Valuetainment - April 23, 2026


“20,000 Flights CANCELLED” - Jet Fuel Prices SKYROCKET Forcing Airlines To Cut Routes

Hosted by
Patrick Bet-David
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Episode Stats


Length

7 minutes

Words per minute

193.94

Word count

1,504

Sentence count

80


Summary

Summaries generated with gmurro/bart-large-finetuned-filtered-spotify-podcast-summ .

United Airlines slashes its profit forecast for the year, as jet fuel costs surge. Lufthansa cancels 20,000 short-haul flights to save on jet fuel. Jet fuel prices have hit record highs and are on track to keep going higher.

Transcript

Transcript generated with Whisper (turbo).
Hosts, guests, and mentioned names generated with spaCy (en_core_web_sm), reconciled against Wikidata.
00:00:00.000 You mentioned jet fuel, right?
00:00:02.240 And there's three stories I'm going to read at the same time, and then, Tom, I'm going to come to you.
00:00:05.020 Number one, Deutsche Lufthansa canceled 20,000 short-haul flights to save on jet fuel.
00:00:12.880 Rob, go ahead and play the clip.
00:00:13.860 Lufthansa has canceled 20,000 flights between May and October to save on fuel in one of the largest cuts by a global airline.
00:00:22.700 The cuts will save around 40,000 tons of jet fuel and will amount to 1% of available seat kilometers.
00:00:30.600 The carrier is trying to boost profitability with a plan to cut 4,000 administrative jobs by 2030.
00:00:38.040 Can you imagine, like, what's going on there?
00:00:40.260 Now, let me get to the U.S. one.
00:00:41.300 So you may say, well, Pat, that's, you know, that's Germany.
00:00:44.320 Why do I care about Germany?
00:00:45.520 Do you care about United Airlines?
00:00:47.020 Here's United Airlines for you.
00:00:48.800 United Airlines slashes 2026 forecast as fuel cost surge.
00:00:54.020 Okay, so here's a story for them.
00:00:56.700 Forecast to just $7 to $11 a share.
00:00:59.660 Let me read this story to you with them.
00:01:03.460 Here we go.
00:01:06.940 So United said it could earn between $7 and $11 a share on an adjusted basis this year,
00:01:11.740 down from its previous forecast, $12 to $14 a share,
00:01:14.980 released in January more than a month ago.
00:01:16.660 The carrier, like others, is trimming down of its planned flying this year to reduce costs.
00:01:21.720 Wall Street had already been adjusting its expectation for the year.
00:01:25.240 As a result, analysts like polled by LSEG had forecast that United's adjust full-year earnings could be 9.58 a share for the second quarter.
00:01:35.900 United forecast adjusted earnings between $1 to $2 a share.
00:01:39.400 Analyst had expected $2.08 a share for the quarter.
00:01:43.360 The carrier has said it's expected its revenue to cover between 40% to 50% of the fuel price increase in the second quarter as much as 80% in the third and between 85% to 100% by the end of the year.
00:01:56.740 Revenue overall rose more than 10% from $14.61 to $14.61 from $13.21 billion from last year.
00:02:05.280 Tom, what's going on over here with travel and jet fuel?
00:02:08.000 Well, it's a little bit of a complex situation.
00:02:11.720 All of the airlines out there, I should say almost all, I believe 90% of the airlines out there have one of the most important persons in the executive suite is the economist that's responsible for their fuel hedging strategies.
00:02:25.460 They hedge fuel, and they try to plan for things.
00:02:28.620 And what's happening right now, the cost of fuel unexpectedly popping up, they're looking for cost reduction.
00:02:36.500 And the way they're looking for cost reduction, in the case every airline, some of the shorter flights are not profitable, believe it or not.
00:02:45.940 But they get people, like think of Delta.
00:02:48.620 Delta's got a giant hub in Atlanta.
00:02:52.220 And it operates small flights that get to Atlanta.
00:02:55.780 And some of those are marginally like break-even, Pat, or maybe they lose a little bit.
00:02:59.960 Now, why would you do that?
00:03:01.060 Because they make a lot of profit once you get to Atlanta and then you fly to New York or you fly to L.A.
00:03:06.180 or you fly to South America on the long flights with the large wide-body aircraft,
00:03:10.780 and they make a lot of money on those.
00:03:12.420 And so what Lufthansa said is they have a small regional division called CityLine.
00:03:21.080 And so CityLine, they say, hey, we can't afford to run CityLine,
00:03:23.960 which means that some of those people will drive two hours to get to a more major airport
00:03:28.240 rather than having the convenience of a small airport, you know,
00:03:32.360 where they can get to the major airport to fly.
00:03:34.460 and this is all around fuel and i can give you some perspectives on it as well now you're going
00:03:41.560 to have people that say well maybe i just won't fly this year um kim had to go rather urgently
00:03:47.520 to see her dad in idaho and so the coach ticket was 750 bucks just to go from fort lauderdale
00:03:57.100 to idaho and that's on delta go to atlanta switch planes go to salt lake and then they're crazy
00:04:02.660 right well she already has to go back there again because he has another appointment she has to go
00:04:07.460 to six weeks from now in june do you know what the price of that one is 1600 bucks the same coach
00:04:14.980 ticket tom a coach ticket 1600 bucks yeah because it's it's it's also because it's three flights
00:04:21.220 and twin falls is a very small airport but you take a look at what's happening this is crazy
00:04:28.020 This is really crazy.
00:04:29.420 And so you're seeing prices go up.
00:04:31.140 Now, that's one example from Delta to a micro.
00:04:34.240 By the way, and the question she's asking, what if Delta decides they're not going to operate SkyWest later this summer?
00:04:39.820 Or they're not going to have that.
00:04:41.280 She's going to have to go to Salt Lake City and then drive three and a half hours to get to her dad's place in southern Utah.
00:04:47.640 And so what's happening now is the airlines were carrying the initial cost.
00:04:54.000 And now the airlines are saying, look, I wanted to keep my market share.
00:04:58.420 I wanted to keep my customers.
00:04:59.760 I wanted to do a little bit.
00:05:00.880 So they kept a little bit of it.
00:05:03.160 Now they're saying, I can't do that.
00:05:04.980 So I got to get rid of my short haul flights that are just marginally profitable or not profitable.
00:05:09.840 And I got to raise fares.
00:05:11.720 And that's what's happening.
00:05:14.160 While you're saying that, there's five other airlines that are going through this as well.
00:05:18.020 Cathay Pacific Airways, a Hong Kong-based airline,
00:05:20.400 said it will cancel about 2% of its scheduled passenger flights from May 16 to June 30.
00:05:24.820 HK Express, a budget carrier, said it would cut about 6% starting May 11.
00:05:30.620 And then we already talked about Lufthansa, what they're going to be cutting.
00:05:33.900 And then Dutchess Airline KLM said it would cut 160 flights in Europe next month,
00:05:38.280 amounting to less than 1% of its flight schedule.
00:05:41.300 And as some companies have already signaled larger reductions,
00:05:43.920 Vietnam Airlines in March said that it may cut up to 18% of its international flights
00:05:49.540 and 26 percent of its domestic flight so that's big we're seeing the stories it's not yet
00:05:56.460 fully scaled to everybody but you're feeling the impact so far right now brandon yeah and i think
00:06:02.620 this is just kind of the beginning of this if it keeps going in that direction because we just got
00:06:06.200 to the point where the the last fuel shipments from before the um the war started were arriving
00:06:11.540 so i mean like that that lag effect is finally starting to hit but um that's why i think that
00:06:16.300 oil's actually got a lot like interest rates going up and counterintuitively it could kind of knock
00:06:21.700 the price down a lot of things like people are saying this is going to cause inflation but i
00:06:25.400 think it's just going to devour disposable income because of what you know what people have to spend
00:06:29.260 on energy people have to spend on travel um and yeah i mean uh airlines it's not surprising that
00:06:34.260 one of the first ones to go there they've always had like razor thin margins i think it's like
00:06:37.800 well like two to five percent and that's why they always have to get government subsidies but
00:06:41.580 But, yeah, one bright spot out of this, I think it could bring down inflation in a lot of other areas
00:06:46.640 because of how much more people are spending on energy.
00:06:49.740 Yeah, you know, there's a great article by CNBC.
00:06:52.160 It says, Travelers need to know a few things.
00:06:53.720 Number one, know your rights.
00:06:54.640 Every airline has its own policies about what it owes to passengers who face delays and cancellations.
00:06:59.480 Federal rules require airlines to pay a prompt refund to a ticketed passenger,
00:07:03.360 even those with non-refunded tickets if they cancel a flight or make a significant change to the itinerary.
00:07:08.280 Number two, check your contact info.
00:07:10.120 Make sure the airline has your contact information on the file in case it needs to get in touch with you.
00:07:13.800 Number three, act fast.
00:07:15.440 If an airline contacts you about a canceled flight or change to your itinerary, set in NERD wallets,
00:07:20.460 the sooner you act in contact in the airline, the more options you're going to have.
00:07:23.780 Fly nonstop.
00:07:24.660 Flying nonstop to a destination is generally more expensive than booking a flight with a layover.
00:07:29.620 However, it's a good strategy for travelers who can afford it and want to minimize disruptions
00:07:33.680 and consider travel insurance while you're going through it.
00:07:35.880 So it's an interesting time where you're traveling right now.
00:07:38.700 So it is something that's becoming real.
00:07:41.140 Of course, we'll follow the story closer to see how much bigger this gets.
00:07:43.800 But that's that part.
00:07:44.480 Let me get to the next one.