350 - Scott McCartney with Delta CEO Ed Bastian. Guest Co-Host Henry Harteveldt

0:27Scott McCartney: Thank you. SoCal, so easy. FlyOntario.com. The Executive MBA in Aviation at the University of Colorado, Denver. Business.ucDenver.edu. And by Cerium, the world's most trusted source of aviation analytics. Cerium.com. We also welcome your business's support. Contact us at airlinesconfidential.com.

1:00Henry Harteveldt: Welcome to Airlines Confidential. I'm Scott McCartney, and we have a lot to catch up on this week. A management shuffle at American Airlines, a winner in the bidding for EasyJet, and I'm most excited to bring you a recent chat I had with Delta Airlines CEO Ed Bastian, who covers everything from how demand is shaping up for tickets this fall to how his management focus has changed over the past 10 years that he's been CEO of the most profitable airline. I think you're really going to enjoy this one. But maybe not as much as globetrotting travel analyst, researcher, and overall savant Henry Hardeweld is enjoying France right now.

1:41Henry Harteveldt: Bonjour, Henri. Welcome back. Thanks for joining us.

1:45Scott McCartney: Well, bonjour, Scott, and hello from Aix-en-Provence in France. I am here with some of my San Francisco friends, and we're spending a few weeks in France enjoying all of it. I've started this trip in Iceland. I've got some stories for you about that when the time is appropriate and involving both United and Icelandair. And I'm looking forward to it. And I got to tell you, your conversation with Ed is indeed a winner. There's a lot here about what he had to say. And I'll add some thoughts to that. And I'll share are some of my thoughts about the American Airlines changes as well.

2:25Henry Harteveldt: Yes, let's start with that. You know, the American Airlines announcement reminded me of a bit that David Letterman used to do with this sidekick, Paul Schaefer. Some silly act would come out, a woman with hula hoops or a guy juggling plates or a guy in a bee costume playing the flight of the bumblebee on the xylophone. And Dave and Paul, and sometimes there was a guest judge, but they would decide whether it was something or whether it was nothing. And I say that because the media coverage of the changes screamed management shakeup and changes to restore profitability. And yet I was left asking myself, is this anything?

3:06Henry Harteveldt: I think it's something, but there better be more to the act if real change is going to happen. That's my bottom line. But here are the changes. Chief Communications Officer Ron DeFeo is out. Kevin Brickner, the Senior Vice President of Technical Operations Maintenance, is also out. In addition, Nate Gatton, the airline's Executive Vice President of American Eagle Corporate Real Estate and Government Affairs, is leaving American to become Apple's Vice President of Government Affairs. Brickner is being replaced by John Benderadis, former chief operating officer at Spirit Airlines. And before that, he was COO at Frontier Airlines.

3:49Henry Harteveldt: Before that, his experience was in operations at regional airlines. Other duties get spread around and reshuffled. For example, Caroline Clayton, American senior vice president of communications and chief marketing officer, will oversee communications following DeFeo's departure, but she loses marketing. CEO Robert Isom says American is looking for a new marketing leader. Chief Customer Officer Heather Garboden's role is expanding to include reservations, contact centers, service recovery, and catering. Listeners will recall we had Garboden on the podcast when she was new to her role. I think it's good news.

4:30Henry Harteveldt: She's a terrific young leader that's gaining additional responsibilities and better news that her reporting path got a lot cleaner. Previously, she was reporting to both operations and the commercial side. Now she'll only report to Nat Pieper, the chief commercial officer. And maybe the most consequential change here is that J.C. Gulbranson, a flight operations exec, will expand his role to oversee airports, planning, flight, in-flight, and the Integrated Operations Center. He's senior vice president of flight operations and the operations center. He's an experienced ops guy who was at Northwest previously, and then U.S.

5:12Henry Harteveldt: Airways, and then American with the merger. As listeners know, I think one of the biggest competitive issues American faces is becoming a more reliable airline. So changes in both operations management and in maintenance are significant. Those are problem areas right now. But are these the right changes? Should there be more new blood coming in? There's some. Is this a shakeup or a tweaking? In other words, is this anything? The big change I hope we will see this fall is a bold move to replace the retiring Steve Johnson with a strong number two. a president for American and likely a successor to Robert Isom.

5:56Henry Harteveldt: Will Isom do that? We don't know yet. Succession is a big issue at any airline. And actually, we're going to talk to Ed Bastian about succession at Delta. But I think it's an especially important issue at American because the current CEO hasn't delivered good results and doesn't seem to have a bold plan for the future. I don't think there's anyone on the property right now at American who could step in as CEO, maybe in a few years. These folks are getting promoted and more responsibility as they gain more experience, more responsibilities, more seasoning. One of them or multiple will emerge as the future leader.

6:38Henry Harteveldt: Maybe it's Nat Peeper. Maybe it's somebody else. We don't know. But I don't think there's anybody there right now who can step in. The best management teams I've seen in this industry over time always have a strong number two. Crandall and Cardi, Bethune and Brenneman, Bethune and Kellner, Parker and Kirby, Herb Kelleher and Gary Kelly, Richard Anderson and Ed Bastian at Delta, Ed Bastian and Glenn Hauenstein at Delta. I think you need that strong number, too. It's a big, big job. And there can be benefits from bringing in different perspective, good cop, bad cop, more just more vocalization, more getting out there, more rallying the troops.

7:24Henry Harteveldt: So America needs to bring in the best executive out there as president, if not CEO. It needs fresh energy. The big issues, I think, are not the little ones they've talked about. The big issues are rallying the workforce. Big issues are fixing the operation, clawing back market share in Los Angeles, Chicago and New York. Revamping business class seats isn't going to do it. America needs to urgently reconfigure its fleet, for example. It's way behind in this. It needs more wide bodies for international service. It needs to rethink its product offering on every aircraft. That's what Delta and United and Southwest also have done.

8:07Henry Harteveldt: Just look at the 737-800. American has 24 extra legroom seats on its 737-800. United has twice as many, 48. Delta has 50 % more, 36. Those are seats people are paying extra for. American has more cheap seats in the back, but even Southwest figured out that you need to have lots of extra legroom rose for sale. A Southwest 737-800, by the way, has 48 extra legroom seats, twice as many as American. And by the way, Southwest reconfigured its fleet in less than a year. There was obviously external pressure with Elliott Management to move quickly. That was a big benefit for Southwest in moving quickly.

8:54Henry Harteveldt: 800-plus airplanes got reconfigured in a year. And look at the difference it is making right now in Southwest earnings. Doing things the same way isn't going to do it. America needs fresh energy, and it has the opportunity for major change staring it in the face with the January retirement of its sort of de facto number two executive. Henry, what do you think? I've talked too much about this. What do you think of the management shakeup? Is this anything?

9:24Scott McCartney: Well, Scott, you know, this is something, yes. But I don't think it's so much a shakeup as and evolution. I think there are some really smart changes that are happening. For example, I'm very happy to see Heather Garboden getting more responsibility. I think Heather has risen to the challenge as the chief customer officer and is doing a terrific job with her team. And I'm glad to see that she is being handed more responsibility. She has earned that. I'm also happy for her that her reporting situation is streamlined. No one should have to have dual bosses. It's tough enough reporting to one person and trying to figure out what the mood of that one person is when you're walking in to meet with her or him.

10:10Scott McCartney: So I think it's good for Heather that she has just one boss right now. And I think it's great for Nat, by the way, because he really, as chief commercial officer, now has so much of what this airline is. And you want to talk about marketing. Nat really has that. If you think of marketing, the classic four Ps, product pricing package promotion. You know, he's got pricing. He's got product network. He's got product, the actual product on the plane. He's getting catering. He's got marketing, which includes, if you will, packaging. That's brand and what the airline's marketing position needs to be and so on.

10:49Scott McCartney: And he's got promotion, the advertising and everything that goes along with it. So, you know, I'm very happy to see this. The other changes all, again, make sense to me. But I'd like to talk about the letter itself that American sent to management and I presume the rest of the airline as well. And that is what was outlined in the letter. It says that from Robert, quote, I recognize that there is a meaningful gap between where we are today and where we know American can and should be, unquote. And then he outlines what they're going to do. And there are four bullet points to improve the airline's performance, elevate the customer experience, grow American's global network, drive premium revenue, lead in loyalty.

11:35Scott McCartney: All of those make sense, but there's a conspicuous absence at the top of that list, which is improve on-time performance and overall reliability. Scott, we have talked about this. You've spoken about this with other guest hosts and with other guests on the program. We all know a fundamental truth in the airline business is this. If you're not on time, very little else matters. The champagne doesn't matter. The brand doesn't matter. The lounge doesn't matter. The loyalty program doesn't matter. You've got to have the right network and the reliability behind the flights that operate on that network so that people can trust you.

12:14Scott McCartney: And Delta learned this a long time ago. United has learned it. The Syrian data shows that they're generally among the two top U.S. airlines. Americans' on-time performance is improving. And it's not Americans' fault that DFW, which I've nicknamed doesn't function wet, suffers from what I call the one, two, three problem. One cloud, two drops of rain, a three hour ground stop. You know, American doesn't choose the ground stop. They have to respond. But American seems to get hit with these problems a lot and it affects their on-time performance. Now, Americans' on-time reliability and performance is better than Southwest and many other airlines, but it's not as good as it needs to be.

12:59Scott McCartney: And so I'm hoping that as this new team comes together and everybody gets into their new roles, that they will focus on the reliability and the on-time performance. I think that is truly job one for American, because when the airline is operating better, that helps improve the culture, that improves customer preference, that improves customers' willingness to buy the premium products, pay more even for the main cabin products and many other things.

13:30Henry Harteveldt: Absolutely. Amen to that. You know, Richard Anderson years ago realized that you were going to win business travelers if you sold them reliability. And I think that's, it's really key to everything. And it is such a, to get there, it has to be a holistic solution, right? It has to be changes in maintenance so you can reduce mechanical breakdowns. It has to be changes in scheduling and the network and everything else. But it also, I think more than anything, has to be an effort to rally the employees to make this a priority to them to really fight for this. And Delta has done that with profit sharing and convincing employees that they got to really make the airline work.

14:24Henry Harteveldt: Scott Kirby has done that at United. I think American can do it, but Robert just hasn't been, maybe it's getting better more recently, but just hasn't been out there trying to rally the troops. And I think American has run late so much that employees get beaten down and they get very, you know, day after day after day, they have to deal with angry customers and it's debilitating. And so I really think that holistic change, and it has to include some effort to really get the employees realizing the threat that the airline is under. And, you know, like Herb Kelleher used to put on the battle fatigues and, hey, we are in a tough battle and we got to win.

15:17Henry Harteveldt: And I think they can do it.

15:19Scott McCartney: Yeah. Look, American is now an underdog brand. Right. You've got Delta and United leading the U.S. industry. There are a host of foreign flag airlines that do a better job with the soft and hard product in all cabins on long haul routes. So American has to really think in a way that is very un-American airlines. And that is stop looking at the cost on everything. Stop thinking about pennies and start focusing on dollars, ideally tens and hundreds and thousands of dollars, meaning the premium customers. And that means making some very bold decisions. One, they've got to get rid of the Oasis configuration on the 737-800s.

16:05Scott McCartney: Never has a product been worse named than Oasis. That is one of the most miserable, uncomfortable aircraft configurations on any mainline aircraft in terms of a network airline or a non-ULCC. American has got to take a look at reliability. And if that means maybe flying the fleet less and padding scheduling time more, padding turn time more, then so be it. It has worked for Delta. It has worked for United. It could work for American. They have got to invest more in technology, not just the website, but the disruption management technology for the airline, for the op center, for the cruise, but also for the customer.

16:50Scott McCartney: I know they've started down this, but they've got to do things to make it easier for customers to manage the disruption and for employees to help customers when these things happen. Disruptions are marketing opportunities. So can American do it? Of course they can. They are intellectually capable of it. They have a lot of smart people working there. And I think the employees very much do want to do a good. And I bet many want to do a great job for their customers. They need the tools and they need the overall product in the form of reliability to do that. You know, I don't think there are any American Airlines, you know, airport gate agents who are saying, oh, you know, I don't care that a plane is running late.

17:33Scott McCartney: I'm going to just let it sit out there another few minutes before I roll the jet bridge up or something like that. I think they're very committed to doing what they can, but they can't obviously control the schedule. So American needs to help those employees do that job better. And that means making some bold, brave and potentially expensive in the near term, but highly profitable in the long term decisions.

17:58Henry Harteveldt: Yeah, absolutely. Absolutely. And look at the whole customer service thing. I was in O 'Hare on a stormy day and the long lines for rebooking were just miserable for people to not only have your flight canceled, but then be standing in line for a couple hours. And that's a technology issue. That's a staffing issue. There's a lot to that. But that just shouldn't be the case.

18:32Scott McCartney: It shouldn't. And look, I want to be fair. I have seen those long lines when there's been bad weather at various airports with other airlines. And even though those airlines invest in technology to help their customers, United has virtual agents, Delta has really good rebooking capabilities through the flight Delta mobile app. Other airlines have invested as well, foreign flight carriers included. Sometimes people have to or just want to talk to somebody, and that's a challenge. And airlines need to remember that as good as technology is and as pervasive as it may be in our lives, sometimes we feel better getting these problems resolved with a person.

19:12Scott McCartney: And that means they have to have the people there at the airport when these problems occur. Storms are forecast in Chicago. You can't have two people at the rebooking desk. It's going to be more than that. And I'd like to build on your comment about Chicago, because Chicago and American were involved in a rather unsettling incident in the skies this week, northeast Phoenix, early Friday morning. American Airlines flight 2482 was flying right at American Airlines flight dot dot dot 2482. That's right. Same call sign, same airspace, two different airplanes. One was a flight coming from Chicago O 'Hare to Phoenix.

19:59Scott McCartney: The other was the return flight from Phoenix to Chicago. Now, normally, airlines will take the same plane and fly it to a destination and turn it around and send it back to the origin hub. Because 2482 from O 'Hare to Phoenix was running late, American got another aircraft to depart on time and keep the on-time performance out of Phoenix, which was certainly a good intention. But here's the problem. These two planes were in the same sky and the near traffic controller realized the problems that instructions such as altitude assignments for American Airlines 2482 could be confused by both flights.

20:42Scott McCartney: So he began calling one American 2482 the arrival and the other American 2482 the departure. The two planes crossed paths, one at 9 ,000 feet, the other at 10 ,000 feet. But they were, you know, we all were communicating with the controller. They were all doing, the pilots were looking and had the other aircraft in sight. The controller did a phenomenal job with the communications. There was no panic. These pilots seem to be very much in control. It was outstanding work by that air traffic controller who remarked to the pilots that in 25 years of working air traffic, this had never happened to him before.

21:26Scott McCartney: What do you think of this?

21:27Henry Harteveldt: Yeah, you know, it's a fascinating radio exchange to listen to. I imagine a lot of listeners have already heard it. If you haven't, go find it. It's well worth listening to the whole thing. This actually highlights a couple of issues facing air traffic these days. First, there's a shortage of flight numbers worldwide. Legacy IT systems, really on the reservation side, legacy IT systems only allow four digits. An airline like American has something like 4 ,000 mainline flights a day, plus another 2 ,000, 3 ,000 regional flights that are sold as AA in reservation systems, right? And then there's all the code sharing that gobbles up flight numbers.

22:14Henry Harteveldt: A British Airways flight or a Qantas flight or you name the partner, they'll have a lot of flights that'll carry AA flight numbers as well as their own. So poof, the 9 ,999 flight numbers that are available for American Airlines flights with the four digit limitation, that gets gobbled up each day. So one thing American and other airlines have done is give a round trip itinerary the same flight number. As you mentioned, in this case, American 2482 leaves Chicago, leaves about 9 p.m., arrives in Phoenix about 11 p.m., turns around, goes back to Chicago as a red eye, departs kind of around midnight and arrives around 5 a.m.

23:02Henry Harteveldt: in Chicago. Not unusual, but usually there's only one plane that's 2482 at the same time, right? In this case, because they replaced the aircraft to avoid the delay, there were two flights, and they happened to be crossing each other in the same airspace, same time. I agree. It was great work by the controller to realize the potential for trouble and come up with the specific logical way of instructing both planes clearly, right? The fact that the controller, by the way, is fascinated by this as a pilot myself and all, and, you know, been involved in a lot of air traffic control communications.

23:45Henry Harteveldt: The fact that the controller said 2482, the arrival, 2482, the departure. If you just said 2482 arrival, you could misconstrue that. My arrival route, what do you mean? whatever, you know, in a sector like that, you're talking to somebody who's handling both arrivals and departures. Obviously, you know, the control tower says contact departure on 121.6, whatever the frequency is, or the center turns you off and says, you know, contact Phoenix's arrival on 20. It's the same controller. So there can be confusion with that. But the fact that the controller inserted the word the, I thought was really brilliant.

24:32Henry Harteveldt: So it's important to remember that there are a lot of safeguards in place. You know, it's just not, if it got to that stage, there are onboard collision avoidance systems that would have instructed both airplanes to avoid each other and all. I don't think there was a huge danger of a collision, but it was a fascinating situation and kudos to the quick thinking controller. Okay, a few other news notes before we get to Ed Bastian. Investment firm Castle Lake dropped out of the bidding for EasyJet, so it looks like Apollo Management Group will take EasyJet private with a$7.7 billion US bid. There are a lot of issues and hoops to jump through in terms of a US-based investment firm taking control of a UK airline that also has inter-European traffic rights.

25:26Henry Harteveldt: But I'd assume Apollo knows what it's doing in terms of meeting the regulatory hurdles, both in the US and in the European Union. Second, the FAA has started staggered arrivals at San Francisco International Airport. Good news, that should increase capacity some and reduce delays. SFO is not back to full capacity because of runway construction that's underway. Listeners will recall that the FAA ended the practice that had been in place for years of doing parallel approaches. There's a special radar that allows parallel approaches close together. The runways are not spaced far enough apart for the normal separation of parallel approaches.

26:16Henry Harteveldt: But with this faster radar, they had been doing this for years. It proved to be a problem that the FAA wasn't comfortable with. Too many TCAS alerts, too many pilot deviations, pilot concerns. So it led to an end of the parallel approaches. This staggered approach system allows more flights. And I hope there will be improvement on that once the runway construction gets done. Yeah.

26:47Scott McCartney: And as someone who lived in San Francisco for 35 years, I was very happy to see this announcement made because I think this will help SFO get back up to around a rival rate of roughly 46 or so flights per hour while the runway construction is underway. And I believe take it up once that construction is done. But again, as you said, not sure if it gets back to the full level it was before this restriction was announced. Scott, there were two additions to the Southwest Airlines Board of Directors recently that I think are worth mentioning. There was also one at American Airlines that we haven't yet discussed.

27:23Scott McCartney: So let's start with the folks at Love Field. At Southwest Airlines, Jason Liberty, the chairman and CEO of Royal Caribbean Group, joins the Southwest Board immediately, as does Varun Krishna, the CEO of rocket companies, the rocket mortgage folks. One has extensive experience in selling leisure travel. The other has extensive experience in e-commerce and digital finance. So these are both great skills, leadership skills and knowledge to bring to the Southwest Board. Neither one of these execs has airline experience, but they do have that business experience that is relevant. And remember, there were two Elliott management appointed directors, David Cush and Greg Saretsky, who resigned from Southwest's board in February when the standstill agreement expired, and Elliott sold some of its ownership stake in Southwest.

28:15Scott McCartney: And then last month, American Airlines added John W. Dietrich to its board of directors. He'd been with FedEx and before that Atlas Worldwide, where he'd risen to president and CEO. Way back, he spent 10 years at United Airlines as an attorney. I know he knows air transportation, admittedly, most recently on the cargo and logistics side, but he doesn't seem like someone who's going to rock the boat for change. One thing that does concern me about Mr. Dietrich's appointment is that the point American Airlines emphasized in its, or at least communicated in the press release about his joining the board, is that he cut$4 billion of spending from FedEx.

28:56Scott McCartney: Okay, that's fine, but the last thing American Airlines needs is another cost cutter. Americans already got way too many people, as we talked about earlier, who are focused far too much on cost, far too much on pennies, not enough on the dollars. We've seen American and United talk about how they're looking at the revenue picture, and that's what American has to focus on. So American needs, certainly I think Mr. Dietrich will benefit the airline, but I'm just concerned that he's going to have to bring different skills to the board.

29:33Henry Harteveldt: It's kind of an interesting contrast, isn't it? I mean, these are, you know, each a couple of appointees on a larger board, but it was interesting that the Southwest guys, very customer focused, right? And cargo and boxes, we're not in a box world anymore. It's about how to attract people to your airline. And so just an interesting contrast.

30:02Scott McCartney: Yeah. Yeah. And then the Financial Times got some interesting data showing that the peak wait times at some major European airports has doubled since the EU began using a new border crossing system known as the Entry Exit System, or EES for short. Wait times doubled at Frankfurt, Amsterdam and Munich. Frankfurt went from 60 minutes average to 120 minutes average. Munich went from 31 minutes to 60 minutes and Amsterdam from 80 minutes to 120 minutes. Now, let's just say one thing. Even the pre-EES wait times are far too long, far too unacceptable for any airport, any government agency to say, you know what, we got this.

30:48Scott McCartney: We should be happy with this. If you are a non-EU citizen traveling to these major gateway airports, and whether you are going just to that city or making a connection to an intra-European flight within the EU, having to spend 31 minutes to 80 minutes in a queue to clear passport control is flat out unacceptable. We should never have allowed that. And the longer waits are, of course, even worse, much, much worse. So what has been done is this biometric EES system, which requires the non-EU travelers to register their fingerprints and facial scans, have basically been turned off. The kiosks were malfunctioning.

31:34Scott McCartney: Travelers needed far too much assistance. The system had glitches. So for now, a lot of these airports have turned it off. And I can just share my firsthand experience flying into Keflavik a week and a half ago. Arrived on the morning of August 5th on United from Newark, which was delayed, by the way. The flight was miscatered. It was not one of United's better flights. The Polaris experience was not good. But we land and there's a long queue in the passport hall. All the kiosks have been turned off. There were only two passport control agents working the non-EU line. There were two working EU arrivals and two working connecting flights.

32:18Scott McCartney: Now, to the credit of the folks, the officers in the connecting flights, they would, as they could, bring over people from the non-EU line to their booths to help clear them and move the line. But we still waited more than half an hour after landing to clear passport control. Not the greatest welcome to a country. Not great for your tourism. Not great for business travelers. And especially with business travelers, business travelers are looking at all the hassles and saying, I don't need this. I can stay home. I can do my work remotely. We can have our meetings remotely. We can share the documents remotely.

32:57Scott McCartney: This is why I think the industry is struggling with some of the business travel activity to get as much business travel back and on the road. Yeah.

33:07Henry Harteveldt: So interesting. So interesting. Well, I hope they get this worked out. And you're right about the original wait times. You know, I went to Canada recently and it was easy peasy. I mean, you know, scan and go, basically. Yeah. So and some of that comes from, you know, the the sort of pre-registration work you had to do. And that's fine. I would much rather do that. Load up my information. You can run me through the database. And then when I get there, all you have to do is verify I am who I am.

33:41Scott McCartney: Right. You know, I give U.S. Customs and Border Patrol credit for global entry. It works brilliantly well. Singapore, brilliantly well. You know, there are plenty of other countries where passport control generally takes 15 minutes or less. London Heathrow, even during rush hours, because they have e-gates that can scan the passport, generally is a quick process on arrival. You know, the rest of Europe, they've got to figure this out. Yeah.

34:14Henry Harteveldt: Yeah. All right. Before we get to Ed Bastian, time to thank some of our sponsors. I want to thank Ontario International Airport for its support of Airlines Confidential. ONT just launched the ONT Bold program, a proposed vision to transform the airport's facilities to streamline the passenger journey, while also creating jobs, growing the regional economy and building on ONT's legacy as a global gateway. The program includes plans for a new terminal, a multi-story parking garage, upgrades to existing terminals, enhanced roadways, and new utilities. The ONT Bold program is early in the planning phase.

34:53Henry Harteveldt: Visit flyontario.com slash bold to learn more and join the journey to ONT's boldest chapter yet. And thanks as well to the Executive MBA in Aviation at the University of Colorado Denver for its help in making this podcast possible. The Executive MBA in Aviation at CU Denver is the first degree of its kind in the world, taught by industry experts and designed for ambitious leaders from across the aviation ecosystem. With classes located at Denver International Airport and week-long residencies in Washington, D.C. and at airports around the world, students experience a hybrid, flexible course structure that balances in-person and online classes without career interruption.

35:41Henry Harteveldt: Go to business.ucdenver.edu to learn more.

35:46Scott McCartney: Scott, we also want to thank longtime sponsor RTX. At RTX, a century of aerospace and defense innovation shapes a unique perspective. It takes more than technology alone to rapidly advance the future of flight and strengthen global security. It takes the vision to see what's next, adapting expertise and scaling manufacturing capability to deliver where and when it matters most. Perspective is everything, RTX. Visit rtx.com to learn more.

36:18Henry Harteveldt: At the risk of stating the obvious to Airlines Confidential listeners, I just want to note the confluence and coincidence of having Ed Bastian on the same week we were talking about a management shakeup and weakness at American Airlines. Because Ed Bastian is responsible for some of that, maybe a lot of that. We often focus on how Scott Kirby and the team he took from American, people like Andrew Nocella and Patrick Quayle, some very smart executives who left a brain drain at American, how United has run circles around America in the past couple of years. But the decline goes back much further.

36:55Henry Harteveldt: I think Richard Anderson deciding way back that reliability was the way to win high fare corporate travelers, that was kind of the start. Delta creating a hub at LaGuardia weakened American. Delta building fabulous facilities at LaGuardia, Kennedy and LAX faster and better than American really hurt American. A lot of this war has been waged on the ground and Delta's facilities have have really come together much faster than American's improvements. Delta's deal with American Express has made a huge difference. American is only now catching up with the renegotiated deal with Citibank. So Ed Bastian has been at the heart of a lot of that.

37:36Henry Harteveldt: So let's talk to him now. Ed Bastian is celebrating his 10th year as CEO of Delta Airlines. He's been with Delta nearly 30 years and has led the airline to new heights in profitability and service and set new standards for what an airline can be. Ed joined Delta in 1998 as vice president, finance and controller. He was named Chief Financial Officer in 2005 and in 2007 he was appointed to serve as Delta's president. Before joining Delta, Ed was at Frito-Lay International, PepsiCo, and he started his career at Price Waterhouse Cooper. He's a native of Poughkeepsie, New York, graduated from St. Bonaventure University with a bachelor's degree in business administration.

38:23Henry Harteveldt: Ed, I find it hard to believe this is your first time on Airlines Confidential, but welcome. Well, we've known each other for a long time, Scott, so it's good to be on this platform as well. Yeah, yeah, it's really fun. So we always start with the Ben Baldanza question, how'd you get into this crazy business? You know, I tell people I didn't grow up flying. I was 25 years old before I ever stepped foot on an airplane so sometimes I have to scratch my head and wonder how I got here. But I was a road warrior in the early years of my career both in the financial world with Pricewaterhouse in New York and then with Frito-Lay and Pepsi.

39:10And a friend of mine at one point said, you know, you travel so much you might as well work for an airline. you probably could help them a bit, because as we know, this industry is a little complicated. And coincidentally enough, six months later, I got a call from Dell to ask if I'd be interested in considering an opportunity. And since I think probably because I was already thinking about it, because someone mentioned it to me, I said, sure, why not? And here I am.

39:39Henry Harteveldt: Yeah, yeah. Interesting. Okay, let's start with the current economy. I'm not sure I've ever seen costs be so unpredictable with all the swings in oil prices, but how's the summer gone for you? Has demand held up or do you think demand's going to hold up for the remainder of the year? Demand is holding up this summer. It's quite healthy. I'm sure you've heard that from virtually everyone you've talked about in our industry. And the more premium the product you're offering, the higher the demand is for that offering. We have an outlook obviously out into the fall. Early indications are that the fourth quarter should continue more of the same in terms of strength of the demand set.

40:29Consumer expectations are mixed from a lot of different signals. I think a lot of it depends where you sit in the economy, where do you sit in the airline economy, what type of product offerings you have, dictates the resilience of the demand. And at Delta, we know we are at the upper end of the threshold, and the quality of the service is certainly driving the price point.

40:54Henry Harteveldt: Do you think there's a permanent change in demand for air travel? It's just a more important part of people's lives? Or do you think it's still cyclical and especially that premium demand, if you get into a weaker economy, do people save money by trading down? It's too early to say, Scott, but I think we're in a secular shift. I think COVID helped prompt some of that when travel was taken away. The ability to experience life was limited. and people, you know, I think had a chance to reflect on what's important and how they wanted to spend. It's not just folks at the baby boomers and folks of our generation, but I think it's across all demographics and generations.

41:48We've seen that. You know, the world is increasingly, moving towards looking for places that can go and have an opportunity to learn, to explore, to enjoy, to spend time with friends. The world's more accessible, despite all the complexities of the world, than ever before. I think people feel more in touch in certain ways with wanting to go out into the world. And that's not just air travel. That's going to a high-end show on Broadway or a great dinner with friends. People are investing in themselves. I think the world of accumulating stuff is not as interesting as investing in experiences.

42:38Henry Harteveldt: Yeah, yeah, yeah. So with that, let's talk about growth opportunities, domestic and international. partnerships and alliances. I'm really fascinated by what you're doing in Austin, Texas, because it's close and I spent some time in Austin. Also really interested in what you may be thinking for Minneapolis with the Sun Country-Allegiate merger. You've got Boston, Seattle, Focus City. You just started Los Angeles, Hong Kong. Los Angeles has been been fascinating how Delta's become number one there. Now you've got the investment in WestJet. You know, where are the main growth opportunities for you?

43:23I think the long-term opportunities for us are more on the international side than the domestic. And as you know, our domestic business is our bread and butter. And we're always going to be investing and looking to grow that. So whether it's the build out in Austin or looking even further down the road from in San Antonio, you know, looking for places to continue to grow and expand into Texas. We're not as big in Texas as we'd like. And so those are two markets that we have found some really good reception. The growth of our coastal hubs, whether it's Boston, Seattle, New York, LA, LA has done really well for us and we continue to invest there as well.

44:14But a lot of the opportunity for the future though is the fact that you're now big in so many of these markets, LA being one example of that, that gives us an even greater case to move internationally from those markets. So announcing LA to Hong Kong, which we're now flying, or LA to Manila and other markets that we're looking at and considering. We're launching Atlanta to Riyadh coming up here in October and thinking about ways in which the world can get a greater appreciation for the Delta brand. That is the future. I think we spend more of our time thinking about the longer-term opportunities, and those are markets that the brand is doing well already in.

45:00We've had a lot of growth in international in the last handful of years. We work well with partners. Almost all of our markets, we have a partner by our side. So in Riyadh, for example, we're partnering with Riyadh Air as we come into that market for the first time with a U.S. carrier direct. And that is, I think, helping shape the brand too. I like to think of Delta as a leader in the U.S. travel industry. but when people talk about who are the global leaders, I want to make sure Delta is the tip of their tongue. And that's different for a U.S. carrier. That's been something that has been often, whether it's the Middle Eastern carriers or the Asian carriers or Singapore or some higher-end premium brands, Delta should be considered in that category.

45:55Henry Harteveldt: Asia is fascinating. You mentioned partnerships. I was reminded that you were really the point guy on trying to lure Japan Airlines away years ago, right? Some of them I couldn't do. Yeah, that's one I couldn't get done. But you did lure LATAM away from American. And I'm curious if there's more, if the partnerships, the alliances, is that all kind of set? Or do you think there's more room for change? And LA is a great example where you're now the number one feed carrier there. So that may make the world look differently to trans-Pacific carriers. Yeah, I don't know that there's any big shifts coming.

46:43You know, we're pretty well set. We've got a great group of partners around the world that we work very closely with. As you know, we're also investors in most of our partners as well.

46:53Henry Harteveldt: Yeah. Because we like to influence their investment decisions for their own brands to become closer to Delta. But I think the partnership world for me, I spend more of my time looking outside the airline space than within the airline space. And whether it's with Uber, which we announced a year ago, and we're spending a lot of time working closely with them. Joby, an eVTOL operator, which we have an investment in, and thinking about what that can create for the future. There's so many brands that sit alongside travel. Obviously, American Express being the largest of them, and we work so well together.

47:34I think that ecosphere, you'll see more and more of our partners coming in there. And so expanding the reach of the brand, not just the scale of the brand.

47:47Henry Harteveldt: And talk about that a little bit more, because it kind of ties into what we were talking about earlier about travel being so important. Is there, I don't know, new industries that will partner with airlines that we haven't really thought about? I think you're seeing it. And our platform on board our planes, Delta Sync, and the Wi-Fi platform that we launched five years ago is represented that. we have a very close relationship with T-Mobile, for example, which is a major sponsor of what we do on board our planes and we work closely with them as a brand. When you think about how some of the big brands align and gain strength, if you're going to restrict yourself to the airline industry, I mean, you're really limiting the capability.

48:43And I like to think of Delta as a great brand, not a great airline brand, but is a great brand and gets its lift from and lifts other brands that are like-minded such as uber, such as Starbucks, such as American Express. And so often those the currency that we offer and the opportunity for people to gain access to Delta benefits or experiences or loyalty points that the other brands are really attracted to that because they know their customers are the same people and they want to share opportunity together. And we've got a couple more that we'll be announcing here in the next number of months along that same vein.

49:26So I won't give you the first report. Sorry for that, Scott, but we've got more in the hopper. Well, all right.

49:34Henry Harteveldt: If you want to drop a hint, that's OK, but I understand. So you're now the longest tenured CEO in the industry, I believe. And I'm curious about your management philosophy, maybe how it's evolved. What do you know now that you didn't know back then when you took over the CEO office? Well, I think your management style evolves over time, particularly at the CEO level. I'd say in the first few years as CEO, I was, and I think a lot of CEOs go through this. You try to make sure that the company made the right decision. You're almost proving yourself because you're not prepared for the seat as well as you might otherwise think.

50:25Until you're in the seat and having to make decisions and be the last point of contact or dealing with a board and actually having to lead and manage a board and shareholders and so many constituents along the way. It's a lot of responsibility. So you find yourself running around an awful lot, trying to be in as many places. And, you know, they want to see you, you want to see them. You want to make sure that they know who you are and how you think. And, of course, the biggest constituency of all your people. and that for me I think was probably the first half of my career as a CEO and I think as the second last five years I've tended to be able to sit back from that.

51:11I still do all that but I add a more strategic lens to it. So building the relationships for the future that are going to be important for Delta and whether it's in technology, whether it's in these international partnerships, the brands that we affiliate with, and how the company will be seen further out. One of the things that I've learned as a CEO is that we all talk about strategy, but strategy is something, and all companies have strategy departments and receive consultancies come in and tell us what we should do and how we should think. But there's only a few people in a company that can really set the strategy, And that really starts at the top.

51:57And that's because you're thinking 5, 10, 15 years from now. There's not a lot of people in the company that really can think like that. And our industry is a long cycle industry, whether it's the aircraft we deploy or how we think about where we're going to be investing for the future. So I really spend more of my time these days thinking about that long 5, 10, 15-year roadmap rather than how the operation of the day is doing.

52:26Henry Harteveldt: Yeah, interesting, interesting. But even with the operation, one of the things that's always impressed me about Delta's operation is, going back to Richard Anderson, you were thinking long term. It wasn't about the immediate issues. It was about how do we take care of the 767 fleet for the next 20 years? Oh, yeah. No question about it. No question about it. And we're not a great operation. And we've been tested over the past year. We've had some issues in the operations with respect to the overall performance of our completion rates and resilience in weather conditions, which we're working through.

53:03But fundamentally, the operations are a strong operating culture here. And so you have to make sure you're continuing to pay attention to that. But there's more that has to be done beyond that.

53:16Henry Harteveldt: And with that big challenges, what do you see as the biggest challenges ahead? I know you've got pilot negotiations coming up, and there have been some issues leading up into that, the completion factor you talked about. What are the big issues? I think we understand our issues, the opportunities, as well as the challenges with our pilots on the upcoming negotiations pretty well. and they will take their own path. And I'm not going to, again, give you any insight as to what the answers are in that. But we always find a way, and I've done many of them over my 30 years. So it's not something you always look forward to, but it's something you have to do.

54:01But I think about technology. I think about how the world is now captivated with AI and how it's going to change life as we know it, and what does that mean for the airline industry. And we're spending a lot of time thinking about that at Delta. And while I know the technology will change and the challenges will be great and the opportunity is great, at the end of the day, you want to make sure you're keeping the people in the heart of it, the center of it, and not losing that human centricity. When I talk about Delta and why we've been as successful as we have, It's because our people are the very best.

54:42And I know all airlines say that about their people, and that's fair. But I truly know it's true at Delta. And that's the only thing that can't be replicated is the culture and the people. When you look across the lot, and our people do perform. And so, you know, making certain that those people have the future tools to continue to succeed is going to be really important here.

55:03Henry Harteveldt: So you mentioned AI, and I wanted to ask about that. It came out that you were using AI in dynamic pricing. There was concern about that. I know Congress started asking questions and all. But you're using AI in reservations and tech ops and crew scheduling. How is AI changing the airline? Well, when you think about what AI does, it allows you to hopefully make better decisions. and because you have more access to data and more timely, it gives you a clear perspective of what the opportunities are. And our industry, our company, we have lots of decisions we have to make every day, whether it's how we're managing the daily operations or what's happening in the maintenance realm with our engines and the history of the engines.

56:00And there's so much data around our business revenue management you talk about in pricing. So much data. We don't use but a small fraction of the data because we don't have the capability. And we don't have the programming. And so much of our technology is backward looking in terms of historically what happened. We need forward-looking data, predictive data that has the intelligence to kind of anticipate before issues become issues and try to make decisions better. And AI is going to provide that. Now, it's not going to be easy, and there's no off-the-shelf solution to how you better manage crews and weather and fuel burn and engine performance.

56:49But all those things go into play in terms of running a great operation, both financially as well as from a customer standpoint. So I think that realm, and it's going to take us some time, and we're doing a lot of work. In that space, we're working with kind of pilots. We're not flying pilots, but kind of small projects in a number of different arenas. And we're getting really interesting observations. I think that's going to change our paradigm. If I look at cost, you mentioned cost being a big challenge in our industry and fuel alone. If we could take two, three, four points of our cost down from making smarter, better decisions over a series of several years, my gosh.

57:44You know, you look at a margin of delta, you go from a 10 % margin to a 15 % margin, it's a 50 % improvement in your profitability, right? I mean, these things are - And billions of dollars. Substantial. Or on the revenue side, because you can make better revenue decisions on how you manage different buckets. So, I think the opportunity is there. I think the issues of trust and governance are also really important. And that's why I never refer to AI as artificial. I always call it augmented intelligence. It's going to make our people smarter and better. Interesting.

58:21Henry Harteveldt: Okay, speaking of the future, I have to ask about succession planning. You know, it's a thing that over time, it's the thing that I think often trips up companies and airlines in particular. You're 69. You did some management reshuffling earlier this year, most notably naming a president, Peter Carter, and moving CFO Dan Janke to COO, give him operational experience. Is that all part of succession planning? Is that happening or down the road or what's your view of it? Well, I think all organizations have to continue to build for the future. And we have a great team at your Delta. This is not run by one person or even a small group of people.

59:09It's a large leadership team and widely talented, and you need to continue to give that team opportunities to show what they can do in different settings and different backgrounds. The thing I've loved about the airline industry is that it's a connected industry. You have so many different roles within an airline and deep roles, whether running the operations and the pilots or then running what's going on in finance or running what's going on in pricing. And they all connect at a certain level to create a singular entity and franchise and P &L and customer experience that you can move people around and give them basically a different job in the same, looking at the same lens from a different angle.

59:59And they become that much better. and that much stronger as to how they perform. They're more well-rounded and take different perspectives. And I'm enjoying watching it this year because I made quite a few. We have a new CIO. We have Eric Snell as our new CFO. And I have a handful of new leaders from around the table. And it's given me a chance to sit back and watch them because you've got to let them perform. And you don't want to micromanage it. You've got to let them see how they do. and I think they're all doing really well. So am I doing that for succession? No, I'm doing that to make sure we have a healthy leadership team for the future.

1:00:40But ultimately, I'd be disappointed if one of those people don't become the successor for me at some point down the road.

1:00:50Henry Harteveldt: And I imagine that's not anytime soon. You're enjoying this? Well, I am. You can probably tell. You've known me a long time. I think the thing about me, Scott, is I'm a pretty competitive person and I'd like to win. And there's more to do here. And I'd like to continue to win. I'd like to continue to learn. I'd like to continue to lead. And I'll keep doing that as long as my board will have me. Well, you've been winning. And congratulations on that. It really has been amazing what Delta's done. I know this is such a hyper-competitive industry. It's got to feel good to win. It does. It does. And I appreciate the people because it's a great reward for the people.

1:01:40Henry Harteveldt: All right. Well, thank you, Ed, so much. This has been wonderful. And I look forward to doing it again someday. Absolutely. Someday soon. Yeah. Yeah. I enjoyed it. I've always enjoyed our talks. And this is an industry that always has a lot going on, as you know. So we'll always have something to talk about. It does. All right. Thank you so much. We will be right back with more on Airlines Confidential.

1:02:07Scott McCartney: Promotional support provided by the ultimate avgeek website, theairchive.net. A vast collection of airline memorabilia, timetables, route maps, rare cabin and airport photos, special flights, and more. are all at theairchive.net, the hub of air transport history. Thanks again to Ed. So, Henry, what did you think? Well, you know, Scott, that was a terrific conversation with you and Ed. There were a couple of things in there that stuck with me. First, Ed's comment about Texas. Glad to hear it as a newly native Texan. And he's right. I was at a conference about a year and a half ago, I think, maybe even less, That said, Dallas or the Dallas-Fort Worth metropolitan area, Houston and Austin are poised to potentially become the three largest U.S.

1:02:55Scott McCartney: metropolitan markets by 2050, if not before. Now, some of us can't even think to tomorrow. 2050 is definitely a long time away. But I think it's very smart for Delta to be looking at Texas. And of course, they're doing that with an eye knowing that American is headquartered in Fort Worth and United has a major presence at Houston Bush Intercontinental. And of course, Southwest is practically the unofficial state airline of Texas with extensive intra-Texas network. So, you know, it's interesting. And, you know, Scott, I remember when Delta had a hub at DFW, and I keep thinking that they never should have walked away from that, that they should have made Dallas more of a focus city.

1:03:42Scott McCartney: I think it's going to be really interesting to see what they do in Austin, potentially San Antonio, and who knows where else that the airline looks at. You know, I thought that Ed's comments about management succession was important. Culture, obviously. I think that is a key part to what they call the Delta difference. I enjoyed hearing him talk about the fact that they are actively working on that. And it will be interesting to see how their little shuffle and who's going to win that second spot in the leadership. Will it be Peter Carter? Will it be the COO? Will it be somebody else or an outsider?

1:04:19Scott McCartney: We don't know. But the one thing that Ed did not talk about, and I was disappointed, is he didn't acknowledge that Delta is not the airline it was pre-COVID. You know, he keeps saying Delta is great. Sorry, Delta is a good airline, but it is not a great airline. Its reliability has suffered. He did acknowledge that. Time is not where it once was. And again, there's been bad weather. Some of that's outside Delta's control. But there's some labor stress with the pilots. and did say they want to fly more long haul directly. I think they've relied on their foreign partners far too much. By the way, Americans also guilty of that.

1:04:57Scott McCartney: But the hard and soft product at Delta are stale. The soft product is frankly inferior to what its top competitors do. So I'm hoping that Delta is going to restore some of the magic there. You know, at one point, Delta really was a marketing machine. It's not quite that these days. We'll see what happens.

1:05:19Henry Harteveldt: Well, you know, on marketing, it's interesting because he talked about building the brand into, you know, one of those sort of iconic national brands and his focus on partnering with companies outside the airline business. Yeah, I don't buy it.

1:05:38Scott McCartney: Sorry. Yeah.

1:05:39Henry Harteveldt: Does that really bring in passengers? No.

1:05:43Scott McCartney: You know what? I mean, sure. It's nice to get Delta points when you take Uber or go to Starbucks. I don't know that that changes anybody's behavior on their choice of a car service or a cafe, nor do I know that it changes those companies' customers' likelihood to fly Delta. You know, there's no downside to it. I just don't think there's a lot of upside. And, you know, the partnership with American Express, you look at the numbers, you can't deny that it is phenomenal. It is, you know, on track to be a$10 billion relationship. Amex is not accepted at as many merchants as Visa and MasterCard. And, you know, in fact, I'm in Europe and I cannot tell you how many places actually have signs saying we do not accept American Express.

1:06:32Scott McCartney: That's an issue for any company that wants to partner with the Amex. It's a challenge for Amex itself that they've never been able to overcome. Delta loves the data that they get from Amex as well as the dollars, and I get it. But let's also not ignore that without that Amex revenue, Delta would be losing a phenomenal amount of money. Yeah. Yeah.

1:06:55Henry Harteveldt: Yeah. Very true. All right. Interesting. Well, thanks again to Ed. It really was a great conversation. I always enjoy talking to him. Okay, before we open the mailbag, we want to thank Infinity Flight Academy for helping make the podcast possible. The path to the flight deck starts long before a pilot reaches the airlines. At Infinity Flight Academy, they're proud to serve as a flight training partner for the American Airlines Cadet Academy, helping prepare the next generation of professional airline pilots. Infinity Flight Academy's training is structured, standardized, and built around the discipline today's airlines expect from day one.

1:07:36Henry Harteveldt: For future pilots pursuing a career at the highest level, Infinity Flight Academy is proud to be part of that journey. Infinity Flight Academy, training tomorrow's airline pilots through the American Airlines Cadet Academy.

1:07:50Scott McCartney: Scott, we also want to thank CERIUM for their ongoing support of Airlines Confidential. Serium offers the most accurate and precise data and analytics to enable airlines to optimize planning, operations, and passenger services. The right intelligence drives operational efficiencies, enables you to predict market shifts, and helps airlines respond quickly to maximize revenue, manage costs, and seize commercial opportunities. Visit serium.com for more.

1:08:19Henry Harteveldt: In the mailbag, Henry, we have, guess what, a question about American Airlines. Jeff from Dallas writes, Hi, Scott. Thank you for all you do with the podcast and continuing the legacy of Ben Baldanza. I really enjoy your guests hosts and their unique perspectives and experiences with a special shout out to Christina for her airport commentary. The recent discussion with Jay Sorensen was yet another that included reference to Americans' subpar performance relative to its peers. And it made me wonder if Americans' decision to pick Robert Isom over Scott Kirby for the potential successor to Doug Parker in 2016 ranks as one of the worst strategic decisions in the modern history of airlines.

1:09:03Henry Harteveldt: If we compare AA and UA's operational revenue and stock performance since 2020 when Kirby took over as CEO at United, it has been no contest. Americans' flawed strategies are to blame, with the most blatant being their decision to scrap corporate sales combined with laughable network planning strategies. Recall a former executive calling El Paso a strategic imperative! exclamation point. AA's recent reorganization seems uninspired and doesn't address the failings at the top of the organization. It is fun to imagine what AA would look like today if Scott Kirby had been chosen as their future CEO.

1:09:46Henry Harteveldt: I suspect his leadership and innovation would have been a windfall for AA shareholders, employees, and customers. So my question, is AA's board doubling down with ISOM and is simply unwilling to admit its mistake in picking the wrong person for the CEO in waiting in 2016. Keep up the great work, Jeff. So thoughts, Henry?

1:10:13Scott McCartney: Well, look, I mean, first, hello, El Paso. We like you. This isn't about, you know, we think you're important. I think that there's no question. In fact, this is one of the questions I get a lot as an analyst. Did American make a mistake? You know, Robert Isom is smart. He's dedicated to American. He's capable. I'm not sure why he has not been bolder in his thinking. I'm not sure why the board hasn't pushed Robert more or pushed back on not just Robert, by the way, the entire American leadership team to be more innovative, to be more creative, to stop accepting the status quo. The success that Delta and United are enjoying is not new.

1:11:06Scott McCartney: This has been happening for several years. So, you know, granted, there was a lot of uncertainty around the period of COVID when Scott took the helm of United, but we're now five or more years away from that. And at this point, you would think that the board would have pushed and should have pushed the leadership at American to be more creative, to be more customer focused, to not accept this poor financial and operational and stock performance. My view is there is shared responsibility here between the board, which has been, frankly, appears to have been complacent, and the leadership at American.

1:11:52Scott McCartney: And I hope that the board will be willing to listen to the creative ideas that I hope will be coming from people like Heather and Nat, that the ops team is going to get more permission to do things to actually improve the operation. There are some who question whether American needs a new COO. That's a fair question to ask. I hate to make this all about individuals, but it is about individuals. So it is fair to ask if American bet on the right folks. Unfortunately, the results don't appear to show that they did. Maybe things will change. I'd like to see it. But I also think that American needs more customer focused people on the board.

1:12:42Scott McCartney: And what do they do? They get a penny pincher from FedEx.

1:12:47Henry Harteveldt: Yeah, you know, it's a fascinating question, right? And, you know, business school cases will be written and all. A couple things. First, the Scott Kirby at United of today is not the same Scott Kirby at American. Scott has really, I think, worked hard at becoming a better leader of people. He worked hard at presenting the right kind of swagger and confidence and innovation publicly. I would give Josh Ernst, who is the chief communications guy at United, former press secretary for President Obama. Josh Ernst has done so much to turn Scott Kirby into this transformative leader publicly. There's Scott on Good Morning America talking about pilot training.

1:13:50Henry Harteveldt: There's Scott on NBC talking about sustainability. There's Scott at the White House being the top airline CEO. And what they have done, and I think just as much as United hiring Scott was transformative, I think Scott taking people like Andrew Nocella and Patrick Quayle with him not only left a brain drain at American, but those guys, you know, they're interesting, innovative, smart, smart, smart leaders. But they also knew everything about American, right? They knew all the vulnerabilities. They knew all the data. They knew what American was doing in Los Angeles, what it was doing in New York, all of that, Chicago, everything, right?

1:14:34Henry Harteveldt: And they certainly have exploited that. So to me, the thing that was really missed was the American board makes that decision and then has to say, And then the same weekend, Scott gets hired at United. And that's when American had to sound the alarm and say, oh, boy, we are in for the fight of our lives. This guy is going to make his mission to squash us. And he knows all of our vulnerabilities. And we have got to respond from day one in a big, big way to not let United up off the doormat. the doormat. I mean, remember, United was struggling with the continental integration and was really kind of a mess.

1:15:24Henry Harteveldt: And Oscar Munoz did a lot to help Scott sort of become a more likable leader, if you will. So I think, as you said, it goes way back. But man, from that first weekend, the American board had to think, we can't keep doing what we're doing. This is really going to be a dogfight. Right.

1:15:48Scott McCartney: And, you know, look, I remember having some rather heated at times conversations with Scott about marketing brand product back in the days of America West at U.S. Airways and shortly after the merger with American. And Scott kept saying that's not what people buy. They buy the route network. They buy the schedule. They buy on time and frequent flyer. And that's all that matters. And somewhere along the way, whether it was at American or between American and United, Scott got the religion. He understood that product matters. And granted, he's right about on-time performance and he's right about the network.

1:16:25Scott McCartney: No one's questioning that. But you've got to give people a reason beyond that to choose an airline so that they're not looking at price. And Delta and United have cracked that code. And Southwest is doing extremely well. So I'm hoping that American will have better days and brighter days ahead. You know, the stock is languishing compared to that at Delta and United and Southwest. You know, there's a lot of room for improvement there. And there are a lot of people, there are a hundred and something thousand people who work at American and American Eagle who would love to see that improvement happen.

1:17:07Scott McCartney: I think they to be part of it. So hopefully this will be it. Now, one thing I'd like to just share is that I'm going to get to speak with Nat from American at the Future Travel Experience on September 9th. So for anyone listening who's attending that, I hope you'll be at our session. And if you're not planning to go to FTE, well, maybe you should. It's in Dallas. Anyway, other than that, Scott, Thanks again for allowing me to share the podcast with you. It's been a pleasure. It was, like I said, great to hear Ed's comments and good to be with you.

1:17:42Henry Harteveldt: Great to be with you, Henry. Enjoy Europe. Have fun in France. I'm sure you will. I hear the food's good there. You'll enjoy partaking and really appreciate all of your contributions to this week's episode. So I'll be back next week with Christina Kasotis and a deep look into airline pricing with Brett Burgess, the CEO of ATP Co. ATP Co, a company you may not be familiar with, but which is foundational to pricing airline seats. Should be a great conversation and looking forward to that. So long, everyone. This podcast is produced by Mass Media.

1:18:23Scott McCartney: Info at MassMedia.net.