Ed Bastian here in Dubai tonight. He's going to receive the AT twenty twenty four Airline of the Year award. That's why he's here. He's also here as well for the eightieth i Arta AGM, which is going to be taking place here at the start of next week. But John, you bring up you bring up a couple of stories.
Actually you bring up what's happening with Boeing, but you also bring up the issue that we had earlier on in the week with the American numbers and the impact that that had on the rest of the sector.
Ed.
Great to see you, congratulations on the award. First of all, oh, thank you guys. It's good to be with you.
It's good to be in Dubai, and really proud of our team have their ability to continue delivering outstanding results for our customers. This is what makes these awards, first of all, very humbling to receive, but hungry to continue to win them.
Yep, you've got to keep it up.
Don't go to keep it up.
Let's talk a little bit about kind of what is happening in the market right now and those customers that you talk about. We did see the American downgrade in terms of its guidance a few days back. I'm not going to ask you a comment on what is happening over at American, but really just to kind of get a comments on whether you're comfortable with your current guidance.
Yeah, the demand has been really strong. I think that was the issue that were the American numbers, and you know the quarter, as we've indicated all along cerads the last several years, that consumer demand and that priority to
invest in experience continues to be really, really healthy. June for US is always the largest travel month of the year of the calendar, so we still have to see how June's going to go, but I'm confident it will be a good result for the full quarter, and we'll see how June runs out.
Are you seeing any evidence that inflation and its inflation day We're going to be watching those numbers that inflation is starting maybe to hit the middle class traveler. The middle class traveler is beginning to rethink maybe the attitude towards travel, which has been really strong over the.
Last few years. I don't see it. You know, our consumer tends to be at upper end of the income scale. Our traveler tends to go internationally. Our consumer is prioriti is in travel above things. So while you may be hearing from a number of industrial sectors trade downs occurring, we're not seeing that in our numbers.
Do you think you will see that at some point? Do we go to a more normal? Is this the new normal in terms of what travel is going to look like? Will this continue to persist? The store market continues to do very well. We're obviously seeing an upper end consumer that is still fairly flushed with cash. Is that something that lasts years?
I think it's going to continue for quite a few years to come. One of the factors people don't give enough consideration to is our industry's capacity is lower that it's been given the constraints around OEMs, whether it's Boeing or engine issues. So our economy is a lot larger than we were historically, go back pre pandemic, Yet the amount of capacity that we're all able to fly is significantly constrained, and that's what's keeping demand as well as pricing pretty so.
So okay, pricing, so fares is still fairly robust, don't you.
Prepares on balance are about twenty percent higher than they were pre pandemic.
You bring up business travel as well. Is that something that it has come back. It's maybe come back significantly more slowly than we've seen in terms of the retail story, But is that coming back and ultimately given that bigger economy, is that a bigger number someway down the road.
Well, business business travel this year, particularly in twenty twenty four, has really stepped up. As we went through the return from the pandemic. In twenty two and twenty three, business travelers were still a bit sluggish, largely because they weren't back in their offices and they were still working from
various remote locations. Once companies have finally laid the edict down, you needed to get back and particularly as some of those businesses started to getting a little challenge themselves, people wanted to be back in the office that opened up. They need to travel for consultancies to go visit clients, for people to get back out on the road to
see their own people. So we've seen business We saw about a ten point increase in business travel at the start of the year and net's continuing to climb.
Middle of the top line. Okay, so we talked about that it can get middle. What's happening in the middle of the P and L. You still seeing What kind of inflation are you seeing in the business.
We're seeing inflation, but it's starting to moderate a bit. For us. The biggest part of our inflation story is wages. Is our people, which is the best type of inflation we can have, and our people continue to grow wages in the four to five percent per animal rate. We're continuing to work on productivity and efficiency so we can take some of those rates and make certain that their productive increases other parts of the supply chain. You know where the supply chain is still not where it needs
to be. We talked about the engine issues. We still don't how much is not holding you back. Well, it's significantly against not just delta, it's the industry and the turntimes are longer. You now have turntimes on planes that could extend up to months rather than weeks, which they should be. Parts are higher than ever, material costs are growing. You know, the manufacturers across the industry are having challenges.
This doesn't sound like an economy that you'll describing that that needs needs rate cuts right now.
Well, it's it's an economy right now from I standpoint, that's doing well. But there's not just one consumer out there. Okay. Our consumer again tends to be in the upper end. Our consumer generate a tremendous amount of wealth and continues just to have that wealth through the pandemic. The markets up real estates are. Unemployment is extraordinarily.
I don't need more help, is basically what you're saying.
The lower end, Yeah, I think there's I think there's some challenges. So that's something that the FED will will look at all the data. I don't think an airline is necessarily the.
Pretty You've got a pretty good view of what's happening in the economy.
Our business is doing quite well. Okay. You bring up Boeing.
You talk about what's happening with the with the OEM's Boeing and Airbus, but it's also the engines, as you mentioned the and Whitney engine issues that we've been seeing. How long does this last? How long? How much of a struggle is it to get hold of the kit that you need right now?
How much?
How long do you think the problems that we're seeing at Boeing and Airbus and Pratt and Whitney are going to be lasting for well.
Right now, we have no Boeing orders that were anticipating up delivery on in the next several years. So from our standpoint, it's really an Airbus story. Airbus has been a great partner and Airbus continues to provide us the planes and the technology that we've been expecting for them, and they were right through the pandemic. The engines are going to be a bigger issue, particularly for us the gear turbo fan that's slowing down a little bit about the amount of new deliveries that we can take us
more engines than it is planes. And what is causing us to do is maintain the existing fleet we have a little bit longer. So that's another cost to the business.
You are well known for keeping your fleet for longer it had. The age of the average aircraft has come down a little bit over the last few years. But does that strategy work in an environment where the sustainability question comes in? If you fly all the planes, they inherently tend to be less efficient. Is that something? Is that a problem that you're going to come across at some point?
I don't think so. Again, I think this is transitory. I think the OEMs will get their parts. I think they will get the transition all. A lot of this is about labor and the fact that many of the engine not just the Tier one, but down into the tier three and tier four of the supply gen let a lot of people go, so it's experienced, it's staffing its rates. I mean, it's a very complex story, but
long term, I feel good about our sustainability story. We're taking our overall footprint down in the range of one to two percent per year every year, and that's going to continue to go on and as we get new planes, those numbers are going to go down faster.
Politics is going to become a bigger and bigger issue over the next few weeks and months as we approach November. When you think about who goes next to the White House? What if the next administration need to do to keep the aviation market that you've just described, this buoyant market, this market with momentum, keep it going. What do you need to see from the next administration to keep it on track?
Most important thing is infrastructure investment. Maintaining the current structure is challenging, and they need to continue to modernize the technologies. They continue to need to get air traffic controllers staffed and hired and in position to enable us to grow, and from an investment standpoint, that's where we were very happy to see the FAA reauthorization bill finally come about.
It took unfortunately months, if not a year or year overdue in its delivery, but it's here now and we're going to work closely with the FAA to make that happen.
Just to wrap the conversation up, you feel like you are on the front foots at the moment. This is an airline that is growing. What is the capacity constraint that you are seeing right now that is going to slow your race of growth down? If I'm gonna invest in looking at Delta, is this as good as it gets? What does it get better?
From hand? We're doing well on campacity growth. This year. We expect to grow our top line in the mid single digits, you know that foward to six seven percent range, which I think is healthy growth considering particularly the growth we've had over these last handful of years. This year
will be the highest revenues in our company's history. Support are sixty billion dollars plus, remind us, and the outlook I think is strong because I think think the supply chain and the extreends are only going to get a little bit better as we move forward.
At Congratulations on the award, the ATW award that you'll be getting here a Dubai this evening. Great to see you here in Dubai. Thanks for stopping by to see us here. Thanks guys Blimberg. Great to be with it. Thank you very much.