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Air Canada CEO Quits After Furor Over Crash Condolence Video · Bloomberg Intelligence

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  Speaker 2: I don't really fully appreciate sensitivity to language in Canada,
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  Speaker 2: and once again it came again today, and I don't
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  Speaker 2: think the CEO of Air Canada does as.
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  Speaker 3: Well, and that might be the problem.
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  Speaker 2: Yes, exactly right. So the Air Canada CEO is gonna
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  Speaker 2: stepping down after a furor over the crash condolence video
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  Speaker 2: that it was only really in English, not in French,
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  Speaker 2: and of course for the twenty one percent of the
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  Speaker 2: people in Canada that have French as their primary language,
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  Speaker 2: that's a problem.
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  Speaker 4: And one of the two pilots who was killed in
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  Speaker 4: the crash was from Quebec, and this flight was actually
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  Speaker 4: headquartered in the Montreal region. I believe it came from
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  Speaker 4: Montreal as well. He did say bonjour and mercy.
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  Speaker 3: I can do that, but that's it.
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  Speaker 5: Yeah.
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  Speaker 2: Matthew Jon joins us here Bloomberg Montreal Bureau Chief. Matthew,
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  Speaker 2: thanks so much for joining us. What's happening at Air Canada.
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  Speaker 6: I think we have to go back a few years
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  Speaker 6: ago to understand what's going on. So in twenty twenty one,
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  Speaker 6: Michael Russeau was CFO and then became in twenty twenty
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  Speaker 6: one the CEO of Eric Canada. He made a speech
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  Speaker 6: in front of business leaders in Montreal. Montreal is a
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  Speaker 6: bidy Goual city, right but within French speaking Quebec. It's
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  Speaker 6: the only territory essentially in North America where people still
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  Speaker 6: talk French and Quebri. Kars wants to preserve that, and
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  Speaker 6: there are some laws in place to preserve it because
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  Speaker 6: there's a lot of pressure from English coming in and
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  Speaker 6: a lot of influence.
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  Speaker 7: Right.
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  Speaker 6: So after his speech, Michael Rousseau talks to reporters and
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  Speaker 6: some reporters are asking him, why did you deliver your
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  Speaker 6: speech only in.
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  Speaker 8: Name, Why not even a few words in French? And
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  Speaker 8: he's essentially said that he's been.
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  Speaker 6: Able to live in Montreal for more than a decade
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  Speaker 6: without speaking French.
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  Speaker 8: It was proud of that.
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  Speaker 6: That sparked outrage and over the years it was a
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  Speaker 6: constant criticism about him from French Canadians.
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  Speaker 8: French speaking Quebecers.
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  Speaker 6: Then last Monday he makes this video statement entirely in English.
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  Speaker 8: Like you said, he said, bonjour and mercy. That's high
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  Speaker 8: and thank you. Right.
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  Speaker 6: There was some captions in French at the bottom. But
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  Speaker 6: considering that one of the boat pilots killed was a
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  Speaker 6: French speaker, antoine fare and you have a lot of
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  Speaker 6: employees working at Eric Canada or from Quebec, so it
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  Speaker 6: sparked outrage in the province because it was the last stow. Essentially,
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  Speaker 6: then you have Prime Minister Mark Karney coming in saying
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  Speaker 6: that Eric Canada has a responsibility to always communicate in
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  Speaker 6: both languages.
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  Speaker 8: Regardless of the situation.
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  Speaker 6: That is subject to the Official Languages Act in Canada.
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  Speaker 6: There's a law in place the two languages in Canada
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  Speaker 6: are French and English. So that's essentially what happened there.
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  Speaker 6: And you even have the National Assembly of Quebec passing
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  Speaker 6: a motion last week asking for Michael Rousseau to resign.
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  Speaker 8: So that brought us essentially to today.
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  Speaker 4: Matthew, I'm looking at the Airic Canada ticker on the
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  Speaker 4: Bloomberg terminal. If you go to the DIES page, it
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  Speaker 4: gives you all the basic information, and what you see
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  Speaker 4: there is that Eric Canada is based in Quebec, in
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  Speaker 4: Quebec city Saint Laurent, which I'm probably mispronouncing. So this
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  Speaker 4: is a company that's probably based in Quebec itself.
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  Speaker 3: Why was this not an issue from the get go?
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  Speaker 4: Why did he become CEO even with this language deficiency.
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  Speaker 8: That's a real good question.
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  Speaker 6: A lot of CEOs are appointed in Montreal and with
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  Speaker 6: the promise to learn a little bit of French. Michael
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  Speaker 6: Russo said that he took more than three hundred hours
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  Speaker 6: of classes in French and today all he's able to
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  Speaker 6: say is bonjo and merci. So a lot of cuemakers
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  Speaker 6: are just seeing that as a lack of consideration or
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  Speaker 6: even something like that's very condescending on this part regarding
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  Speaker 6: the French language. So, I mean, it was appointed with
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  Speaker 6: the promise probably that it would learn French. I mean
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  Speaker 6: as a CEO, it did deliver at the beginning with
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  Speaker 6: our Canada delivering the company from the COVID pandemic. Over
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  Speaker 6: the past few months year or so, the company has
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  Speaker 6: underperformed global peers, but it delivered from a CEOs point
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  Speaker 6: of view, if you want. But on the French Langritish
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  Speaker 6: side like it really failed here and he failed especially
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  Speaker 6: last week and today the company had to issue his
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  Speaker 6: notice to shareholders for the annual meeting on May first,
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  Speaker 6: and the documents and the filings you have the compensation
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  Speaker 6: of the CEO in twenty two so Michael Russo earned
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  Speaker 6: a compensation of thirteen point one million dollars Canadian dollars
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  Speaker 6: in twenty twenty five, of five six percent from a
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  Speaker 6: year ago. So that would have added another layer into
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  Speaker 6: this debate. And it's our understanding that Eric and I
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  Speaker 6: wanted to end this, and there was especially a global
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  Speaker 6: search for a new CEO anyway because it was planning
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  Speaker 6: to retire.
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  Speaker 8: That search started in January.
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  Speaker 6: So probably that they just announced this sooner than expected.
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  Speaker 6: And now he's expected to retire at the end of
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  Speaker 6: the third quarter of this year, which is on September.
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  Speaker 3: Thurio Stay with us. More from Bloomberg Intelligence coming up
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  Speaker 3: after this.
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• 5:58
  Speaker 2: Matter platforms at eighteen percent this month, putting them on
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  Speaker 2: pace for the worst performance since October twenty two. I
• 6:08
  Speaker 2: think there's some legal risks in there, maybe some spending
• 6:10
  Speaker 2: on artificial intelligence. I don't know. Mandy sing joins us here.
• 6:14
  Speaker 2: He's Global tech research head for Bloomberg Intelligence. What's going
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  Speaker 2: on with Meta these days? Because it was a story
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  Speaker 2: that was working on cost cutting on number one and
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  Speaker 2: number two AI seemed to be a really viable work
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  Speaker 2: caase to augment their advertising platforms. It's gone on with
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  Speaker 2: the stop yeah.
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  Speaker 7: I mean, look, they have underperformed relative to the MACS
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  Speaker 7: seven peers, and on top of that, they had that
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  Speaker 7: addiction lawsuit that they lost along with the Google. So
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  Speaker 7: from that perspective, it could create that negative sentiment that
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  Speaker 7: I don't think is going away anytime soon, simply because
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  Speaker 7: when you look at their free cash flow expectations for
• 6:54
  Speaker 7: this year, I mean they're spending almost one hundred and
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  Speaker 7: thirty five billion dollars in capex. That'll take them to
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  Speaker 7: almost you know, native free cash flow territory. And last
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  Speaker 7: year they had almost forty five billion dollars in free
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  Speaker 7: cash flow. So look, when you have you know, this
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  Speaker 7: much investment and people aren't even clear what the focus
• 7:19
  Speaker 7: is on. Yes, they are building data centers. That's a
• 7:22
  Speaker 7: real asset, but we know it's a depreciating asset. And
• 7:26
  Speaker 7: when I look at their model relative to open Ai,
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  Speaker 7: Google and Anthropic, they.
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  Speaker 2: Don't even have a model, so they don't have a
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  Speaker 2: large language model of their own.
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  Speaker 7: They have a large angleg model, but in the leaderboards
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  Speaker 7: it's nowhere. Okay, So from that perspective, like look at
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  Speaker 7: how well Claude has done, you know, in terms of
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  Speaker 7: coding agents and their anthropic claud is almost adding billion
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  Speaker 7: dollars in.
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  Speaker 3: Revenue every week.
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  Speaker 5: I didn't know that.
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  Speaker 7: Well, there are some league sources and when you look
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  Speaker 7: at you know, the token usage, that's the one metric
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  Speaker 7: that everyone is tracking right now for these llms is
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  Speaker 7: how much is that token usage growing? And some of
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  Speaker 7: that can be reflected in the revenue run rates, others
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  Speaker 7: is tied to training these llms, But at the end
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  Speaker 7: of the day, that's a real metric in terms of
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  Speaker 7: how your model is getting used. Meta doesn't even have
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  Speaker 7: a model that is being utilized externally. So the promise
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  Speaker 7: was Meta will use the llms within their own ecosystem,
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  Speaker 7: and that will drive revenue. And so what saved Meta,
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  Speaker 7: otherwise the stock would have been down even more is
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  Speaker 7: their top line is still quite healthy. You know, they've
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  Speaker 7: guided to mid twenty percent top line growth, but that
• 8:44
  Speaker 7: will reduce in the back half because of tougher commps.
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  Speaker 7: So I think that's the challenge. And that lawsuit. I mean,
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  Speaker 7: this has never happened in terms of Meta losing a
• 8:55
  Speaker 7: lawsuit around their product being addictive and dangerous and so
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  Speaker 7: we already know they are banned in Australia and in
• 9:05
  Speaker 7: the EU there is a proposal to ban the app
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  Speaker 7: for under sixteen. So from that perspective, if you are
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  Speaker 7: losing that demographic that is one of the highest using
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  Speaker 7: demographics for your platform, that becomes a challenge. And now
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  Speaker 7: there could be more lawsuits, you know, along the similar
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  Speaker 7: lines to the ones where they had, you know, where
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  Speaker 7: they go against them.
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  Speaker 2: So the first time, really one of the first times,
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  Speaker 2: I'm not to sayd for someone of the first time
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  Speaker 2: were some of these the legal issues for a technology
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  Speaker 2: company are really material potentially because I mean you asked myself,
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  Speaker 2: included you ask everybody on the street. I spent too
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  Speaker 2: much time on my phone. If they have children, they
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  Speaker 2: will site that I'm thinking is one of their top
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  Speaker 2: top worries.
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  Speaker 8: Yeah, and.
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  Speaker 2: I think that's a global situation. Any parent anyone in
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  Speaker 2: the world would probably say that.
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  Speaker 5: Yeah.
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  Speaker 7: And now the judge said it actually harms in this case,
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  Speaker 7: so it's true. And I mean, the million dollar fines
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  Speaker 7: are not that big, but suddenly if you've got two
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  Speaker 7: thousand more lawsuits like.
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  Speaker 8: That, then it all adds on.
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  Speaker 2: I was just similar risk for a Google for I
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  Speaker 2: don't know. I mean, you could argue YouTube, you spend
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  Speaker 2: too much time on YouTube.
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  Speaker 7: But in YouTube's case, the you know, the harm was
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  Speaker 7: more in terms of AutoPlay than the content or the filters.
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  Speaker 7: So in terms of the you know, the type of content,
• 10:31
  Speaker 7: I think the verdict said that it was more harmful
• 10:34
  Speaker 7: from the meta side compared to YouTube, where it was
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  Speaker 7: more like, yes, it shouldn't be autoplaying content or things
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  Speaker 7: along those lines. Not not about the type of content,
• 10:45
  Speaker 7: but there's a very fine line. And I do agree,
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  Speaker 7: you know, YouTube and Instagram are similar in that regard.
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  Speaker 7: But we'll see more lawsuits.
• 10:54
  Speaker 2: All right, just real quicker you get an ai IPO
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  Speaker 2: this year, like is it anthropic or is it.
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  Speaker 7: Most likely it's going to be Entropic four q IPO
• 11:05
  Speaker 7: and they really at the rundred that they are in.
• 11:08
  Speaker 7: I mean everyone in the private market right now is
• 11:11
  Speaker 7: queuing to get you know, a small slice of that
• 11:17
  Speaker 7: a transaction which we're.
• 11:19
  Speaker 2: Expecting, so Entropic would be one.
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  Speaker 3: What else does chpt goo?
• 11:23
  Speaker 7: Yeah, I mean if Entropic is going public, I think
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  Speaker 7: right now open Ai fields they're losing share to Entropic
• 11:30
  Speaker 7: given they had a headstart. So from that perspective, I
• 11:34
  Speaker 7: do think open Ai will likely go public if Nthropic
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  Speaker 7: announces they're going public.
• 11:39
  Speaker 3: Stay with us.
• 11:40
  Speaker 2: More from Bloomberg Intelligence coming up after this.
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  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
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• 12:00
  Speaker 2: Let's get right to it. Ed Price joins us here
• 12:02
  Speaker 2: in studio. He's a non resident senior fellow at NYU.
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  Speaker 2: Edward day thirty one into this war and Iran. I
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  Speaker 2: think if you ask ten different people out there, they
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  Speaker 2: might give you ten different reasons. What are our objectives
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  Speaker 2: for being there? I'm not sure they were clearly articulated,
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  Speaker 2: so that makes it maybe even more difficult to articulate
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  Speaker 2: how we get out of there. What's your view of
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  Speaker 2: how the warn Iran has developed over the past four weeks.
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  Speaker 5: Thanks Paul. Well. Let me first of all start by
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  Speaker 5: saying that I hope and pray are a service personnel
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  Speaker 5: as safe, so I don't revel in this at all.
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  Speaker 5: I think that the initial strikes that we carried out
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  Speaker 5: on Iran were successful in the sense, like I said
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  Speaker 5: last time, they are our enemies and we killed them,
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  Speaker 5: and we can't forget that as a bottom line. I
• 12:42
  Speaker 5: think you're right now to say what is the second
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  Speaker 5: phase of this war? And it does look like there's
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  Speaker 5: a growing consensus that it's not being handled very well
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  Speaker 5: and possibly also a mistake. And you have people august,
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  Speaker 5: people like Larry Fink pointing to the price of oil,
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  Speaker 5: which does seem to be the coloration point, the muster
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  Speaker 5: point for those who are concerned. Paint a quick counter factual.
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  Speaker 5: In February twenty twenty two, Russia attacked Ukraine. Imagine if
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  Speaker 5: China had gone after Taiwan and Iran had gone after
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  Speaker 5: Israel on the same day. So I know that this
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  Speaker 5: war looks messy right now, but there is a counterfactual
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  Speaker 5: in which our enemies overwhelm us and we lose that war.
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  Speaker 5: I think that Russia and Iran are losing.
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  Speaker 4: Theirs, but that didn't happen, and right now the US
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  Speaker 4: is in a bit of a mess, some would say,
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  Speaker 4: and Americans are rightly questioning what the objective is at
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  Speaker 4: this point to pass point, How does the US resolve
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  Speaker 4: this in the end?
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  Speaker 3: What does victory look like?
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  Speaker 5: So the obvious is the obvious answer to that is
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  Speaker 5: the one that Americans don't want to hear, which is
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  Speaker 5: that there'll be an escalatory ladder in which the United
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  Speaker 5: States has to pour more and more resource, more and
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  Speaker 5: more blood and treasure. And that means boots on the ground,
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  Speaker 5: and that means regime change. That is the way Thatgion
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  Speaker 5: the regime would fall, right, and that's the way the
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  Speaker 5: region would be reconfigured. I'm slightly stumbling of my words
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  Speaker 5: because it's a terrifying prospect even to think about that,
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  Speaker 5: But that is the way that this war ends very successfully.
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  Speaker 5: I would say, however, that it's not a binary between
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  Speaker 5: win and loss. If the United States and Israel have
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  Speaker 5: degraded the power of the Iranian regime. They're not as
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  Speaker 5: powerful a player in a future confrontation. That is a
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  Speaker 5: general war scenario.
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  Speaker 2: So could Some people are suggesting that at some point
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  Speaker 2: President Trump will look at everything that's been accomplished militarily,
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  Speaker 2: which is substantial, claim victory and leave that part of
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  Speaker 2: the world. Is that a scenario I think is possible,
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  Speaker 2: And I'm so under what time frame?
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  Speaker 5: Well, President Trump, I mean, we've spent years discussing his
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  Speaker 5: mind together, and it is another terrifying prospect. I'm not
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  Speaker 5: sure what he's thinking. I think that he could very
• 14:46
  Speaker 5: well act like a wounded tiger. At this point. He's
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  Speaker 5: an elderly gentleman. He's going to be out of power,
• 14:53
  Speaker 5: if not office, in November, and so I think he's thinking,
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  Speaker 5: this is my last chance to make a splash. And
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  Speaker 5: he made very well move up that escalatory ladder simply
• 15:02
  Speaker 5: through vanity. It's an ugly thing to say, but I
• 15:04
  Speaker 5: think he might do that. That would be my bet.
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  Speaker 5: But again, he might get distracted by something else. I mean,
• 15:09
  Speaker 5: Rubio was talking about Cuba, and Trump is always thinking
• 15:13
  Speaker 5: about things like ballrooms. So there's another sort of ADHD
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  Speaker 5: scenario here where he just loses interest.
• 15:19
  Speaker 3: What about oil prices?
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  Speaker 4: We see oil prices surge and they're up I think
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  Speaker 4: ninety percent so far since the start of the war.
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  Speaker 3: How does this go?
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  Speaker 4: I mean, even if the US decides to come up
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  Speaker 4: with a definition for victory and retreat in any way
• 15:35
  Speaker 4: or wind things down and Trump says we got what
• 15:38
  Speaker 4: we wanted. If oil prices stay elevated because Iran controls
• 15:41
  Speaker 4: the seriit of horror moves, how does that shake out
• 15:44
  Speaker 4: for not just the global economy, but for geopolitics, for
• 15:47
  Speaker 4: who's got leverage, who doesn't bad for the economy.
• 15:52
  Speaker 5: JPM Morgan just released an excellent report which is kind
• 15:54
  Speaker 5: of like a doomsday scenario if oil gets anywhere near
• 15:57
  Speaker 5: one hundred and fifty hundred and eighty. But it's so
• 16:00
  Speaker 5: bad for China. So we talk a lot about how
• 16:02
  Speaker 5: this is good for Russia because their oil revenue is
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  Speaker 5: funding their war in Ukraine. I imagine that's true at
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  Speaker 5: least in the short term. But China gets a lot
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  Speaker 5: of its oil, a lot of its energy out of
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  Speaker 5: that area. And so one scenario is that China decides, look,
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  Speaker 5: enough is enough and communicates with the Americans to try
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  Speaker 5: and wind this thing up. It's also not in European interests,
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  Speaker 5: so I'm always cautious of what I think about is
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  Speaker 5: the financialization of geopolitics and strategy. Yes, the economists are
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  Speaker 5: right to warn us about the price of oil, but
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  Speaker 5: I think that's an independent variable. I think the most
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  Speaker 5: important thing is Western security. And at the end of
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  Speaker 5: the day, like I say, the Iranians have been at
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  Speaker 5: war with US for effectively fifty years, and now we're
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  Speaker 5: fighting back.
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  Speaker 2: So if the US, if President Trump were to claim
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  Speaker 2: victory and cease operations, is it a fair assumption that
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  Speaker 2: Israel will follow our lead.
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  Speaker 5: I have absolutely no idea. I don't think Israel follows
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  Speaker 5: anybody's marching orders. If anything, we've followed theirs to some
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  Speaker 5: extent in the timing and nature of this operation. I
• 17:02
  Speaker 5: don't think that's necessarily a bad thing, because Israel is
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  Speaker 5: a foundation or ally of the United States and of
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  Speaker 5: the West, and is effectively fighting people in that region
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  Speaker 5: that would otherwise be in Europe or in the United States.
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  Speaker 5: It's that simple. But I am not an analyst of Israel,
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  Speaker 5: and I would defy anyone who claims they are to
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  Speaker 5: guess at the next move. I mean, look at the
• 17:22
  Speaker 5: pager thing. Nobody saw that kind of behavior coming. So
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  Speaker 5: no idea.
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  Speaker 3: What are you thinking?
• 17:29
  Speaker 4: How are you preparing yourself, bracing yourself for what could come?
• 17:32
  Speaker 3: What's on your mind? As we as we enter into
• 17:36
  Speaker 3: the second month of this war.
• 17:39
  Speaker 5: We are struggling to describe World War three. Gary Kasparov
• 17:44
  Speaker 5: calls it world War four because the Russians think of
• 17:46
  Speaker 5: World War three has been the Cold War. I've called
• 17:48
  Speaker 5: it the Central War Ukraine and Iran's word war. But
• 17:51
  Speaker 5: this is a global conflict. It only gets worse, it
• 17:55
  Speaker 5: only gets bigger. And that's why, with that very zoomed
• 17:58
  Speaker 5: out lens, I look at what's going on in Iran
• 18:01
  Speaker 5: and think, on balance, this is the thing to do. Again,
• 18:04
  Speaker 5: I repeat myself, If we had waited, if we had
• 18:06
  Speaker 5: just sat in that boiling water like a frog and
• 18:09
  Speaker 5: waited for a much more coordinated attack through these three powers,
• 18:13
  Speaker 5: we could have been overwhelmed and morale could have been broken.
• 18:15
  Speaker 5: All credit to the president. I'm a massive critic of his,
• 18:19
  Speaker 5: but he is crazy enough to see a bad guy
• 18:21
  Speaker 5: and do something about it.
• 18:23
  Speaker 2: So again, what are the oar firstwhile airline allies around
• 18:28
  Speaker 2: the world.
• 18:28
  Speaker 8: What are they saying.
• 18:29
  Speaker 2: The only sense that they're saying, Okay, we're really getting
• 18:32
  Speaker 2: hurt by this energy situation more than you, the United States,
• 18:35
  Speaker 2: because you're net exporter of oil. Do you think that
• 18:37
  Speaker 2: pressure has any bearing at all.
• 18:39
  Speaker 5: I don't think that the president is subject to any
• 18:41
  Speaker 5: pressure of any kind. But the Germans are seriously rearming,
• 18:45
  Speaker 5: and they're talking about a war with Russia in the
• 18:47
  Speaker 5: near future.
• 18:48
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• 18:57
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• 19:01
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• 19:08
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