>> i am mark with first word news. russian missile attacks and rush it on so areas killed at least 19 people -- in a residential area killed at least 19 people. three missiles fired by russian bombers had an apartment building and two campsites. the strikes came a day after russian forces withdrew from a black sea island. a spokesmen claim they are not targeting residential areas. officials in kyiv are exploring the possibility of debt restructuring. the war ravaged country is running out of funding options

and multiple scenarios are being considered. ukraine has until september 1, when it faces 1.4 billion dollars in redemption and interest payments. north korea, blaming its coronavirus outbreak on what it calls "alien things," items such as balloons and sent across the border with south korea. a government agency in seoul negated that claim. health officials elsewhere said as early as two years ago the virus had clearly made its way there. more than 43,000 guard members are out of compliance with the direct order to show proof of vaccination or get an exemption by a deadline last night. that is about 10% of the force. the guard told the new york times in bun army national guard has a lower vaccination rate that they -- than the air guard.

they say soldiers will have every opportunity to get the vaccine. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. ♪ caroline: welcome to "bloomberg markets." kriti gupta is about to take on all things airlines. the s&p 500, with a shortened week upon our hands as was celebrate the holiday we celebrate -- -- as we celebrate the holiday of july 4. we are downgrading the outlook for growth on the back of some of the data today, manufacturing coming in less than expected. consumer sentiment, coming in worse.

the u.s. dollar, like a haven. pushing higher by .5%. we see the supply side once again under pressure. once again we look at this particular instance, seeing an issue on supply pyramid the bond market is really where the action is today. yields down, crushingly lower, as we see this recession shock. when it's to watch yields and the two-year. down by 11 basis points. the 10 year yield also down by 12 basis points. we are going to be talking about airline stocks. falling more than 20% to start the year as the industry grapples with various disruptions. we will focus on the travel chaos and then some optimism as we go into the u.s. holiday we can. -- u.s. holiday weekend. they said it is easier said than

done to increase capacity to meet high demand. >> operationally [indiscernible] >> operationally airlines definitely have more demand today. even with more consumers choosing to drive. they have taken it back because they want to maintain the operation. we are probably trending only one percentage point higher than it was pre-pandemic. caroline: a little technical glitch here. kriti gupta, who are usually sitting where i am, but today you are at the airport, laguardia airport, what is it like in new york? >> we were expecting travel chaos. we are starting to see a little bit of a pickup.

but it's not the chaos you were expecting. if you talk to people on the ground, they say you should've seen what it was like 2-3 days ago. we've been hearing about the flight delays and cancellations because of labor shortages and jet fuel prices. perhaps demand disruption at play, at a time when everyone wants to get out and travel on this very long weekend in the states. they seem to get ahead of that and do it earlier in the week. >> interesting. i wonder also, what is it like over in jfk? what if people been telling you about what it is like on the others? is it a purely u.s. issue that we are seeing? >> it is certainly not a u.s. issue, laguardia has international and domestic flights as well -- we are only domestic on domestic at this terminal, terminal b at laguardia. what is significant here is what people are saying about not just

domestic travel, but international travel, travel by rail, travel by car. some of the folks i spoke to hear are going to places like albuquerque and florida but they say their families are already there and have actually driven into those specific areas, and that is going to be really a significant part of a conversation here. is air travel the only way to travel anymore? caroline: well said. that is the thing i'm noticing. i'm pleased to say the campbell industry analyst will be joining us from campbell research group. kriti so beautifully set us up, how busy is it, what kind of weakened are we anticipating on their -- weekend or we anticipating on the air? >> we are looking at one of the strongest, busy holiday weekends for airlines. perhaps almost as busy as we would see as thanksgiving. it is just a massive summer travel weekend. it helps that we obviously have

the holiday on a monday. a lot of people have made it the center of their holiday vacation. kriti: let's talk a little bit about the airfare here. we have been talking about demand destruction for ages. when you hear some of these forecasts, a lot of people are saying there is record airfare prices and fuel prices but people are still saying that even in the face of that, that is still cheaper than the alternative of flying, how long is that dynamic going to last? >> that's a good question. airfares are as much as 50% higher than they were in 2019, according to associates. measuring airfares. what's really interesting to me is we have a lot of people paying for this summer's vacation with travel credits that they got in 2020 and 2021, when they were forced to cancel their flights because of covid.

so, a lot of folks may be able to use those credits for all or part of their vacation -- their summer flights. and that cushions the blow against much higher airfares that we are seeing. how long those credits will last, we don't know. i am hoping the airlines will provide more color on the redemption when they discuss their june quarter results in the next few weeks. kriti: the redemption is where i wanted to go. it was recently told to me some of the travel benefits a lot of americans are used to with their credit card purchases or employee benefits is not exactly the case abroad and internationally. i have to ask -- as you start to see the redemptions, how much capacity do the airlines actually have? your hearing stories of $10,000 waivers, just to get one flight -- you are hearing stories of a $10,000 waiver just to get one seat on one flight. how long can airlines offer those kinds of benefits in the wake of this french we are seeing --

french we are seeing? -- this crunch we are seeing? >> the $10,000 waivers are the exception, not the rule. the airlines have a lot more planes than they can fly because they just don't have the pilots available. there are hundreds of regional flights with passengers that are grounded because of regional carriers do not have enough pilots. a lot of smaller communities in the u.s. have lost some or all of their service. airlines in other parts of the world are scaling back. luftansa canceled 2200 flights this summer because so many of their pilots and flight attendants are contracting covid. british airways was just told they had to cut 650 flights out of heathrow and other airports because they don't have enough people to operate. and of course we are seeing

airport disruptions in europe with matterhorn sized mountains of lost bags at london heathrow and chaos elsewhere. it used to be a thing that getting there was half the fun, no getting there is all the misery. airlines around the world are under a strain. my concern is this is going to have really negative repercussions going forward. caroline: talk to us about the negative repercussions in the relationship between the labor and management in the moment. how are things between pilots and british airways, lufthansa, united, you name it? >> they are not great. i'm not going to say united should be in the group. but right now there's a lot of tension between american airlines, delta air lines, southwest airlines, and those airlines and management. yesterday american airlines issued a new contract proposal to its pilots offering a 16.9% pay increase. that would be in place by the

end of 2024. that certainly is very compelling. united had put out a proposal a couple of weeks ago to its pilots. that appears to be dead in the water right now. i think united's pilots and management will renegotiate that. they seem to be a little bit more collaborative there. delta which has a reputation for having one of the best relationships between management and labor is really, really struggling. yesterday they were picketing by delta pilots at several airports. the delta pilots say they are being overworked, as do southwest pilots. delta pilots are also frustrated that in their opinion delta outsources a lot of the long haul international flying. flights between the u.s. and europe, they want to operate more of those lights and they want more and better pay and other forms of

compensation. it's going to be a tense few months, i believe though that we will see these settled amicably. caroline: great to have some time with you. thank you for all the expertise. coming up, travelers are struggling to reach their holiday weekend destinations. this is the beginning of the summer trouble nightmare. -- travel nightmare. we hope not. this is bloomberg. ♪

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>> fuel prices, that is what is driving inflation in the economy in my opinion. certainly for united airlines, if the fuel prices stay at today's levels, incremental

expense compared to 2019. if the forecast is correct, i expect this will be the new normal. caroline: this is "bloomberg markets." with kriti gupta live from laguardia airport, i am caroline hyde. in this half-hour we are looking at all the disruptions of the airline industry. this week alone, the delta ceo apologizing for all the difficulties in the frequent flyer program for members. he said, "the majority of our floods continue to operate on time, but the level of disruption and uncertainty is an acceptable." joining us as the president of crank a concierge travel assistance. one of the best companies we have had in a while. talk to us about, as you write these daily newsletters, your research supporting the airline

industry, how is the consumer weathering the unprecedented delays? >> well, it is certainly difficult for people. a lot of it is, if you look at the numbers, the majority of flights are on time. while that may very well be the case, that just means you have a lot of people that are impacted, especially when they are connecting. it creates a lot of stress. then you hear a lot of the airlines talking about how they need to come back, we are issuing apologies, travel waivers, like delta has done for this weekend. it just makes people more anxious. caroline: i have to to ask about capacity here, because i think for consumers, it is easy to go on to say a travel book and website, a travel agency book on their flight -- but what happens when you don't actually have the planes leaving the airport? if there are not enough air traffic controllers, say, 89 flights are likely to get condenser 36 lights, as scott

kirby told our own guy johnson, problems like that, how can travel agencies really anticipate those kinds of issues and really retain the customer base? >> right, well, it is hard to do that because are so many different moving parts. what we have seen is some airlines have looked at this in advance and realized that they were overcapacity of what they could actually serve. alaska airlines cut down significantly for the summer. they are actually running a pretty good operation right now. united just recently removed 50 flights a day from newark, to try to right the ship there. but ultimately you don't know what is going to happen on any given day. there could be an air traffic control staffing shortage, like in jacksonville is a problem, a lot of people in florida. then you have the weather, just look at tomorrow, the northeast may have some thunderstorms -- that could snarl travel as well. it is really hard to predict in advance what is going to happen. but travelers can usually do is, you keep an eye out for these

waivers when they do put out waivers for severe weather, that could give people an opportunity to try and move away from that. and to another hub, possibly. other than that, it is just hang tight and hope it all goes well. [laughter] caroline: hang tight and hope it all goes well. -- kriti: hang tight and hope it all goes well. in honor of your company, cranky, i'm sure it will make customers cranky as well. from an airline perspective, if there are certain hubs that are more congested, does that mean some of the flights are then allocated to other areas? >> depends. if they have the ability to do it, they can do that. but united for example, they are just pulling those 50 flights out of newark. i haven't seen that they are reallocating that anywhere else. travel this summer, the demand is very high. so floods are very full. -- so flights are very full.

but people traveling and -- traveling in august, they are still seeing issues. especially of other people are missing connections, that is frustrating for them, but it becomes a whole shell game, where people are looking around for states to become available. if you can travel nonstop, then that certainly makes it a lot easier for people. but once it comes to connections, it is really tough. from an airline perspective, if they could add more capacity, they would. they've already tried to add more capacity and many realized that that was too much and they could not actually handle it. delta pulled down there flying beginning now, in july through august, they had to pull down additional flying when they realize they were not able to support what they had filed. caroline: that is really interesting insight. you and i are users, trying

to navigate pick current airlines. thank you so much brett snyder, resident of crank a concierge. as airports get hectic before the holiday weekend, let's talk private travel. that's next. this is bloomberg. ♪

>> this is "bloomberg markets." many are traveling ahead of the holiday weekend, as airlines are canceling, delaying flights. some people have got the money to do so, private travel. we've got megan wolf. a leader in private jet travel. people are managing to make their lives a little bit easier if they pay up. what our numbers looking like for you at the moment? >> we have seen, over the course

of all of 2022, from 2021, we are up about 30%. but we are seeing this weekend it is the travel to the boston's comments on nantucket -- from the boston area, to nantucket, to islands. i was listening to brett talking about how challenging it is for commercial travel, when there is a disruption. one of the greatest ones as you have flexibility. -- is you have flexibility. when there are delays in one location, we can pave it to another airport and avoid the congestion that you hear commercial travel dealing with. kriti: i am curious about simply the longevity of this. if you have a lot of customers who perhaps are not normally private jet flyers now, stimulus plays into that, the extra funding -- but now we are looking at an environment where the local economy -- where the global economy is

struggling, does that mean the trend is going to continue into the next five years? >> who actually have a long-term commitment with the flagship program, it is a three to five commitment to be a part of the program, but when they are making the investment up front they are doing so based upon an excitation of being with us for the long term. . so we don't expect any of the challenges right now to erode the ownership that we have today. we are seeing more travel into our larger cabins. kriti: you might hear one plane behind me right now, if there's a little bit of background noise. what we are seeing is they are actually moving up the food chain in terms of the chairs they have, the ownership, in order to just have more accessibility to promote mobile products. kriti: let's talk about jet fuel, how much of that is playing into how much you are costing -- how much it is costing your consumers? >> jet fuel has always been part

of a pass for the owners, it's been part of the program for day one -- from day one. with these increases in prices, we have seen them before and there's not much different from the experience from the past. caroline: we enjoy spending time with you. a beautiful backdrop, hearing the jets take, learning more about your business model, megan wolf. coo of flexjet. some areas are seeing growth at the moment. the question is, what about consumer demand amid the recession risk? kriti: i think that is the key part of it. you are already hearing a lot of people make that trade-off between airfare and driving, because they are saying, there's a higher gasoline price, but we are going to drive anyway because airfare is too much for us. i'm curious how much of the airlines lose their customer base as we stare into the face of a potential recession. caroline: this is such a global story, i've got a story on the bloomberg right now, more cancellations of flights.

it is a perfect storm of labor alongside the concerns about health, as well as wealth. what an amazing job, kriti gupta at laguardia. we thank her there. i'm caroline hyde. this is bloomberg. ♪ when people come, they say they've tried lots of diets, nothing's worked

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mark: now keeping you up-to-date, here's the first word. global news 24 was a day on air and on bloombergquint take. china's president xi jinping defending his crack out of,'s pro-democracy movement -- crackdown on hong kong's pro-democracy movement. xi said the former british colony should focus on its economic development. he said hong kong entered a new stage, moving from chaos to governance. this was xi's first big speech in hong kong before it was rocked by pro-democracy protests in 2019.