The TACO Trade & United CEO Scott Kirby Teams Up with JetBlue 5/29/25

24:11Right. This is not about managing capacity. This is not even a co-chair deal. This is really about a frequent flyer deal that gives each of our frequent flyers access to a larger network. But just so I understand, there's the DOT, but then is there the FTC or the Department of Justice? For us, it's the DOJ. They could, but again, this one is much more straightforward. And what's the, in terms of pricing, though? So let's say I'm a United customer. I've got all my, I've got a lot of miles in United. And then I want to buy a JetBlue ticket. I'm going to buy it through you? You could, but the point is, because we're not co-chairing, we're not pricing each other's flights.

24:47So you'd be buying it whatever JetBlue sets the price at. So you'd use your miles to buy there. We're also going to sell on each other's websites. So now you'll be able to go to United.com or use the app to buy a JetBlue flight if you wanted to fly from Boston to Orlando. So the idea is it's more to make it more convenient for me just to plan around working either through JetBlue or through United. Yeah, it's to give you more options. So if you're a frequent flyer that, you know, you want to use Newark as your home airport, but sometimes you want to fly out of JFK, it gives you more options. which we didn't have that option for customers.

25:19We're on both sides of the huddle now. Let's say you're Ed at Delta this morning. You're seeing this news. He's thinking what? Meaning, or flip it around. If he was doing this with somebody and the Department of Justice called them and said, hey, is this good or bad for business, they would say what? Well, it'd be hard to argue it's bad for the customer. You know, Delta's a really, really good airline. They've done a great job. In fact, a lot of what we've done at United has been copying some of the things that Delta did successfully. But this, their number one competitor, JetBlue's number one competitor is Delta at JFK, Boston, even in Florida, the Caribbean.

25:54And this makes JetBlue more competitive. Because it makes them more competitive because they're going to get more traffic to their site. Well, because now if you're a frequent flyer, you like JetBlue, but if you're flying out of New York, for example, Delta can get you all over the world. And you get to capture the miles? And JetBlue would get the miles. You could use them, though, to fly at night. So you could earn on JetBlue and then just say, I want to take a vacation to Cape Town. Right. Use your miles to go to Cape Town. So you're looking at a Newark United guy. Full on. I know. I would never go to JFK.

26:26I would never. I'm a JFK guy. And I'm totally. It's quite interesting. Yeah. With all of Newark's warts and whatever you want to call it. But by the way, I think the Newark is, we can talk about it, but because the FAA is going to finally cap the capacity at Newark.

26:45Newark is going to be the most reliable New York it is right now. The Memorial Day weekend was the best weekend we've had in our history. That A terminal is pretty nice. It's very nice. I prefer C. Let's talk about Newark because Secretary Duffy was out yesterday with an update saying, look, that the runway work may be finished sooner than June 15th, which means they could move up instead of, what is it, a cap to 28, they could move up to 34. But it's not going beyond that through October. The reality is it's the lack of air traffic controllers for that particular airport that it's really going to limit growth for the foreseeable future.

27:21I mean, when do you realistically believe that you can go beyond 34? Or do you sit there and say, well, now it's October, but come on, it's going to be like this for the next couple of years? This is really the important point is at the 34 flights per hour, 34 arrivals, 34 departures, is going to be great for customers. You can now book with confidence. This is what we've wanted. Maybe the number inches up a little, but there's only one set of parallel runways at Newark. And even in perfect conditions, the theoretical max is about 38. And the problem with Newark has been when you schedule more than 38, that you wind up with delays that cascade through the day.

27:56And so this is the solution for Newark to be the most reliable of the New York airports. Are you worried about the hangover effect? Look, I live in Chicago, and I hear from all of my friends. Going to New York, like, hell if I'm flying into Newark because I don't want to get, you know, flight canceled or delayed. And, I mean, it's hurt you guys in terms of traffic. Yeah, it's, I do, it's been disappointing. Because first, the safety issue, like, the FAA has tower, TRACON, ground center. So there's three separate systems that can control flights. And if one of them goes down anywhere in the country, doesn't happen often, but when it does, it's not unique to Newark.

28:32When it does, the other two back it up. Then we have a fourth system called TCAS on the airplanes. It's independent of those. So there's four backups for these systems. So the safety has always been high. So that was surprising to me. But isn't there a hangover effect where you might have people around the country who are saying, I'm going to New York, stay the heck away from New York? And how long does that last? Well, I hope it didn't last long. We've already seen that the leisure traffic has come back. We did take a big hit, but the leisure traffic has come back. Business is lagging a little.

29:04But really, I mean, I think you just need to get people to try it. because you look at this is it's the it's going to be the most reliable the fares are the best this year that they're probably ever going to be because we lost traffic at least crowded airport now because the fa is done we've been asking for a decade for the fa when did you join when were you ceo when did you become ceo right it started covet a little over five years ago because you remember this is what i remember and that is that continental was a great airline i love gordon and you remember united in in continental and there were some issues initially putting putting them together and there's some disgruntled United employees.

29:38Would you say, and I'm going to show you a chart, and I should get a couple of upgrades from this, but I'm going to show you a chart of a three-year XAI versus a three-year United. Is this just solid management? What do you attribute? There it is, Phil. We got United up 63 percent, the average. Against the airline index. Is that? XAL. That's the airline index. Yeah, that's what I asked for. Yeah, against the index. I also did Delta, too, because you have highlighted some of the issues that ed has faced over uh at delta as well um so you're looking at 16 versus 63 percent i guess my question was is it all in the past flight it to everybody's happy flight attendants across the world people seem happier they are there were some issues initially yeah i thought what i i say i have the easiest job of anyone at united because i only have one responsibility create an airline that our employees are proud of because if they're proud of it they want you to feel that way when you fly and they take care of you.

30:34And like really everything I do is focused on an airline that they can be proud of. And that works. Anyone else close to that three-year? So minus 21 versus plus 63. Maybe not, but also, you know, like Delta, Delta's a really good airline started ahead of us. Is it the CEO or it's the employees? It's the employees. And really, it really is. I mean, it's just, it's about getting them an airline they're proud of. Did you know that the outperformance of? Yes. You did. Have you seen my reports? I have to ask you, because I don't know how long we have you here. A big part of your growth in the future will be the continued improvement of aircraft deliveries from Boeing.

31:18And Kelly Wartberg is going to be speaking later today at the Bernstein conference. How comfortable are you with what you're seeing out of them? And do you sit there now and say, these are the aircraft we're planning for in whether it's the rest of this year, 26, 27. Are you much more comfortable now that they're going to hit those targets? I think Boeing has turned the corner and is heading in the right direction. I have to be blunt. I think the rest of the supply chain is now getting exposed to engines and all kinds of other places. So I don't think that aircraft deliveries are going to get to the levels that we thought they would a few years ago.

31:55I think they're going to be constrained for years to come. The good news for us at United is we ordered so many aircraft. We overordered aircraft, believing that the supply chain would be challenged. So we want to take 100 narrowbodies a year. We ordered 140, thinking we wouldn't get the others. We're now only getting 60 to 80, so it's been worse than we thought. But we're growing. The growth that we have at United is an absolute growth is more than any airline in history has done. We're doing it year in and year out, despite the supply chain challenges. We can manage through the supply chain challenges, but I do think Boeing has turned the corner.

32:24Really? But you ordered some Airbus or never? We have some. We're 85 % Boeing. The XLR is the Airbus A321, and the XLR, which is a narrow-body airplane that replaces the 757 to fly. So we're going to add several destinations, smaller cities in Europe and North Africa, that will be able to fly that airplane here out of Newark. Great. Cool place for you to go on vacation. Good. I need those pods. They're going to have the live flat seats on them. That's the future. Is it not? And it's hub and spoke. Yeah. I saw a picture of a, I don't know what kind of jet. It was the biggest jet I've ever seen next to a normal 730.

33:04It's staggering. It is. The future really, I think, is customer service and technology. I thought the future's boom. Boom is cool. Do you think that boom will have a commercial aircraft, that you'll be a united supersonic jet? Yeah. When do you think realistically we see that? It's hard to predict the timing. I think what boom needs to do, and I've told Blake this, is extend the range of the airplane. It can't just be an airplane to get you from the East Coast to London and Paris. We need to get it to be able to fly across. If they can get it to have longer range, then it will be a home run. But is it a longer range issue?

33:42Part of it's a regulatory issue about being able to fly over land. Yeah, but you're not going to be able to fly over land, I don't think. because of the sonic boom. But if you could fly from the East Coast to Europe where you're over the Atlantic, but particularly if you could fly across the Pacific, so fly out of San Francisco, L.A., across the Pacific, you don't have the sound problem, and those are longer markets. That's a huge opportunity set. So I think that's the key to having boom be successful. I'm long, Blake. I think it's very exciting. He's a great guy, too. We tried it before. Yeah, that stupid sound barrier.

34:16Can't we change? I thought part of what Blake had figured out was actually how to reduce the boom. Wasn't that the whole point? He got rid of it. Physics is a bitch. You can reduce the boom under certain meteorological conditions. That's what happens. You fly at 1.15 Mach. The sound barrier will bounce off. But it's impractical. It's a lot of fuel. You have high fuel burn there. It's not much faster than the speed of sound. So it's probably impractical. The Air Force is working on technology, though, that essentially cancels out the sonic wave. So there's theoretical ties. What about these other wild planes you're now seeing?

34:54Jet Zero? Yeah. Those, I really think, are going to be the future. I don't know how far away it is, but that airplane, it's like the B-2 bomber. It looks like a B-2 bomber, but it's a commercial. Yeah, those are the blended wing bodies. The whole airplane is a wing. They're more technically efficient. They burn a lot less fuel. There's more space inside. You can carry more cargo. You can do a lot of things. I think those, I think it may be 20 years from now. I think 20 years from now, someone is going to be flying blended winged bodies. Blended winged bodies are going to be the future, I think.

35:25And will we have room for them at the airport? We'll have to make changes. Gee, sounds like fun times at the airport coming in the future. Not just those goggles where no one goes anywhere. Oh, where no one goes anywhere? No, people are going to do that, too. That's going to be the other version of travel. It's not the same. Either person, it's not the same. I'm telling you, I can't see it. I can't see it. I need to be there. We're just trying to get Air Force One up and running, the new Qatari plane. Yes. That's a separate project. Safely. Yeah. All right. Fabulous. Thank you for coming in. Thanks for having me.

35:55Thanks, Phil. Thanks, Phil. Thank you, Joe. Love your reports, Phil. I appreciate it. You know what? I'm going to flag you. Next time I have a report, I'm going to say, Joe, I'm on the air in an hour. You would never preferentially highlight you. I do stuff like that. You don't. You're like Mr. Airline Object. Yeah, I have to. Okay, we're getting the hook, folks. Thank you. Cheese will be next. Coming up on Squawk Pod, NVIDIA lost billions from its China market this past quarter. CNBC's Christina Partzinevelis reports from the front lines of the chip war. Despite the China headwinds, NVIDIA's AI story is far from over.

36:34And the cost of the giant reconciliation bill making its way through Congress with the president of the Committee for a Responsible Federal Budget. She says not so responsible. We pivot to the Senate where it's moving next. Their aspiration, what they've put out in their roadmap for what they are going to try to save is$4 billion. That's their standard out of$86 trillion.

37:00This is Squawk Pod. Up in Andrew. Q. You're watching Squawk Box on CNBC. I'm Andrew Osorkin along with Joe Kernan. Becky's off today. It's just the boys. It's not just the boys. We've got women and others. She definitely chafed on that. We're going to bring. Introduce me. Well, no, but that was just once we do that, then it's a whole. This is your show. I'm just here for the ride. It's a whole different story. No, no, no, no. Come on. Come on aboard. Chairs of NVIDIA sharply higher this morning and up 30 % in the last month. Christina Partinellos is here with us at the table with the boys to talk about what's going on with NVIDIA.

37:38Good morning. Good morning. And thanks for letting me join, guys. But NVIDIA just proved that even major geopolitical headwinds really can't slow down this AI boom. So the chip giant reported better than expected earnings and revenue. We know that despite getting hammered by U.S. export controls that basically we can say banned its H20 chips going towards China. NVIDIA took a massive$4.5 billion hit from excess inventory of those restricted chips and said it would have pulled in an extra$2.5 billion in sales if the restrictions hadn't been put in place. CEO Jensen Wang had some pretty pointed words about it, warning that the U.S.

38:13government is really underestimating China's technology capabilities. His argument is if American tech companies can get blocked out, China will just build its own ecosystem. And Huawei is already showing how it's done. Jensen Wang spoke with our Jim Cramer about why staying in China matters so much. Listen in. That's probably the most important strategic reason to be in China because there are so many developers there. and because the world is going to adopt technology from one country or another, and we prefer it to be the American technology stack. So it's better to be just American than be completely blocked out.

38:48But the bottom line, NVIDIA projects it's losing$8 billion in Q2 revenue because of these government policies. But the company still managed to forecast$45 billion in second quarter revenue thanks to strong demand for its Blackwell products. That's the latest iteration of its GPU architecture. And as for serving the Chinese market going forward, NVIDIA had some limited options to explore. But when analysts really pressed CEO on the call on specifics, he was pretty blunt saying, we don't have anything at the moment, but we're considering it. So despite the China headwinds, NVIDIA's AI story is far from over.

39:23And most likely there will be another chip geared for that country. What do you think of that chip? How diminished will that chip be? Quite diminishing. The H20 is already much lower than the Huawei Ascend chip, the 910B, if I remember correctly. So on a scale, it's very, very low. And so that's the argument. If you're going to block an already lowered spec chip, you're just handing that market over to Huawei. Jensen Wang has said many times that they used to have a 95 percent market share of China. Now it's dropped down to 50 percent. Of course, they're spending a lot more on each individual chip.

39:55and it's still a big portion of sales. But it's an opportunity for them to still maintain a foothold in that market. You're an expert in this GPU world now. Can you help me with one thing that I can't figure out? So these folks who are building these big, you know, racks, these big centers, the big question in that space and among tech companies is, are they going to need to buy effectively the newest, highest rated chip every year? And if that's the case, what happens to the old chip? And what happens to CoreWeave. Right. And so what is the answer? The argument from CoreWeave's CEO, who corrected me upstairs here, because we were often talking about how these chips become obsolete, and he said, no, there's at least a shelf life of six years.

40:40That's what's in all of their financial statements. So depreciation cycle is six years, and that he believes it could be repurposed. However, the H20 chips that we're talking for China, Jensen Wong literally said, the end. There's nothing they can do with those hopper chips. They're essentially dead. These are more watered. I shouldn't use the word watered. This goes to the whole idea of it. Just like you're going to do all these things. These are like seriously depreciating assets. Yeah, and he's sticking with the annual cadence. What does that mean for every company that buys the hopper now?

41:09They're switching to Blackwell. So Blackwell chips are 70 % of their data center revenue. And then the next iteration, Rubin, after that, every single year, what does that mean for the smaller guy that just spent a lot on those hopper chips? Right. There is this argument that you're going to use the newest chips for sort of like the highest end stuff you're going to use. Then you can use some older chips for some mediums and then the oldest chips for like the easiest kind of. They're not completely obsolete. That's the argument. And they can be repurposed. But when at the level of compute that you need it at, you would need the most advanced.

41:41Christina, thank you. Thanks for having me. Appreciate it. Guys.

41:47According to the Committee for a Responsible Federal Budget, the House budget reconciliation package will add roughly$3 trillion to the debt, including interest over the next 10 years. And bank CEOs, among others, talking about the economic impact and worries about the deficit. Maya McGinnis is the president of the Committee for a Responsible Federal Budget. that she's not happy, and rightly so, probably, Maya. If I were to tell you how difficult it is to make a dent on discretionary spending, you'd say, yes, I understand that. And if I were to tell you that it's a very narrow margin in the House and you've got Republicans that also are very unhappy with this, would you at least acknowledge that$1.6 trillion of cuts is maybe the best that could be expected in this environment?

42:40I sure hope not. Well, first, I would tell you that this isn't actually the discretionary cuts that they're looking at here. That's done differently in the caps. But this is where they're taking the real part of the budget, the mandatory or structural reforms we want to see. It's where the biggest growth in the budget is. And overall, the changes we're seeing are tiny. And let me put it in context to say that, no, I think we should be able to do more in spending cuts. But over the same time period, the federal government is going to spend$86 trillion. OK, so I don't think$1.7 trillion out of that is very large.

43:15And then we pivot to the Senate, where it's moving next. Their aspiration, what they've put out in their roadmap for what they are going to try to save is$4 billion. That's their standard out of$86 trillion. So, no, I don't think this is serious about reducing spending at all. And one thing we know is part of the purpose here is for growing the economy. You do that by pro-growth, focusing on pro-growth tax reform and also by as little debt as possible. And so the three trillion that the House would borrow and the more the Senate might borrow is anti-growth. That's one of the big concerns. Right.

43:48I mean, in a reconciliation bill, you can't do discretion. I mean, that's that's what I meant. It's not possible. Taking that off the table. You're totally right. Yeah. So taking that off and that that needs to be addressed at some point. But but how much could could actually be done here, given not one Democrat is going to vote for this at this point in their view, Maya, that the spending cuts that we're seeing right now, grandma's going off the cliff again in her in her wheelchair from the slightest thing you do to Medicaid. Absolutely. So first, you're right. Discretionary can't be part of this, nor can Social Security.

44:24So those are big chunks of the budget which we should be committing to reform as well. You can't focus on cutting taxes and ignore the fact that we should be doing all these spending parts. Number two, that's right. This is not a bipartisan effort. Unfortunately, reconciliation rarely is. Something that used to be used to reduce the deficit. Now it's used to increase the deficit, and both parties use it in a way that is not at all inducive to bipartisan efforts, which is what we're going to need. You're not going to make any of these difficult choices if we don't have cover of bipartisan work to do it.

44:56I'm afraid a huge tax bill will make it more difficult to get Democrats engaged afterwards. I would like to see us focus on a big debt deal. But you are right. Every article I read where there's the description of all the benefit changes as slashing is so unfair, kind of stacked against the fact that a lot of these policies that are structural are going to have to happen and then much more. So there's a huge bias against doing anything hard, which is what fixing the fiscal situation is. But when you've got interest as the fastest growing part of the federal budget, when you have a Senate that may well make a$3 trillion addition to the budget worse, not better, you have to start looking at every effort you can.

45:37And if it's going to be a purely partisan bill, listen, Republicans have wanted to cut spending for a long time. Now is their opportunity. So I really hope we can do better than$1.7 trillion out of a very large budget over the same time period. So, Maya, the Treasury Secretary, we're at 7 % deficit to GDP. He wants to get to 3 % and you applaud that. This will not do it. Is there any way that you're underestimating the possible growth aspects where it actually does come in? much. That's what most Republicans will come back at you with. We're going to have much. The CBO doesn't calculate this correctly, and the growth could be much more robust than people think.

46:25Is there any way you're underestimating that? Yeah, they will indeed come back at us with that. And we're not actually estimating it as much as looking at the ranges of estimates out there. I would say there is no credible way that this bill is going to generate the kind of growth that the advocates are arguing it would. So listen, outside experts, there is a range of what the growth effects of this bill would be. They range from about negative 50 billion to about 710 billion. That negative number comes because the negative effect of all the borrowing can outweigh the positive effect of the economic growth, particularly in a bill like this, where a lot of those tax cuts aren't pro-growth.

47:03They're actually the opposite. They're cutting up the tax base. We should be broadening the base and lowering rates. But if you've got a range of negative 50 to 710 billion from growth, and then the House budget resolution is assuming 2.6 trillion in growth, many multiples. No, I don't think that that is what we should be banking on. We certainly shouldn't assume it ahead of time. Remember, there are things outside of government that are going to be negative on growth, looking at the uncertainty from tariffs and possibly from immigration. So we're not talking about a situation where you should spend all that growth, which nobody except the advocates of the bill are arguing is a credible number ahead of time.

47:41I know that's what people want to make the scene easy say, don't worry, we're going to grow our way out of the situation. Usually tax cuts generate enough to offset about 20 percent of the cost of the bill. This is less pro-growth than the previous 2017 version because that had the corporate rate cut, which is where a lot of the growth really came. How would we broaden,

48:04and your answer on is it on the revenue side or is it purely on the spending side? I would do as much as possible. Listen, I would love to see a reconciliation bill that would reduce the deficit. We have people who have said out there, and I completely agree, we should not be passing any legislation that makes this worse. Over the next 10 years, we are set if we do nothing to borrow 22 trillion more, we will have a debt as a share of GDP. That's the record of what it's ever been. So I would start with don't pass legislation that adds to the debt at all. I would increase the offsets as much as possible.

48:38If we're not going to do Medicare, which we should, there's still a lot more we could do in Medicaid. And yes, there will be accusations of slashing benefits, but there are a lot of gaming and gimmicks and taking advantage of the system goes on where we could focus the efforts. I also would get rid of all of the tax cuts that aren't really the fundamental pro-growth cuts and focus on the extension of the existing ones. And there's more offsets we can do in other areas. Yeah, Andrew. You know, Ray Dalio talks about what he calls the 3 % solution, which is basically you have to get interest rates in this country down to 3%.

49:10And the only way to do that effectively is using these sort of three levers, if you will. One is cutting costs. But the other, ultimately, he would say is raising taxes. And the last one, which is related to the first two, is getting the interest rates down. Actually, interest rates are the most important piece of this, but of course are a function of the first two. Nobody is willing to touch the idea of raising taxes at all. And clearly, nobody's really willing to touch the idea of cutting spending. And so if you can't even touch the first two, you never get to the third. And my question is, what's it actually going to take?

49:46I mean, he talks about a crisis is what it's going to take. But how do we force the issue earlier? Yeah, first I would like to say absolutely endorse what both Ray and Secretary Besant are saying, which is let's get this deficit to 3 % of GDP. It's the right goal. It would require savings of about $750 billion over the next 10 years. So that is, I'm sorry,$7.5 trillion over the next 10 years, clearly moving in the wrong direction. This is something that would bring those deficits up to 7 percent, not down. Number two, absolutely what you're saying is true. We have to reduce spending, we have to increase taxes, and we have to do it in a way that promotes as much growth as possible, but has reasonable estimates or assumptions about growth, not these kind of huge wishful thinking ones.

50:33We don't have the political dynamic to do this. We have two parties who are in a cage match against each other, fighting each other by trying to give away more than the other party. And the levels of polarization we have in this country are leaving us making bad choices. The fiscal choices that we are making are weakening our economy, weakening our ability to respond to emergencies, weakening our national security. We had a conference just yesterday with a lot of folks from different areas about what do you do if there is some kind of downturn or emergency because we're so indebted. Any response that we have right now will be much more difficult than it would be.

51:08So I'm worried about the political environment. If we went back to pre-pandemic spending, what would that take? And we're not going to do that. I mean, would that get us close? We got 15 hard. We got to go, Maya. We'll have you back. Okay. You know, I still think it's more spending than, I don't know. We've just blown out spending since the pandemic. And that is Squawk Pod for today. Thanks for listening. Squawk Box is hosted by Joe Kernan, Becky Quick, and Andrew Ross Sorkin. Tune in weekday mornings on CNBC at 6 Eastern. To get the smartest takes and analysis from our TV show right into your ears, please follow Squawk Pod wherever you get your podcasts.

51:51We'll meet you right back here tomorrow. We are clear. Thanks, guys.