U.S. first-quarter earnings are typically a non-event, but not this year. Aviation Week editors look ahead to updates from airlines and OEMs and share what they will be watching for.

Quarterly Qhaos—How Hard Will Geopolitics Hit Commercial Aviation?

Aviation Week's Check 6 Podcast

# Full Transcript

**Podcast:** Aviation Week's Check 6 Podcast

## Participants

- **Christine** (None)
- **Sean Broderick** (Aviation Week)
- **Lori Ranson** (CAPA)
- **Michael Bruno** (Aviation Week)

## Transcript

Hello and welcome to Aviation Week's Check 6 Podcast. This week we're taping just ahead of first quarter earnings calls and getting ready to hear from Alaska, United, American Southwest, and RTX and Boeing. An earnings preview is a bit of an unusual topic for us on this podcast, but these are unusual times. Since the U.S. and Israel launched joint strikes in Iran six weeks ago and we now have some sort of double blockade situation in the Strait of Hormuz, the playing field has changed.

In purely economic terms, we went from slow growth in mature markets and higher growth in emerging markets to the big oil shock, an environment that could be a powerful catalyst for change. So what can we expect on airlines, manufacturers, suppliers, and MRO as we head into first quarter earnings? With me to discuss are Aviation Week Senior Editor Sean Broderick, CAPA Senior Analyst Lori Ransom, and Aviation Week Executive Editor for Business Michael Bruno.

Lori, let's kick it off with airlines first. We already had Delta report its earnings for the quarter and we had an investors conference in mid-March that gave us some early insights. In the U.S., at least, carriers are raising fares and fees to offset higher fuel and so far seeing no slowdown in demand. So what's been your impression so far about how airlines are navigating this challenge ahead of the updates that we'll hear next week?

Yeah, thank you, Christine. And I think, not to diminish what's happening right now, but if you go back five, six years, or 20 years for that matter, this is the latest headwind, right? I think what is different this time in the case of U.S. Airlines is they're not hedged. And as you said, they're pushing fares through and those fare increases are sticking. It's a little bit different for European airlines because they are hedging.

And so pressure to raise fares isn't as intense. But as we all know, with the closure of the Strait of Hormuz, they're facing fuel shortages. And so it's a different kind of challenge that they're facing because the busy summer season is coming up. And if they don't have fuel, it could cause chaos at airports, passenger discontent, all of those things. Just to jump back to the U.S. for a brief second.

So the two most successful airlines from a financial standpoint, Delta and United, have opted to cut capacity. So what I'm looking out for is capacity discussions from other carriers that aren't so financially sound and what they're going to do in terms of balancing the fare increases while managing their balance sheets that aren't as strong. Thanks, Laurie.

Delta also raised the point about how past periods of disruption have been and higher fuel costs have been catalysts for change like consolidation. And of course, this past week, ...

Quarterly Qhaos—How Hard Will Geopolitics Hit Commercial Aviation?

Transcript

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Every day you wait, your competitors are finding
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Quarterly Qhaos—How Hard Will Geopolitics Hit Commercial Aviation?

Transcript

Built for investment professionals

Every day you wait, your competitors are findingedge in conversations you're not hearing.

Every day you wait, your competitors are finding
edge in conversations you're not hearing.