Complete Intelligence


United Airlines’ biggest ever order

Back in the BBC Business Matters, Tony Nash shares his thoughts on matters like United Airlines order of Boeing planes and how important is this order for the US economy? Also, will travel be back to normal and how soon will that be? How about pork prices becoming super cheap, and what’s the outlook for the agriculture commodities in general? And is the work-from-home people be lured back to go and work in the office?


This podcast was published on June 30, 2021 and the original source can be found at


BBC Business Matters Description:

United Airlines makes its biggest ever order of aircraft in a bet on a post pandemic travel renaissance; the BBC’s Theo Leggett gives us the full details and how safe the bet might be. As many people abandon the office for working from home, property companies say they need to lure us back to the office by making us want to go back – Liviu Tudor is the President of the European Property Federation and tells us how he plans on making office spaces more alluring. As some companies introduce leave from work for women in menopause, the BBC’s Ivana Davidovic speaks to women about why it’s so hard to talk about menopause in a corporate landscape. Plus, cheap pork has flooded the market as China’s pigs recover from the African Swine Flu – Kirk Maltais from the Wall Street Journal explains how the oversupply of pork has forced US producers to cut their prices to very low levels. We discuss all this with guests Shuli Ren, Bloomberg Opinion columnist in Hong Kong, and Tony Nash, chief Economist at Complete Intelligence in Houston, Texas.


Show Notes


JR: How are you, Tony? Before we get on to the sort of impact on the trumpet or the importance of the travel industry, I just want to think about the importance of this order for Boeing. And I’m remembering that old phrase about GM. What’s good for GM is good for America. I mean, you can’t say about GM anymore. You could perhaps say that about Boeing, couldn’t you? I mean, that’s why this order is important.


TN: It’s important. And I’m pretty sure there’s some sort of subsidy for United to buy it, especially since a lot of it’s being spent in the U.S.. It’s in listening to some of the analysis, it’s pretty easy to be critical of United since they’ve been on government support. But really, the market was pulled by the government, the travel restrictions and everything else. So it’s really hard.


And I’m no defender of United for sure, but it’s really hard to blame them when their market was really pulled because of public health restrictions. So I do think that they’re making the right call here. I do think that travel will come back faster than the fears of many. I don’t think it will immediately react by September. But I do think that they’re making the right call.


JR: You’re not one of these people who thinks that travel will never quite go back to where it was. Actually, there have been certain changes in the way we regard moving around this planet in terms of we can do video conferencing, we don’t have to go to business meetings, we don’t have to go to those international conferences anymore. Is it not a permanent change or is it a temporary one?


TN: I think it’s probably permanent for maybe 30% of people. But if you think about the people who have to see each other face to face, the 30% who it won’t be required for, they will aspire to do that because they want to be like their peers who are actually getting deals done and who are actually meeting people that they need to meet face to face. I used to travel, you know, twice around the Earth every four weeks or something. And if I don’t ever get on a plane again, I am a happy man. But I don’t think I’m most people. I think most people are very happy to get on a flight and go for for a holiday or for business.


JR: Okay. I just want to know, have you traveled actually, and spend time in the last year or two by plane?


TN: I haven’t. But it’s not because there haven’t been business opportunities. I just really don’t like to fly anymore. So I’ve done way too much of my life.


JR: Yeah, Tony, the United’s last order actually involved Airbus aircraft as well as Boeing. And that has been this truce between the US and the EU on Airbus and Boeing over the trade war between the two. Do we feel that actually aircraft production is going to get back on track now?


TN: Well, I think that European and Asian airlines will be slow to make capital commitments. I think American Airlines in the U.S. have old fleets and so they have to renew them and their tired fleets, too. So but I think in Europe and Asia, the Asian fleets generally a little bit newer, of course. But I think they’ll be a little bit slower to order. I think we’ll have to say some European countries that subsidize their airlines, like I don’t know if United was subsidized, but I wouldn’t doubt if they were. But European countries that will subsidize their national airlines to help out Airbus, I mean, that’s its fiscal stimulus. It’s all over the place. It wouldn’t surprise me in the least.


JR: We can come to, you know, about the impact it’s had on the American producers and also on Chinese US trade relations, because that’s where it really starts to get interesting, because the China was importing a huge amount of hogs and also corn and soybean in order to be able to support their industry, which was really under in dire straits.


TN: Right. So there are three layers here. So first, you have the news about the hogs. And I think the the commodity prices sold off on the news, I personally don’t believe it. I think the herd is improving in China, but I don’t think it’s back to normal. You also have commodities like corn and wheat that are elevated on really bad corn crops in China and bad feed crops in China. So there’s been a lower corn crop in the U.S. than usual this year.


And Chinese pig farmers have started to feed them wheat, which is not a normal feed for hogs in China at least. So that’s affected with corn prices and wheat prices, which are which are continue to be elevated partly on the demand in China, but partly on, say, weather and supply and other things in the U.S..


So I do hope for China’s sake that the herd is healed and back to normal. I’m just skeptical of it. But I do think that we are seeing pretty hot and dry summer in the Dakotas and other parts of the U.S. that produce significant part of the U.S. corn crop. And until we start to see rain in the Dakotas and elsewhere, I think there’s going to be pressure on those prices. So U.S. farmers are you know, they’re struggling just to grow. Of course, the ones who are growing are doing well. Those who have crop to sell are doing well because the prices are elevated.


But it’s put pressure also on U.S. consumers because what we saw in the U.S. was a lot of accumulated frozen meat, pork, beef, chicken. And with the shutdown of the meat processing plants in the U.S. with the pandemic, it wasn’t manufactured in the U.S. So we had a large stock of frozen meat in the U.S. that’s now drawn down. And so the supply chains around meat are are pretty tight, actually. So we’re seeing real upward pressure in the U.S. on meat prices. And so that’s part of the reason I don’t necessarily think that the news in China is what they say it is, because there’s still there’s still draw of pork to China now.


JR: That’s really interesting. A whole lot of confluence of different influences that are pushing in different directions. We have seen these very dramatic falls. But you think they may actually be just temporary and just the sort of the market volatility of the last couple of weeks, you think?


TN: Well, I think part of it is weather, part of it is supply chains. I think we’ll see things come back to normal in probably four to five months in terms of U.S. commodities. But I think the summer is going to be pretty volatile still. So if China does continue to have the demand, it’ll put more pressure on the volatility in the U.S..


JR: OK, Tony, what about in Texas? What’s happening there? I mean, you still got supply chain problems, still got sort of the difficulties of actually getting stuff or is there no problem in that?


TN: I don’t think there’s a problem in actually getting stuff, I wouldn’t say it’s the supply chain itself. I think it’s the after effects of the supply chain problems. We also had things like I’m sure you’ve heard of the freeze that we had here in Texas in the spring. That freeze actually killed three generations of chickens. It killed the the chickens that would be sold to market and it killed the eggs.


So we had a several state area where where all of the chickens died because of the freeze that happened in this part of the U.S.. So while people made fun of us for our windmills not working, there actually was real impact. And, you know, we really had an impact here. So we’re seeing an impact on chicken prices. And, of course, meat is substitutional generally. So it’s really pressuring all of the all the proteins. But again, we are seeing vegetables and other things. It’s not necessarily availability per se at the cash register. It’s really the pressure on the price. So whoever pays the most will get it. At least that’s Texas.


JR: Has it got to the point of the poor people it’s a problem. I mean, it’s of a wages keeping up. I mean, is this a real issue or is it just one of these things people say, oh, gosh, prices are going up. It’s, you know, what a nuisance.


TN: Well, because of the the programs that the federal government has had here, I think the minimum salary of someone who actually stays home and collects unemployment is something like 48000 U.S. dollars a year. So for the past, I think 15, 16 months, the people who would be the poorest and who are unemployed are actually making almost 50,000 dollars a year based on a kind of the federal kicker because of the virus. And so while it’s hitting, the people who would normally be the most affected are actually getting more money from the federal government. So the hope is that they’re not feeling it.


JR: Okay, Tony, thank you.


I was talking to my colleague, Rob Young. Now, what I think is really interesting here is the sort of power play between the various people involved, the employee, the employer, the property company. And basically, if the employee has to come back, has to come back to the office, no one’s going to bother to give them fantastic facilities and sort of going to gyms and all the rest of it, if they’ve got to come back. And it’s really depends on that part played between the two. So do you think actually, Tony, we’re going to see any change in the way property companies or employers actually treat their employees?


TN: No.


JR: I’m quite doubtful, too. I mean, it always sort of blue sky thinking about how marvelous our offices are all going to be in the future. I don’t think it’s going to be different.


TN: No. And in fact, I’ll go even further than that. All of the talk over the last year about how work will change. I don’t believe that’s going to happen. You know, here’s what it really comes down to. People need to be in the office. Why? Because work is a couple of things. First, it’s about achievement and what you do. It’s about how much you know, but it’s also about how you politic. OK. You have to be in the office to politic with people. Otherwise, when the next retrenchment comes around, your head is you know, you’re out the door. So people will have to go back to the office and the ones who scream the shortest about not wanting to go back will be invited eventually to go elsewhere.


JR: The only thing I would say possibly is that actually if there is a demand and there’s a shortage of supplies, it’s supply and demand. There’s a shortage supply of certain workers. Employers will put better facilities in place to lure them in and treat them better and give them these kind of privileges, some of which will be the privilege perhaps of working from home if they want to.


TN: Interesting. I actually spoke with the U.K. demographer last week talking about this very issue, and he said there will not be a shortage at all. In fact, over the next 10 years, in 10 years time, there will be something like 600 million people who cannot get a job. Sorry. 420 million people who cannot get a job globally. So there will be people will be competing very aggressively for those jobs globally.


JR: Tony, isn’t that really important for them to be able to see stuff, hands on whatever job that doing really?


TN: Especially for you, surely because the Bloomberg office in Hong Kong is spectacular, according to the office, everything. So I’m surprised you didn’t just move in.


JR: Yeah. Do you get free food at the Bloomberg office as well? I remember that was one of the things where I used to work for Bloomberg a long time ago. And you did get free food in the office. I remember that.


SR: Yes. Bloomberg is very generous. So so these days, like there is free lunch, they have like that the vegetarian option that the vegetarian option with the calorie counts, very healthy food, absolutely free food.


JR: They are making an effort to lure you back in from your pajamas until your comfortable bedroom. Thanks for joining us. Business matters.