00:00Delta, United, and to a lesser extent, American are going to probably be the best part of the story this
00:07quarter.
00:07And I think Delta showed some resilience in that in the revenue lines. Right.
00:12And I think, you know, you have to remember, this is a pretty diversified from a revenue standpoint company.
00:18They have a maintenance business that brought in some great double digit gains.
00:24They've got the cargo, they had loyalty that all sort of brought in gains as well as premium and then
00:31and basic lagged a little bit, although they indicated that, you know, they've been cutting down a number of basic
00:37seats.
00:38But I think generally the story was pretty good on the revenue front.
00:42They grew less than United and American.
00:44So I think that means they could support some of those higher fares.
00:48They were like at one percent seat count growth.
00:51We're going to see United, I think, come in closer to six.
00:54We're going to see American around three ish.
00:56So I think this might be the best part, again, of the revenue story for U.S.
01:02airlines as we get into this earnings season.
01:04And one of the challenges, I think, too, in growing a little slower on the capacity front is that some
01:11of their costs ballooned a little bit.
01:13But look, again, I think they made some good ground.
01:15They haven't totally compensated for higher fuel prices, but they made some some good ground.
01:19I think it was a it was it was a pretty decent earnings, you know, earnings numbers.
01:25Hey, George, talk to us about just maybe the trend in the industry to maybe taking out some economy seats,
01:31putting in more business or first class seats.
01:33How is a cabin changing within the industry these days?
01:38Yeah, I think you're just, you know, on the big full service guys, you're seeing a lot of I don't
01:42know what we call it, upgrading, improving.
01:46Right. And remember, like that premium seat, you know, that can stretch anything from premium economy to more business seats.
01:55And, you know, I think they're finding again, you know, they're sort of they're focusing on the well-heeled consumer,
02:01your retiree, you know, and your your 401k accounts.
02:07I guess it's not a 401k anymore. Your investment accounts are rocking and rolling.
02:10You don't want to fly overseas.
02:12You don't want to fly to the West Coast in something that's as cramped as some of that basic economy
02:17in the back of the airplane.
02:18So those carriers are sort of pushing that upgraded seat, trying to get more money from it.
02:24And again, I think, you know, Delta has shown some success on that front.
02:28And I would expect you're going to see the same out of United and American, but to a lesser extent.
02:34But what happens, what happens to the the lower end consumer?
02:39Where does that consumer go? Do I have to fly?
02:41I mean, aren't some of these airlines going out of business, these discount airlines?
02:45So we saw spirit, you know, we saw spirit leave the business.
02:49I think that helped.
02:50Look, I think still at the bottom end of the of the scale, right, that basic economy traveler one, they're
02:56under a little more pressure economically.
02:58I think inflation is hurting them a little harder, right?
03:02If when you raise the price of gas, it hits them in the pocketbook a little further, too.
03:07Right. You know, they cost them more to commute to work of their total income.
03:11And so I think that means demand is probably a little bit softer in that basic economy world than it
03:18is in the premium world.
03:19And so and so I think, you know, that kind of took away some of the gains we might have
03:24seen as spirit left.
03:26And again, I think, you know, you've got to bear in mind that Delta United and American are going for
03:32that basic economy travel, right?
03:34There's still a basic economy section in the back of those airplanes that, you know, provided they can sell that
03:41seat at a price that's higher than their incremental cost to deliver it.
03:47They're going to do it to that basic economy traveler, fill out those load factors and create efficiencies, which improves
03:54profitability.
03:54And so that's the challenge in this business is United, Delta, right, especially in the growing again, 6% seats.
04:03There's probably going to be about that much in basic economy growth.
04:08They do that for long enough and they kind of make up pretty quickly for Spirit Airlines leaving the business.
04:13So there's still a lot of competition, I think, in that basic economy.
04:16We'll see as the earning season goes on.
04:18See you next time.
04:18Bye-bye.
04:18575-kay5-kay6-kay.
Comments