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Trump Admin Looks to Save Spirit Airlines · Bloomberg Intelligence

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  Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the
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  Speaker 2: The White House is pretty busy these days, not only
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  Speaker 2: dealing with the Warren Iran, but they're also playing a
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  Speaker 2: big role here in Spirit Airlines, embattled in its second
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  Speaker 2: bankruptcy in about one year.
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  Speaker 3: Who wants to own an airline?
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  Speaker 4: I don't know.
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  Speaker 2: Well, maybe the US government is going to own a
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  Speaker 2: stake in the airline.
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  Speaker 4: Let's bring in George Ferguson.
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  Speaker 2: He is our senior aviation aerospace defense analysts here at
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  Speaker 2: Bloomberg Intelligence.
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  Speaker 4: George.
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  Speaker 2: The reporting right now is the White House is close
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  Speaker 2: to reaching a financial rescue package for Spirit, and we're
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  Speaker 2: hearing that disagreement would offer up to five undred million
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  Speaker 2: dollars in financing an exchange for warrants to purchase stock.
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  Speaker 2: Is this kind of out of the Great Financial Crisis
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  Speaker 2: playbook of bailing out a company?
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  Speaker 5: It sort of seems out of almost the pandemic playbook,
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  Speaker 5: right and the pandemic. We decided we couldn't let any
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  Speaker 5: airlines fail and so came in to support them. Not
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  Speaker 5: sure why we need to do it here, you know,
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  Speaker 5: I think that the market has certainly recovered, the airline
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  Speaker 5: markets recovered since then. I think that there's probably too
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  Speaker 5: much capacity right now in the US market, and that's
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  Speaker 5: that's why some airlines are having problems generating profits. Spear
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  Speaker 5: at the tip of that spear having the most problems
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  Speaker 5: generating profits, and so it seems to me that we
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  Speaker 5: again need to cut down a capacity. So, you know,
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  Speaker 5: having some some airlines leave the business is probably the
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  Speaker 5: sort of the right way to fix it. But I
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  Speaker 5: guess the white House fields differently.
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  Speaker 3: That's kind of where I want to go, George. I mean,
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  Speaker 3: what's the what's the marketplace telling us here? It just
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  Speaker 3: seems like, well, not one of these big three airlines.
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  Speaker 3: It's just a tough business. I mean, is there a
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  Speaker 3: market for some of these more regional, lower cost airlines.
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  Speaker 5: I think there is, right, but the market has definitely
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  Speaker 5: turned I think against sort of most harshly against these
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  Speaker 5: low cost carriers, right because I think, really, you know,
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  Speaker 5: right now, the sort of the state of play in
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  Speaker 5: the US airline businesses, you need a strong loyalty program,
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  Speaker 5: so you need to be able to put a credit
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  Speaker 5: card in the hands of your loyal flyers. They're using
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  Speaker 5: that credit card for dinners, groceries, everything else. You're selling
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  Speaker 5: the credit card company miles, which is boosting your profits,
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  Speaker 5: which you can use to support the flying business. And
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  Speaker 5: then the big full service carriers, you know, they get
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  Speaker 5: they also have the premium I think there's a lot
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  Speaker 5: of premium travelers, a lot of baby boomers who've retired
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  Speaker 5: business travelers who will pay more for the front of
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  Speaker 5: the airplane and the back of the airplane seems very competitive.
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  Speaker 5: They're using those loyalty programs and that premium revenue to
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  Speaker 5: you know, subsidize the back of the airplane to a degree.
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  Speaker 5: So again telling me that there's just too much basic
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  Speaker 5: economy capacity, having Spirit leave the market would be one
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  Speaker 5: way to get rid of some of that basic economy capacity.
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  Speaker 2: We're seeing airlines start to reduce capacity as well because
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  Speaker 2: of the higher costs from fuel. Does that bring us back,
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  Speaker 2: bring us more back into balance.
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  Speaker 5: It's a beginning for it's the beginning of that of
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  Speaker 5: that process, absolutely right. And so Spirit had its problems
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  Speaker 5: before the Iran wars. So again that's why I think
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  Speaker 5: it's more a you know, the market really does have
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  Speaker 5: too much capacity. I think now for however long we're
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  Speaker 5: going to see these much higher fuel prices, the market
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  Speaker 5: has even more excess capacity.
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  Speaker 2: Right.
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  Speaker 5: So look, if we if we return to you know,
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  Speaker 5: two dollars a gallon jet fuel, I think a lot
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  Speaker 5: of these airlines that are starting to take some capacity
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  Speaker 5: out would take those park planes, put them back in service,
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  Speaker 5: and we'd be off to the races. But at these
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  Speaker 5: higher fuel prices, the airlines have to push through price increases.
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  Speaker 5: And you know the economics of that is when something
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  Speaker 5: costs more less is demanded and the airlines are seeing it,
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  Speaker 5: they can't get fares to rise enough to cover that
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  Speaker 5: increased fuel price. With this levelcity capacity in the marketplace,
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  Speaker 5: and we saw United, we saw Delta, we saw Alaska,
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  Speaker 5: all announced cutting back at least growth plans. Nobody's cutting
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  Speaker 5: in to you know, capacity levels that they flew last year.
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  Speaker 5: Starting to cut growth plans more more probably has to happen.
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  Speaker 3: Georgia United airlines at some numbers and they reduce their
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  Speaker 3: for your guidance, now, this looks like an earning sestment
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  Speaker 3: like I would put out between seven and eleven dollars
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  Speaker 3: a share. You can drive a seven forty seven through that, George,
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  Speaker 3: does that just reflect the uncertainty they have and kind
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  Speaker 3: of their whole p and L.
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  Speaker 5: Yeah, I mean it's a wide range. And you know,
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  Speaker 5: United has really gone to the less is more on
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  Speaker 5: the guidance world. So every other airline will give us
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  Speaker 5: a sense of what the cost available seat mile could be, right,
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  Speaker 5: they'll talk to us about where operating margins could be.
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  Speaker 5: United for the last I think it's about a year now,
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  Speaker 5: they just throw an EPs at us, a wide EPs,
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  Speaker 5: and they're like, yeah, you guys, go figure it out.
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  Speaker 5: So they're the poster child for less is more in
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  Speaker 5: the guidance world. And yeah, that's what they gave us
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  Speaker 5: this time too.
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  Speaker 4: It's kind of how they figured they're going to play
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  Speaker 4: the game.
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  Speaker 6: Right.
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  Speaker 2: Let's talk about Boeing, which narratives cash burn in the
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  Speaker 2: first quarter because of rising deliveries.
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  Speaker 4: How did these summers look to you?
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  Speaker 5: Yeah, I mean they looked as expected, all right, and
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  Speaker 5: so look, you know, the progress towards the recovery at
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  Speaker 5: Boeing continues, lowering cash burns always great. The defense business
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  Speaker 5: showed a profit, which was nice. Global Services continues to
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  Speaker 5: ring the bell, you know, eighteen percent margins. We love
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  Speaker 5: that business. It's a little bit of a black box.
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  Speaker 5: You don't always know what's going on there, but I
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  Speaker 5: hope it just keeps going. And the commercial airplane side,
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  Speaker 5: Spirit Aerosystems got folded in at the end of the year,
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  Speaker 5: and we would have expected a better result at a
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  Speaker 5: commercial airplane until Spirit got rolled in. And so there's
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  Speaker 5: some work to do down at Spirit. Bowing said, go figure.
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  Speaker 5: They were buying fuselages for more than Spirit can make
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  Speaker 5: them for or less than Spirit can make our force.
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  Speaker 4: Stay with us. 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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  Speaker 1: weekdays at ten am Eastern on Apple Coarcklay and Android
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• 6:55
  Speaker 4: Let's talk a little tech here.
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  Speaker 3: Why not? It's always in the news. Ed Ludlow, He's
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  Speaker 3: in town, usually based there in Silicon Valley Peer three.
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  Speaker 3: I think it is at Bludlow b Tech co host
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  Speaker 3: Joints us here in our studio, ed, do I need
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  Speaker 3: to pay attention to this Anthropic Mythos model being accessed
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  Speaker 3: by authorized users? I'm not a Mythos user, but how
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  Speaker 3: should I think about it?
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  Speaker 7: You should pay attention. How confused are you all this
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  Speaker 7: by the ongoing story?
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  Speaker 4: Well?
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  Speaker 2: I thought it would like people couldn't use it in
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  Speaker 2: the government, but the government is also coming out with
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  Speaker 2: rules on how to use it.
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  Speaker 7: I really sympathize with everyone that's reading about this and
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  Speaker 7: listening to us talk about it. It's so complicated, But okay.
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  Speaker 7: There is a community of people who are hang out
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  Speaker 7: on discord, which is a platform for programmers, and one
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  Speaker 7: of these people, a single individual, was a contractor who
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  Speaker 7: had a contractor relationship with Anthropic and therefore had credentials
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  Speaker 7: to access Mythos. Mythos is a general purpose AI model,
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  Speaker 7: but it's very good at detecting vulnerabilities in source.
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  Speaker 4: Code, so it's like a chat GPT.
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  Speaker 7: It's the underlying model, but its primary competence is that
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  Speaker 7: it can go through really big bodies of code. Take
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  Speaker 7: for example, bank banks are built on lots of software,
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  Speaker 7: and it can quickly go through that software code base
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  Speaker 7: and say ah, I've found a flaw and I know
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  Speaker 7: how it could be exploited, and if I wanted to,
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  Speaker 7: I being the model, I could exploit it. So what
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  Speaker 7: we know is that this contractor with some a merry
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  Speaker 7: band of fellows and colleagues from this community got access
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  Speaker 7: around April seventh. It was supposed to be a very
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  Speaker 7: limited release to the biggest tech companies and banks, so
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  Speaker 7: a group of maybe forty entities, so it was supposed
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  Speaker 7: to be closed off. They did not use it for
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  Speaker 7: anything malicious. Actually, the other thing the model is really
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  Speaker 7: good at is making websites, so it's just very good
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  Speaker 7: at generating software. The concern is they should not have
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  Speaker 7: had access. They were unauthorized. How could that have possibly happened?
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  Speaker 7: And this is good old fashioned kind of hacking. They
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  Speaker 7: did use credentials, that's so important. I keep underscoring that
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  Speaker 7: this person had access but shouldn't have used it.
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  Speaker 2: Maybe companies should hire full time staff rather than use
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  Speaker 2: contractors who have no loyalty to the company.
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  Speaker 4: Just the thought.
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  Speaker 7: But they also used logic and were like, where do
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  Speaker 7: we think that the code for the model itself is hosted?
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  Speaker 7: And they went through the internet slewth thing is the
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  Speaker 7: word we've used in the story and found it, and
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  Speaker 7: so it's completely bizarre. The net result is that Anthropic
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  Speaker 7: has confirmed that this has happened, they didn't do anything
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  Speaker 7: malicious with it, and that it was within the sort
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  Speaker 7: of closed confines of this contractors. They could have, but
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  Speaker 7: they could have. And so here's the hypothetical. What if
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  Speaker 7: a bad actor, this could be a state level piece
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  Speaker 7: of espionage, It could be a malicious group of hackers.
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  Speaker 7: What if they got access through the same mechanisms and
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  Speaker 7: did something actually bad with it.
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  Speaker 3: I mean, it's one thing to hack some code back
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  Speaker 3: in the day. It's another thing to get access, as
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  Speaker 3: you were saying, to this type of technology, which I
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  Speaker 3: don't think we as users, certainly the regulators in Washington,
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  Speaker 3: I can't imagine know exactly how powerful this can be. Yeah,
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  Speaker 3: I mean you could paint some really dire scenarios.
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  Speaker 7: The reason I'm sympathetic with the audience is that we
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  Speaker 7: use blanket terms like cybersecurity. Cybersecurity is a good thing,
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  Speaker 7: you know, it's the defense against potential catch up, right,
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  Speaker 7: and so like, let's make this really simple. It's a model.
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  Speaker 7: A user can say to the model, here is a
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  Speaker 7: very big body of code, the code of a bank,
• 10:34
  Speaker 7: go through it and find vulnerabilities. Now, the Fed and
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  Speaker 7: the Treasury want those banks to do this proactively so
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  Speaker 7: they can find the flaws and patch them to d risk.
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  Speaker 4: So it's a race to see who can get to
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  Speaker 4: it first.
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  Speaker 7: But what if there were a bad actor? So this
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  Speaker 7: is the hypothetical, and it is a hypothetical. There's no
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  Speaker 7: evidence that there is yet a malicious actor out there
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  Speaker 7: that has access to this. It's so complicated. But the
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  Speaker 7: into is that the model can go through lots of
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  Speaker 7: code much more quickly, in more detail, and find things
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  Speaker 7: that an army of humans cannot do at least as quickly.
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  Speaker 7: That's the basics of what we're talking about.
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  Speaker 1: Stay with us.
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  Speaker 3: 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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  Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
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  Speaker 1: you get your podcasts, or watch us live on YouTube.
• 11:31
  Speaker 3: All right, here's a headline. When I read this morning,
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  Speaker 3: I'm like, are we back in the nineteen nineties, Deutsche
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  Speaker 3: Telecoms seeks to build number one carrier T Mobile deal.
• 11:40
  Speaker 3: I mean, this is the stuff we were doing back
• 11:41
  Speaker 3: at Salomon Brothers and Credit Swiss, back in the day
• 11:44
  Speaker 3: when telecoms were just buying and selling each other left
• 11:47
  Speaker 3: and right, and spending money which.
• 11:48
  Speaker 4: We as opposed to being a utility business.
• 11:50
  Speaker 3: Exactly what we like to fund those people because they
• 11:52
  Speaker 3: are capital intensive.
• 11:54
  Speaker 4: So it's teching him. John Bler.
• 11:56
  Speaker 3: He knows what's going on out there. He covers all
• 11:58
  Speaker 3: the telecoms for a Bloomberg Intelligence. Hey, John, did this
• 12:01
  Speaker 3: surprise you this morning to see that Deutsche Telecom is
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  Speaker 3: maybe thinking to buy the whole thing out there in
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  Speaker 3: T Mobile.
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  Speaker 8: I think the timing was a little surprising, Paul, I
• 12:11
  Speaker 8: didn't expect it, sort of out of the blue. It
• 12:13
  Speaker 8: came midday yesterday Bloomberg reported that taught the Deutsche Telecom
• 12:19
  Speaker 8: was considering this move, and as you said, it's kind
• 12:22
  Speaker 8: of back to the future with this mega merger. Here.
• 12:26
  Speaker 8: Keep in mind, Deutsche Telecom is the parent of T Mobile.
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  Speaker 8: They own fifty three percent of the company and have
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  Speaker 8: for a while. They have fifty six percent I think
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  Speaker 8: of the voting rights here, So what they're really after
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  Speaker 8: is Europe is a much more mature market than the US,
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  Speaker 8: and so T Mobile has been a real profit engine
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  Speaker 8: for them, and I think they're looking to sort of
• 12:51
  Speaker 8: boost their profits by bringing in T Mobile into the
• 12:54
  Speaker 8: fold as one hundred percent holding.
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  Speaker 2: Is this something that regulators in Germany and here in
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  Speaker 2: the US would be okay with?
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  Speaker 8: That is the big question mark scorelet. It's going to
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  Speaker 8: be really interesting to see how the current administration here
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  Speaker 8: in the US reacts to it. I can't speak to Germany,
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  Speaker 8: but I do believe here in the US they may
• 13:16
  Speaker 8: look at it and say, gee, do we really want
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  Speaker 8: a foreign entity holding one hundred percent of T Mobile
• 13:24
  Speaker 8: which has US license spectrum licenses across a broad swath
• 13:29
  Speaker 8: at different frequencies, and it's you know, they would have
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  Speaker 8: obviously control over the customer relationships, call it eighty five million,
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  Speaker 8: I think at T Mobile. So I don't want to
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  Speaker 8: second guess the administration and how they're going to react
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  Speaker 8: to it, but my sense is there might be some
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  Speaker 8: pushback there. The US may even seek some sort of
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  Speaker 8: a deal with Deutsche Telecom to you know, favorable terms,
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  Speaker 8: if you want to think of it that way, to
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  Speaker 8: clear the path for getting the deal done in.
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  Speaker 3: The Bloomberg News reporting today on this story. US congress
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  Speaker 3: and Jim Jordan, chairman of the House Judiciary Committee, said
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  Speaker 3: Tuesday that the US government would look at the details
• 14:16
  Speaker 3: of any deal. Quote, A foreign company taking over TA
• 14:19
  Speaker 3: Mobile will get our staff's attention end quote. He said,
• 14:22
  Speaker 3: So there's certainly gonna be something from the congressional side here.
• 14:25
  Speaker 3: Would do you think that would Deutsche Telecom's full ownership?
• 14:28
  Speaker 3: Would that mean anything to Charlie Pellett, who's a Tea
• 14:32
  Speaker 3: Mobile customer? And are you a T Mobile customer?
• 14:34
  Speaker 6: Scarlett?
• 14:35
  Speaker 3: And Scarlett's a T Mobile customer and.
• 14:37
  Speaker 8: Scarlet, so I'm a Verizon customer, but I do have
• 14:40
  Speaker 8: a single line with T Mobile. It is a great network.
• 14:45
  Speaker 8: I look at a combination in the scale that comes
• 14:48
  Speaker 8: with it, and I see potential for investing more heavily
• 14:53
  Speaker 8: in the network. I think they would have access to
• 14:57
  Speaker 8: greater source of funds, they would have greater leverage over
• 15:02
  Speaker 8: suppliers potentially, so they would get better deals on equipment,
• 15:07
  Speaker 8: lowering their cost capital. So from that standpoint, Paul, I
• 15:13
  Speaker 8: think we could see real uplift in T mobiles network.
• 15:17
  Speaker 8: They've been investing in it over the years and have
• 15:20
  Speaker 8: done a very good job of building out five G
• 15:23
  Speaker 8: coveraging capacity, but that's an ongoing process, right, so you
• 15:28
  Speaker 8: would you know, you're constantly investing there, and you're constantly
• 15:33
  Speaker 8: seeking more funds to be able to do more on
• 15:36
  Speaker 8: that front, and I think a deal would favor that.
• 15:41
  Speaker 8: So Charlie can rest assured that his service would probably
• 15:45
  Speaker 8: get a lot better, not worse.
• 15:46
  Speaker 4: Than the I like hearing that, John.
• 15:50
  Speaker 2: Where does that leave the number one player in the
• 15:53
  Speaker 2: telecom space here in the US, which is AT and T.
• 15:55
  Speaker 2: It just reported earnings. Wireless service revenue did come up
• 15:59
  Speaker 2: short in the last quarter, it.
• 16:01
  Speaker 8: Did, Scarlet. I think investors should look beyond that. In
• 16:06
  Speaker 8: two Q we're going to see a price increase across
• 16:09
  Speaker 8: the base, which is going to lead to higher wireless
• 16:12
  Speaker 8: service revenue. The one thing that AT and T has done,
• 16:17
  Speaker 8: and I suspect for Rizing and T Mobile are doing
• 16:20
  Speaker 8: exactly the same, is they're relying more on subscriber growth
• 16:24
  Speaker 8: now to drive the revenue equation as opposed to driving
• 16:28
  Speaker 8: up rates. So again positive for consumers. We're going to
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  Speaker 8: see fewer price increases, although, as I said just a
• 16:37
  Speaker 8: second ago, AT and T is implementing a price increase
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  Speaker 8: on some of the older plans starting in two Q
• 16:44
  Speaker 8: so that'll help to lift that wireless service revenue, but
• 16:48
  Speaker 8: you don't have that dual engine of rate increases and
• 16:51
  Speaker 8: subscriber growth at work.
• 16:53
  Speaker 4: Stay with us. 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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• 17:14
  Speaker 3: Earnings out again for a lot of companies this week.
• 17:17
  Speaker 3: This is a big week. Philip Marsh International Alison better
• 17:20
  Speaker 3: than expected numbers. The stocks up about six point six
• 17:24
  Speaker 3: percent today, so a big move for that stock. It's
• 17:26
  Speaker 3: up about two percent year today. Let's break down the
• 17:28
  Speaker 3: numbers from Philip Marsh, Ken Sha Bloomberg Intelligence, Senior Consumer
• 17:32
  Speaker 3: Products Analyst joints us here Ken. What's driving Philip marsh
• 17:37
  Speaker 3: businesses these days?
• 17:38
  Speaker 6: Well? Philip Morris today a late any fears that some
• 17:42
  Speaker 6: competitive activity with their oral nicotine products into the US
• 17:46
  Speaker 6: is going to derail them hitting their numbers. They didn't.
• 17:49
  Speaker 6: They beat their numbers handily. Top line up nine percent
• 17:52
  Speaker 6: EPs up sixteen helped a bit by currency, but the
• 17:56
  Speaker 6: underlying business is healthy cigarettes. Unexpectedly, or I should say
• 18:01
  Speaker 6: as expected, volumes are down as the long term secular
• 18:04
  Speaker 6: decline continues, but pricing was up eight percent over the
• 18:07
  Speaker 6: year of a year smoke free products top line was
• 18:12
  Speaker 6: up strong. Gross margins are about seventy percent. And so
• 18:18
  Speaker 6: the big picture is that they're on plan with their
• 18:20
  Speaker 6: transformation to move away from legacy cigarettes to these smoke
• 18:24
  Speaker 6: free products which are on trend. And now that business
• 18:27
  Speaker 6: smoke free is a scale business, a sixteen billion dollar
• 18:30
  Speaker 6: business that's now being positioned I believe for separation at
• 18:35
  Speaker 6: some point soon.
• 18:36
  Speaker 3: Oh interesting, Yeah, I mean the kids. I hear zin
• 18:40
  Speaker 3: like in social media posts from from younger folks. I'm
• 18:42
  Speaker 3: not really sure because I think Zinfandel line, but that's
• 18:45
  Speaker 3: not it.
• 18:45
  Speaker 4: No, this is Zyn not Zinfandel.
• 18:48
  Speaker 2: Okay, So yeah, talk a little bit more about that
• 18:50
  Speaker 2: smoke free business and how a spinoff might be on
• 18:54
  Speaker 2: the way.
• 18:55
  Speaker 4: Why would Philip Worse want to do that?
• 18:57
  Speaker 6: So there's smoke free business I mentioned is powered most
• 19:00
  Speaker 6: by Icos. That's their heated tobacco device which uses its
• 19:05
  Speaker 6: Marlborough and other branded plugs, if you will, units that
• 19:09
  Speaker 6: you put into the device and it heats tobacco rather
• 19:12
  Speaker 6: than burn it like a combustible cigarette, and thereby is
• 19:15
  Speaker 6: smoke free and or less harmful alternative. The two other
• 19:20
  Speaker 6: legs of the stew of smoke free or it's evapor
• 19:24
  Speaker 6: product that's a closed system, meaning there's no plugs involved.
• 19:27
  Speaker 6: It's just that once you use it, you're done. That's
• 19:29
  Speaker 6: called viv that's a more economical version, and that's catching
• 19:32
  Speaker 6: on well. And then you have the oral nicotine products
• 19:36
  Speaker 6: that I alluded to before, which they have a sixty
• 19:39
  Speaker 6: percent share in the US, a big share you know,
• 19:42
  Speaker 6: outside the US in selected markets. It's still prohibitive prohibited
• 19:47
  Speaker 6: in many European markets, but where it is legal, it's
• 19:50
  Speaker 6: doing well, and that rounds out their smoke free business.
• 19:54
  Speaker 6: It really is the fastest growing element to Filla Morris,
• 19:58
  Speaker 6: this smoke free The company is providing the disclosure that
• 20:02
  Speaker 6: analysts love. It's a double digit grower, it's got high margins,
• 20:06
  Speaker 6: it's on trend, and I think they're going to market
• 20:08
  Speaker 6: it that way probably, Like I said, I believe at
• 20:12
  Speaker 6: the end of the year as a really attractive spinoff.
• 20:15
  Speaker 3: So I'm just looking at the PGeo function which gives
• 20:18
  Speaker 3: you the segment revenue, and smoke free is now forty
• 20:21
  Speaker 3: percent of total sales there. That is just external talk
• 20:25
  Speaker 3: to us about the competitive landscape for that smoke free products.
• 20:30
  Speaker 6: They Phillip Morris, to their credit, was really out in front,
• 20:35
  Speaker 6: well ahead of its competitors, namely British American Tobacco, Imperial Tobacco,
• 20:39
  Speaker 6: Japan Tobacco, who have similar products a heated tobacco and
• 20:43
  Speaker 6: you know an e vapor E cigarette products. They are
• 20:47
  Speaker 6: way behind with Philip Moore to Philip Morris, so they
• 20:51
  Speaker 6: have like a seventy five percent share of where they're
• 20:54
  Speaker 6: where they compete with these products and the icos product.
• 20:59
  Speaker 6: So they're way ahead. You know, they're not immune to competition,
• 21:02
  Speaker 6: but they're so far ahead they're already coming out with
• 21:04
  Speaker 6: second and third generation products. Whether competition is trying to
• 21:08
  Speaker 6: catch up.
• 21:09
  Speaker 2: Do we see any impact from the war in Iran
• 21:12
  Speaker 2: on Philip Morris, whether it has to do with just
• 21:14
  Speaker 2: costs overall or you know, transporting its products.
• 21:18
  Speaker 6: They said there was a small impact, namely the duty
• 21:20
  Speaker 6: free you know shops you see in airports with less travel,
• 21:25
  Speaker 6: they had a downturn there. They said they did site
• 21:28
  Speaker 6: some input costs, you know, distribute, They have some of
• 21:31
  Speaker 6: their own distribution costs, transportation, things like that. It's a
• 21:34
  Speaker 6: relatively small impact though, and you know, it's something worth
• 21:38
  Speaker 6: keeping an eye on. But I don't think anybody changed
• 21:40
  Speaker 6: their margin profile on the company just yet due to that.
• 21:44
  Speaker 2: This is the.
• 21:45
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