00:00the impact of these higher prices so i'm sure they are today all right uh typically airlines
00:07buy fuel ford i think you know a couple weeks so uh we've been sort of enduring this at least
00:13for
00:13uh what about a week now yeah so maybe they're just starting to buy uh fuel at higher prices but
00:20it had inched up before uh fuel prices really popped recently uh so i think again i think
00:26they're probably already experiencing some of the pain u.s airlines don't uh hedge they haven't
00:32hedged for a couple years a couple holdouts on that was uh was southwest alaska jet blue used to
00:39hedge a little bit a lot of them have gotten rid of their hedges you know i think a lot
00:44of them
00:44thought look there was a lot of cost in hedging and many times those costs weren't needed and so
00:51since i think you know the the broader group of u.s airlines don't hedge they all feel like
00:57look my competitors will raise prices pretty quickly as fuel prices rise because it's an
01:02important part of their cost base and so we'll do the same why bother being in the hedging markets
01:07and try to predict where the price of fuel and the price of oil is going george if oil prices
01:13continue
01:14to stay elevated and start uh you know prompting airlines to lift their ticket prices do you see
01:19that substantially weighing on consumer demand or has the post pandemic travel boom uh kind of been
01:26enough to offset any potential headwinds to demand no i think you know anytime you see a higher price for
01:33any product you're going to typically lose uh some level of demand right and so right now we see a
01:41couple percent growth in 2q and 3q for u.s airlines in the domestic market i think if you stay
01:47elevated here
01:49uh as you know for fuel prices i think they're going to have to knock that capacity uh increase out
01:55in order to try to solidify fares because you know what they'll have is it they'll have a higher cost
02:01base and then they're going to have to they'll raise fares and i think they won't be able to keep
02:06that same amount of capacity in the marketplace at that fare level so i'd anticipate they would knock
02:12out some of that growth because again the higher price for anything uh the less gets consumed and
02:18we're already seeing a little bit of a challenge at the low end u.s consumer i think that's some
02:24of
02:24the problems we've seen with uh airlines like spirit and frontier this kind of exacerbates that
02:29problem so i think you'd see less capacity in the market i was checking online one economy class
02:34round trip ticket from sydney to london has increased by more than 80 percent over the past two weeks
02:41so talk to me though george quickly about who's best positioned right now who has the healthiest
02:45balance sheet to sort of weather this this um storm when it comes to higher oil prices
02:51yeah if this challenge stays around for a while it'll be the healthiest airlines that survive
02:55uh and do well delta uh actually southwest has the best balance sheet uh in the marketplace delta's
03:03got a very good investment grade balance sheet united's on the way to that some of the more
03:07challenge or sort of jet blue frontier and spirit airlines i think you continue to see this trend
03:13of the big full service carriers being uh you know being outperformers here given i think their
03:19customer base less sensitive to higher prices and a number of them have had pretty good years now
03:25and the balance sheets have improved pretty nicely unfortunately i think american not as good
03:30as united and delta in that in that group
03:32you
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