What American, Southwest and United Told Investors

0:00Jay Shabat: Hello and welcome to the Airline Weekly Lounge. I'm your host Gordon Smith and I'm joined as usual by co-host Jay Shabat plus Meghna Maharishi. In this week's show we're delivering you a debrief from some of America's biggest industry players.

0:30Jay Shabat: Hi, Jay. How's it going? Okay, Gordon. How are you? Doing really, really well, thanks. I've had a nice coffee today. So you always know, Jay, when I've had a nice coffee, I'm either really busy or really sort of highly caffeinated. I'm both. So I'm ready to go. I'm raring for this. Ready to go. All right. Raring to go. For full disclosure, we're recording here on September 17th, a little early because of what we're doing in New York City next week with the Skiff Global Forum, which basically wreaks havoc on our usual podcast recording schedule. So coming to you a little earlier than normal, but we think you'll appreciate this episode because we are going to be unpacking a huge event which took place just yesterday.

1:04Jay Shabat: That's the Morgan Stanley Laguna event. And you might have heard Jay and I speaking about it in last week's episode or trailing ahead to it, I should say. And for anyone that's not familiar, this is a big industrial event, not specific to airlines, but there were some very interesting industry players there as we're about to explain. Both Jay and Meghna, I know that you've been listening in to some of the webcasts and looking at some of the transcripts. And Meghna, you've written up some great overviews on skiff.com. If you're a real-life weekly subscriber or general Skiff subscriber, check those out.

1:34Jay Shabat: But before we get into the detail, Meghna and Jay, some top-line themes. This is an event that happens every year. How would you compare, contrast it to maybe last year's event or to the sort of narrative that we've had at similar events? Meghna, do you want to kick us off? I feel like, I don't know, maybe it's just me, but I think at this investor conference, I think they basically all the CFOs and CEOs that were there were saying just a lot of the same themes that we've heard over the past year ever since this Iran war broke out. It was just like a lot of the same trends. I think like the biggest takeaway to me is that basically fares are going to be higher and then airlines are going to cut capacity more aggressively because fuel right now is quite high.

2:19I think as of yesterday, like afternoon, it was at$4.43 a gallon. I don't know what it is yet today. But basically, I think fuel has been so highly volatile. So we got a lot of just the same commentary. And I think also the airlines that were on American, United and Southwest, they're all pretty well suited to weather these fuel shocks. It seems like especially like a United, it has like the international network. It has all these premium offerings. American said it's starting to invest more in premium. They just started operating one of their older like Boeing 777s with the new business class seats.

2:59And there's 70 of them, which is a huge number for a business class cabin. And then I think like Southwest has also been really profitable so far this past year. whatever worries there were about demand destruction for Southwest's customer base like has not come to fruition and they're moving through with lounges and based on the way that CFO Tom Doxy was talking about it it seems like these lounges will be a pretty premium product they're working with Chase to design them and the Chase Sapphire lounges are already pretty popular so to me it was just a lot of the same as what we heard and I guess just refreshed commentary on what is going on given that fuel is again really high.

3:41Jay Shabat: A lot of important themes that we'll unpack during the episode, Meghna, I'm sure. Thank you for that initial overview, Jay. What was your take? Sort of business as usual with the caveat that business is very unusual at the moment?

3:52Gordon Smith: Yeah, I would echo Meghna's comments. Much of what was true when these airlines reported their second quarter results back in late July is still true today, but I would say to an even stronger degree. And we spoke about this on our earlier podcast last week, Gordon, how revenues just keep getting stronger and stronger, but the cost base goes higher and higher. And that's definitely the theme. And just in case we didn't already say it, there were three U.S. airlines in particular that presented at this Morgan Stanley event on Wednesday, September 16th. It was American, United, and Southwest. So our comments today are pretty much confined to those three, although some of what we say we can presume should be broadened out, generalized to the U.S.

4:53Gordon Smith: airline sector as a whole. One thing that these three airlines did not do that perhaps some observers were expecting they might was change their financial guidance for the third quarter. So even though the cost conditions have gotten worse than what they said they'd be back in July, they didn't adjust their financial forecast in a negative way because the revenues are better. And we also talked about JetBlue, they weren't at the event, but they, if you've listened to our podcast last week or read our newsletter last week, we mentioned how they produced a regulatory filing that eventually said that same thing.

5:44Gordon Smith: They did change their guidance a little bit in their case, but the point being is that the costs are up, but the revenues are up too. That's kind of the big main takeaway. And yeah, I'll just just to, you know, hammer home the point on the demand side. Southwest said, quote, about demand, quote, that it's very, very strong, unquote. United's term for it was incredibly resilient, quote unquote. And American also said they went into even deeper detail you know that not just the premium and the corporate and the you know all the all the high-end stuff is doing well but they said the economy class is doing very well uh too and they attributed it to they mentioned how um the job market in the u.s is still very healthy and i think that's something you'll hear from a lot of corporate america as long as people have jobs, they're generally going to spend money.

6:48Gordon Smith: And especially right now on things like leisure travel and even premium leisure travel. So yeah, that's some of what we heard yesterday for us, for anyone listening last week.

7:02Jay Shabat: And Jay, just maybe for the benefit of anyone that's new to the industry or even new to the podcast, we discussed JetBlue there and their market update that they filed last week, even another one at Morgan Stanley. And then we heard from three big airlines just yesterday. It's fair to say that JetBlue had the most significant change to how they see Q3 panning up. Is that fair?

7:21Gordon Smith: Yeah, I'm not sure it was even that big of a change. I think they just, they put numbers to it. They specified that here was what our unit revenues were looking like back in July, and here's what they look like now. American, United, Southwest, they didn't actually do that. They just basically said in very general terms that, yes, our revenue is looking better. Yes, our costs are looking worse. So I'm not sure that I'd say that JetBlue is materially going to see any bigger change in their outlook for profitability for the third quarter than these other three airlines, if that answers your question.

7:59Jay Shabat: Yeah, absolutely. Just quantifying it, whereas the others maybe qualified it.

8:02Gordon Smith: They just put some hard numbers to it, yeah, to their forecast. They literally updated their forecast, which the others did not in any kind of public sense. Got it.

8:13Jay Shabat: And Meghna, with the acknowledgement that sometimes an airline can be represented by an individual who is sometimes quite charismatic and quite outgoing, and that can sort of excite the room, and others can be maybe sort of more small-c conservative and maybe a little bit more straight talking in terms of, frankly, maybe being a little dull, putting those quirks to one side, which of the three airlines that were represented and that you listened into felt the most upbeat out of American Southwest and United? I think United was the most upbeat. Maybe that was expected, but just some of the quotes from the event, like the way their CFO, Mike Buskinen was talking, I believe at one point he said, all of society is becoming premium and was tying it to how it's the same trend with cruises and hotels and car rentals.

9:03People want to spend more on a product, so that's why United is so bullish on their own investments. They're also really optimistic about the returns that they'll get on operating the A321XLR. I think overall they were all pretty positive. I don't think I had heard anyone say that they were worried about demand dropping in any of the sessions. Like as Jay said, like, you know, Tom Doxey at Southwest said demand is very, very strong. I think even American Robert Isom, the CEO, he was really positive about the revenue generation that they have been seeing the past two quarters. And he was essentially expecting that to continue for the rest of the year.

9:49So overall, it's been pretty positive. I think this past year, that's just generally been the feeling, like despite these really high fuel costs. And I'm not sure if it's maybe because when like last year, when we had like the initial shock of the tariffs in like March of 2025, the reaction was like, not like, oh, it's okay. We'll get through it. Like there was definitely some alarm. But I think maybe at this point with the airlines, maybe they see that a lot of their customer base is ignoring the headlines. So they're also kind of just ignoring the headlines too, because I mean, really hasn't impacted demand, even though airfares are up, I think, over like 20 % this year.

10:28And they'll probably increase more in the event that fuel continues to increase at the pace that it currently is.

10:35Jay Shabat: Interesting United being so bullish, because they've always been talking up premium and premium offerings. and obviously them and Delta, you would argue quite easily, are the two really, really sort of, they are going above and beyond with premium in a way that Americans catching up with and others really don't touch the sides. I want to just draw back to United's chief customer officer, David Kinselman. He was speaking at the SCIF deviation forum in Dallas-Fort Worth last December on our stage. And we were talking around this idea that you can have almost an alienation of the Joe public traveler, the fact that you've got all of these bells and whistles for premium, and you'd expect that, of course.

11:15Jay Shabat: If a passenger pays more, they get more. This idea that you're alienating the average customer. And this is what David said. He said, we can't be profitable, quote, we can't be profitable running an empty plane with a full first class or a premium airline that offers a range of products to everyone who's interested in traveling. We're making investments across the customer journey, not just for premium. Was the mood music slightly different Yesterday at Morgan Stanley, David's comments sounding very wholesome and making sure that everyone from the front to back is looked after on a United Airlines flight.

11:46Jay Shabat: Was the mood music yesterday maybe a little bit more premium, sharp on premium, Megan? I think at the United and American, I'd say that there was definitely more of a focus on premium. I remember, I think, during American session, Isom had a line where he was essentially saying it's better to race to the top than try to race to the bottom. And that these customers, they're willing to spend, again, they're not really impacted by some of these headlines that we have been seeing in the past like two years that might make you think that things are going to get bad at the economy, but that just hasn't been the case.

12:22So I definitely, I think there was definitely more of a focus on premium. I think like that at this point has been like the big like revenue generator for at least like these big three airlines. And I think even with like a Southwest, like Southwest doesn't have like a, they don't have like a business class suite or anything like that. But even just like them, like going into lounges, like Tom Doxey was saying that he thinks like lounges and coupled with a premium credit card will make their loyalty program more aspirational. that's something that is kind of like what a delta sky miles basically is and like i think what their partnership with amex tends to represent uh i mean doxy also said that they are going to be able to get more customers with higher credit scores and who are more you know at the top of their wallet um so i definitely think that there is still that bullishness around premium and it might also partly be because like if fuel is going to be really high and airlines costs are going to go up.

13:17This seems to be just the most resilient segment of customers. They're still willing to spend. They're still going to go on their vacations to Europe in the summer. They still want to fly in premium economy or business class if they can.

13:30Jay Shabat: So Jay, you agree with Meghna that United certainly felt like the most upbeat, as you might expect, given some of their recent financials, their operating margins and so on. But there's still a good bit of gumption and a good bit of energy behind Southwest changes. These post-Elliott changes, you only have to look at some of the numbers from their ancillaries, not just the bags, but the checked seats, et cetera. This is an airline that has got an enormous amount of additional revenue coming in. And so much of that falls into the profit category because there were things that they were essentially giving away for free previously.

14:03Gordon Smith: Yeah. I was going to say before, the more these airlines invest in their premium and add more premium and allocate more aircraft space to premium, the fewer economy seats that they have to sell. So that market is, you could say the capacity in that market is just kind of shrinking just by means of these, of this premium, you know, push. And you're even to a smaller degree, but even on a Southwest where you're adding, you know, extra legroom seats. it's probably not going to take away a whole ton of total capacity, but it's not that opposite densification push that we saw maybe a decade earlier or pre-COVID where everybody was trying to squeeze more seats into the cabin to lower their unit costs and get more revenue.

14:57Gordon Smith: It's just, yeah, that's not the game that airlines are playing today. It's the revenue game. The other thing I was saying, just to your question, Gordon, about the varying degrees of bullishness among these three airlines. Yeah, and Meghna makes a good point that perhaps United was slightly more bullish than the others. They're all coming from a very different place. Just keep that in mind. United had a pretty good 2025, and the first half of 2026 was very strong. Southwest is in a position where they had kind of a rotten couple of years. And now in 2026, they're really starting to turn things around because of some of the things that you mentioned, Gordon, how they're monetizing things they used to give away for free.

15:47Gordon Smith: That's one of many reasons why they're really starting to increase their margins. They were the only U.S. airline, by the way, besides Allegiant, to increase their operating margins versus last year in Q2. every other airline saw a decrease which which you know you might expect given where fuel is going but southwest even despite their incredible uh incredibly high fuel inflation has been able to increase their margins so that's kind of where they're coming from and then american comes from an entirely different place from those two where they've just been you know i wouldn't say they've been losing money like a jet blue or anything they've been earning profits but kind of weak profits.

16:28Gordon Smith: And they're in a position where they're just trying really, really hard to catch United, to catch Delta in terms of the margins that they can produce. They keep falling short and they have this kind of four-pronged strategy to try to get there. And one of them being just heavy, heavy investment in premium. They said, Robert Isom, their CEO, and he was the only CEO who spoke, the other Southwest and United both sent their financial officers. But Robert Isom, the chief executive, was there speaking at the Morgan Stanley event. And he gave a statistic that, I think it was him because the CFO was there as well, but I think it was him who said that only currently 30 % of the seats that American sells are premium seats, but those 30 % account for 50 % of the carrier's total revenue.

17:27Gordon Smith: So you can see they punch well above its weight. And I'm not sure that's, you know, that was kind of always true that premium punches above its weight in terms of revenue, but they're really just, you know, just pushing really hard into that. They're going to expand. You know, Meghna, you mentioned that, what was that number you mentioned before? How many they have in their triple sevens now how many live flat seats 70 70 so you can see they're really really uh you know doubling tripling down on that strategy and you know the nightmare scenario for them and really would hurt all these guys would be if suddenly for whatever reason economic or otherwise premium demand would would plummet and uh you know then you start to have a big big set of troubles on your hand but uh yeah so but but you know back to the main point i think demand just across the board is really firing on all cylinders for all three of these airlines and probably every U.S.

18:21Gordon Smith: airline, even JetBlue, what we talked about last week.

18:25Jay Shabat: Meg, before we head to the break, I'm going to give you the final word. But before I do that, all the talk about reconfiguring aircraft made me think of Virgin Atlantic. We've got Cornel Costa joining us at the Skiff Global Forum just in a few days' time as we're recording here. And Virgin Atlantic, lo and behold, the new Airbus A330 NEOs, they've got a new configuration coming. They're cutting economy seats from 184 to just 128, while upper class jumps, that's basically their business class with the live flat seats, jumps from 32 to 48 suites, and premium economy goes from 46 to 56. So overall, the A330 NEO will carry 30 fewer passengers overall, dropping from 262 to 232, with a huge reduction in economy cabin.

19:06Jay Shabat: And obviously, Delta being 49 % shareholder in Virgin Atlantic, I'm sure they had some influence over those decisions. Meghna, I appreciate you going to jump off shortly. So any final thoughts around Morgan Stanley, your sort of closing thoughts there? Yeah, I mean, I guess it'll be interesting to see what airlines say when third quarter earnings season comes around, like next month. And it seems like for the most part, the commentary will probably be around the same. I think like during the summer, there was a big narrative on pricing power and how much airlines can retain whatever pricing gains they've had recently, like when once fuel goes down.

19:44But now I assume that might be the last concern given the rate that fuel has been going at. So I guess we'll see what they say in the third quarter. But it seems as if demand is really held up across the board. I think even with the ultra low cost carriers to like during the second quarter earnings call frontier so that they were even like benefiting from the pricing environment and the demand that they've been seeing. So it seems as if overall the American consumer does want to travel and they're not deterred by fuel or more expensive airfares.

20:18Jay Shabat: Yeah, it's at the man and don't forget about this. No, no, no jumping on the Greyhound yet. Yep. Nobody wants to go on the Greyhound or the Flix bus. all the flicks plus jay we're going to pick up on a few of these themes in part two so do hang on with me magna thank you so much for joining it's always a pleasure to have you on the podcast um before we do go into the break a quick reminder to send any questions or comments that you might have for us do podcasts at skiff.com that's podcasts with an s at the end and if you are enjoying the show please read us five stars leave us a post to review so we can continue to spread the word about the airline weekly launch don't go anywhere jay and i'll be back in part two hello and welcome back to the airline weekly launch i'm gordon smith joined in part two by co-host Jay Shavett.

20:58Jay Shabat: We've been discussing the Morgan Stanley Laguna Conference, which had some interesting names there. American Southwest United, also Boeing as well. We shouldn't forget about them. Kelly Altberg was there. But for the purposes of this podcast, we're going to focus on the airlines as opposed to the airliners. Jay, I know you've got a few other themes, little nuggets that we weren't able to get to in part one regarding the conference. Share those

21:20Gordon Smith: with our audience oh sure yeah i just really wanted uh to give everybody an update on fuel and i realize uh we're recording a little bit in early earlier this week in advance of when when all of you are listening and seeing this but uh as of september 16th anyway um the fuel price based on the airlines for america uses um they have on their website they publish daily um update on jet fuel prices. September 16th figure was$4.63 a gallon. That was up from South, I'm just using Southwest numbers. They paid$3.92 in the second quarter. If you look at one year ago in the second quarter, prices are pretty much, the average jet fuel prices per gallon are about double what they were a year ago.

22:14Gordon Smith: So you can see the extent of the headaches that airlines are dealing with. And thank goodness from their perspective for the revenue strength. Otherwise, there would be much bigger trouble. So as Magda said earlier in our first session, we're going to learn a lot more when airlines start reporting their third quarter results. Fortunately, we have to wait about a month for that because the third quarter is not over yet. We've still got a couple of weeks to go and then a few weeks before they prepare their numbers. Delta always goes first, so maybe we'll get them in maybe less than a month, but still have a little bit of a wait to go.

22:52Gordon Smith: But we will certainly learn more sooner than later about where things are going. I guess the only other thing that I was going to add about that Morgan Stanley Conference is those three airlines, all three of them, they're very much committed to trimming capacity as fuel goes up so they're even though demand you might you know think initially well if demand is so good then just why not grow and get the unit cost benefit the economy scale well it doesn't quite work that way you know fuel is a variable cost so as you grow you know you just you gotta you gotta keep there's gonna be a lot of routes that maybe make a little bit of money when fuel is X, but they stop making money when fuel is X plus Y.

23:42Gordon Smith: So, you know, right now we've got X plus Y plus C plus A plus B, but it's getting really, really way up there. And a lot, you know, more and more routes have difficulties making money. So you'll see capacity trimming on behalf of all of these airlines. lines um we have a lot more in the issue that's currently out some of you may have read that uh but um or you know we're playing a little bit with time travel here gordon because uh the issue's technically not out as we're talking but uh it will be when you're listening it will be yeah it will be i'm i'm playing a little uh you know futures game here but uh yeah that's that's all i have really about the morgan stanley conference for for our purposes today i was going to say jay

24:27Jay Shabat: you look like an absolute fool because it's now actually the 25th of September and fuel is only $30 a barrel.

24:32Gordon Smith: Yeah, there's always a risk. When I'm playing the features game, there's always a risk of that, of looking like a fool, but it wouldn't be the first time. I've been accused of worse.

24:45Jay Shabat: I think we both have various degrees, Jay. One thing that was not discussed at Morgan Stanley, at least not on stage, although I'm sure there were some whispers in various dark corners, was the possibility of consolidation, and specifically consolidation between American and United. Regular listeners, regular viewers, however you engage with us, will probably be familiar that there was really that sort of huge buzz. Was it February, March time? When there was the will they, won't they, isn't there a discussion around United and American tying up? And there was even talk that it reached the White House in terms of sort of sensing them out in terms of how amenable they might be and everything else.

25:29Jay Shabat: And it was shot down by Robert Isom, who said, absolutely not. And then we had Kirby, who actually went onto LinkedIn and elsewhere, who even after it sort of all died down, made the case for it again. And anyone that's really wanted to get into the weeds will sort of know that there is history between Kirby and American Airlines going back a number of years. We don't need to get into the weeds today, but it is worth noting just at this junction, Jay, that the chatter, the whispers, I don't even want to call it chatter, the whispers, just the slight buzz around these two possibly getting closer has started to just increase a little bit after that frenzy much earlier in the year.

26:09Jay Shabat: Tell our listeners what we hear, what we're hearing, obviously unsubstantiated at this very, very early stage or what we believe to be an early stage, but it is worth sharing. Yeah.

26:20Gordon Smith: So I think we know that, in fact, United Chief Scott Kirby, who used to work for American, approached American about a possible merger. And American said, you know, no, thanks. We're not interested in part because there's no way this would ever get approved by the regulators. so don't even you know talk to us and i think united's response was okay well if we're going to do this we have to at least have some buy-in we're not going to you know do go go all out hostile here so that's kind of where we stand there was some i think some some belief in the industry some commentary across the industry that maybe this was just kirby kirby's media fireworks or, you know, just raising this as a, you know, that he wasn't very serious about it.

27:19Gordon Smith: I kind of think he was. I sort of downplay any speculation that this was just a, you know, that Tim just fooling around. I think in his eyes, the industry has reached a point where, yes, it's gone through multiple rounds of consolidation over the past 20, 25 years. But it's still an industry that is rather vulnerable to shocks and not a particularly profitable industry at that. So, you know, during the 2010s, the U.S. airline industry collectively did historically relatively well, you know, relative to its past. I think you had, you know, particularly you had the big 2014-2015 fuel collapse. And over the next couple of years, you know, that latter half of the 2010s where, you know, U.S.

28:16Gordon Smith: airlines were earning 9%, 10%, 11 % operating margins, some even a little bit more than that. And, you know, it was for airlines that was celebration time. But if you look at a lot of other industries, that's still not very, very profitable. And of course, the airline industry just being what it is, being the nature of the business, it's constantly exposed to these just very, very serious existential sometimes shocks. We saw COVID. We had terrorism in the past. We now have this Iran conflict and what it's doing to the fuel price. And here we are again. And, you know, for now, airlines are most of them are holding up rather well, thanks to the revenue strength that we talked about earlier.

29:03But it's still it's it's you know, they they're never able to get you know, you listen to Scott Kirby or any of these airlines talk and they really want to get to, you know, consistent double digit margins.

29:13Gordon Smith: And it's always very, very difficult. So I think Kirby, in his mind, saying we need to just, you know, structurally reset. We need to consolidate even more. A United-American merger as, you know, beyond the pale as that would have sounded five years ago, 10 years ago. It's now, you know, maybe something that the world should start thinking about because, hey, we need to, you know, we want, we would like to have a more stable airline industry that can consistently produce margins. I think what, I mean, I don't know. I'm just going to spec that this is major speculation here, but I sense, you know, that Scott Kirby might have looked at what's happening in the railroad industry right now.

29:57Gordon Smith: The U.S. has, I mean, the U.S. doesn't really have any passenger railroads. I mean, we have Amtrak, but that's government owned. It's, that's, doesn't. But we do, you know, the U.S. does have a very vibrant freight railroad sector. And we only have four railroads. six if you want to there's two canadian ones that compete domestically in the u.s but there's really only four big railroads four or six two of those railroads including the second largest one they're planning to merge they announced a big merger in july of 2025 so i don't think that you know uh escaped kirby's uh you know news feed i think he probably saw that and said look if these guys, you know, four airlines, four railroads, sorry, can consolidate into three, then maybe it's not so crazy if, you know, I don't know, what do we have now?

30:46Gordon Smith: Seven, eight, nine U.S. Airlines can consolidate a little bit. So, you know, I'm sorry for being very long winded about that, but I could sort of see where this is going. Now, you know, then there's a whole bunch of other questions that you have to ask. Well, would this pass regulatory muster, you know, the Americans concern? We don't even know, by the way, if that big railroad merger I was talking about, it's between Union Pacific and Norfolk Southern. If that's going to pass regulatory merger, we're not going to know until next year. So that's, you know, two years, more than two years of regulatory review.

31:18Gordon Smith: So, you know, certainly consider that. We obviously have to think about, you know, if United and American merged, surely Delta just couldn't stand by and do nothing. I mean, I suppose they could, perhaps, you know, hoping that it would just be execution wise a complete mess. And, you know, that's that's one avenue to play it. But you would think Delta would have to say, OK, I need to get bigger, too. Where can I get stronger? Obviously, if the United American is approved by regulators, then I can do anything I want. So one thing that they could potentially do is like buy Alaska. They would control Seattle.

31:55Gordon Smith: But then you think even one step further, would an American-United merger potentially open up another door, that being the deregulation of international consolidation? Would it be possible that Delta would say, hey, okay, you want to do this? Let me merge with their France-KLM. Let me merge with Virgin Atlantic 100%. And then I see your mind blowing up there, Gordon. and uh yeah so so that could open another door obviously this is this conversation is very very speculative it's very you know um will it ever happen i mean you could even argue like i mentioned the railroads before the railroads are not public not very they don't have much interaction with with the public public so um it may be easier to approve a railroad merger than a big airline

32:48Jay Shabat: merger i mean that's a great point yeah they're not consumer facing brands are they exactly exactly

32:53Gordon Smith: so you know and airlines politicians love to beat up on airlines it's just an oh yes it's an easy win it's any those guys that that uh you know kept you in the airport for three hours and you know sometimes i think that the public may underappreciate the complexity of you know moving a you know 180 000 ton 180 000 pound piece of metal through the air with you know 500 miles an hour and, you know, zero tolerance for accidents, you know, but the fact is, you know, whoever it is, whether you blame the airlines for it or not, or air traffic control or whoever is to blame, if there is anyone to blame, the fact the matter is, is that, you know, it's airlines or if you're in air travel, you're constantly subject to disruptions and delays and to, you know, uncomfortable situations in middle seats and, you know, sitting next to passenger that, you know, may have not showered that morning or whatever.

33:49Gordon Smith: But so it's just they're very easy whipping boys for, you know, politicians. So I don't know that it could ever get passed. But again, just going back to my original point, you could see what Kirby might be thinking.

34:03Jay Shabat: Yes.

34:04Gordon Smith: He might be thinking along those lines.

34:06Jay Shabat: Well, United itself, obviously, going back, most of the Continental to become its current form. American Airlines, you don't have to go too far back. US Airways, and there's plenty of other M &A activity that has led to the two companies as they stand today, Delta, Northwest, et cetera. So the industry as we see it today, the US industry, if nowhere else, is the very product of a series of M &A. So I think it's unwise to assume that no further M &A is going to happen. And political watchers may argue that this is an administration that may be a little more open-minded to deals. Although we did have, I think, President Trump back earlier in the year, I think phoned into CNBC or one of the cable networks, and he was asked around United American, and he didn't like that idea.

34:51Jay Shabat: So interesting that he was particularly outspoken on that particular deal or proposed deal. But I think it's fair to say that this administration more generally is more open-minded to M &A activity, Jay. We will obviously keep a close eye on everything going on there. But as it currently stands, speculation, scenario, scenario planning is maybe what we can call it. You got something else to add before we wrap up?

35:13Gordon Smith: Oh, just one more point. In that railroad industry I refer to, international consolidation is legal. The most recent merger before the big one now being debated was a Canadian railroad purchasing a US-based one.

35:28Jay Shabat: So, you know, there is precedent. There is template for it. There is. And you know what you're talking about when it comes to the railroads. I don't want this to become a railroad podcast, but anyone that knows Jay will know that he is very, very informed in that industry as well. So drawing parallels with a little bit of knowledge on both sides, I think it's fair to say, Jay.

35:47Gordon Smith: I always say I could talk fluently about three things. I could talk about airlines, I could talk about railroads, I could talk about baseball. Anything else is a little shaky, but... I'll stick to airlines, Jay. Yeah, we'll stick to airlines on this podcast. I think it's a good idea.

36:02Jay Shabat: I think so, yeah. My knowledge of baseball is poor. My knowledge of railroads is almost zero. So yeah, let's stick to what we know. Thank you, Jay. And thank you, Meghna. She joined us in part one, of course. And thanks as well to our producers, John, Monica, Kelsey, and Will. And wherever you are in the world, thanks for listening. And we'll catch you next time. Bye for now. Whether you're listening to us on Spotify, Apple, or wherever you get your podcasts, please remember to subscribe, rate us five stars, or leave us a positive review. This really helps us get the word out about the Airline Weekly Large, so we can continue to bring you this podcast every week, absolutely free of charge.

36:35Jay Shabat: And if you're watching us on YouTube, be sure to subscribe to the Skift channel and hit the notification bell to find out whenever a new video drops.