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We have airlines in focus today after Delta withdrew financial guidance because of global trade uncertainty. Let's keep that conversation going now with Ben Smith Air France klm CEO. Great to have you in studio, Ben.
Well, thanks for having me.
So this isn't a conversation strictly about Terrace, but it's pretty related. Of course, Delta not really able to have any visibility at least when it comes to the US given all of this trade uncertainty, the effect on consumers. What are you seeing from where you sit?
Yeah, so we're based in Europe, we don't have a domestic market, and on the Transatlantic we're seeing relative stability in the premium cabins and we're seeing slight softness in the economy cabins, but nothing as of today which is causing us to shift any capacity.
I want to double down on this. What does relative stability mean? Because at what point? And investors around the world are watching every airline right now to see when that starts to break in confidence. When you talk to higher and consumers, when you talk to businesses, what would cause them to stop spending on air well always.
Have a recession, would you know travel is one of the first industries to get hit. I think after COVID we've seen travel reposition itself on the priorities of many many consumers. But you know, with fuel being down at least for us, and we look at you know, how could this uncertain time play out on our bottom line? Relatively? We're we're always in crisis mode our business. You know, in Europe we haven't had the record profits that US
carriers have enjoyed for a long time. So since even before COVID, we you know, we've had to transform, transform, transform, bring costs down. So it's you know, this is this is a different, uncharted territory for us, but we are used to CHRISTI it's in particular in France when it comes to transport.
So in terms of costs, things are looking better, right. I imagine fuel and labor are your two biggest cost inputs, and neither of those things is rising. In fact, you say, fuels coming down, what's labor look like so far?
Okay, you know we've we haven't reduced our capacity and we haven't got big, big demands from our employees for wage increases. So you know that's a relatively steady and fuel coming down. That's a big win for us. I mean hopefully it'll I haven't seen it this low in a long time, so that's good news for us.
Yeah, it's been wild to watch what's unfolding in these energy markets. I do want to talk about this anti American sentiment that we're seeing developed across some industries. I promise you're not going to hurt my feelings here, but Airic Canada has already seen a drop in US travel. Are you seeing something similar when it comes to your France?
Well, I just mentioned, you know, premium cabins. You know, New York is still very attractive for for regions, for French people, for Europeans from you know what I see the people i've spoken to today. Still, I don't know if you guys have any trips planned to Paris, but no, it's a you know, I think it's we're hoping that it remains a stable like we are today now. As I said, in the economy cabins, we're seeing some softness,
but we're able to fill it with lower pricing. But watching it very very closely.
You know, one thing I'm interested from where you sit is do you look around and say, well, maybe this is a good time to play some offense as a CEO. Are there deals in this market that you might be willing to strike in terms of stakes in other carriers or even full on acquisitions given the weakness in the market.
Well, I'm here today. Yesterday we flew in on our brand new La Premiere first class product. We launched it on our route to New York on a Boweing Triple seven airplane, and I spent some time walking around the plane to talk to various customers, and it was a you know, I was pleased that, you know, it's a big willingness to continue to fly and our new product.
There was a lot of excitement around it. It is what I believe is the best in the world, at least from my perspective, and we're we're trying to position it that way to have a private jet feel five windows at each seat. You know, in French know how to you know they call grete wines, great champagne, great food, and half of our cabins are filled by Americans.
Let me ask about getting planes. There was a time when that would have been my first question if I talked to Gimpori of of the big the only other big planemaker Airbus. I would have said, you know, are you able to produce these?
Is it?
Is it no longer that time when you're worried about getting more capacity.
Well, our you know, our plans for the next one, two, three, four or five five years. We we were not counting on growing our capacity significantly. You know, there are a lot of carriers in developing regions of the world that
have got massive orders of new airplanes. Now we have a lot of airplanes in order to replace existing existing planes in our fleet, and if we have to take some further delays on those, we'll maintain our older airplanes longer, so you know, it will have higher expense on those airplanes. We won't have the fuel savings that we're expecting, but we've got the capacity that we'll need to keep in the marketplace to keep our budgets going.
All right, Ben, it's really great to get some time with you. Hope you come back to New York soon and join us again on set. That is Ben Smith. He is the CEO of Air France KLM