Decoding Q3 U.S. Airline Earnings

Hello and welcome to the airline weekly launch. I'm your host Gordon Smith and I'm joined as usual by Cohost J. Shabbat. In this week's show, ahead of a skipped aviation forum in New York City, we're making sense of the latest earnings from America's biggest carriers. Hey, Jay, how's it going? All right, Gordon, how are you? Doing very, very well. Just as a little bit of context for anyone that's not joining us live, we are recording here on the 27th of October, and we've heard now from most, not all, but most of the major US carriers. I don't know about you, Jay, but for me, this has been a particularly interesting earnings season. We've got record revenues, soaring fuel costs, and some very, very different financial outcomes. A lot to unpack over the course of the next 30, 40 minutes or so of this special show. We are recording live on LinkedIn, but for regular reviewers, regular listeners, do not worry, it's not going to be death by PowerPoint. We are going to be keeping things relaxed, chewing things over in our usual conversational format. That said, if you are joining us live, and you have got a question either for myself or for Jay, feel free to jump into the comments section, and if we've got any time towards the end of the show, we'll try and take one or two of those, Jay. But with no further ado, let's get into it with the notable exception of, I think, the Legion Frontier, and perhaps on the regional side, Sky West and Republic, with all the US numbers in. What's the Jay Shabbat overarching takeaway for Q3? Yeah, so we've got the big six, American Delta United Southwest, Alaska, and JetBlue. There's the big six airlines now, and as you said, there are a couple of smaller ones that haven't yet reported. So we've got all the numbers. We got JetBlue last night. They did their earnings call this morning. I got a chance to listen to about maybe the first 20 minutes or so before preparing for this, but so I have a little bit of an idea of what's going on there. I think enough to sort of know the big picture, which is that JetBlue is struggling. I don't know things any surprised there. Talk about that in a little more detail. Just, yeah, brought over view from what we know from these six airlines having reported now is, I think you said it, you know, two big things. Costs are going to the moon, and the revenues are going up really fast as well. So that's the big story. And for most of these airlines, while let's say four of the six, the costs are going up more than the revenues. In Southwest case, and actually in JetBlue's case, the revenues actually did go up more than the cost if you compare Q3 year-to-year. So, yeah, there's there's, you know, little progress to report there. They're now in both of those examples, Southwest and JetBlue. The margins are still not nearly where they need to be, particularly in JetBlue's case, but there was some year-to-year progress. I did want to be forward just throwing it back to you. I have here the operating margins for these six carriers over the course of the first three quarters of the year. So January through September, just to give a, you know, kind of a longer term sense of how everybody's doing. I have to tell everybody I quizzed Gordon on this this morning, and he came almost close to 100%. I stumped him on the, you know, little, is some, so the middle portion here, but it was a beep, a beep plus, if I was mocking my own home budget. We'll give you a beep plus. I think that's a fair grade. Yeah, fair grade. Without any, yeah, I got him in prompt to you. No preparation. So, maybe we'll bump that up to an age, you know. A minus. We'll give you an A minus, yeah, A minus. Delta came in at 8%, that's the nine-month arm. They led the way. United at six, Southwest at five. Nice turn around there from last year, as much worse. American only one. And then you get into the two red ink guys, Alaska, negative two, in Jeppeloo, negative six. That, all this removes special items and, you know, kind of cleaned up numbers for the first nine months of the year. So there you have it. I'll turn it back to you. Yeah, a fantastic scene set of that, Jay. And I think it is important to look at things in context. That's what we try and do, air-long weekly and skipped more broadly. You know, we're not just taking an individual day and individual quarter even in isolation. We do try and contextualize and make sense of those sort of bigger picture trends and themes. Spoiler alert, I think a huge distinction between the revenue growth that we've seen and the actual demand growth is going to sort of underpin our entire conversation over the next half hour or so. Just before we do dive into the figures, again, to a bit more detail, including Jeppeloo, whose numbers are pretty fresh. Are there any big caveats that we should just keep in mind or viewers or listeners should keep in mind? Q3 isn't a sort of stand out quarter for every airline or our son that are historically stronger than others. Let's just set the scene a little bit in terms of that detail. And then when we are looking at those numbers, we've got to keep in mind as well that there are some data points that look impressive on paper, but don't necessarily tell us that much about the underlying health of an airline. So let's get the caveats and the small print out of the way before we really dig in. Yeah, correct me if I'm wrong, but the way I'm reading your question is about seasonality and how the third quarter is going to be different than say, the first quarter for different airlines. Is that what you're asking? Couldn't have put a bet on myself. Yeah, I just wanted to make sure that yeah, that we're on the same page here. So yeah, I mean, it's true. The third quarter is the summer quarter and that's traditionally a peak travel period. Now it's become less peak than it was in the past. And that has to do with a lot of kids in the US go back to school early of schools open earlier in some parts of the country anyway, you know, parts of the South. There are schools that are open in early August. And so you'll hear airlines talk about the third quarter being not quite as peak as it used to be. The second quarter tends to be the best quarter now for the industry at large. Now, you know, Alaska, they didn't have a great quarter, but summer does still tend to be very, very strong for them. If you think about a lot of the East West Seattle flows a lot of, you know, tourism. And to Seattle tourism, nobody's going to Alaska in January. They're going in, you know, the summer. So it's going to differ different airlines. One final, you know, I'm probably giving you a longer, longer answer than you bargained for here, but one one thing with JetBlue, uh, that is interesting. You might assume that the first quarter might be a little bit more peaky for them because they have so much Florida, so much Caribbean stuff that tends to do well in the first quarter, but it's really not true. They do tend, they'll have better margins in the Q2, Q3 and they're doing Q1. They're probably has a lot to do with their European service, their transcontinental service, which is a lot of seat piles, that's a lot of production. So there's your long answer to a question you're probably expecting a shorter one too, but there it was, it was a long answer to a long question. There we go. Okay. You mentioned JetBlue there, Jay. And we got the numbers out just in the past 24 hours here. As we're recording on October 27th for anyone that hasn't been able to get into those in some detail. What was your assessment? Yeah. Well, so, you know, JetBlue went into this, uh, this week with a lot of concern about, you know, the people using the B word, the bankruptcy word, and, you know, worried about, uh, they're gonna lose money this year, unless some, you know, miracle collapse in fuel prices, uh, they're gonna lose money for the seventh straight year in 2026. Uh, they have about nine billion dollars in debt. So there was, you know, some news headlines this week about bondholders getting concerned about, you know, bondholders just people that lent JetBlue money worrying, uh-oh, uh, you know, if these guys can't pay us back, they might have to go, you know, the Claire bankruptcy. So there was, you know, news headlines swirling about that, some reports, I think Bloomberg reported, I think it was Bloomberg, that JetBlue is, you know, hiring some restructuring advisors. So, you know, that, that's kind of how the, uh, situation, as we went into, uh, this week. So yesterday, they reported numbers for the third quarter, they reported a negative four percent operating margin. They were the only airline of those six, the big six that are reported so far, that had a negative result, even Alaska, you know, positive four percent. So, uh, it's, you know, not, not a pretty picture. The numbers were not pretty for the third quarter. Uh, they are still, they continue to have negative cash flow, so they're burning through cash. Now, I only got a chance to listen to you about the first 20 minutes of the call, you know, I'll go back tonight, look at the transcript, but, um, the basic message was, I'm trying to satisfy you, you know, say this in a, in a nicer, clean, clean, clean, clean, clean, and stuff. But the way I was, I was speaking with Megna earlier in the way I kind of said it as the message was that, uh, you know, we're going to continue to burn cash for the next 12, 14, 16 months, but don't worry because we got a lot of furniture to burn. So, we, uh, we've got, we've got plenty to, uh, you know, we can raise cash if necessary. And that's, um, you know, being a little facetious there, but I think their point was, is that, no, we don't, don't worry if you're a bottler, we can pay you back. We have, if we can't, you know, generate enough cash in the interim, we have aircraft to sell, we have engines, we could sell, we have this loyalty program, we can further monetize. We have a couple of businesses that paysly business, which is an online travel platform. They have some, they have a small venture capital business, airport slots, I, they probably have some of that too. They all and most of their fleet too, so they're saying, "Don't worry, we've got this bridge to 2027 when we'll start earning operating profits," and a bridge to 2028 when we start producing positive free cash flow. That was kind of the overriding message. Yeah, there have been a lot of scary headlines, I think, for those that are involved in JetBlue in the past week, Fortnite, even going back, frankly, quarters and quarters, but particularly noisy in the past Fortnite, Jay. If you speak to JetBlue, they will point to elements like you've just said, the Jet Forward program, the new slots that they've got it, La Guardia freed up from spirits demise, that real push into Fort Lauderdale, the lounges, etc. So there is plenty that the executives can point to in terms of meaningful, you have domestic first, meaningful changes to the business, but like you said, when the numbers stack up as they do, you're going to have some inevitable questions. I just want to bring in a quote, it wasn't directly related to JetBlue, but just a broader point from Scott Kirby, the CEO of United Airlines. He was reporting his own airlines numbers a few days ago. And he said here, quote, "The fact that spirits went away was a reprieve for some airlines from making hard decisions." He continued, "But there are other airlines that are next up on the firing line, I think, changes are coming." Obviously, he's been from a position of strength, United, as we've already established, being one of the most successful carriers, not just in the US, but further afield, certainly amongst its class. But when you do have someone like Scott Kirby with the platform, he's got saying that more changes are coming without necessarily naming names and naming specifics, it doesn't help that feeling that there is perhaps a sort of broader reckoning coming for the parts of the US industry. Let's broaden it out if we can, though, because it isn't just JetBlue that be making some meaningful changes to improve the bottom line. Southwest has been a really interesting carrier as well. They managed to really boost revenues, but also expand that all-important operating margin, despite the fuel shock, give our readers, give our listeners, give our viewers a little bit of color around that, because that does sound like a little bit of a paradox. Yeah, and I'll talk about Southwest a little bit. I just wonder if I can just say one more thing about JetBlue. There is kind of this collection of reasons why they are so distressed. If you ask someone, what's JetBlue's problem right now? The quick answer is, well, fuel is what they expect to pay. I'm looking at $4.64 a gallon for fuel this quarter, which is an extraordinary amount. So that's putting enormous pressure on all airlines, but especially in our line that's on its way to losing money for the seventh straight year. But there, you know, you have to remember this is an airline that was hit twice by adverse judicial rulings. I mean, they had a partnership with American that by all accounts was going pretty well. That was deemed illegal by a federal court. The Northeast Alliance. The Northeast Alliance with American Airlines. Then at the same time, or in that same period of time, they of course had their plans to buy JetBlue blown up by a federal court. So that's kind of a lot, you know, they were putting a lot of resources, a lot of energy, a lot of, you know, they saw those two transactions as a way to mitigate some of the problems that they knew were coming, the inflation or problem setter. It didn't work that way. And I'm one of those people, you know, that still things that the merger at the time made sense. I think that was maybe a more controversial premise among a lot of industry analysts, but I thought that would have done a lot for the network, a lot for the loyalty program, et cetera, et cetera. Now we're in a situation and there are more things we could talk about, you know, why is JetBlue having trouble, you know, they are subject to talk about a broken recording, you know, it's one thing you can set your watch to is every time JetBlue does an earnings call, it's always, we had rough operations last quarter because they are traffic control and the thunderstorms and that, I mean, it's just they're in a very difficult airspace. There's that. They obviously weren't as exposed as some of the bigger carriers to, you know, the why they're the international, they have some Europe, they don't have why bodies, they're frequent fire program, they just it just doesn't have the scale for monetization to the same extent as, you know, the big guys do, or even I think they're, you know, even even well short of what Alaska is able to do. And I can go on, you know, there's there's a list of reasons why JetBlue is struggling, but if I can just move now to your question about Southwest, Southwest is kind of a little bit of a different situation where they suddenly, you know, flipped on all these revenue switches last year. Many of them at the, you know, behest of this management firm, Elliott, they, and it's it's working really well. I mean, the revenue performance at Southwest has been pretty outstanding. And, you know, the cost are, of course, they've got a deal with fuel too and, you know, they're labor inflation, airport inflation, all sorts of inflation that's afflicting the industry, they're dealing with that too, but they are on a kind of much better trajectory back to health. I should emphasize that their operating margin, if you exclude aircraft and engine sales, which, you know, you don't have to exclude them, that's real money, it's real cash. But if you just want to get a picture of how the, you know, the actual business is performing, if you exclude that, their operating margin for the third quarter was only 3%. So you can see, despite all the progress, they know there's still, there's still more progress. There's still more work to do. And so now the question is, how much further are they going to go? We know that they're opening lounges, for example, we know that they're, you know, making changes to their loyalty program. Will they buy wide bodies? I don't think so. It doesn't sound like it, maybe. Will they, you know, have a domestic first class? Will they have, you know, additional international partnerships? That kind of remains to be seen. It remains to be seen. You might be wondering how US carriers compared to the European counterparts, the short answer is we don't know yet. For the most part, we have had a handful of numbers out, I think, Finair in the past 24 hours, but some dates for your diary. I'm calling it the European early, European Airlines mega week. The very fact that I can't say, I mean, I probably need to adjust the title of that, Jay. But dates for your diary, Ryanair, on Monday, 2nd November, Lufthansa Group on the 3rd of November, Air France KLM on the 5th of November, and IAG, obviously, the parent company of the likes of Air France, British Airways, Iberia, Ellings, et cetera, on the 6th of November. So for European heavyweights, I'll bring much back to back next week and we'll keep you across that personnel language, and of course, skift.com. Jay, just back to the US, if we can, it feels like airlines are generating revenues that would have been almost unimaginable a few years ago. I think you opened last week's issue of airline weekly with, and you told American this time last year that their revenues would be up 20% and they'd be delighted, but obviously the huge caveat being that fuels also short up. Airlines, as we've already established, and you've been Scott Kirby was saying himself on his earnings call, US airlines are still struggling to make money despite these soaring revenues. What do you think that tells us about the broader economics of this industry? It is not easy to make money when costs are rising, even if your revenues are also rising. Yeah, I mean, we, we, this industry, as we know, as you said, it's extremely difficult to make money because it's so, it's so labor intensive, it's so capital intensive, and so dependent on government, you know, just for example, air traffic controls, you know, factors beyond, beyond any airline management, executive team control, and at the same time, you know, anything that goes wrong in the world always hits the airlines first, whether it's a, you know, a hurricane or a war, terrorism or, you know, a pandemic. So it's, it is just a very, very difficult low margin, low-ish margin industry. US airlines did a very impressive job during the 2010s to consolidate and to if you look over the course of that decade, particularly the latter half of that decade, earnings for the industry were much more stable across pretty much all the major airlines, whether it be a low cost carrier like Sparrow, they did very well, even some of the big guys like United and Delta, they were doing well in the 2010s. Some of that was low-ish fuel prices, but a lot of that was reform via consolidation. So now, you know, fast forward to the 2020s, post-pandemic. We've had all this additional cost inflation. We've had some additional consolidation as well. We know that Alaska and Hawaiian are, you know, got married. We know that a legion in Sun Country got married. So there's been some consolidation. You know, will that have the same profound effect on industry-wide earnings as we've seen with consolidation in 2010s? Maybe not, because those are, you know, relatively smaller airlines, Hawaii and Sun Country. Well, you know, United ever get its wish and merge with American. I'm not sure, you know, we've talked about that past, we know, debatable whether that's, you know, how serious Scott Curry was, but, you know, as I suggested in the past, it might have been, you know, at least semi-serious, because even with all of the prior consolidation, here we have a carrier like Japlieu on the Virger bankruptcy. We saw spirit disappear, which was rare, right? I mean, usually even if you even if you went at the bankruptcy. get at least restructure, at least someone's gonna give you cash, the spirit's case, it's like, poof, they're gone. So, the industry, I can't. - Oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, Oh, I'll be on the second time, Crupti. Yeah, they did once, they were able to survive one bankruptcy, number two, you know, they couldn't do that. So, yeah, a very, very extreme, I mean, just think about an industry that, you know, one minute you're dealing with, and I'm pulling up the numbers while I talk here, you know, one minute you're dealing, if you're dealt, let's not use Delta because they've got the refinery, but, you know, if you're united, one year, once summer you're dealing with two, you know, one year, once summer you're dealing with two. $2.40, $2.43 per gallon fuel, the next summer you're dealing with $3.90, so, you know, $2.43 to $3.90, and, you know, these are companies that use massive, massive amounts of fuel. So, multiply that, tens of very, very large number, and then that's, that 3.90 number is, that's starting to look, you know, airlines wish they had 3.90 right now. So, in order to corner, I mean, what did I say for JetBlue for, I have it in front of you, for 64 is their forecast for Q4, that's, you can, it's not, it doesn't take a brain surgeon or an Einstein to understand why it's difficult to make money in the airline industry. Sure doesn't, just a few of the names that you mentioned there, and Legion, some country, consolidation, of course, we are, due to have drew wells from a Legion on our stage at the Skift Aviation Forum. If you're not already familiar with that, that's November 11th, the opening reception in New York City, Manhattan, and then on November 12th, at a food event at the May, I, I, I, I tell you, most journalists still like to use what iconic, but I do genuinely reserve the what iconic for the TWA hotel. I agree, it is a, it is a masterpiece, it is well justified, the usage of the what iconic there, and November 12th, good luck to Skift.com for the latest agenda, and we're still putting in the final touches to that, so, you know, in the past two days, we've had some exciting new additional names there, and if you're on airline weekly subscriber, check out the latest issue of airline weekly or check out the weekly email that we send, there is a special promo code there for an exclusive subscriber rate, J, I'm later on in the podcast, we're running through a few of the additional highlights for the Aviation Forum. Of which there are plenty, let's just go back to the here and now, and the US industry, on a macro level, it does seem like we've been speaking about this sort of incredible resilience on travel demand, but there must come a breaking point, and we've seen that in previous fuel shocks, when tickets get too expensive, you start to see travel demand being hit, especially on that more discretionary consumer, the leisure consumer, at what stage, generally speaking, or specific to this instance in 2026, do high affairs start actively discouraging people from flying, and airlines must surely be wary of that. They're wary of that, for sure, and that's the trillion dollar question, or billion dollar question, is the demand destruction. How high can we go with the fairs before the demand starts getting the demand destruction? The Southwest said just was the last week, two weeks ago, we don't see, this is direct quote, we don't see any sign at this point, that fairs coming up are eroding customer demand in any way, shape or form. At what point does the thing start to break, I mean, many who knows, we know that the stock market has been mostly healthy, there's some little bit of wobbling in some parts of the stock market now, certainly hasn't been any crash, that's produced a lot of wealth for people, a lot of, I think, confidence that people have to travel, so that's still there. The job market is, you know, I think people talk about the job market is it's not expanding, but it's not shrinking either, I mean, you know, no hiring, no firing, so people still have jobs in general, we're not seeing mass layoffs or anything like that. We still have some of those structural factors in place, like the favorable demographics, we do just have a very fast growing segment of retired people who they have seen their wealth increase quite substantially because the stock market gains, real estate gains, a lot of these people are, you know, they're collecting social security, which is index to inflation, so inflation doesn't hurt these people as much. These are people that you can argue have been healthier than in the past because of, you know, various improvements to healthcare, which means they're, you know, eager to travel, they're, you know, they're, so they've got the money, they've got the time because they're retired, they've got that energy to travel, and at the same time, you know, there's all these consumer preferences about people, you know, I like the thing of it is like, you know, trip to Rome, rather than new home, I'm not so interested in buying a fancy new house now, I want to go to Rome, some of it is just genuine consumer change and preference, some of it is just like, I can't afford a home, you know, that's one big problem in the United States, and I think a lot of other countries as well, I'm sure it's, I'd be surprised if that wasn't a problem in parts of Europe as well, where it's just very difficult to find affordable housing, because of supply issues, because of higher interest rates. So it's, there's a lot of people that, even young people that are like, okay, well, I'm not going to bother saving for a house, I'll just, you know, use my money to go to rest. So there's all these structural issues that are in place too, that might mitigate any spectacular, you know, if there's some crack in the economic armor, whereas, you know, there are some, you know, unemployment goes up, or the stock market goes down, or corporate profits start to slip, or this whole AI bubble, you know, if it really is a bubble, it starts to pop. You know, some of these structural factors could mitigate some of that maybe, but the obvious answer is, you know, who knows. And then there's, we talked about this, I think last week, but there's kind of that sort of risk looming in the background, which is not a very big risk, but if it does happen, it's disastrous for the US airlines. And that's, you know, we talked about how these credit card fees are unregulated, if there's movement on that. It's just this enormous title wave of cash that's coming, that's transferring from banks to airlines because of these, these, these mileage fees. I keep thinking of that old Barbie song, you know, the credit cards of the plastic, you know, it's made a plastic, it's fantastic, it's like kind of the theme song for the US airlines, you know, anything plastic is fantastic, just making so much money. So, you know, I think the, the serious answer to your question is that we have absolutely no idea when the man cracks, but it kind of feels a little bit tenuous. And there are, you know, very numerous examples in US history dating back to, let's call it the 1970s, where during times of very high fuel inflation, not too long after consumer stop spending. So, we'll see, it didn't happen in 2022, 2022 though. So, there's precedent for the opposite as well. Yeah, and the U.S. President and Jay, and I never thought I would see the day when Jay Shabbat quoted directly and directly, Bobby go by Aqua. You're a, you're a, you're a pop favorite for anyone that's not familiar. I did see that movie on airplane, actually. I think, well, there was, there was a list of favorite airplane films and the sun that I think I only ever watched on an aircraft, I would never ever be tempted to watch. Sort of, yeah, of an afternoon, how do we care about my, I think, I think that one would be playing I think for me. Yeah, crazy rejections as well. That's another sort of easy one to watch on the aircraft. Okay, a few others, but we get, we get off topic here. Jay, you mentioned aviation history and we can learn some lessons, but like you said, 22, an indication that it doesn't always follow that historical pattern, but because I say you've been following the industry longer than most, looking beyond what we're seeing here in the Q3 numbers. Is there a single most important thing that you're going to be watching out for in the next few months, we're already almost a month into Q4? Things don't seem to be getting any cooler on the fuel front, maybe quite the opposite depending on where you are and what you're doing. Are we seeing the fundamentally healthier elements of the US industry starting to appear, or are we maybe storing up problems through 2027? Because from where I'm sitting on this side of the Atlantic, it still looks like we've got some pretty nasty underlying issues still to address. Yeah, I think it's, you know, the answer to your question is, it goes back to a lot of the stuff we've already been talking about. I mean, obviously I'm watching the fuel price. That's a huge deterministic factor watching the economy, you know, how's the economy going to perform? One interesting, you know, we talked about it really quickly before, but when we were going through some of JetBlue's problems, some of their, you know, reasons why they're in their current predicament, one of them is that JetBlue, although, these traffic has been pretty good over the last couple of years, we've had a really strong resurgence in corporate demand, and JetBlue doesn't really have a lot of that. So that's kind of, you know, worked against them to a degree. That corporate demand is, that's another wild card, you know, does that disappear? You can, you can just picture all of these big tech companies traveling, all of these even small businesses that are associated with this, you know, this AI investment. And we're talking trillions dollars, and I remember I once heard this. It was a great, some professors are talking about the difference between a million, a billion, and a trillion. And I can't remember exactly what they said. But they said, if you pile up a million dollars worth of dollar bills, it would be like this. And then a trillion would go to the moon or something like that. It's just understand a magnitude of when you say that these hyper-scaling companies in Silicon Valley are investing a trillion dollars, even in some cases more than that, a year in these data centers. That's a lot of money just floating around the economy. Think of it like, if I'm going to use a farmer analogy, if you're a farmer, think of it's raining, there's plenty of full rain right now. Farmers always praying for rain. We've got plenty of rain. The money circulating through the economy, there's a ton of corporate investment. There's obviously other challenges at the same time that I could go, I won't go with the farmer analogy, but you can imagine, the farmer's paying more for the tractor, the farmer's paying more for the seeds. The farmer doesn't know if he can sell his stuff to China because of a trade war, the farmer's losing ten of his workers because they were deported, and you can go on and on. But you can extend that analogy to the overall economy too. There's a lot of money in the economy, a lot of investment in the economy, but at the same time, there's all these inflationary challenges, there's all sorts of challenges. That's where we are. That's the kind of stuff I'm watching. That's the kind of stuff you're watching, and this kind of stuff that we love you for Jay. For anyone that's not familiar with what we did last year at Aviation Forum, we started the day with Jay. We started with you. That was a sort of breakfast briefing around 809. For anyone that's not familiar with what we did last year, given the elevator pitch, what do you do, and what's start your day with Jay all about? Yeah, nothing more than just kind of what you said an hour of, we're going to focus on US Airlines as we kind of done here, we did last year. We'll go into more detail about how US Airlines are performing. Funny thing is, we're only, how many days away? I think you're telling me this morning. Just over two weeks. It's about two weeks away. I wouldn't be surprised if I have to change some of my slides. I finished my slides this morning, but I think I did that too early because everything's changing so fast, you know, who knows what the fuel price is going to be, who knows, et cetera, et cetera. But yeah, we will, if you encourage you to attend that morning session with me, we'll go over all of the latest and greatest developments in the always exciting US Airlines industry. Absolutely. And for anyone that wasn't there last year, you're going to be there Gordon, we got to wake you up early. I always wake up early. Okay. No, no, no, not as early as you this, food, food disclosure. It's only four hours time difference between Lisbon and New York right now, but I wasn't long out of bed and Jay was already messaging me. So I think you're up at 5 a.m. some mornings. I am. I'm not going to pretend to be here, though, because I do take naps, I go to bed early. So you know, just like early time, it's no distractions, no phone calls, no emails. No, it's nice. All right. And for anyone that wasn't in Dallas for worth with us last year, it was standing room only for start your day with Jay. And I know Jay you're going to be very modest and say it was a relatively small room, but standing room only is standing room only. So yeah, make sure you get there in good time if you're joining us in New York in a couple of weeks time. The days for your diary again, we've got the evening reception on Wednesday, November 11th. That's in Manhattan. And then the full day event at the TWA hotel at JFK on Thursday, November 12th. I think Jay, the speaker list is coming together beautifully. One of our strongest yet, representing the airlines, a few highlights. We've got Lucia Gallego, the CEO of IAG, Nat Piper, the Chief Commercial Officer of American Airlines, Drew Wells, as we already mentioned, CCO at Legent and Mark Nasser, the Chief Operating Officer at Canada. But that's not all. Well, I think we've done really, really well this year is hearing from some of the founders, as well behind these airlines. No disrespect to the C-suite, but it's a whole different bowl game, thawing an airline. Nevermind, just running one day to day. So two big founders come to mind. We've got David Neelman, a fan favorite, of course, serial aviation entrepreneur, the man behind JetBlue, Azul, and our breeze. He's going to be joining us for an Ask Me Anything session. And you know, if you've heard David speak on one of our stages before, he has a filter, but you know, quite a. You can pretty much get a lot out of David. And the audience appreciates that. So, compound David Neelman, who's already great on stage with and ask me anything format, I'm expecting a lively conversation. And that's not all in terms of the founders. We've also got Adita Gosh, who is the co-founder and co-founder of Acata Air, one of India's largest fastest-growing airlines. He's also a founding member of the Indigo team, where he later served as president. So really looking forward to hearing his insights on stage. From an OEM perspective, we've got Emberia represented, we've got president and CEO of Emberia commercial aviation, Arjan Marja, and then Robin Hayes, a familiar name to many as well. The joint is last at the Aviation Forum in 2024. Previously CEO of JetBlue now heading up Airbus in North America. The list goes on, this is non-extensive list by any means, but two exciting airports, representatives. We've got John Ackerman. He's the CEO of Los Angeles World Airports. Obviously a huge couple of years ahead for Los Angeles with the Olympics coming to town, but always a busy airport at any time of the year. And then we've also got the MD of Paris Charles de Gaulle Airport, Regis Le Co. So really, really looking forward to having those two contrasting perspectives from across the Atlantic Ocean. So, so many others, few others off my head, Sarah Nelson, the International President of the Association of Flight Attendants. We'll also be delving into the lucrative world of loyalty with senior representatives from one world alliance and AirFrance KLM. Packed today, I can't do it on my own. We've got Jay, obviously, doing the start my day, starting the day with Jay. We've also got Magna Maharishi, our Skeptale Island Reporter, Skept Founder, Raffa Dali. We'll be joining us the Skept Editor and Chief, Sarah Coppitt. Plus a few friends, I'd say, off Skept. We'll be joined by Brian Summers, a familiar name to many editor of the airline observer. We'll also have Peter Greenberg as well, the CVS travel editor joining us on stage. So so much to get through live.skift.com for the latest gender and to secure one of the last remaining tickets. But yeah, I'm excited, Jay, are you? For sure. Yeah, all of you will join us, or as many of you, as is possible. And yeah, Gordon, I look forward to chatting with you on the sidelines and, yeah, learning from you as much as you learned from us as always. Yeah, I know. I think we've discussed this on the podcast before. No disrespect to the people on stage, and they are amazing, but actually one of the best things about any Skept event, but particularly, Skept Aviation Forum, is the audience as well. It's not a case of the audience being a lot of nobody's and all the talent being on stage. The audience itself, who we have the breakout sessions, even a coffee break, something informal at lunch, the people that you meet who are there as a as a delegate to use of old-fashioned terminology are really interesting folks as well, very valuable insights. So, Leah, live.skift.com for the Skept Aviation Forum happening New York 11th and 12th. As promised, there's a QR code up there for anyone that's watching us. That'll take you straight to the page where we've got a list of gender and also the link to buy your tickets. Jay, we have got a few questions that have come in over the past half hour, as we were recording here live on LinkedIn. Can I put a couple to you? Yeah, sure. Interesting one here on capacity. Where are airlines pulling back on capacity heading into 2027? And do you think the capacity changes will be enough to support FES? Capacity is an interesting one. What's your assessment? Yeah, good question on that. The, well, I guess, keep the focus on U.S. airlines and says the topic here. So, yes, so as fuel prices have increased, airlines have in fact been trimming their capacity. You can go, you know, there's obviously some markets where capacity, they're still capacity wars unfolding. One of them is Chicago air. Another one is, you know, American versus United. Another is San Diego, Alaska versus Southwest, etc. I think, you know, Jeppel is still growing in four letters, etc., etc. But yes, so there is some trimming of capacity. Now, if you do, if you look at publish schedules and at an airline vehicle here, we use a Syrian data. And I was actually looking at this this morning for the upcoming first quarter, some of the capacity is still pretty elevated. I mean, industry wide growing at a pace considerably ahead of GDP growth and think of GDP growth is about 2%. So the question is, is, you know, well, that we're talking about first quarter. We're still a few weeks away that will that start to come down? Well, airlines start to, you know, pull some, pull some flights. The answer's probably yes, if fuel prices continue to stay high. And then there's just some airlines that are growing at a little bit of an elevated level for strategic reasons. You'll see that with United. They've been doing that for a couple of years now. This whole idea is like, you know, moving from regional jets to mainline and to larger gauge and air body aircraft, like the 321s and NEOs. The max 10 is soon coming online. You know, that's been approved for service. So that won't really be a factor until 2027. But you'll start seeing that sort of put some upward pressure and capacity as well. Seat capacity. Obviously, it's very low cost capacity. So, you know, low unit cost, low marginal cost capacity. So, you know, keep that in mind. But in general, general, yeah, I mean, when fuel prices go up, the bias is towards the trimming. Yeah. And then big wild card, you know, is Japlieu going to have to, you know, are they going to be forced to make big cutbacks for financial reasons? Who knows? Yes. And network. A Frontier's, you know, results in a day or two here as well. Yeah. Absolutely. With caveat that we haven't got results in from every US carrier yet, a second question here. Which US carrier, surprise you most, this earnings season for better or for worse? Surprise. Um, you never surprised today. I know. You must have come. I know everything in advance. So now, um, everything surprised me. Now, maybe, I can't really say I was surprised. I was thinking maybe Southwest might have had a little bit of a better margin, um, I think the improvement. So if you go back, I'm just looking at my spreadsheet. If you go back to the second quarter, um, their margin increased by three full percentage points of your year, um, and they didn't quite achieve that again, close in Q three, but they didn't quite achieve that. So maybe I was expecting a little bit better, but, you know, don't take that with a grain of salt. I, uh, you know, I, it's hard to be too surprised, um, on the downside of airlines when fuel prices are so expensive, I mean, you're almost expecting things to be, to be rough. And sure, I mean, Delta did well, but they did two points worse than they did the earlier. And United did well, but they did two points. So it's pretty, pretty expected that these airlines, um, would have shown some deterioration year over year with fuel prices where they are. Yeah. Expecting the unexpected. It's spooky season after all, Jay. Yeah. It says we got Halloween here in a couple days. Mm-hmm. Okay. Um, thanks for the questions. Uh, you want a question answered by Jay or myself podcast at skiff.com podcast with Ness at the end. Uh, more than happy to get that to, and Jay's also an excellent follow on LinkedIn. I'm comparatively dull, but, uh, Jay, I know you, you, you, so if you're under as an earning season, polls and a few other insights and quicky bits, uh, so you give Jay a follow on LinkedIn, uh, if you're looking for more insights from Jay. Uh, and just as a final reminder, if you aren't drawing the podcast, what we're doing here, why not consider subscription to airline weekly, go to airlineweekly.com forward slash subscribe, they can get a free trial issue and, uh, yep, get Jay and I insights 48 weeks out of the year. They gave us a couple of weeks off in summer and over Christmas. But other than that, we are there week and week out, um, even with those Friday earnings write ups, Jay, which seem to be becoming more and more frequent. It feels like as soon as I said on the podcast, CFOs and other sort of airline types, please stop doing your result on a Friday. It seems like we've had an increase in Friday results. So go on. Go on. Go on is looking at you, air Canada. They are. I believe that. I believe that. Yeah. I do. Are they again Friday? I think our candidates Friday this week. We've got Luis Villego on our stage in a couple of weeks. I'll ask him to, uh, go on, make it, make them Monday or Tuesday. Yes. If you can get him the change. Fantastic. Uh, and a reminder as well that if you want airline weekly subscriber, not only do you get the discounted ticket to, uh, aviation forum in New York, but you also got all the airline news on skiff.com plus skiff research is airline reports as well. So loads of additional value ads there. Um, right. That brings us to the end of this special episode recorded live on LinkedIn, uh, but even if you're listening, uh, an irregular whole fashion way, uh, we thank you for joining us. Thanks always to J for joining us week and also to our producers, John, Monica, Kelsey and Will plus Nicole and Fatu behind the scenes wherever you are in the world. Thanks for listening. We hope to see you in New York in a couple of weeks time. We'll catch you next time. Bye for now. Thanks for listening to us on Spotify, Apple or wherever you get your podcasts. Please remember to subscribe, rate us five stars or leave us a positive review. This really helps us get the word out about the airline weekly lounge so you can continue to bring you to this podcast every week, absolutely free of charge. And if you're watching us on YouTube, be sure to subscribe to the skiff channel and hit the notification bell to find out whenever a new video drops.