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OpenAI Breaks From Exclusive AI Pact With Microsoft · Bloomberg Intelligence

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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the
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0:23
Speaker 2: Here's some news out today. I think it's important, but
0:26
Speaker 2: I'm not sure. Microsoft will no longer pay revenue to
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Speaker 2: open Ai. Instead, it's partnership with the leading artificial intelligence
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Speaker 2: firm will not be exclusive going forward. Microsoft stocks down
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Speaker 2: just fractionally on the news here. I'm not sure what
0:39
Speaker 2: they're reading to it. But our next guest does know
0:41
Speaker 2: Ed Ludlow be Tech co hosts. He is in our
0:44
Speaker 2: San Francisco studio. Can you explain this news to us
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Speaker 2: and what it means?
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Speaker 3: This is important and it's the latest development in a
0:55
Speaker 3: series of a changing relationship, and so Microsoft critically important
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Speaker 3: mega cap tech name and open Ai. Let's call it
1:02
Speaker 3: the most profound AI company in this generation of AI companies.
1:08
Speaker 3: And basically what Microsoft is allowing open Ai to do
1:12
Speaker 3: is sell its products elsewhere. For a long time, they've
1:17
Speaker 3: been tweaking the exclusivity by which Microsoft gets first DIBs
1:22
Speaker 3: or first access to open ais tech and also is
1:25
Speaker 3: a major distribution platform for open ais tech to third parties.
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Speaker 3: So the net result is like open ai can now
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Speaker 3: run but also sell its models on any cloud. And
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Speaker 3: you'll note that our colleagues in BI their main takeaways
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Speaker 3: from this is the Amazon will be a big beneficiary
1:41
Speaker 3: of that decision, but there's also some mechanical stuff, so
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Speaker 3: believe it or not, Microsoft is the biggest shareholder of
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Speaker 3: open Ai. It has like twenty seven percent stake, but
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Speaker 3: for a really long time it's been paying money to
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Speaker 3: open Ai as a share of revenue from revenues it
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Speaker 3: generates using open ais tech. That's quite complicated. So that's
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Speaker 3: now ending. And open ai is a major customer of Microsoft,
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Speaker 3: even though Microsoft one of its main investors, and it
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Speaker 3: will keep paying Microsoft to use its cloud services. And
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Speaker 3: that's the net takeaway, all right.
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Speaker 4: So perhaps this is all kind of in the lead
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Speaker 4: up to open ai eventually going public, which is expected
2:17
Speaker 4: to happen sometime this year. I also wanted to get
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Speaker 4: from you this story that we have here about China
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Speaker 4: blocking metas two billion dollar acquisition of this AI firm
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Speaker 4: called Manus.
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Speaker 5: It's an AI startup. Tell us a little bit more about.
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Speaker 4: This and whether this would really get in the way
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Speaker 4: of Meta wanting to acquire this company.
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Speaker 6: Yeah.
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Speaker 3: I mean, the way to look at it is that
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Speaker 3: it shows China still having power and an ability to
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Speaker 3: assert control over technology that originates from that country. You know,
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Speaker 3: that is the main part of it. Meta wanted Manus
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Speaker 3: to kind of build out their agentic offering because that
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Speaker 3: is what Manus does, It makes AI agents. But you know,
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Speaker 3: the one reason I suppose this story is so well
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Speaker 3: read on the terminal is that we are just a
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Speaker 3: few weeks away from President Trump meeting with Jijiping and
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Speaker 3: the access to technology in either direction across borders. You know,
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Speaker 3: that has been a point of negotiation right in the
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Speaker 3: relationship between these two countries.
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Speaker 2: Is there any expectation just along that front ed that
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Speaker 2: things will ever get better? I can't see a world
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Speaker 2: where I'd want China to have our best tech. I
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Speaker 2: can't imagine they'd want us to have their best tech.
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Speaker 7: Where are we on that?
3:27
Speaker 6: Yeah?
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Speaker 3: Yeah, the net position of the administration is that they
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Speaker 3: do not want Chinese entities, companies, and other government entities
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Speaker 3: from having access to America's best technology. But that has
3:45
Speaker 3: largely focused on the picks and shovels the chips that
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Speaker 3: are being used to develop that. The other way round,
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Speaker 3: the export of software from China to US has been
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Speaker 3: a much grayer area.
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Speaker 6: You'll see.
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Speaker 3: The other big headline on the terminal is deep seek Right,
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Speaker 3: which is a very competent maker of open source models
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Speaker 3: and so like. The main takeaway in this sense is
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Speaker 3: that the direction of travel is China trying to cut
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Speaker 3: off access to its own companies from American capital, both
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Speaker 3: intellectual and financial capital, which is you know, how the
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Speaker 3: president passes. That is going to be very interesting to see.
4:22
Speaker 5: Stay with us. More from Bloomberg Intelligence coming up after this.
4:29
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
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Speaker 1: weekdays at ten am Eastern on Apple, Coarclay, and Android
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Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever
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Speaker 1: you get your podcasts, or watch us live on YouTube.
4:43
Speaker 2: Back to these markets here we're can get an IPO.
4:46
Speaker 2: I think a lot of big IPOs are in the
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Speaker 2: offing here.
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Speaker 4: Stir and you're thinking open AI, You're thinking a topic.
4:50
Speaker 4: You're thinking SpaceX.
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Speaker 2: Exactly right, and it looks like Bill Ackman's Purging Square
4:55
Speaker 2: IPO that's going to be starting us off here at
4:58
Speaker 2: least in this period of time. Let's just check them
5:00
Speaker 2: with Billy Lipschalt. He does all the equity markets, including
5:03
Speaker 2: the new issue markets. Bailly talked to us about Bill Ackman.
5:05
Speaker 2: What's he bringing to the marketplace with this IPO.
5:08
Speaker 8: Yeah, so he's bringing a closed end fund, so raising
5:10
Speaker 8: some permanent capital, as Wall Street loves to do these days.
5:14
Speaker 8: And as part of that deal, they're distributing shares of
5:18
Speaker 8: Pershing Square Proper, which is the hedge fund which manages
5:20
Speaker 8: the strategies. So that deal is expected to price tomorrow.
5:24
Speaker 8: My colleague Anthony he has broke that they're expecting to
5:26
Speaker 8: price it at five billion dollars.
5:28
Speaker 6: Keep in mind, a few weeks ago when they.
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Speaker 8: Launched this process, excuse me last week, when they launched
5:31
Speaker 8: this process, they said they would raise five to ten
5:33
Speaker 8: billion dollars, so at the bottom of that range. And
5:36
Speaker 8: if you think back two years ago, without the sweetener
5:39
Speaker 8: of the hedge fund, they wanted to raise twenty five
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Speaker 8: billion dollars.
5:42
Speaker 6: That ultimately was pulled.
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Speaker 8: So this has been a few years in the making,
5:45
Speaker 8: but it does seem like we'll cross that finish line tomorrow.
5:48
Speaker 4: Which part of this offering do investors want more the
5:51
Speaker 4: closed end fund or the exposure to the hedge fund.
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Speaker 8: Hedge fund, I mean closed end funds historically or at
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Speaker 8: least recently, have traded at discounts. The London market, where
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Speaker 8: he currently has a closed edge foot closed end fund
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Speaker 8: trades at a wider discount than here in the US.
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Speaker 8: But just for reference that right now, according to our data,
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Speaker 8: is it a thirty two percent discount? So you're talking
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Speaker 8: about buying something that if you have the long term
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Speaker 8: vision in Bill Ackman and Ryan Israel and the team
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Speaker 8: at Pershing Square, you can buy it now and you
6:19
Speaker 8: hold on to that closed end fund for as long
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Speaker 8: as you want, and you at least get access to
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Speaker 8: Pershing Square, the management company in the interim?
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Speaker 2: Is that discount, that thirty two percent discount, is that
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Speaker 2: bigger than typical?
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Speaker 7: So why is that? Why is he getting a discount?
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Speaker 2: Why is he having a hard time pushing out this
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Speaker 2: deal in the US market?
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Speaker 8: Well, it's wider because these things are more thinly traded
6:43
Speaker 8: in the UK in Europe, so that's one part of it.
6:45
Speaker 8: It's also the fact that these are essentially going to
6:47
Speaker 8: be identical products. So if you're an investor, why would
6:50
Speaker 8: you not cut a check today to get in at
6:53
Speaker 8: least at NAV and then get the bonushares. I mean,
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Speaker 8: the counter argument is why would you not buy something
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Speaker 8: that's thirty two percent on sale?
6:59
Speaker 6: Which is also the other.
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Speaker 8: Argument when you talk to folks in the closed end
7:03
Speaker 8: fund space, is the only reason to get an incremental
7:07
Speaker 8: buyer is someone who believes in the vision going forward.
7:09
Speaker 7: So find first what a closed end fund is.
7:12
Speaker 8: It's everyone knows what a netf is. It's essentially that
7:16
Speaker 8: except for you can't withdraw your money. So if you buy,
7:18
Speaker 8: you participate in this. At fifty dollars, you can sell
7:21
Speaker 8: it in the market. It's like these BDCs and other
7:23
Speaker 8: products that are permanent capital.
7:25
Speaker 6: You buy it, you can pay this sticker price if you.
7:27
Speaker 8: Will, but you don't get access to what the underlying
7:30
Speaker 8: assets actually are worth. So if you buy it fifty
7:32
Speaker 8: at trades at ten percent discount, you certin around sell
7:34
Speaker 8: at forty five bucks, you lost five bucks. But if
7:36
Speaker 8: you buy the Pershing Square London deal at a discount
7:39
Speaker 8: or buy it today, you don't necessarily.
7:41
Speaker 6: Care about the discount.
7:42
Speaker 8: You just care where you can turn around and sell
7:44
Speaker 8: it in a minute, a day, a year.
7:47
Speaker 4: Just remind us again about what Bill Ackman's investing thesis
7:51
Speaker 4: is because he was one of the most vocal activist investors.
7:54
Speaker 5: We can all remember herbal Life.
7:55
Speaker 4: And what he tried to do there and didn't get done.
7:59
Speaker 4: But he's not really pursuing that path anymore, is he.
8:02
Speaker 8: No, he's become kind of a relatively long view, taking
8:07
Speaker 8: a longer view, I guess you could say. I mean,
8:08
Speaker 8: the counter argument is he has exposure to Brookfield, he
8:10
Speaker 8: has his exposure to Howard Hughes, which has been a
8:12
Speaker 8: big position in the company. Also loves the technology companies Amazon,
8:15
Speaker 8: Alphabet has been backing and tweeting a nauseum about Fanny
8:19
Speaker 8: and Freddy and what they can bring us always, so
8:21
Speaker 8: not necessarily your old school activist where you come out
8:24
Speaker 8: with some reports and go head to head with management.
8:26
Speaker 6: Now kind of taking a longer view.
8:28
Speaker 8: And again the counterpoint to from some investors is if
8:32
Speaker 8: I get paid to invest money, why am I turning
8:34
Speaker 8: around and paying a fee to invest in someone else
8:36
Speaker 8: who's investing money. And when you look at the portfolio, yes,
8:39
Speaker 8: he's had some big winners and has done well in
8:42
Speaker 8: the long run, but Amazon, Alphabet.
8:44
Speaker 6: Uber Universal Music Group, they aren't.
8:47
Speaker 8: According to some people I talk to, you necessarily novel
8:49
Speaker 8: names that are kind of under the radar, if.
8:52
Speaker 2: You will, So, I guess, just thirty second stuff, How
8:55
Speaker 2: has this performance been?
8:57
Speaker 7: I mean, has it been.
8:58
Speaker 6: Depending on their data, pretty good?
9:00
Speaker 8: But if you if you use the London based close
9:03
Speaker 8: end fund as a comp relative to the US market,
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Speaker 8: it's underperformed on I believe a one year and two
9:08
Speaker 8: year longer out has outperformed.
9:09
Speaker 6: It kind of just depends where you slice and dice that.
9:13
Speaker 8: But all things considered, it comes back to the whole
9:15
Speaker 8: debate around do you want active money or do you
9:17
Speaker 8: want passive money. It's really hard to outperform the S
9:19
Speaker 8: and P five hundred right now.
9:21
Speaker 7: Yeah, and this is going to be mostly institutional money.
9:24
Speaker 8: According to Anthony's scoop, about eighty five percent institutional, fifteen
9:28
Speaker 8: percent retail. But still, if you do that math, that's
9:30
Speaker 8: about seven hundred and fifty million dollars of retail money.
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Speaker 6: So not sire performance by any stretch. Stay with us.
9:37
Speaker 7: More from Bloomberg Intelligence coming up after this.
9:43
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
9:47
Speaker 1: weekdays at ten am Eastern on Applecarclay, and Android Auto
9:50
Speaker 1: with the Bloomberg Business app. Listen on demand wherever you
9:53
Speaker 1: get your podcasts, or watch us live on YouTube.
9:57
Speaker 4: We're looking at earning season unfold right now. Of course,
10:01
Speaker 4: this is one of the busiest weeks we had. Verizon
10:03
Speaker 4: reporting results this morning after its larger rival AT and
10:07
Speaker 4: T had reported last week. Verizon surprising investors to the
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Speaker 4: upside with phone subscriber gains, the first time that it
10:16
Speaker 4: has added phone subscribers like net positive in a first
10:19
Speaker 4: quarter since twenty thirteen. So let's bring in John Butler.
10:22
Speaker 4: He's our senior telecom analyst for Bloomberg Intelligence. John, is
10:26
Speaker 4: this credit to the new CEO, Dan Shulman that Verizon
10:31
Speaker 4: has reported this phone subscriber gain?
10:34
Speaker 9: Yeah, I think so, Scarlett. I mean, he really in
10:38
Speaker 9: many ways brings a breath of fresh air to this name.
10:41
Speaker 9: You know, there's he's bringing a level of rigor to
10:45
Speaker 9: managing the company there being more disciplined, I would say
10:49
Speaker 9: on the promotions front, specifically, they have pulled back on
10:55
Speaker 9: providing aggressive handset promotions. He has deployed AI across the organization.
11:02
Speaker 9: So we're seeing very dramatic operating expense cuts, and that's
11:06
Speaker 9: flowing through to cash flow growth. It also increases the
11:11
Speaker 9: safety of the dividend, which they described as as quote
11:14
Speaker 9: ironclad unquote. So for a high yielding stock like Verizon,
11:19
Speaker 9: that's great news to investors, and I think that flow
11:24
Speaker 9: through to cash flow that we're going to see in
11:26
Speaker 9: coming quarters coming out of all these expense cuts. It
11:30
Speaker 9: really I think is helping to boost optimism here.
11:34
Speaker 2: John, how do people investors look at this wireless space
11:37
Speaker 2: and kind of position them the T Mobiles, the Verizons
11:40
Speaker 2: to AT and T's how do investors play it?
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Speaker 9: Yeah, I think they're all different, Paul. You know, AT
11:47
Speaker 9: and T is trying to reposition as more of a
11:49
Speaker 9: broadband growth story. I mean, wireless still drives the bus there,
11:54
Speaker 9: represents well over fifty percent of revenue. It does for
11:57
Speaker 9: all three carriers. But I think AT and T wants
12:01
Speaker 9: to be the broadband name. T Mobile wants to be
12:04
Speaker 9: the wireless leader. They have the most spectrum and increasingly
12:09
Speaker 9: the best five G network out there, and I think
12:12
Speaker 9: for Verizon they're looking for balance between the two. You know,
12:16
Speaker 9: they just close the acquisition of Frontiers, so they have
12:20
Speaker 9: a much bigger fiber territory and a better fiber growth
12:24
Speaker 9: story now, but they also have room to improve on
12:27
Speaker 9: the wireless front. So I would say Verizon a balance name,
12:32
Speaker 9: at and T a broadband name, and T Mobile a five.
12:35
Speaker 6: G leadership name. On the wireless side.
12:39
Speaker 4: Who is Verizon taking these customers from, these mobile phone
12:42
Speaker 4: subscribers from, because this is pretty much a saturated market
12:45
Speaker 4: in the US.
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Speaker 9: It is scarlett. It's a great question. What they're doing
12:50
Speaker 9: now is they're pivoting from being a shared donor. So
12:53
Speaker 9: if you look in prior quarters, they have negative numbers
12:56
Speaker 9: almost every quarter in terms of their post paid net ads.
13:01
Speaker 9: They were really net losses this quarter. Thanks to Dan
13:05
Speaker 9: Shulman and a change in strategy there, we're seeing postpaid
13:09
Speaker 9: net ads driven mostly by improved churns. So they're not
13:13
Speaker 9: losing subscribers anymore. They're being very disciplined about not raising
13:19
Speaker 9: prices anymore. They've sent that message loud and clear out
13:23
Speaker 9: to the subscriber base, and they're adding more value to
13:27
Speaker 9: their plans through content and other added features.
13:32
Speaker 6: On the margin, I.
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Speaker 9: Think they're picking up a little bit of share, and
13:35
Speaker 9: it's always lit across the board. It's hard to pinpoint,
13:38
Speaker 9: but it might be a little bit from AT and T,
13:41
Speaker 9: a little bit from Cable, a little bit even from
13:44
Speaker 9: T Mobile. And they also, by the way, have a
13:48
Speaker 9: lot of upgrade activity from their prepaid plans into post paid,
13:53
Speaker 9: which then get counted as postpaid net editions.
13:57
Speaker 2: John, the telecoms business is a pretty couple intensive business.
14:00
Speaker 2: Is there another cycle that the industry needs to go
14:04
Speaker 2: through or is kind of five G kind of where
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Speaker 2: we are at the moment?
14:10
Speaker 9: So we are what they call mid cycle with five G, Paul,
14:13
Speaker 9: These generational upgrades and wireless tend to happen every ten years.
14:19
Speaker 9: We're about five years plus into it, So I would
14:23
Speaker 9: say as we get to twenty twenty nine and twenty thirty,
14:26
Speaker 9: certainly we're going to see an upgrade of the radios
14:31
Speaker 9: and the technology to six G.
14:33
Speaker 6: But we have a few years to go yet.
14:36
Speaker 9: I think it's an important question for Verizon because for them,
14:41
Speaker 9: they haven't deployed all their five G spectrum yet, so
14:45
Speaker 9: in my mind.
14:46
Speaker 6: They have room to grow.
14:48
Speaker 9: A little bit in terms of the quality of their
14:51
Speaker 9: five G network. And getting back to Scarlett's question about
14:55
Speaker 9: where net ads are coming from, I think is the
14:58
Speaker 9: network quality roofs that churn improves, so you're not losing
15:04
Speaker 9: subscribers and you're enticing new people over to the network.
15:08
Speaker 9: So we're mid cycle to answer your question, and about
15:11
Speaker 9: four years away from that sixty.
15:13
Speaker 4: Upgrade, John, T Mobile will be reporting results tomorrow, the
15:18
Speaker 4: twenty eighth. Now that we've heard from Ate and Tea
15:21
Speaker 4: and Verizon, what's the element of surprise going to be
15:24
Speaker 4: for T Mobile?
15:27
Speaker 9: I think the element is surprised. There might be on
15:31
Speaker 9: the broadband side again, Scarlet, they have the best wireless
15:36
Speaker 9: network out there right now with the most spectrums, so
15:40
Speaker 9: spectrum equates to capacity.
15:43
Speaker 6: To handle a lot of data.
15:44
Speaker 9: They have been a leader in fixed wireless access, that
15:48
Speaker 9: ability to provide a broadband link into the home over
15:52
Speaker 9: your wireless network, and Verizon was weak there and my
15:57
Speaker 9: read through there was T Mobile may have picked up
16:00
Speaker 9: share in fixed wireless access. So if there's a surprise
16:04
Speaker 9: in store with T Mobile, my guess is it's probably
16:07
Speaker 9: going to be on the broadband side.
16:09
Speaker 6: Stay with us.
16:10
Speaker 7: More from Bloomberg Intelligence coming up there for this.
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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
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Speaker 2: Scarla Foom, Paul Sweeney Life. You're in our Bloomberg Interactive
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Speaker 2: Broker Studio.
16:33
Speaker 7: Streaming live on YouTube.
16:34
Speaker 2: There's been some unusual news I'll call it out of
16:37
Speaker 2: the airline industry recently, like two of the major airlines
16:40
Speaker 2: may bee merging. How would that ever happen?
16:43
Speaker 4: I know it wouldn't let other smaller airlines combine. So
16:45
Speaker 4: how on earth could in an American and a United
16:48
Speaker 4: be joined.
16:49
Speaker 2: Yep, we've got you know, maybe the US government taking
16:52
Speaker 2: a big equity stake at another airline.
16:54
Speaker 7: I don't know what's going on out there, but said
16:55
Speaker 7: Phillip does. It's his job.
16:56
Speaker 2: He's a deputy team leader for Global Aviation at Bloomberg News.
17:00
Speaker 2: So let's start with United Airlines America Airlines potential discussion
17:05
Speaker 2: of a potential merger.
17:08
Speaker 7: Where did that come from and what's the status of
17:10
Speaker 7: that now?
17:11
Speaker 10: So American Allies has rebuffed United attempt to merge with them,
17:16
Speaker 10: and so Scott Kirby has been talking about merging with
17:21
Speaker 10: American Airlines for some time now. Bloomberg Groups has reported
17:25
Speaker 10: it a couple of days ago, and Americans sort of
17:28
Speaker 10: came out publicly by the end of the week saying
17:30
Speaker 10: that they didn't think it was a good idea. There
17:33
Speaker 10: was antitrust concerns. Then the Trump administration chimed in saying
17:37
Speaker 10: that he wasn't in favor of Trump said he wasn't
17:39
Speaker 10: in favor of a deal between American and United. And
17:43
Speaker 10: so this seems to be a last attempt by Scott
17:46
Speaker 10: Kirby to explain why the deal makes sense, and he
17:50
Speaker 10: talks about how with some domestic asset, with some domestic
17:54
Speaker 10: sort of reductions, this deal could have got through anti
17:57
Speaker 10: trust scrutiny, and it sort of shows that United Airlines
18:00
Speaker 10: is still not quite over being burned on this deal
18:05
Speaker 10: and sort of is explaining why the rational makes sense.
18:09
Speaker 4: Which makes me wonder whether United might be looking at
18:11
Speaker 4: a smaller partner instead of American. You know, they wanted
18:15
Speaker 4: to be the biggest airline by joining with American, but
18:17
Speaker 4: if that can't be done, then maybe there's another partner
18:20
Speaker 4: out there. And there is talk about more consolidation needed
18:23
Speaker 4: right there is.
18:24
Speaker 10: I mean everyone's been talking about how consolidation in the
18:26
Speaker 10: airline industry is inevitable, especially as the high fuel prices
18:31
Speaker 10: sort of hit the discount carriers and the smaller carriers
18:34
Speaker 10: much harder than United and Delta. So United and Delta
18:39
Speaker 10: have made that entire business based on the premium demand
18:43
Speaker 10: and premium traffic, and that traffic has sort of helped them.
18:46
Speaker 10: Whether even the current upheaval where passengers are willing to
18:50
Speaker 10: pay higher prices just because they want to fly on
18:53
Speaker 10: those two carriers, that hasn't read been this case with
18:56
Speaker 10: other smaller carriers, especially at the sort of lower end
18:59
Speaker 10: of that case economy. We have passengers saying that, hey,
19:03
Speaker 10: do I need to take this trip? Can I hold
19:05
Speaker 10: off on traveling? And so there's some hesitancy in bookings
19:08
Speaker 10: and that's really sort of creating pain for the smaller carriers.
19:12
Speaker 2: So for the smaller carriers, particularly with these higher jet
19:17
Speaker 2: fuel prices, what's their future? I mean, wait, it looks
19:21
Speaker 2: like they may need to be bit bled out those
19:22
Speaker 2: certain extent absolutely.
19:24
Speaker 10: I mean so Spirit Airlines, which is in its second bankruptcy,
19:28
Speaker 10: is already sort of working on a plan for the
19:30
Speaker 10: Trump administration to take out offer as much as five
19:33
Speaker 10: hundred million in exchange for warrants that could allow it
19:36
Speaker 10: to purchase up the ninety percent of Spirit Airlines and
19:40
Speaker 10: the other localst carriers are sort of jumping in and saying, hey,
19:44
Speaker 10: we need some assistance as well. And so the Association
19:46
Speaker 10: of Value Carriers, which represents other airlines like Frontier and Novello,
19:51
Speaker 10: has asked for two and a half billion dollars in
19:54
Speaker 10: aid for the industry and sort of tied to jet fuel,
19:57
Speaker 10: saying that they expect jet fuel to be over four
20:00
Speaker 10: dollars a gallon for the rest of the year.
20:02
Speaker 4: Which I guess is not unreasonable given where things are
20:05
Speaker 4: going with the war in Iran specifically, we've seen the US.
20:10
Speaker 5: Government come to the aid of airlines in the past.
20:13
Speaker 4: I think back to twenty twenty twenty one. Didn't the
20:17
Speaker 4: airlines get a lot of money from the federal government
20:19
Speaker 4: that was never converted into equity.
20:21
Speaker 10: They did, and at that time, during COVID, a lot
20:24
Speaker 10: of basically fly airlines were grounded and airlines were sort
20:28
Speaker 10: of forced to sort of keep planes on the ground,
20:31
Speaker 10: and so airlines were given eight two and a half
20:35
Speaker 10: billion dollars waid from the government in order to keep
20:38
Speaker 10: workers on and not sort of layoff workers, and that
20:41
Speaker 10: was sort of a key part of it. So there
20:43
Speaker 10: is precedent during COVID, but sort of making an exception
20:47
Speaker 10: for one airline at a time of crisis is something
20:50
Speaker 10: that's not quite as precedented.
20:53
Speaker 2: So what's the Is there a concern in the US
20:56
Speaker 2: that if these regional low cost airlines don't I can't
21:00
Speaker 2: figure out an economic model to thrive, that air service
21:05
Speaker 2: and secondary and tertiary markets in this country may not
21:08
Speaker 2: be as good or as vibrant.
21:10
Speaker 10: And also there'll be less competition, so that basically drives
21:13
Speaker 10: up prices. And so there is a concern that having
21:17
Speaker 10: fewer airlines will lead to higher prices and that's not
21:20
Speaker 10: great for the consumer, and especially at a time when
21:23
Speaker 10: you're looking at an election, you have much higher prices.
21:26
Speaker 10: People will see that immediately.
21:29
Speaker 4: What is the latest with Spirit Airlines seeking some kind
21:33
Speaker 4: of I'm going to call it a bailout, but okay,
21:35
Speaker 4: a loan of up to five hundred million dollars.
21:36
Speaker 5: I mean, this is something we've been reporting on the
21:38
Speaker 5: last few days. Has there been any response from the
21:41
Speaker 5: government on this?
21:42
Speaker 10: There has Donald Trump came out and said that he
21:46
Speaker 10: is in favor of a bailout he did talk about
21:48
Speaker 10: how he would say fourteen thousand jobs, and there has
21:51
Speaker 10: been some noise from this administration that they may be
21:53
Speaker 10: receptive to the idea of offering Spirit a lifeline that
21:57
Speaker 10: would get them out of bankruptcy and allow them to
21:59
Speaker 10: sort of continue, despite the fact that oil prices have
22:02
Speaker 10: upended whatever calculations they did have before they were going
22:05
Speaker 10: to exit bankruptcy.
22:07
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