Latest / Bloomberg Intelligence / Novo Falls by Record After Wegovy Maker Slashes Forecast, Names New CEO

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Novo Falls by Record After Wegovy Maker Slashes Forecast, Names New CEO · Bloomberg Intelligence

• 0:02
  Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the
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  Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am
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  Speaker 1: Listen on demand wherever you get your podcasts, or watch
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  Speaker 1: us live on YouTube.
• 0:23
  Speaker 2: His friends call him Mikey, and I'm his friend. I'm
• 0:25
  Speaker 2: calling him Mikey. Mikey Shaw. Michael Shaw, senior Pharmer, biotechanaists
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  Speaker 2: Bloomberg Intelligence spased in London. Mike, you got to talk
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  Speaker 2: to me about what's going on with no vote Nordest.
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  Speaker 2: I thought these obesity drugs were the bomb here. What's
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  Speaker 2: going on with their guidance? That was a huge miss
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  Speaker 2: for them.
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  Speaker 3: Yeah, two pieces in use today versus the guidance cut,
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  Speaker 3: so second guidance cut of the year. So reported guidance
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  Speaker 3: now is calling for some percent sales grows, six percent
• 0:50
  Speaker 3: operating profit growth after adjusting for currency, and that compares
• 0:54
  Speaker 3: to fourteen and fifteen percent respectively previously. Now a lot
• 0:59
  Speaker 3: of that is related to the US market. There, they're
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  Speaker 3: still seeing headwinds from compound and GLP one, which seems
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  Speaker 3: to be the main driver that's affecting wegov growth and
• 1:08
  Speaker 3: there's a lack of visibility here. So all of that
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  Speaker 3: creates uncertain z for investors and also kind of questions
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  Speaker 3: around not only only twenty twenty five numbers, but the
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  Speaker 3: exit rate into twenty six. So there's concerns about you know,
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  Speaker 3: mid to long term growth given how concentrated or how
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  Speaker 3: reliant sorry Novo is on WE'REGOVI for growth. The other
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  Speaker 3: headwind is competition to a zepic, so that's the GP
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  Speaker 3: one for diabetes and that's another you know, key growth
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  Speaker 3: driver for the for the company. Second piece of news
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  Speaker 3: new CEO appointment. So they went with an internal candidate.
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  Speaker 3: I think the market was perhaps expecting them to go
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  Speaker 3: for an external candidate, so you know, perhaps a bit
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  Speaker 3: of disappointment there. But that said, you know he's been
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  Speaker 3: at the company. So this is Mike Dudster. He's been
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  Speaker 3: at the company since ninety two. He's been heading up
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  Speaker 3: international operations since twenty sixteen, and over that time, you know,
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  Speaker 3: we've seen international operations sales double to around eighteen billion dollars.
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  Speaker 3: So you know, he's an internal higher, he's familiar with
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  Speaker 3: the company culture. I think it's a bit too early
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  Speaker 3: to you know, to write him off before he's even started. Now,
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  Speaker 3: his focus is going to be on reget gaining ground
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  Speaker 3: to Lily in the obesite space, maintaining leadership in the
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  Speaker 3: diabetes space, and then improving execution. And that's something that's
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  Speaker 3: going to be key ahead of the Cagary semma launch
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  Speaker 3: as well as the launch for its oral JP one
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  Speaker 3: A in obesity, particularly given you know, Cagary Summer perhaps
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  Speaker 3: isn't as differentiated as we had hoped for, and then
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  Speaker 3: the oral JLP one profile perhaps trails that of Lily's
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  Speaker 3: in a car with journalists.
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  Speaker 4: Though the new CEO said he's planning to review the
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  Speaker 4: company's cost base with outsetting specific targets and metrics. So
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  Speaker 4: could this indicate indicate that Novo is preparing for a
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  Speaker 4: period of silver growth after the initial surge and demand,
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  Speaker 4: especially the blockbuster we Go V drug.
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  Speaker 3: I mean, I think it will be hard to slash
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  Speaker 3: R and D to be honest, So I mean, and
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  Speaker 3: they would need to you know, continue marketing, continue to
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  Speaker 3: do DTC in order to you know, in order to
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  Speaker 3: compete with Lily. They're obviously healy heavily investing into Capex
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  Speaker 3: at the moment, but there is probably some operating leverage
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  Speaker 3: in there, you know, to provide some sort of relief.
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  Speaker 3: I mean, the company's got a margin of about forty
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  Speaker 3: five percent, which is at the top end for large farmer.
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  Speaker 2: Hey, Mike, is there any reasons to believe that maybe
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  Speaker 2: the marketplace has been over estimating the size of this
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  Speaker 2: OBC drug market?
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  Speaker 3: I think, I mean, yeah, I think there's always a
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  Speaker 3: risk with it with an indication this size when you
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  Speaker 3: look at the market potential. You know, in the US alone,
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  Speaker 3: it's one hundred and thirty one hundred and forty million patients,
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  Speaker 3: which is a target population. There is a population then yeah,
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  Speaker 3: I mean there is a risk that you know, perhaps
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  Speaker 3: consensus did get ahead of itself. But the difficulty here is,
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  Speaker 3: you know, you have you know, huge runway of patients.
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  Speaker 3: There's obviously limited supply, so it's difficult to know kind
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  Speaker 3: of you know, how quickly that supply can come on board. Now,
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  Speaker 3: you know, Nova gives guidance around you know, their growth prospects.
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  Speaker 3: You know where they think sales et cetera. Are going
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  Speaker 3: to go, but they keep they don't necessarily quantify, you know,
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  Speaker 3: the cadence supply and how that how quickly that's going
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  Speaker 3: to come online. So that kind of makes forecasting quite difficult.
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  Speaker 3: And obviously they don't want to give that information because
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  Speaker 3: it's competitive information and they want, you know, Lily to
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  Speaker 3: know about it.
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  Speaker 2: Wait, back in my analyst days, I would have slammed
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  Speaker 2: at this management team because that guidance was brutal. They
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  Speaker 2: were nowhere close to hitting it in they're big reduction
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  Speaker 2: the guidance and we see the stock down twenty two
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  Speaker 2: percent today, down thirty seven percent year to date, fifty
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  Speaker 2: two week low. So they're paying the price for Miikey
• 5:02
  Speaker 2: Shaw Folks is one of the best healthcare pharmat analysts
• 5:05
  Speaker 2: in the city of London. Every institutional investor wants to
• 5:07
  Speaker 2: talk to them. We appreciate getting a few minutes of
• 5:09
  Speaker 2: his time. Miikei Shaw, Senior Pharma biotech analysts Bloomberg Intelligence
• 5:13
  Speaker 2: over there in our London studios.
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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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• 5:30
  Speaker 2: One of my very first jobs on Wall Street back
• 5:32
  Speaker 2: in the late eighties, I was a research assistant in
• 5:35
  Speaker 2: the equity research department of paynmall recovering the railroad and
• 5:38
  Speaker 2: trucking industry. So I love the railroads. And today's a big,
• 5:41
  Speaker 2: big deal. Union Pacific agrees to acquire Norfolk Southern for
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  Speaker 2: seventy two billion dollars. Now, the per share it's cash
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  Speaker 2: and stock, works out to like three hundred and twenty bucks.
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  Speaker 2: The Norfolk Southern is trading at a thirteen percent discount
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  Speaker 2: two hundred and seventy nine dollars in works trading today.
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  Speaker 2: It's actually down seven dollars today. I don't know what's
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  Speaker 2: going on out there. I'm not doing this stuff for
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  Speaker 2: a living anymore. But Lee Klaska, he is a senior
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  Speaker 2: transport logistics and chipping alys for Bloomberg Intelligence. Lee, I
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  Speaker 2: look at the stock price of Norfolk Southern and it
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  Speaker 2: tells me a hefty level of skepticism out there in
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  Speaker 2: the marketplace that this just mega deal can actually get done.
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  Speaker 3: How do you view it?
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  Speaker 5: Yeah, I think the whole speculation before the deal was
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  Speaker 5: formally announced about possible consolidation, you know, really fueled shares
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  Speaker 5: of Norfolk Southern previously. And I think people are just
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  Speaker 5: trying to take maybe a breather right now because there
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  Speaker 5: are some execution risks.
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  Speaker 6: Right this deal is not going to close.
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  Speaker 5: If it does close until early twenty twenty seven, it
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  Speaker 5: needs regulatory approval, which is not an easy thing to do.
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  Speaker 5: There were certain rules that we created at the Surface
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  Speaker 5: Transportation Board to make it very difficult for a large
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  Speaker 5: class monrail mergers to happen. That was BECAUST at one
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  Speaker 5: time in the eighties and nineties. Those sorts of deals
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  Speaker 5: resulted in terrible service. I think that the rails today
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  Speaker 5: are much more cognizant of service as it relates to integration.
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  Speaker 1: Uh.
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  Speaker 5: And I don't really think you know, either company once once,
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  Speaker 5: assuming a merger does happen, are going scorch earth in
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  Speaker 5: terms of, you know, what they're going to do to
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  Speaker 5: their networks. You know, they mentioned on the call that
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  Speaker 5: they had earlier today that they're really not going to
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  Speaker 5: lay off any uh, you know, frontline workers. Most of
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  Speaker 5: the probably layoffs are going to happen, uh you know
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  Speaker 5: in in in in the offices.
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  Speaker 2: Uh.
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  Speaker 5: So you know that would just mean that services uh
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  Speaker 5: would uh prevail. And one of the reasons why they
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  Speaker 5: are doing this, you know, from an outsider looking in,
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  Speaker 5: you know, it does make complete sense. You're going to
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  Speaker 5: reduce interchanges. They mentioned on their call this morning that
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  Speaker 5: between the two of them they interchange around a million
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  Speaker 5: car loads a day, and if they're just able to
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  Speaker 5: if that's that car load is able to be on
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  Speaker 5: the same network, it's not only going to improve network fluidity,
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  Speaker 5: it will actually lower the railroads their costs. Let's hope
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  Speaker 5: they pass on some of that cost savings to their shippers.
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  Speaker 6: I think that's what shippers might be concerned about.
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  Speaker 5: And it'll it'll provide probably a better service product that
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  Speaker 5: they can go out and compete against other modes such
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  Speaker 5: as trucks.
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  Speaker 6: And you know that's you.
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  Speaker 5: Know, also a good thing because you know, from an
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  Speaker 5: environmental standpoint, railroads are less fuel efficient. You know, trucking
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  Speaker 5: kind of deals with you know, turnover issues and trucker
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  Speaker 5: availability issues. Right now, that's not an issue, but at
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  Speaker 5: times it can be. And so you know, it is
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  Speaker 5: definitely a very interesting deal. It will create the first
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  Speaker 5: trans continental railroad, but you know, they do have their
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  Speaker 5: work cut out for them to get that regulatory approval.
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  Speaker 4: So the deal is worth eighty five billion dollars. How
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  Speaker 4: do they plan to make money back? What are finential
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  Speaker 4: wins so to speak? To justify that happy price tid.
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  Speaker 5: Yeah, they laid out two point seven five billion in synergies,
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  Speaker 5: about one point seven five and that two point seventy
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  Speaker 5: five is going to be from revenue.
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  Speaker 6: So what they're saying is that, you know, we.
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  Speaker 5: Can probably get more volume onto the network because it
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  Speaker 5: all of a sudden becomes a much more compelling service offering.
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  Speaker 5: And then about a billion dollars in cost savings and
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  Speaker 5: some of that. Again, you don't need to CEOs, you
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  Speaker 5: don't need two CFOs, you don't need two corporate headquarters.
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  Speaker 5: You know, the dimension They are going to have their
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  Speaker 5: headquarter in Omaha where Union Pacific is located, and keep
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  Speaker 5: a I think they word at a major presence in
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  Speaker 5: Atlanta where Norfolk is currently.
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  Speaker 6: So but you know, obviously they're not going to need
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  Speaker 6: as much space as they once have.
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  Speaker 5: And then there's technology benefits, you know, so you're only
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  Speaker 5: investing you know, money in technology once, not twice to
• 9:58
  Speaker 5: get those productivity improvements.
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  Speaker 6: So I think those are the major aspects of it.
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  Speaker 5: And you know they mentioned that you know, they could
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  Speaker 5: be you know EPs a creative after year or two.
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  Speaker 2: Well, he mentioned a lot of regulatory agencies are going
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  Speaker 2: to weigh in here on this deal. I also think
• 10:18
  Speaker 2: President Trump is likely to weigh in. Do we know
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  Speaker 2: anything about how he might view this deal or just
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  Speaker 2: consolidation in general? What's the views as to the Trump administration?
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  Speaker 6: I mean, we don't.
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  Speaker 5: The language that management noted on the call is like
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  Speaker 5: they wouldn't have moved forward with this transaction if they
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  Speaker 5: felt that it was impossible to get regulatory approval. So
• 10:43
  Speaker 5: whether that means they were talking to the administration, whether
• 10:47
  Speaker 5: that means they were talking to the STB or the
• 10:49
  Speaker 5: DOJ or everybody in between, that's kind of you know,
• 10:53
  Speaker 5: if you read between the lines, is what they were saying.
• 10:56
  Speaker 5: The fact that they're not going to lay off any
• 10:59
  Speaker 5: union foe is probably a net positive for a Donald
• 11:04
  Speaker 5: president Donald Trump to say, you.
• 11:06
  Speaker 6: Know, this is okay with me. You know.
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  Speaker 5: So there's a lot of unknown still and again this
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  Speaker 5: is this is going to take a long time.
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  Speaker 6: So we have a deal.
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  Speaker 5: It has to get Surface Transportation Board approval, which you
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  Speaker 5: know won't happen at least for a year and a half.
• 11:24
  Speaker 4: Could this park more railroad mergers in the US, and
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  Speaker 4: if it goes through, what will shipping look like in
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  Speaker 4: fivet to ten years? You said, absolutely, please elaborate.
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  Speaker 6: Yeah.
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  Speaker 5: So, so the other railroads in the US are Burlington Northern,
• 11:39
  Speaker 5: which is you know, owned by Berkshire Hathway. They may
• 11:42
  Speaker 5: make their own bid for Norfolk Southern, or decide, you know,
• 11:47
  Speaker 5: we're just going to go after CSX because if they
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  Speaker 5: do not merge, then they're going to be at a
• 11:52
  Speaker 5: competitive disadvantage. Why would you want to send your freight
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  Speaker 5: across two railroads when you can send it across one.
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  Speaker 6: So it just would make sense.
• 12:04
  Speaker 5: And if there is regulatory appetite for this kind of
• 12:07
  Speaker 5: a transaction, you know, you could see a Berkshire hacked
• 12:11
  Speaker 5: the Way and CSX coming and you know, if their
• 12:15
  Speaker 5: competitors were able to get a deal, there's no reason
• 12:18
  Speaker 5: why you wouldn't get a deal done between the two.
• 12:22
  Speaker 5: A lot of ifs and butts and candies and nuts,
• 12:24
  Speaker 5: but we'll see what happens.
• 12:25
  Speaker 2: For an old real estate anamals like myself, today's a
• 12:27
  Speaker 2: big day. I got to speak to two of my
• 12:29
  Speaker 2: favorite railroad anamals on Wall Street, first Tony Hatch this
• 12:33
  Speaker 2: morning and now leak Glasgow Senior Transport Logistics and Shipping
• 12:36
  Speaker 2: annals for Bloomberg Intelligence. Again the big M and A
• 12:40
  Speaker 2: trade of the year so far and certainly the biggest one,
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  Speaker 2: well personally one. I never thought i'd see a transatlantic
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  Speaker 2: a trans continental railroad. Union Pacific Regied acquired Norfolk Southern
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  Speaker 2: seventy two billion dollars. That's about three and twenty dollars
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  Speaker 2: a share that's in cash and stock would create North America.
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  Speaker 2: The US is first transcontinental railroad.
• 13:04
  Speaker 6: That's a pretty cool thing.
• 13:07
  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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• 13:21
  Speaker 2: Isabell Lee, Paul Sweet. We're live here in our Bloomberg
• 13:23
  Speaker 2: Director Broker Studio, streaming live on YouTube as well. So
• 13:26
  Speaker 2: check us out there. Aerospace Airlines a lot of earnings
• 13:30
  Speaker 2: going on in that part of the world. Boeing in
• 13:33
  Speaker 2: jet Blue today. Let's check out with George Ferguson s
• 13:35
  Speaker 2: in your Aerospace, Defense and Airlines analys for Bloomberg Intelligence.
• 13:38
  Speaker 2: Safely asconsin don there in Princeton, New Jersey. Hey, George,
• 13:41
  Speaker 2: let's start with Boeing. I know, you know, for analyst investors,
• 13:46
  Speaker 2: for Boeing, it's all about cash flow and free cash
• 13:48
  Speaker 2: flow and stemming the free cash flow bleed here. How
• 13:52
  Speaker 2: did the company do this quarter?
• 13:54
  Speaker 7: Yeah, I mean, so the free cash flow is still
• 13:57
  Speaker 7: a little bit negative, not much. Operations positive a little
• 14:02
  Speaker 7: bit two hundred million. I think it was roughly on
• 14:04
  Speaker 7: two hundred negative free cash flow to a positive and
• 14:07
  Speaker 7: cash flow I think roughly. So we're seeing an inflection
• 14:11
  Speaker 7: point here in cash flow. So cashlow had been negative
• 14:14
  Speaker 7: for the last I think it was six quarters before this,
• 14:17
  Speaker 7: and I think that's just the sign of they're getting
• 14:19
  Speaker 7: more aircraft delivered. They're gonna you know, they've got a
• 14:23
  Speaker 7: lot of inventory still, they'll pull off the shelf to
• 14:26
  Speaker 7: build aircraft going forward, to pull a bigger report proportion
• 14:30
  Speaker 7: of stuff off the shelf than they would during normal times,
• 14:33
  Speaker 7: which should juice that cash flow up. Uh, you know
• 14:36
  Speaker 7: pretty well. So I think it it's you know, the
• 14:40
  Speaker 7: turnaround is still in u is underway. It looks like
• 14:44
  Speaker 7: it's uh, you know, well in uh you know, in
• 14:47
  Speaker 7: swing in the results we saw on the way you know,
• 14:51
  Speaker 7: company management commented on the end of the year and so, uh,
• 14:55
  Speaker 7: you know, I think it was a pretty good results
• 14:58
  Speaker 7: quarter for Boeing again, turn around intact.
• 15:01
  Speaker 4: How are they addressing quality in safety issues, especially when
• 15:04
  Speaker 4: it comes to the seven three seven MAX program.
• 15:07
  Speaker 7: Yeah, I mean there it's you know, as Kelly Oprok said,
• 15:11
  Speaker 7: it's a process. I think just the sign of seeing
• 15:15
  Speaker 7: increased deliveries is showing us that the quality improvement at Spirit,
• 15:21
  Speaker 7: you know, has has seen success. And they're talking about
• 15:26
  Speaker 7: you know, they're at thirty eight seven thirty sevens a
• 15:29
  Speaker 7: month now. Kelly Orperk says he's going to approach the
• 15:32
  Speaker 7: FA in a short period of time and work on
• 15:36
  Speaker 7: the forty two seven thirty sevens a month. So again,
• 15:39
  Speaker 7: he must have some level of confidence that his quality
• 15:43
  Speaker 7: and his engineering is good in order to in order
• 15:46
  Speaker 7: to go further. It's it's not perfect. They've been slowed
• 15:49
  Speaker 7: down a little bit in the certification of seven three
• 15:52
  Speaker 7: seven DASH ten and DASH seven. They've pushed them into
• 15:55
  Speaker 7: twenty twenty six. I think it's okay, it's not a
• 15:57
  Speaker 7: big move. You know, we'd like to see them come
• 16:01
  Speaker 7: faster because seven thirty seven to ten is a large
• 16:04
  Speaker 7: competitor to the Airbus A three twenty, which is very
• 16:07
  Speaker 7: successful and one of the reasons they saw United place
• 16:11
  Speaker 7: a big order with Airbus. But again, I think that
• 16:13
  Speaker 7: you can't expect this stuff to go on a straight line.
• 16:16
  Speaker 7: And the fact that they think twenty twenty six is
• 16:18
  Speaker 7: when they could get certification, it doesn't tell me anything's broke.
• 16:21
  Speaker 7: It just tells me the process is nonlinear, and I
• 16:25
  Speaker 7: think to be expected in aerospace.
• 16:27
  Speaker 6: All right.
• 16:27
  Speaker 2: Also, Jet Blue posted a smaller than expected loss. Here,
• 16:31
  Speaker 2: what's going on with Jet Blue and an airline businesses
• 16:34
  Speaker 2: as because I think the last quarter, Boy, these airline
• 16:36
  Speaker 2: companies are really reticent to give any kind of guidance.
• 16:40
  Speaker 7: Yeah, I mean a lot of them have come back
• 16:42
  Speaker 7: with guidance and a lot of cases lower a lot.
• 16:45
  Speaker 7: You know, the airline business right now is really counting
• 16:48
  Speaker 7: on less capacity in the second half of twenty twenty five,
• 16:52
  Speaker 7: and we'll see how that goes. Last time I looked
• 16:54
  Speaker 7: at domestic capacity plans for three Q it's kind of
• 16:57
  Speaker 7: about zero growth. I mean, I think they need to
• 17:01
  Speaker 7: cut capacity in the marketplace. If you look at Jet
• 17:03
  Speaker 7: Blues results, load factor fell by. I think it was
• 17:07
  Speaker 7: around three hundred basis points down to the low eighties
• 17:11
  Speaker 7: from mid eighties, and they held fares pretty much flat.
• 17:16
  Speaker 7: Yields were kind of just up a little bit. So
• 17:19
  Speaker 7: that just tells me that there's too much capacity in
• 17:21
  Speaker 7: this market. They just can't fill airplanes at the right price.
• 17:26
  Speaker 7: Jet Blue has other problems, like you know, the gear
• 17:28
  Speaker 7: turbo fan keeps them from expanding. That means costs are
• 17:31
  Speaker 7: ballooning on them. But I don't see how they'd want
• 17:33
  Speaker 7: to expand right now because again, what I see as
• 17:36
  Speaker 7: a market that has can't fill airplanes at the price
• 17:40
  Speaker 7: that's going to keep them very profitable, and so someone's
• 17:44
  Speaker 7: got to cut. And the question is who the full
• 17:46
  Speaker 7: service carriers are saying, Hey, we got premium to subsidize us.
• 17:49
  Speaker 7: We don't care the low costs are going to have
• 17:52
  Speaker 7: to jet Blue will cut in three Q but every
• 17:55
  Speaker 7: time they cut, their costs go high or per seat,
• 17:57
  Speaker 7: so they're a bit of a challenging position.
• 18:00
  Speaker 4: It does seem like the issues just compound for the
• 18:03
  Speaker 4: companies in this space from aircraft shortages, delivery delays, pilot shortages,
• 18:07
  Speaker 4: wage inflation, labor and negotiation and so on. Are there
• 18:11
  Speaker 4: differences in how Boeing and Jet Blue addressing the issues
• 18:15
  Speaker 4: or is really an industry wide consensus and problem.
• 18:19
  Speaker 7: Well, I mean if you talk to Boeing, everybody wants
• 18:21
  Speaker 7: an airplane, right and they're sold out in the seven
• 18:23
  Speaker 7: thirty seven and seventy eight seven to the end of
• 18:25
  Speaker 7: the decade. Everybody wants the newest. And I think what
• 18:28
  Speaker 7: needs to happen is again the airlines are just putting
• 18:31
  Speaker 7: too much capacity in the marketplace, especially in the US,
• 18:34
  Speaker 7: and someone has to cry uncle and say, hey, you know,
• 18:38
  Speaker 7: we can't take the profitability at these levels. Park some airplanes,
• 18:42
  Speaker 7: get them out of the business so they can write
• 18:45
  Speaker 7: size capacity. And I think nobody wants to do it.
• 18:49
  Speaker 7: You have some competitors that are in a situation where
• 18:51
  Speaker 7: they they you know, some of them are declared Chapter eleven.
• 18:55
  Speaker 7: It's like Spirit and then and then refashioned themselves and
• 18:58
  Speaker 7: got back out in the marketplace. But it's either someone's
• 19:01
  Speaker 7: going to have to go away or the market's going
• 19:04
  Speaker 7: to have to get negative enough and profitability that people
• 19:07
  Speaker 7: start to park airplanes. As we get into laid end
• 19:10
  Speaker 7: of this year, four Q and one Q, those are
• 19:13
  Speaker 7: weak quarters for the US airline industry. If something doesn't improve,
• 19:17
  Speaker 7: if you've got a Jet Blue that's barely positive positive
• 19:20
  Speaker 7: and profitability in two q without a change in this market,
• 19:24
  Speaker 7: that's that's a strong negative. Near the end of the year,
• 19:27
  Speaker 7: people will start to cut capacity and try to boost fars.
• 19:29
  Speaker 2: So, George, who does that? Is it one of the
• 19:31
  Speaker 2: big three? I mean, Jet Blue can't drive capacity in
• 19:34
  Speaker 2: this industry. It's got to be one of the big three, right, Yeah.
• 19:38
  Speaker 7: Look, I don't think it's. The big three are in
• 19:41
  Speaker 7: a game of chicken with the low cost right they
• 19:43
  Speaker 7: think that they've got pole position here and that they
• 19:47
  Speaker 7: just keep capacity and someone's going to fail on the
• 19:50
  Speaker 7: low cost side because the low cost doesn't have this,
• 19:53
  Speaker 7: you know, premium seating. They might be right right right now,
• 19:57
  Speaker 7: it looks like their profitability is hanging in there. Low
• 20:00
  Speaker 7: cost carriers are the ones taking it on the chin.
• 20:03
  Speaker 2: Yep. We saw Southbuth Airlines actually now kind of start
• 20:06
  Speaker 2: charging for bags and you can do seat reservations and
• 20:09
  Speaker 2: all this stuff on that premium Yep. They didn't do before,
• 20:12
  Speaker 2: which was part of their cachet. One could argue their brand,
• 20:14
  Speaker 2: but they're saying, heck, we need the revenue. George, thanks
• 20:16
  Speaker 2: so much for joining us.
• 20:17
  Speaker 6: We appreciate that.
• 20:18
  Speaker 2: George Ferguson, Senior Aerospace, Defense and Airlines Analyst. If it flies,
• 20:23
  Speaker 2: he knows what's going on there.
• 20:25
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