Bloomberg Audio Studios, podcasts, radio news. Yes, I'm very pleased to be in Napa Valley. It's a tough life for some at the CONCLLO Sparks summit here with Edbastian, the CEO of Delta, and this entire event is about leadership, and boy are we being confronted for moments of leadership right now. Two leaders of the world, the two key economies meeting at the moment. And I'm interested as to how you see us China and weather impacts your business very much.
First of all, thank you for having me, and it is fabulous to be out here. I think it's on everyone's top of mind right now in our business in transportation, it's actually interesting. It's the one market of the world where travel actually has not returned to post COVID levels. In fact, it's less than half of what it had been because the two countries, not just economies, have been
decoupling a little bit. So it's so important the fact that we have our leaders of both countries together talking about how we can start back again to start building trust and creating better relationships now that coupling.
In many ways, the conversation has been around a geopolitical moment of anxiety when it comes to conflict in the Middle East.
That has big implications for your business.
Absolutely.
Now, can you remind our audience TV and radio how much you've seen jet fuel increase.
For the business and how you've managed to weather it.
Because you put plans in place over the years that you've been running this business tventually, you can really weather such shops.
Yeah, so several things. First, jet fuels prices have doubled just since.
The start of the conflicts.
Over the last thirty sixty days, we've had at Delta over two billion dollars of higher costs in the current quarter. On a run rate basis is almost ten billion dollars a year, so huge.
Amount of money.
The way we've managed that first is building a brand that is resilient that people understand if fuel prices are up, we're gonna have to find ways to cover it. We have a consumer base that is willing to pay a higher coast. Now we're not covering the whole thing, but in the current quarter we're expecting to cover relatively half of the increase in price and relative short period time,
which is pretty good. The second thing we did over a decade ago, we bought our own refinery on the East coast and the Delaware River outside of Philadelphia a foresight, and in this quarter alone, we expect to save somewhere between two and three hundred million dollars of cost fuel cost, which is more than twice what we paid for it.
So you're able to in many ways try and mitigate it for a consumer, but a consumer that you have very thoughtfully tailored yourself towards being more premium. Ultimately, how are you thinking about Delta leaning into that?
As we continue to.
See remarkably resilient consumer, its willingness to spend and travel.
Well, there's several consumers out in the marketplace.
People talk about the consumer.
Our consumer is a higher end consumer and is incredibly resilient. We have seen the demand strength right throughout the year. In fact, when the war started, it seemed like it even ticked up another notch. So we're seeing significant growth and we're continue and you see significant.
Growth take up another notch. Suddenly people were like, I need to buy now.
I think there's a little bit of that. I think more important that people understand. Typically when wars happen, people pull back and sit back We've been through so much change, so much disruption. There's so many things coming at people, and I think some of this is the post COVID effect because I'm not going to sit and wait to see what the next headline is going to be.
I'm going to go now.
I'm going to go as long as I feel safe and be willing to invest in myself, invest in our experience, see the people and the places I.
Need to be at.
You've been willing to invest in even new routes just in the last week or so announcing that you're going to be going to certain parts of Europe, so Transatlantic routes because it's dining off a moment of sport and football. But how do you decide which routes are working for you right now? Which ones you open, which ones you sew down?
Well, our routes to the Atlantic to Europe are doing very very well now. I would say exit Europe travelers. Point of sale into the US has been down a bit, but that's a trend that we've seen for several years. But Americans specifically are going to Europe. We're launching just in the next week to Sardinia, were launching to Malta were launching to Porto just in the three three brand new routes for us in the midst of everything going on.
So that tells you where the consumers want to be and who they are, and they're principally Americans wanting to invest in their experiences.
We are with Adbastian, the CEO of Delta, for our TV and radio audiences at Bloomberg. I'm interested in how you also invest in your people. Because you've actually increased wages in this inflationary environment and a time where you're just saying you've got two billion more in costs of jet fuel.
How tough is that to do for you or is it just a no brainer?
On the surface, you would think it would be difficult, But when you understand our strategy, when I talk about our asset, our most important asset are our people. It's our culture protecting the people that get us through tough times.
It's an even more important time to invest in them.
So we were pleased to announce a weeks ago that we'll be increasing everyone's wages the company by four percent starting June first. That's our typical schedule every year, sometime in the spring that we announce the increases, and it's
the most important investment I make. You know, there's a lot of things about this business that cost a lot of capital, but human capital is the most important capital that we have, and particularly in times of trouble, because they're the ones that are keeping customers coming back and providing that premium experience and opportunity for our brand to continue to rise.
In times of trouble comes opportunity, particularly when you're on such solid footing. Look in many ways, do you look at talent that now comes on the market very sadly because of what's happened with Spirit, Or are you thinking about the way in which the industry is going to change around you, because we might see consolidation might not be from you, but it might be more broadly the way the market has to go.
Well, you're seeing rationalization. Whether it's consolidation or not, I don't know, but you're seeing rationalization because when the fuel prices at this level, companies such as Spirit, by the way, which wasn't didn't go out of business because of fuel prices. They went out of business with a bad product that people did was a bad strategy. Good people with a bad strategy and we've hired a fair number of the Spirit people as many of the other airlines are bringing
their equipment in. Our industry continues to rationalize itself, and if you've got a good product that people want to pay for it, you can grow. And you see at the lower end of the marketplace those airlines that don't have the quality of the experience, even though they're a lower price point, they can't afford to offer the lower prices.
In the environment which we're in, with.
That pressure on prices, there might be this worry that companies are more anxious about innovating investing in innovation now and time and time again. We have you actually on our tech show because you're so aligned with the tech area, Jobe, I think if the way in which you've thought about the future of travel, you're also though thinking about the future of premium flights and wheels up is another area in which you've worked with. How are you thinking about innovation at this moment in time?
Innovations are likelig airlines. People think about it as a transportation company. Airlines are a technology company. And whether it's the app and the ability to give consumers better control their experience, better information, better displays, whether it's our own people having better data to make better information, whether it's the engine technologies we deploy. We're in the high tech business fundamentally, but it's tech for human sake, and I
think that's the other thing in this AI world. A lot of people get confused about tech for tech. Techno is tech to make our people smarter. I love to call AI augmented intelligence. I don't know why we have to call it artificial. It should give people tools to do a better job, and then it gives them the opportunity to preserve and grow their development, not actually limit their opportunity.
You've actually just made a commencement speech.
I believe where you use AI initially to paybe put thoughts to paper. What you were going to say and then you ripped it up, is that I have to use a pencil here. What was it that you feel that AI can bring to you as an individual, AI can bring to your employees augmented what is it that.
They can't Well, I did that, and it was more out of curiosity. I was never intending, but I was just curious because I was in the middle of writing it, and so I've never done that before in terms of used AI for something like that. So let me say, you and I've done convincence in the past, and it came out that there was, but it was very sterile. It wasn't my voice. Then people wanted to hear me and who I am, the soul of the warmth the appreciation, not some algorithm of me and so.
And by the way, I thought the speech went quite well.
That got the biggest applause from everyone in the room because there is such lack of trust in the technology.
But there's also anxiety.
There's a whole world of new graduates who are worrying about jobs that they're going to get worried about AI dispacing them.
How are you talking about your employees about doing that?
Because I'm sure you're using AI to benefit ensure that we're more productive, But does that come at the cost of actual people that you hire.
Well, no, not necessarily. I think that over time it's going to make us better.
It's going to make us smarter, not less, a bit better able to serve customers, be able to provide more attention to needs, give better information to support. No, So I do not believe that AI in our industry is principally a cost saving measure. It's an opportunity to develop better service. And if you have better service, you're going to have better growth and better revenues.
And thinking of innovation, many have hoped that we'd see innovations solve some of our climate issues, some of that cleaner jet fuel for example.
How are you able to balance that in this moment as well?
A Well, we're still paying attention to it. Sustainable aviation fuels is our pathway. It's hard, it's expensive, there's not a lot of technology that's being deployed. We're continuing to invest in it. We need all stakeholders around the table. We need government, we need customers, we need the energy companies to participate. Impressed, we're seeing improvements there, but it's been very slow and you.
Are able to remain committed for your stakeholders in a transition to a cleaner output from the aviation.
Yeah.
And I think the biggest thing that people miss is not just the sustainable fuels. It's the better engine technologies. It's about being able to forecast the skies, the turbulence and whatnot so that we can provide safer, more reliable,
actually cleaner service. Through the air using technology. They're looking at new forms of transportation and JED zero is a company that we've been involved with where they have the opportunity to reduce fuel missions by fifty percent, and I think over the next decade you will see planes flying with such a significant amount less amount of fuel being utilized.
Those are the moonshots. So sustainable aviation fuel is going to take long time.
That's the ground war, But actually the opportunities are in the sky and.
The opportunities are with leadership, and that's exactly what we're talking about throughout this day at the Concello Spark Summit at Bastian.
What a joy to have you with us.