Airlines Post Record Revenues But Costs Catch Up

0:00Hello and welcome to the airline Weekly Lounge. I'm your host Gordon Smith and I'm joined as usual by cohost Jay Shabbat. In this week's show we're discussing the industry's soaring costs and our little itteron we'll fool you in on the latest news from JetBlue. Hi Jay how's it going? I'm doing great Gordon how are you? I'm just happy to have got through that intro. Nobody will know because we've got our beautiful production team behind the scenes but I've really foolishly wrote a little later on which looks great on paper but trying to say that is not always the easiest thing to do so more fool me but we got there on the second take we are talking inflation in this week's show specifically the industry's soaring costs and also looking at some of the really impressive revenue numbers that are coming out and anyone that's

1:01new to the show might be looking at revenue as sort of the sole metric for success of any company really never mind an airline and thinking oh where could revenue that sounds promising but Jay you don't need to be an economics grad to know the revenue is only one half of the balance sheet you've got your cost as well so give us a little bit of a scene setter around why we're focusing so much on on costs inflation right now and specifically in this week's episode. Right so the big theme of 2026 if you follow the airline industry and listen to airlines as they present their earnings and as they deliver speeches to the investment community everything's going up you've got the two rocket ships I think we've called them two rocket ships going to the moon so yes you have revenue in a very favorable position with airlines reporting very strong revenue growth but at the same time also reporting very heavy inflation cost inflation and in most

2:07cases the inflation is outrunning the revenue gains so 2026 you know we'll see how things shape shape up and in the you know remainder of the third quarter here and then into the fourth quarter but it is looking like looking like 2026 will be a worse year for the industry profit wise and it was in 2025 doesn't mean that the industry can't make money collectively probably will but yeah the margins are under heavy pressure from this cost inflation so I thought we talked in a little bit more detail about what exactly is going on on the cost side what what exactly our airlines facing I kind of put this all into six buckets if you think about an airline's cost-based you can divide it up in different ways but but I divide I like to see it in six six groups and we can start with the obvious one being fuel I mean we think we can ring the bell on

3:07that yeah fuel fuel prices are real headache for airlines this year and it started the year started out not a favorable note I mean fuel prices were rather team for much of 2025 and into 2026 but when the Iran conflict began late February into March we saw a sudden fuel spike we then saw for beginning of the summer we did we did see somewhat of a moderation but now in recent weeks we've seen another big inflection upward and so not looking good on the fuel front there are various reasons for that again related to events in the Middle East I think some of the Saudi Arabian oil exports are now coming out of their pressure as well so we have a very negative situation on the fuel front but it's not just fuel another bucket another

4:09one of those six buckets that I refer to another probably a second biggest one for some airlines the the single biggest one is labor that one's a little bit more difficult to talk about in a global context because that's kind of vary from market to market from region to region I wouldn't say that labor costs are particularly under pressure this year globally anymore so than in recent years there may be some markets where it is true that labor costs are that it is a rough year for labor inflation not so much here in 2026 but now when we get into the other four remaining buckets it's more problematic than then tame and the third one I have on my list years is just the aircraft um aircraft costs have nothing new I mean this we've seen this for a couple of years now but airlines continue to experience heavy aircraft cost inflation and I'm not only talking about

5:15just the purchase of the aircraft or what it costs to lease an aircraft but also what it costs to maintain an aircraft and that has a lot to do with aerospace aerospace supply chains being really under pressure since really all decade and they've arguably improved somewhat since 2022 I think was 2023 you know or even going back into COVID uh they've they've got better but still there is a worldwide aircraft shortage and that's putting pressure on rates we've also seen some of these uh engine um engineering issues or engine inspection demands the GTF engines being being a good example of that that have required a lot of manpower a lot of maintenance infrastructure to uh to address that's also put a lot of pressure on the supply side of the industry as increased

6:18cost so I said fuel I said labor I said aircraft number four just the infrastructure that the the airline industry uses I'm talking here about airports uh they are two um and you can you can add air traffic control air air navigation as well but airports being a big one there too there's been a lot of inflation um there've been a lot of big projects and a construction projects underway expansion projects modernization projects and these have been very expensive if you consider the cost of labor of course that that kind of labor you know construction labor has been under a lot of pressure in a lot of markets um you could also think of the cost of materials um has gone up a lot because of tariffs yeah let me jump in there I've been talking talking too much no Jay just uh just to highlight just how complex it is doing any sort of infrastructure project airside and airport even I speak someone who's involved with one of the big London airports and they just wanted to open a new retail unit they're super simple it was an established chain this is basically

7:20to cookie cutter store that they would have another airport so in a train station or other travel environment and the amount of paperwork that you've got to do you know you're thinking not just getting the people back and forth materials back and forth for the individual tools so they have to sign in and sign out every tool that they bring airside which could in the wrong hands of course be a threat and theory to uh passengers or or or an aircraft but it just adds so much complexity and then when you consider things like you've said labor costs are high across the board materials cost are high across the board you throw on the complexities of working in and around an airport and it just goes sky high yeah I was just happened to randomly listening to what was listening to a uh an earnings call from a manufacturing company they happened to manufacture I think it was like cardboard by paper paper products like cardboard boxes and nothing to do with the airline industry but I raised it here because they were talking about how uh 10 years ago when they built a factory it cost X and they were talking about how if they built that same factory today it would

8:26cause vastly much more you know much more than you'd expect over the course of you know just just a 10 year rate of inflation so they're definitely um you know the aviation industry is very much experiencing that as well just as this collective inflationary burden um across all sorts of different categories and I mentioned before already another fifth or just I call it the service category I mean as airlines have leaned into or pivoted into premium investment yes that comes with more revenue but it's not free I mean when you outfit your airplanes with these very expensive life-flat business class seats or if you install you know starlink Wi-Fi on your airplanes if you open uh you know fancy lounges going back to your port garden about how just you know building anything inside an airport is expensive um certainly that's that's true for building an airport lounge um those

9:29airport infrastructure costs are one thing but then in addition just the added costs associated with premium services is another driver of industry inflation so you can see there's just as vortex of of of of of different you know cost pressures pushing upward um I mentioned so just recap fuel labor aircraft infrastructure service and then the final one would just be borrowing costs you know the interest burden of the industry is going up that's obviously going to depend on the credit of the airline it's you know going to depend on whether the airline has you know fixed borrowing rates or or variable barry there's there's you know going to be airlines airlines specific repercussions uh that you have to consider but just just broadly uh the entire economy and all companies within an economy are uh you know facing higher interest rates uh we we see you know that's true the u.s. government it's it's it's true of uh you know people borrowing for home

10:33mortgages people borrowing to you know buy by an automobile so that is very much true for for airlines as well at the bar market is is more expensive so that's kind of what airlines are are facing here in 2026 and I'm not sure that there's any airline that would uh tell you with particular optimism that 2027 2028 are going to be whole lot you know whole lot better I never know but uh obviously fuel is is one that could you know swing wildly but looks like you know we've had most most of what I've described uh terms of inflation you know uh infrastructure inflation even borrowing cost a lot of that has sort of been defying the entire decade of the 2020s yeah great points Jay and I think it was just last week's show we were discussing air Canada and how they were paying down the decks with the aeroplane 25% cell and you know they're chasing that investment grade rating to ensure that when they do need to borrow which is obviously quite often for a large airline especially when you've got large capex when we're talking about

11:33levers the airlines can pull and we're speaking generally here about the industry there's going to be lots of nuance and and many caveats how do you address inflation when you're sitting in your your boardroom wherever you may be Jay airways Gordon Airlines and you're thinking right we've got these coming at us pretty quickly we might be slightly hasty here and there we might have a good deal with the with the OEMs we might have our labor contracts even in reasonably good shape but no airline as we've already established is immune to these what can we do to help mitigate these costs without spooking all of our customers right it's it's not easy I mean there are always you know various things you can do to cut costs I mean if you feeling really desperate you can you know turn to turn to labor where you know a lot of like for some airlines that's 40% of your cost base 30 40% you know you could ask for concessions from from labor unions but that doesn't come without repercussions I mean it has impact on employee morale it may have impact on service it you know

12:35may have impact on quality you know on time performance could have you know it's that's not not a freebie by any means and it could also trigger labor unrest you strikes industry election you have to this is the threat of compulsory redundancies coming through that can be very messy indeed as we've seen a liftoons of finna British airways going back a few years absolutely yeah even air candidate you mentioned them they had flight attendant unrest last summer so that is you know one issue but I wouldn't say that's an area you know a major lever that airlines are pulling on in 2026 you know you could always invest in new technology that tends to have longer lead times but you know for example you may I guess I guess the most obvious in most powerful technological investment in airline can make in terms of or towards the goal of cutting costs or becoming more cost efficient is just replacing your older aircraft with your newer aircraft you get a mileage a lot of mileage out of that but as we just mentioned you know it's that's also comes

13:40at a lot of upfront costs you know and there's a lot of inflation and the the acquisition cost of aircraft now too so that's you know there's there's there's some things you can do on the technology side you know I'm sure a lot of airlines are looking into using some AI models some AI technology to you know perhaps reduce the number of call center you know customer service agents they need or you know the cost of maintenance area etc etc so there's definitely things being done how much of a needle you know how far can they move that needle with just technology probably you know somewhat limited traditionally you know just just the way airline economics are structured carriers will often try to boost economies of scale achieve unit cost growth through economies of scale by growing you know you just want to you have a fixed amount of labor cost and you want to fly more so that you can spread all those costs over more revenue producing units or AS happens

14:45which is you know basically the units that that are used in any airline industry so seat miles so fly more seats fly them longer can get your unit cost down problem with that is that that works for fixed costs a lot of labor is fixed maybe some aircraft is fixed some infrastructure is fixed maybe your airport airline you know airport gates for example your fuel is not fixed your fuel is going to go more you fly the more more fuel you're going to burn so fuel is eating up more and more of your cost the more you grow the more you're going to burn fuel the more you know you're your your overall cost bill can grow so that's becoming much more difficult to do to achieve economies of scale through growth and what you'll see across the industry this summer going into this fall is a lot of airlines actually doing the opposite they're trimming capacity getting those you know trying to reduce fuel consumption and you can imagine especially if you

15:49you know every airline has a network worth of routes and there's a hierarchy of you know you're you have some routes that are performing really really well you have some routes at the bottom that are losing money well when fuel is very expensive you have more routes losing money those ones at the very bottom are getting worse and worse so you're really under you know a lot of pressure to just shop the ones at the bottom you know get rid of those losses and yeah you're going to take a unit cost penalty but it's it's got to be done it's got to be done um and Jay what about the the obvious trick putting out fizz yeah so so that in the end uh what ultimately airlines are doing they're kind of number one weapon this summer this fall to uh battle the inflation demon is like you suggested to race race fairs race fees whatever new revenue you can get and that strategy

16:51for most airlines have has been very very successful i think we talked that it came around last week or two weeks ago how there are some exceptions we talked about the Chinese airlines in mainland china have been very much unable to do that that's an example uh where revenue this this sort of revenue offset strategy is not working and you see the losses just mounting and mounting but in the us for example um in europe where where the airlines are a little bit advantage because a lot of them have fuel hedges um very substantial fuel hedges um you see um the the pain is a little bit less so uh we'll talk about jeppelieu in our in our next part but they a jeppelieu and other us airlines are are good examples of carriers that have uh raised fairs and raised revenues a lot and that's not fully offset the fuel pain the inflation pain but it has to a substantial degree so you know that's goes um and you know how how are they able to do that how are airlines able to

17:55raise fairs so much i mean it's pretty substantial we're going to talk about jeppelieu in a minute but jeppelieu's total second quarter revenues were up like 15% on three percent work capacity i may have that that number wrong but it's not a lot i mean that's some that's some big big fair fair and fee hiking how are they able to get away with it well the answer is both demand and supply related to i think i mean it's demand related in the sense that there legitimately is a strong u.s. economy right now or at least uh parts of the u.s. economy that are applicable to to or that are relevant for for air travel are very strong if you think about just yeah retired people um you know watching their stock market gains grow and they're sitting on you know valuable real estate and the you know people that have jobs that are related to the AI tech build out and um oh to be 75 j yeah well i'm almost there well not quite but i'm i'm on my way a little gray but so it is

18:58demand related i mean there are legitimately lots of people who are uh i mean we've talked about this so there's so many reasons why people are traveling not even just that their stock market their stocks are up and their housing values are up uh or that the job market and in certain areas are very good but also just we've talked about shifts like people uh prioritizing spending uh hey i want to go to vacation in Italy this year rather than you know by a fancy new tv for you know like a watch the watch the uh i was gonna say we're they're on weekly loans on youtube yeah well that i mean that's where you go i i would prioritize that over over going to roam but um but you know everybody's different but it's also it is demand driven it's also supply driven as well i think one reason why uh airlines have been able to race fair so much is you do have this air crash shortage out there there's not a lot of seats flying around there's not as many seats as would be flying around if airlines had you know the option to to acquire more um in

20:01which case you know it it they just haven't been able to because Boeing hasn't been able to deliver on time airboats hasn't they it's there we also have some carriers like spirit which you know completely gone that wasn't a small airline um what other other supply issues you know you think of some bankruptcies we just had air baltico bankrupt last week small airlines and not kind of move the needle a ton but you do have you know situations like that so as as fuel uh and just what i said before you know as fuel prices keep going up and up and up airlines are going to be tempted to cut and cut and cut and that's going to remove some more supply from the system also create some more enabling capacity for airlines to race fairs so both of supply and a demand uh reason behind that ability to race fairs love that analysis Jay it's a very complex topic but i think we got there in just over 20 minutes so if you do want more detail with something that we come to time and time again in the airline weekly issue i know you've just something you'd like just for the break that go ahead sar Gordon i just can't stop talking can i one more one more thing to add uh

21:07because i just does an interesting question so it's not just the airlines facing this uh you know inflationary uh pressure it's also Boeing and airbus and you have to consider that as they you know they have a very very big decision to make at some point it's going to come time where the 737 max the a through 20 neo you know these are uh getting a little bit is a relatively you know young air aircraft right now but because of such a long long lead times you have to think that it won't be too long now before these airlines before these manufacturers have to make a decision i know okay what are we going to uh provide the market um to replace these and then maybe it's a 20 mid-20 mid-late 20-30s maybe 20-40s as Ryanair says what's we could wait to the 20-40s i don't know what it is but at some point you know you have to start working on that now and an announcement they come in the next couple of years to imagine what it would what it's going to cost just a development

22:10program uh to to you know introduce this you know new narrow body into into the into the market it's going to be a rather hefty investment it sure is sure is um we do have robin haze from airbus america there's jemen and ceo he's one of our latest additions to the speaker lineup at the skiff deviation forum that's in new york city november 11th is the opening reception in sort of the evening and then we've got the full day event on november 12th if you're an airline which you can subscribe or you should have a discount code lucky in your inbox or you'll find that in the latest issue go to live dot skiff dot com for the full agenda the latest speaker lineup and the ability to join j and i in new york city as well as magna and the the wider airline weekly team we look forward to it you mentioned j there as well air ball take filing for chapter 11 bankruptcy protection in the u.s earlier this week as we're recording here on the 15th of tember more detail about that on skiff dot com as well and of course as an airline will t subscribe you get access to all the airline news on skiff to fill you in there before that quick reminder to send any questions

23:12so comments that you might have for us to podcasts at skiff dot com at podcasts with an s at the end and please don't forget to follow or subscribe to the podcast whether you're listening or watching and if you aren't drawing the show please remember to rate us five stars leave us a positive review so we can get you to spread the word about the airline weekly lounge don't go now we'll be right back hello and welcome back to the airline weekly lounge i'm Gordon Smith joined as usual by cohost j shabbit at the very end of part one there j i was mentioning the skiff deviation for but it would be foolish of me not to mention the skiff global forum which like i said we're recording it on the 15th of september it is just a week away now there are so many highlights here if you're listening to this podcast and you're interested in the broader travel industry it doesn't really get bigger than this you know you've got a ceo's of uber airbnb booking dot com expedient group hilton uh it's unreal just the level your windom i i got i got i got i'm hint that hi it's just that every time i look at the screen there's another cte other i don't want to pretend that i'm naming the list and fool because there are so many people and i don't want to feel like everyone's

24:13left out good life dot skiff dot com for the latest uh speaker liner but there will be two three names from an aviation point of view that are particularly relevant uh himato cata the new ish cteo of the catterayways group and also corneal caster the cteo of virgin Atlantic both of them i think making the first on stage meaningful one stage uh debuts in their respective roles so really looking forward to that it'll be me doing the the talking on stage with us go to margolardo who is the chief commercial officer at a canada so really looking forward to getting his insights there it's only a few days away i know there are literally a handful of tickets left so go to live dot skiff dot com if you want to secure one of those last remaining tickets all right j we're going to be in new york in a few days time what's also in new york jepaloo's headquarters how's that for a segue? a good one yeah we're going to talk about jepaloo yeah and i and i should add i was just going to say the you mentioned all the uh the headline speakers at the uh skipped forum

25:16it's uh there's also just a lot of you'll run into a lot of airline people in in the audience as well absolutely so it's uh you you can uh yeah i i've been many times in the past and i i could tell you there's um a lot of just airline people floating around a room so if uh you know be there be there be square as you know my mom would have said it's great point in this test it's a test to enter the quality of the event the i don't notice respect to those people their own stage but it's also the people in the audience that are really influential sometimes you get the most you just i've learned i've always at conferences i always learned so much just talking to people you know just just uh overlaunch or yeah during breaks and things like that so yeah there's quality everywhere quality everywhere yep yep and Gordon you will be there as well so that's a number number one for quality so i'll call it a people the way that it's just the the way you wait the cadence of your words uh it means i'm like quality everywhere and Gordon you will also be there and Gordon also

26:20yeah okay well now i did that that that that may have come out wrong but uh no on the quality scale you you know you're right up at the top there so well um looking forward to it and looking forward to seeing many of you uh in new york in a few days time j let's uh pivot across to jett blue because like i said we're recording here on the 15th of september we've got the Morgan Stanley Laguna Conquence which is a big event in california not just aviation related but we've got south west united american i think um kelly olberg from bowing is also going to be there so we're going to save that for next week's show but we take it a little sort of insight into what's going on at jett blue they're not going to be as far as i understand at the Morgan Stanley event but this was almost like a sort of a warmer pact tell us what jett blue shared with with investors in the broader market uh just a few days ago yeah thanks Gordon so they did um provide a an investor disclosure uh last week we're speaking on twos day september 15th so this was uh you know week we prior and the update was

27:21essentially what we were talking about before Gordon where you know the cost situation is is worse than the originally forecasted but the revenue situation is better than the originally foresaw so uh just giving some numbers here so back in july i think it was i think it was late july they gave uh this is when they announced their second quarter financial results they provided some third quarter guidance and they said look we're you know we expect at this point um that our third quarter unit revenues revenue per available seed mile will be up about between 13 and 70 13 and 17 percent um that's impressive right i mean that that's that takes takes a lot of fair and fee hiking to get to get to that um and and they're they're still growing too they're not you know don't think of it like oh we're just pushing up the the yields by shrinking they're

28:21they're growing not a lot but they said that they were going to grow 3 percent to 6 percent so that's actually is kind of a lot i mean if you always uh you know if you can sort of uh for context consider that alongside gdp growth gdp growth is i don't know somewhere between two to three percent so 30 to six percent is is kind of a lot and we'll talk about their fort loaded ale expansion whatever it's not it's not it's not a small airline you might sometimes see those to the numbers small airline you might see this number is in a very small airline that's growing very very quickly but for mature airline relatively mature airline like jeplu uh particularly one that isn't flush with cash that is uh pretty notable yeah and and and again to to be clear that was i was talking about that was their previous guidance back in july but what they said last week is that no no no it's uh our unit revenue is not going to be growing between 13 and 17 percent they're going to be growing between 17 and 20 percent that's the range wow 17 and 20 so and and of course that there's a range there because we're not done with the quarter yet i mean we still

29:23got a couple weeks of September so we're we're not they're not sure what's how it's going to pan out exactly that revenue rocket really is getting to the moon quickly now here's the cost picture so it's take out fuel and they said that their unit cost cost per available seed mile uh originally back in july they said it's going to grow 2.5 to 4.5 now they say six to eight again some of that is because they're getting you know dis economies of scale as they grow more slowly than they expected you know they're getting they're just you know taking out that those unit cost advantages or that growth advantage economy of scale advantage so they're they're they're getting penalized in that but some of that is just you know our costs are coming in higher than expected because of whatever aircraft and um you know i'm not sure that they actually specify they they they will specify when they announce their earnings once the quarter is complete and that'll be in lead October so we're still not a little more than a month away from that but uh you know very much uh

30:26they're feeling it on the non fuel cost uh side of their business now fuel they said back in july fuel would be an estimated three dollars and 49 cents per gallon now three dollars and 96 cents per gallon that's not a small difference you know this is we're talking about one gallon here so multiply that however many gallons they use during the quarter so very very big cost pressures to two of my point earlier revenues are up but costs are up a lot so as well so that is jepaloo's uh situation in a nutshell and you just wanted perfectly in the most recent issue of Elon Weekly Jay you said jepaloo's revenue conditions fantastic jepaloo's cost concerns drastic yeah there you go you you you you put it nicely you mentioned four lot of deal they're Jay tell us why that's so significant uh i guess spirit might have a little role to play very much so yeah so i was looking uh just now in uh syrium scheduled data

31:26for the first quarter coming up um in uh of 2027 for lotterdale's actually going to be the busiest airport in the entire jepaloo network um i don't think it's ever happened before it was always new york it's it's currently new york number one i think jepaloo is a jepal i think for lotterdale's actually number two um this current quarter maybe it was for fourth quarter but uh i think it's kind of crept ahead of boston so you know it was always jfk boston where there are two big ones of for lotterdale in q1 obviously that's Florida peak season so they're gonna you know push it up a little bit more but i think for the first time ever as far as i'm aware for lotterdale is going to be their number one market in terms of the number of seats that they're putting into it so they are really betting the house on that south florida market will it um and if you look uh another thing i noticed from the schedules they if you look at their fourth quarter schedules there are about uh six i'm looking at it now there about 64 airports where they where they've

32:32actually where they're going to be cutting capacity so this q4 versus last q4 they're going to be flying fewer seats um and that ranges from everything you know a bunch of florida markets uh they're gonna be flying 10% less in new york and they i think they completely pulled out a new work and few other florida markets a lot of a lot of these new england markets where they tried to increase providence manchester didn't didn't really either didn't work or they just decided hey we need the planes for the fourth loaderdale growth uh because as you you know you you you mentioned spirit the big one of the big reasons for the spirit uh or for the jepaloo for florida growth is that spirit is no longer there so yeah it's great point j and you speak to an owner in the in the revenue side of things i i know quite a few guys and girls who work in the airport business the route development business and they get really offended when an airline calls out or reduces a route guys i thought we were making money together i thought this was working and they say you know the airline often says yes we are making money but not enough we can get more bang for our buck

33:33on another route and hq is telling us to divert the resources elsewhere so it isn't always a case that that route isn't necessarily a flop it's just there's more there's better riches to be had elsewhere and particularly when you've got the costs rising as quickly as they are in many areas uh you want your best routes where you can get them they are taking a lot of steps for loaderdale expansion just being one of them there also you mentioned the united partnership there's also you know they're investing heavily heavily in premium so they have this new domestic first class product now new lounges now premium credit card but even like think about that domestic first class product if you know as fuel prices they're going up day by day you know tomorrow you can fuel price and go up 10% to get that to get the benefits of a new first class product that's going to take years and you may start seeing at the end of the next year mid next year i don't know but that's a long-term investment so i think a lot of the situation with jepp blue is and again

34:38contacts we've talked about this before if they lose money this year which they're on track to um and i think they'll tell you they probably will uh it's going to be the seventh straight year of operating losses for jepp blue so um it is it is a carrier that is um experiencing a lot of distress and you've heard that you know the the b words swirling around the bankruptcy um and not saying that they're any you know they're close to that and they certainly say they have plenty of cash on hand and all that but you know a carrier that loses money for seven straight years obviously there's going to be liquidity pressures at some point i don't know when um and with fuel where it is now those concerns only get it though they only intensify they only make me believe you know as an outside observer the pressure dialers got to be going up it's got to be even more intense than ever so that's why you know i wonder if if maybe if fuel doesn't start to

35:38tape or fuel prices don't a free inflation doesn't start to taper off over the next couple of weeks months quarters do they have to do something even more drastic and does that mean you know looking for a merger partner i think there's there have been some reports in bloomberg or whatever that jepp blue has in fact been picking up the phone and trying to find maybe someone that would be interested in merging with and investing in it i don't think we know the details about that they've never said but you could sort of see why they might look to do something like that so who potentially could be a marriage partner for jepp blue uh i know gourd you're thinking oh don't go there you're gonna we're already running over time but i'm gonna go there sorry if i i'm gonna ask your permission will be nice and ask your permission do i have five minutes to talk about jepp blue's merger prospects let me ask all the listeners yeah the all the listeners say yes okay yeah i just can't say no we can't okay okay so obviously you mentioned united um being being

36:40one of them but that's united itself has said that we're not interested i mean you know i can change but i think they have bigger fish to fry they're not really focused on getting more exposure and flarter whatever that's i don't think that's uh they have their JFK slots from the partnership deal and i think they'll be happy with that you know south was could they use more real estate in the northeast sure could they uh you know that is that is a kind of a weak spot in their network could they use could they use jepp blue as a springboard to turbocharge their push into premium into the premium segment sure i mean that makes logical sense right i mean that's doesn't so you could sort of see some logic of why south west might be interested in jepp blue at the same time south west is extremely busy doing a lot of organic uh moves into the premium market and you know doing doing all sorts of

37:42different changes um any other one that comes to mind would be american i think the american jepp blue partnership was working pretty well um and unfortunately for for their sakes they had to uh break it apart because of that judicial ruling back in 22 20 through whenever it was um but you know different administration now could could be different you know judicial conditions they who knows maybe american could get a deal like that done obviously americans finances they have their own distress uh that they have to deal with so you know there's some questions right there thank you jay um obviously jepp blue isn't here to defend itself and we did mention the b-word have been swelling around i just want to just for a mini right of reply um hardback to mechner mechner marhorshi rskift eland reporter uh pichiro back in mid april this year uh and it was jepp blue cio johne garrity staff note headline here no bankruptee now but quote dex are stacked against smaller carriers like us this is a message that we've heard from garrity both on the skift stage

38:46and elsewhere she was at our aviation from last year the global form the year before that uh she says in the staff memo quote it's no secret that we believe that in today's airline industry the dex are stacked against smaller carriers like us she continued i know how distracting and even scary all the noises in periods like this it's important that we stay in forms but not distracted our focus needs to remain on what we can control and how we continue to execute so very much keeping the heads down and making sure that everything that they can do is being done but like you said jay hadn't stopped the rumor mele running red hot in recent weeks around possible fresh consolidation talk and that that that that that i'm sorry gourd i just want to say that that that point you made right there about uh jepp blue feeling like they're that that that that that that point is most apparent most visible in the transatlantic market where they just have you know competing against this big joint ventures you know these three giant joint ventures where they're essentially you know colluding with uh european carriers your their us ravels so that's just an example

39:50yeah and just full context garrity was responding to a video of jepp blue co founder and current breeze airways CEO David Neelman that went viral online at which he believes jepp blue may need to file for bankruptcy this is obviously early in the year but we do have as luck we'd have it uh david neel and joining us on stage in new york in november so we are really between the skip global forum and the aviation forum piecing together the industry here j one massive event at a time we are speaking of time out of time but really appreciative to you jay for running through jepp blue and obviously much more details to come uh hopefully from the cfos and others at the morgan stan laguna event which is happening uh tomorrow as we're recording here much more detail on that in the next issue of airline weekly and also on the next uh addition of the airline weekly podcast great okay thanks to jay for joining me this week thanks as always to our producers john moniker kelsian will look forward to seeing many of you at the global forum in new york next week but wherever you are in the world thanks for listening and we'll catch you next time bye for now whether you're listening to us on spotify apple or wherever you go your podcasts please remember to subscribe greatest five stars

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