up For Airlines (Audio)

a celebratory meeting, is it. Well, we'll find out more about the future of the airline industry with Helene Becker, senior analyst at Cowen and Company. We'll find out if she thinks this ebbing demand trend will last or not. Let's get to Charlie Pellett now in the Bloomberg newsroom. He's got a Bloomberg business lass and I thank you very much, Kathleen, thank you him. The dowin SMP trading

lower nezdaka just we're versing. It is now higher, barely up by half a point, little change their forty nine thirty four right now and then as that compositive index SMP five hundred index down five, a drop of three tenths of one percent, and with twenty nine minutes to go ahead of the close, the Dow is down one oh eight, a drop of six tenths of one percent, So stocks are slipping. Stronger spending data bolstering the case

for higher interest rates as early as this summer. Plenty of economic data for investors to sort through today, consumer spending climbing in April by the most in almost seven years, up one percent on Bloomberg Intelligence, Chief US Economists car

Rickadono was interviewed about the spending report. The data right here on taking stock so not quite so strong when you start to look beneath the surface, because what we saw was a big increasing gasoline prices, uh, and so that led to a rise in spending on non durable goods. So if you adjust that away, it's not quite so strong. Also, a big increase in spending on utilities as we had more normal weather conditions last month after a warm ut start to the year, so that led to some bounce back.

So I wouldn't characterize this as great, but I put it in the good category as some PK. Schiller says, home prices in twenty cities rose faster than projected in March from a year earlier, adding to signs of healthy demand at the onset of the industry's busy selling season. On the conference Board said consumer confidence unexpectedly fell in

May to the lowest level in six months. Down industrials down one oh three, a drop of six tenths of one percent, Gold off a dollar little change to twelve fourteen, up point one percent, and a three thirty two on Wall Street. Now, let's look at other news from around the world. Thank you, Charlie from the Bloomberg Newsroom. I'm rainy in essentio. This news update is brought to you by the Jeep Grand Cherokee, the most awarded suv ever. The Grand Cherokee continues to raise the bar with its

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I'm Charlie pad That's a Bloomberg business flash you're listening to taking start with Kathleen Hayes and Pimpbox on Bloomberg Radio. The International Air Transport Association reported a four point six percent increase in global air passenger demand in April. That sounds good, but it was the slowest growth since January of twenty fifteen. Let's find out more about the industry with Helene Becker, senior analyst at Count and Company. Helene,

always a pleasure, Thank you for being with us. What do you make of this uh four point six percent rise in global air passenger demand in April. Is that something that is set to continue this decline? No? Oh good, Okay, we can all go back now. Thanks for having me um on the show again. And no, I don't think so. I think April was very specific. You had, um, you had some strikes over in Europe by some of the

European airlines. You also had, you know, a m Easter shift into March, so you had a little bit of a tough year over year calm. So it made the numbers look um knock hit as good as they are. We think May it's a better month normally May it's worst in April, and June's better than May, you know, kind of on par with April. And this time we should have April be the worst month of the quarter

and mana June sequentially better. So Delta reports traffic Thursday morning before the open, that will be the first May number we got and we're expecting it to sequentially be better than it was in April. Of course, as we just said it was, April was the slowest pace since you know, over a year ago. January. In our Bloomberg story quotes the CEO of the I A t A, the International Air Transport Association, saying the stimulus from lower oil prices appears to be tapering off global economics with

situations subdued, demand growing. But maybe we're shifting down a gear. What are prices doing? Could prices have anything to do with bb people not being quite as eager to buy a plane? Take well, prices are still you know, down quite a lot year every year, and oil prisses are back up, I guess about off their January lows. So as the year goes on, we expect to see less capacity growth from the airlines and higher air fares. But right now, especially coming into the summer months, fares have

been relatively low and demand has been very strong. I mean, you know, you guys reported on stories over the last few weeks about lines at at T s A, at security, and you know, the airlines are working very hard to keep people moving. We're expecting two two hundred and thirty million people to travel over the next three months, and you know, that should be a record for UM for US carriers. Now, Helene, I know you you you follow the carriers as opposed to let's say, air Bus and Boeing.

But because of the stories having to do with competition between the two aircraft makers, I'm wondering if the current concern is a result of just outsized ordering buy airlines that met the demand and now the demand is maybe stabilizing,

so they're not ordering as many planes. Is that accurate? Yes, yes, Actually that's a very good observation because the you know, most of the world's airlines ordered aircraft over the past four or five years, and the US carriers only just started ordering over the last day year, with the exception of American which placed that big order back in August

of two thousand eleven. But on balance, most of the rest of the US airlines have only just ordered recently, and even there they've been very judicious about the aircraft orders they placed because they don't want to get into an overcapacity situation. So a lot of what they've ordered

is designated for replacement actually are not for growth. Um. You know, using the one and a half to two x GDP multiplier, we're only expecting in a two percent GDP growth environment, traffic to grow three to four percent, and that's the peak, you know, off peak times, first quarter, fourth quarter, you know, except for Christmas, UM probably is going to grow, you know, one percent. So I got to balance that out. And the airlines certainly don't need

a lot of new equipment. Helen. I don't want to jinx myself, but I've been had a several flights in the last few weeks and I have not encountered hashtag line gate. That's use the d S as a mess, hashtag line gate. These these growing long lines cross the US. What have you experienced in more broadly, how big of an issue is this? What is it? Is it a big problem for the airlines or not? So fair question. I think it's at the busiest airports. I think the

worst of the lines was probably in Chicago. I like you, I had a bunch of flights over the last few weeks and I didn't experience long waits at all. And in three of the four cases, you know, over the last ten days, my flights were I I just walked through security in less than five minutes, and my daughter had one coming out of Baltimore. UM A week ago and her flight was I think she had a twenty minute wait. UM and one of my associates how to wait over the weekend of nothing. So, you know, I

think it's it's been dissipated. The UM T s A has has worked very hard to improve the way at times, and the airlines have sent UM what we call, you know, helping people out to the airports to help UM infrequent travelers getting through the line. You know, this is the line you wait on. Take off your shoes, don't take off your shoes, take your bag out, take your laptop out, whatever, don't do it, do it UM. And I think that it's helped speed those lines. So I think, you know,

lots of news, but I think it's beyond us now. Alrighty, Helene Becker, thank you so very much for joining a senior analyst at Cowen and Company. She says, don't be put off by some slower growth in demand for airline tickets in April. Me and JR. Gonna looks just fine. I'm Cathine Hayesel on pim Fox. This is taking Stock on Blomberg Radio. Coming up on taking Stock, will be speaking with Scott Clement's chief investment strategist private wealth management

for Brown Brothers Harriman. He'll tell us what are his clients doing with their money next