First On CNBC: CNBC Transcript: Delta Air Lines CEO Ed Bastian Speaks with CNBC’s “Closing Bell” Today
WHEN: Today, Tuesday, January 7, 2020
WHERE: CNBC’s “Closing Bell” – Live from CES
The following is the unofficial transcript of a FIRST ON CNBC interview with Delta Air Lines CEO Ed Bastian on CNBC’s “Closing Bell” (M-F 3PM – 5PM) today, Tuesday, January 7th. The following is a link to video of the interview on CNBC.com:
Watch CNBC’s full interview with Delta Air Lines CEO Ed Bastian
All references must be sourced to CNBC.
WILFRED FROST: CES kicking off in Las Vegas. More than just tech companies are making headlines this year. Delta Air Lines announcing a number of new ventures, including plans for a digital concierge service that expands the airlines relationship with Lyft, and a new venture into robotics. Delta is exploring the use of exoskeleton suits its employees can wear to help with lifting heavy cargo or machinery. Joining us now, live from CES in a first on CNBC interview is Ed Bastian, the Delta Air Lines CEO. Ed, a very good afternoon to you. Thanks for joining us.
ED BASTIAN: Hey, Wilf. Thanks for having me. A lot of excitement going on out here.
WILFRED FROST: I bet. We’ve had great coverage from our colleagues all day. And delighted for you to be a part of it. Ed, tell us, what will you launching there at CES? I guess not typical for an airline to be there. It’s very much app-based expansion.
DELTA AIRLINES CEO : Yeah, it was great. We were -- we delivered -- I delivered the opening keynote for CES. The first time an airline had ever done that. In fact, the opening question that the CEO of CES gave me is why is an airline here? And it gave me the opportunity to tell our story. And our story really is about all of the investment we’ve made to improve the quality of our operations. We’re the on-time leader. We’ve got the most reliable, highest performance airline in the industry.
Investing billions in dollars, in the in-flight experience. And now, we’re doing the same to improve the ground experience. And you see our airports going up in many parts of the country and the improvements. We need to bring technology alongside that, whether it’s digital, whether it’s the Fly Delta app, whether it’s new technology like parallel reality. And that was our opportunity to describe that.
WILFRED FROST: And in terms of the new technology aspect, to what extent is it only really for on the ground services for the consumer? I mean, you were disappointed that free WiFi on all flights is still not a reality.
DELTA AIRLINES CEO ED BASTIAN: Well, we’re working on free WiFi. We’re committed to getting to free WiFi. But it has to be WiFi that has the expectations that consumers deserve: high-quality content, high-quality bandwidth and speed. We’re not quite there yet, but we’re on the path to getting there. And as I said this morning we will get there within the next two years. Sooner if we can. And then when we get there, we have to make it the same price on the ground, which is generally free.
COURTNEY REAGAN: So, Ed, you explained a little bit about technology helping the operations of Delta. What about on sort of on the consumer-facing side? When we all travel, it’s become stressful experience. Obviously, there are many players that tie in together, from the TSA and security, the airline itself, as well as the airport operations. But have been really announced any technology for making my experience potentially less stressful?
DELTA AIRLINES CEO: Sure, well that was one of the key themes for the presentation, is that we need to find ways to destress consumers as they’re traveling. And we all know that there’s stress in the environment, particularly in the ground experience. So, we announced, together with Lyft, a closer integration. So, when you’re traveling on Delta, yew the Fly Delta App, you’ll be able to monitor your arrival or destination information through Lyft. They’ll have cars there available waiting for you.
We unveiled a vision of the future, because it was really a visionary presentation going out over the next five years, whereby you don’t even need to bring your bag to the airport. Because we know how much stress is involved in bringing your bag and checking it or trying to get an overhead bin for it.
Why not have the opportunity to have us get your bag from your home to your destination, so it’s waiting for you when you arrive at that hotel. If you’re in a business meeting, you can go directly to the business meeting. Or, if you’re going to a new city, you have a chance to go explore it. I mean, there’s many, many things that we’re doing. But we’ve got the credibility, because we’ve got the core reliability performance of the airline fixed. And now it’s our opportunity to bring technology to make a real difference with our consumers.
WILFRED FROST: And I wanted to ask you about Boeing, if I may, another story relating to the timing of the return of the 737 Max today. Today, the airline saying that it’s going to push for a simulator training for all pilots moving forward. But either way, there’s been a delay after delay as to when this plane might return. To what extent do industrial executives like yourself losing fate in the company, whenever it makes any target, whether it’s related to the 737 Max return or anything else, are you losing faith in the ability of this company to make – to meet the promises it makes?
DELTA AIRLINES CEO : Well, Wilf, as you know, we don’t fly the 737 Max. So, we’re not directly impacted by that issue. We’ve been monitoring it. We’ve been in touch with Boeing around it. Yes, we have to -- we do have concerns regarding what it will mean for future development, and future technology innovation in our space. We have basically two suppliers in our space, we have Airbus and we have Boeing.
And we need Boeing to get through this crisis. We need them to get focused on the innovation and the development of the new technology for the new aircraft that we’re waiting to order. And they continue to push our industry forward, not just from an efficiency with cleaner emissions, but also better comfort for our customers. So, I have confidence in Dave Calhoun. I’ve known Dave for a long time. I think he’s the right man for the job. We’re staying in close touch. But it is frustrating, yes.
WILFRED FROST: That said, that frustration aside, Ed, is there a part of you that actually weirdly welcomes further delays in the 737 Max? Of course, the original tragedies aside, because you don’t fly the plane? Have there been some gains in market share for you because of the delays in the 737 Max’s return?
ED BASTIAN: No. We’re not – we’re hoping for that plane to get in the sky. You know, you’re right. We have on the margin some additional revenue and some additional share that we’ve gained because the plane has not been flying. But all the other airlines that do fly the plane I think gave a good job of covering off their key competitive markets.
You know, the great thing about airplanes is they move, and they can go fly to different revenue pools to make sure they’re protecting their key markets. So, we’ve had some marginal benefit. When it does come back, I’m sure there will be marginal negative impact. I think it will be small for us. But, you know, we really want -- it’s not good for any of us to have that plane out of the sky.
COURTNEY REAGAN: Ed, there’s been a lot of focus on the energy market this week, as you well know, after the events in Iran after the assassination of the General there. What is your outlook for jet fuel prices? I know the airline stocks got taken down a bit yesterday, as energy prices moved higher albeit preparing some of those losses by the end of the session. So, how are you focused on the cost of jet fuel going forward this year?
DELTA AIRLINES CEO : Well, we watch it closely, Courtney, as you can imagine. You know, we’ve built our business to be able to sustain short-term shocks like this. And we talk about short-term shocks going from $60 to $70 a barrel. You know, we’ve been built on a model where we had to cover over $100 a barrel not that long ago. So, I think the industry is in a good spot.
I know Delta is in a very good spot. We’ve built our business to cover oil and we expect oil to be on range-bound somewhere between $60 and $80 a barrel, where it’s been for the last several years. If it gets above $80, obviously there’s some decisions that we’ll have to take over time. But right now, there’s no change to our strategy. We’ve got a great plan for 2020 and we’re not seeing any real negative impacts from, you know, the most recent short-term spike we’ve seen this week.
WILFRED FROST: Ed, I wanted to ask you about the investment you made in LATAM Airlines Group. Is that a sign that you think the domestic airline travel market is somewhat saturated in ex-growth? And if, at the moment, 72% of your revenue comes from the domestic market, where will that number by in five years? Significantly lower than 72%?
ED BASTIAN: Well, it’s a fair point. Because over time -- not yet, but over time the domestic market will become relatively saturated. You see how congested air travel can be at times in our key markets. We’re building bigger airplanes and we’re building bigger airports, but we’re not building new destinations in the domestic market to fly.
You know, we’re doing well. We’re growing 5-7% a year. And we’ll continue. And I see that growth rate staying pretty strong over the next couple of years. But over time, certainly as we enter the next century of our future, which will be happening in the next few years, international, I think is the place we need to be.
That’s why we’re investing in Latam. And, a great airline, they have 40% market share throughout all of South America. A really important future partner for us. That’s why we’re investors in Virgin, Air France, KLM, Korean, China Eastern. We have taken a contrarian view that we need to get inside these other airlines, not just as commercial partners, but as equity owners to try to bring a longer-term opportunity for us and for them to the future.
WILFRED FROST: Ed, great to speak, as always. Thanks for joining us.
ED BASTIAN: Appreciate you guys having me.
WILFRED FROST: Ed Bastian, CEO of Delta Air Lines joining us from CES in Las Vegas.