00:00First, it's always super important to generate cash.
00:01You can tell if companies are cheating or not,
00:03depending on whether or not they're generating cash.
00:06They could show earnings and no cash, and then you're like, it doesn't matter.
00:10But the second thing for Boeing is they want to pay down some of this debt
00:14they have in the balance sheet over time.
00:15They need to get themselves into better rating sort of territory.
00:20And so that cash generation will go to, at some point,
00:24helping to liquidate some of that debt and tightening up the balance sheet.
00:28George, where's Boeing these days on delivery of those 737 MAX?
00:33You've told us in the past that that's really the cash generator for this company.
00:37And where are they these days, and where do you expect them to get to?
00:41Yeah, so Kelly Ortberg confirmed that they're at 47 a month about now.
00:46We're seeing a little bit less come out the door of the factory,
00:50but they measure these at different points in the production schedule.
00:54But they're 47 going to 52 early next year.
00:58Another important component of that cash flow story, right?
01:02The beauty of this business is it does finance itself as you increase build rate.
01:08And so as you increase build rate, airplanes start to get ready to cut metal in airplanes.
01:14You go out and ask the customer to start bringing the deposits.
01:17And they bring deposits as the airplane moves down the production process
01:22to essentially fund the build of the airplane.
01:25So when you're increasing build rates,
01:27customers are increasing the send of money into the company,
01:31and that's what we saw driving cash flow today.
01:33When you slow down build rates,
01:35unexpectedly customers stop sending that money in,
01:38and you suddenly have to finance it somewhere else.
01:41So again, this cash generation, a nice positive because customers are submitting cash
01:47because airplanes are about to be cut or in the process.
01:50And as you boost that build rate, you bring more of that in,
01:52which means it should persist if things go well.
01:55Let's talk about JetBlue because that company reported earnings as well.
01:59And it looks like it posted a loss in the quarter,
02:02but it was narrower than what analysts had anticipated.
02:08JetBlue, I don't want to call it an also-ran,
02:10but it's not doing as well as Delta and United with their premium offerings.
02:15But it's been trying to make up for that lost ground.
02:18How's it doing in that effort?
02:20Yeah, I mean, yields came in a bit better than we thought.
02:23I think they were high single digits getting close to 10%.
02:26I think that's pretty good.
02:28It's pretty challenging right now.
02:30I think, you know, for a company like JetBlue,
02:34you know, the good portion of their business right now
02:36is going to be the premium business,
02:38and any loyalty money they can make.
02:40It's never going to be as much as Delta and United.
02:45And so they kind of operate from a disadvantage to that standpoint.
02:48Again, they do have a bunch of premium, you know,
02:52seats inside those airplanes, especially Transcon.
02:54They have a pretty loyal following.
02:56But that back of the airplane basic economy seat,
03:00I think, is the challenge seat right now for getting the right price for it.
03:05And so, and there's a bit of a scramble, I think, going on now
03:08between them and Frontier to try to grab those customers
03:13that Spirit Airlines left behind.
03:15Now, again, that's not a high-end customer,
03:20but it looked a bit better to us during the quarter
03:22than we had originally expected as well.
03:24So it does okay.
03:26Again, we're still, you know,
03:28this is still a very challenging environment for them,
03:31but it looked a bit better than we expected.
03:33George, I'm so glad you bring up Spirit,
03:34because JetBlue has won court approval
03:37to acquire Spirit's LaGuardia slots.
03:39It still requires the FAA approval,
03:41but it's trying to pick up some of the benefits
03:45of, you know, a competitor going away.
03:48Does that change the game for JetBlue
03:50to get these precious slots at LaGuardia Airport?
03:53Well, I mean, I don't know that it changes the game,
03:56but LaGuardia slots are high-value slots,
04:01you know, given the proximity to New York City.
04:03This is a core market for JetBlue.
04:06You'd like to not only take those slots,
04:09but keep competitors out of there
04:11to fight for those tickets or those customers.
04:15So to me, it'd be a good sign
04:17if they can get a hold of them
04:18and probably well on their way
04:20if they've already got the waterproof.
