00:00Bloomberg's Managing Editor for Space and Aviation, Benedict Campbell, will also be there, and he is with us now.
00:06All right, what is this thing? Because it's a really big deal, and I admit I really hadn't heard about
00:10it,
00:10but it's been going on for a very long time, and in fact, Annie Burnham, who we just talked about,
00:15is going to be the first British Prime Minister not to attend in quite a few decades, but he's a
00:20little busy.
00:20He's got to meet the king. He is a little busy. He doesn't have to get his new job.
00:23So tell us what this is, why we care, and what we should be on the lookout for.
00:27Sure. I mean, you'll be forgiven not to know what Farnborough is or where it is.
00:31It's south of London. It's really in the middle of nowhere. It's a small airfield,
00:35but this is one of the big annual air shows that takes place every year.
00:39It alternates with Paris, so it's Paris one year, slightly more glamorous, and then Farnborough this year.
00:44And what it is is essentially a big sort of conclave of global aviation space and defence.
00:51So you'll have companies like Boeing, like Airbus, like Honeywell, GE.
00:55They're all going to be there. They're going to show off their kit.
00:58The main executives will be there.
01:00And crucially for us, for Bloomberg, who follow the money, it'll be about what kind of deals get close.
01:07Because this is not just a show to present things. It's also a show to get deals done.
01:11So over the past couple of days and into the next couple of days, we'll be chasing those deals.
01:16Who buys what? Who's ordering which aircraft?
01:18It's always the back and forth between Airbus and Boeing.
01:21So that's going to be a main component of what we'll be doing.
01:25It sort of kicks off today with a couple of pre-meetings here in London, where I am right now.
01:30And then Farnborough out in the field as of tomorrow, Tuesday and a bit of Wednesday.
01:35Benny, I know of this event because at the end you get these headlines that Boeing has clinched X amount
01:41of deals or Airbus has.
01:43I'm curious how the flavour of this gathering is different.
01:47I know there's been so much focus on the future of weapons and war, the advent of AI and what
01:54that means for the aviation industry and for the defence industry as well.
01:57Are we talking principally about a conference that's focused on passenger aircraft or is it a much wider spread of
02:02aviation than that?
02:04It's the latter.
02:06I think the headlines are always on the sort of the big impressive kit like, you know, the Boeing 737
02:11or the Airbus 350 or whatever it might be.
02:14You know, the kind of planes that people have seen, have flown on and so on.
02:18But it is increasingly and also a display of military kit.
02:24There'll be fighter jets on display.
02:26There'll be drones on display.
02:28And as you said, it has taken a more of a flavour of a defence show over the past couple
02:34of years.
02:34That's always existed, but it's always been a little bit of a niche issue.
02:37But over the past couple of years, obviously, that's become far more important.
02:41So we'll be looking out for what will be on display, what kind of deals might happen.
02:45How is artificial intelligence shaping the way that we look at future conflict?
02:50The role of drones and so on, you know, players that a couple of years ago wouldn't have really participated
02:56in this event are now really big, like Ukraine, which is sort of the ground zero, should we say, for
03:01sort of the next generation of warfare.
03:04That's going to be something that people will be discussing the European rearmament efforts and how those are going.
03:10So lots of military components happening there.
03:13But again, a lot of the headlines tend to be on the civil side, what Airbus is doing, what Boeing
03:18is doing.
03:19So those two things will keep us busy.
03:21And speaking of those two, this is going to be the first appearance at this conference for Boeing CEO Kelly
03:26Orberg.
03:27What does he need to do here?
03:29Boeing is an interesting position.
03:31It's seeing increasing competition from Airbus.
03:35And it also has American politics that are kind of complicating where it can sell, who it can sell to.
03:41The deal that comes to mind is this deal President Trump allegedly struck for China to order some of these
03:47Boeing aircrafts.
03:48And now this week we had this big press conference where the president accused the Chinese of election malfeasance.
03:53Does that factor in when making these orders?
03:55Just because you say someone's going to order seven airplanes until they actually get that done and delivered, it doesn't
03:59mean it's going to happen.
04:01Yeah, so, you know, sorry.
04:06You know, it's never far – the politics are never far away.
04:12It's always a big component of what goes on at the show.
04:15And for Boeing in particular, as you said, it's really important how they sort of strike the balance.
04:21President Trump is obviously an important factor.
04:23He's a salesperson for Boeing.
04:25But it can also go the other way.
04:27So with China, we saw that if he doesn't get the tone right or if he accuses them of something,
04:32China can hit back.
04:33So for Ortberg, Kelly Ortberg, the Boeing CEO, this will be a very important sort of test case, how he
04:39strikes that balance.
04:40And it's his first show, as you said.
04:42He's been on the job for a while.
04:43But last year, Boeing basically sort of got out of the show because they had the crash of the 787
04:53a couple of days before that, and they decided this is not the right moment to be at the show
04:58and to sort of tout their sort of products.
05:01So this is really the first time that he's going to be there, that he's going to sort of present
05:06his products, present his vision, shall we say, and also talk politics to some degree.
05:10That will certainly be a part of it.
05:12Benny, before we let you go, let me play an exchange that Lisa Bromowitz, our colleague, had with Ed Bastian,
05:15the CEO of Delta, on the issue of oil prices and rising fuel prices.
05:19Let's take a listen to what they had to say.
05:20If you look at post-COVID, airfares are about 10 to 15 percent below where inflation has been.
05:28So I think there's still significant room.
05:29So if oil prices go further, you think that airfare prices could go higher without causing just demand destruction?
05:37I think so.
05:37We just saw it in the quarter.
05:39Got about a minute left here, Benny, but I'm just curious if, yes, we're focusing on all of the gear
05:43and the kit that we're going to see this week,
05:44how much of the conversation is going to center just on this particular kind of pressure these companies are facing
05:49when it comes to fuel prices?
05:51So one thing that airlines will want to do is buy new aircraft, because as we just heard from Ed
05:55Bastian, fuel efficiency is key.
05:58And buying aircraft that are more fuel efficient, so that's important.
06:01So that factors into sort of where they are going.
06:04But for the passenger side, again, like how far can fuel prices go?
06:08How much can they – and as a result, how high can ticket prices go?
06:12That's going to be a conversation to hear sort of have we reached sort of peak fuel costs?
06:17And as a result, have we reached sort of the peak of what a ticket price can cost?
06:21Ed Bastian seems to think we can go higher.
06:23The demand is there.
06:24There's a demand picture, and particularly on the front of the plane.
06:27So we might see some growth there still.
06:29Not great for the passengers, but good for the airline's bottom line.
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