The TACO Trade & United CEO Scott Kirby Teams Up with JetBlue 5/29/25
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Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod. Flying the crowded skies, United Airlines in the thick of an air traffic control mess, the airline's CEO Scott Kirby on the Squawk set, rising above Newark Airport delays. We did take a big hit, but the leisure traffic's come back. Business is lagging a little, but really, I mean, I think you just need to get people to try it. It's going to be the most reliable. The fares are the best this year that they're probably ever going to be because we lost traffic. The least crowded airport now.

The big in the big beautiful bill raising eyebrows, adding possibly trillions to the federal debt. Maya McGinnis of the Committee for a Responsible Federal Budget joins us. The fiscal choices that we are making are weakening our economy, weakening our ability to respond to emergencies, weakening our national security. Plus, a blow dealt to the president's tariff policy by an obscure court. But will he just...

Chicken out? Is every Tuesday Taco Tuesday? She did it on a Wednesday, which was even braver. Our Megan Casella asks in the Oval Office about the so-called taco trade. That's a nasty question. The president was very defensive. He said this strategy is working. And Doge versus the swamp. Did the swamp win? Elon Musk needs Trump. And I still think to some degree. Trump needs Elon. Trump needs Elon. Yeah.

It is Thursday, May 29th. SquawkPod begins right now. Stand and by in three, two, one. Good morning. Welcome to SquawkBox right here on CNBC. I'm live at the Nasdaq market site in Times Square with...

The great Joe Kernan. The blue shirt boys. The blue shirt boys are here. Becky's off today. So it's just this is us. Here we go. NVIDIA shares rising this after earnings and revenue coming in above analyst estimates. Data center sales. Those jumped 73 percent year over year throughout the show. We're going to bring you a lot more on what's going on with NVIDIA's earnings, which can be powering so much of NVIDIA.

the indexes today. We'll also bring you some comments from CEO Jensen Wang, who sat down with Jim Cramer last night on mad money. We used to be a chip company and then we became a systems company. And Jim, you know now we're an entire infrastructure company. Take a look at treasury yields right now. Let's look at the 10-year. We're looking right now at 4.537. Two-year up now, over 4%.

4037. What do you think? Remember what we were saying? That we've got little easy things for us to remember. Tenure is now, it was below, it's now above four and a half.

The two-year was below four, it's now above four. And the third year was below five, it's now above five. So we at least can, it's such an easy thing for us. I appreciate the yield curve allowing us to have perspective. What it means, you would think that if tariffs aren't going in, if they're not gonna do it, that you don't have to worry as much about inflation. You would also think though, that maybe the slowdown and the uncertainty we were worried about in the economy

uh is no longer something to be worried about so maybe that's why rates are up with ever whenever we have this it's just we can always explain it one way or another i think can't we we can make a case it's not big moves and even the 400 points isn't a huge move i i'm glad we don't live in a dictatorship and people that say it's a he's addicted he can't be because we have all these great systems of checks what do you think you want these rates to look like the rates i don't know the tariffs i was going to ask you about are we happy

Because it kind of-- I mean--

I think the original notion that you use fentanyl as an emergency or even suddenly the trade deficits suddenly become an emergency, that was never going to hold up. Presidents do these things. You know, Biden did it with student loan forgiveness. They push the envelope. They push the envelope. Presidents have pushed the envelope before. But now, you know, we did the UK deal. That might be good. I don't know if it was great, but we were supposedly close with a lot of countries. What does this do to our leverage now with countries we were close to? It pulls the rug out. Pulls the rug. Yeah.

Is that good? For the markets, it may be good. 400 points. Because the markets don't like tariffs, generally speaking. But they would like, I think they would like more fair tariffs.

I mean, Biden left a lot of them on, right? But there's a difference between fair and reciprocal. And yes, sure. Well, the reciprocal ones were the ones that were OK, weren't they? Right. That's what I'm saying. Well, now we can't do those. That's not totally true. I think that you're going to be able to do some. I think you're going to be able to do things on a strategic basis. I think the sort of broad based, you know, paint the whole thing one way is going to be the harder. I don't think he wins on appeal. No.

If it goes to the Supreme Court? I don't even think there he wins. And your law stuff, your WilmerHale stuff, the Journal's got a nice piece that goes, cut your losses before you go 9-0 at the Supreme Court, before it's a 9-0 ruling on this. Just cut your losses. Megan Casella, Taco Tuesday. Taco Tuesday, Megan, do you see Megan? Yeah. With the throwdown on the... Is every Tuesday Taco Tuesday? Do you know how that works?

She did it on a Wednesday, which was even braver. Let's get to it. I don't know if you'll mention that, Megan. Explain to everybody what he's talking about. Okay, so Megan was in the White House. Yes. And he asked President Trump about something traitors have been talking about. But let's talk. We'll get to that at the end. First, let's talk about this ruling that blocks President Trump's reciprocal tariffs. And we'll get to Megan for that. And then we can talk later about Taco Tuesday. Hey, Megan.

Hey, Joe. Hey, Andrew. We can talk about all of it, guys. But first, this really significant news overnight is the Court of International Trade struck down the tariffs that the president has imposed for reasons of economic emergency. And as you said, that has been most of what we've seen so far this term. So a three judge panel ruled unanimously that the statute he used, known as IEPA, does not grant the president the authority to impose as broad of tariffs as

as we've seen. They wrote that IEPA does not give unbounded tariff authority to the president and that the statute can only be used for unusual and extraordinary threats. They said they don't believe the trade deficit fits that definition. So the ruling will impact all the tariffs Trump has imposed this term against Canada, Mexico, and China, also impacts the 10% baseline tariff on all nations, and those so-called reciprocal tariffs

on other trading partners. So the court essentially gave the administration 10 calendar days to implement this ruling and stop collecting the tariffs. Now, the White House did already file plans to appeal. It will also separately have to ask for an administrative stay

In order to keep the tariffs in place for now, we are very likely to see that in the next few days as well. And a White House spokesman meantime rebuking the court last night saying that, quote, "It is not for unelected judges to decide how to properly address a national emergency," and that, quote, "the administration is committed to using every lever of executive power to address the crisis of nonreciprocal trade and deficits."

And while this plays out in court, guys, it is worth noting which tariffs are not affected by this. That's the sector-specific ones on steel, aluminum, cars, and car parts. And as you'll remember, there are many others under that statute, known as Section 232, that could be coming on things like semiconductors and pharmaceuticals. Those were all imposed for national security reasons. Those can all stay in place for the moment. Guys? We're going to toss that soundbite in a second, Megan, but

There's no way. I mean, Congress controls tariffs. Usually this big, beautiful bill is the most important thing right now. I can't imagine with the narrow margins in the House that you could take up tariff legislation to codify it. Is there any chance that Trump could try that or President Trump? I'm with you. I agree.

he might push for it. And there are some lawmakers on both directions wanting to try to push some legislation, either to remove tariff authority from the president that Congress had delegated from the constitution or to say that, that Trump could, should be able to, you know, keep this power. So either way, but as you said, a really uphill battle in Congress, there are other ways the administration could go. Obviously the appeals process is likely to be long, could go all the way to the Supreme court. And in the meantime, there are

There are other ways of doing this. So far, they've mostly not wanted to do it because a lot of them take longer or have different limitations. But even within this ruling, they sort of lay out one we've talked about before that's more about balance of payments, and it's about the trade deficit. And these judges sort of seem to say, if you want to address the trade deficit, use that statute. So we could simply see them move in that direction. It has its own limitations. You can't keep those in place forever. But it's another way you could try to get this done.

We referenced this. You also talked about, to the president, about the so-called taco trade. Mr. President, Wall Street analysts have coined a new term called the taco trade. They're saying Trump always chickens out on your tariff threats, and that's why markets are higher this week. What's your response to that? I've never heard that. You mean because I reduced...

China from 145% that I set down to 100 and then down to another number. And I said, you have to open up your whole country. And because I gave the European Union a 50% tax tariff and they called up and they said, please, let's meet right now. Please, let's meet right now.

It was a Financial Times reporter, probably not a big fan of Trump, that came up with it. And then I guess the Wall Street Journal wrote about some trading floors that it talked about. My initial thought was these are the same people that were up in arms when the tariffs were announced. And then when there is a instead of embracing, they walk back or

Whether it's whether it is some signs of progress from the other side, whatever causes the walk back instead of embracing it. It's like he's Trump's damned if he does and damned if he doesn't damned when he puts on the Trump's damned when he when he pauses the reciprocal. But, you know, snark is is the word of the for Frank Holland. That's the word of the day every day in this current environment that you're in right now. But you touch the nerve there. That's for sure.

That's right. He didn't like the question, but it was a chance really for him to defend this strategy. The Journal had written it up. The New York Times had written it up. It was starting to sort of circulate a little bit further. And it also just touches on this broader debate that we'd already heard even before this term had coined about whether the president was bluffing, whether these were real threats, whether other countries would continue to come to the negotiating table,

if they didn't think that these tariffs were going to be followed through on because so many had been paused. With this ruling, I think that discussion, we get back to that because the president, as you heard, was very defensive. He said this strategy is working because other countries are talking to us. Now, as you guys said just before I was on, this pulls the rug out. It really blunts that leverage. So we do have to see what happens next because

There are many, many, at least 18 or 20 trade negotiations ongoing, deals we have been expecting. Do those pause? I wouldn't expect so. But maybe it means that other countries don't agree to as much as they would have. And we had heard Trump administration officials arguing in recent days to the court not to go through with this because they had the leverage right now. Now we don't know what happens to that. Right. I mean, I could see.

still wanting to, you know, not poke the bear. Maybe they agree to less, but I still wouldn't like to be the last country that offers absolutely nothing for the next three and a half year or whatever it's going to be. That might not be smart either. And also, Megan, I... Especially because there's things... Oh, go ahead. No, I was just going to say, in the old days, when a lot of, like, the left and right both loved Trump. In the old days, when he was a developer, he was on Saturday Night Live.

And people were asking for autographs. They loved him. But he got in a chicken outfit to sell Trump chicken or something like that. And I just probably wishes that he hadn't played along with SNL at that point, because that's what was in all of the trending tweets yesterday. It was the most, you know, it was on top of the Twitter trends. You probably saw that, your question.

But every one of them had it in that yellow chicken outfit. Right, right. But I would also just say, Joe, that, you know, to your point about not wanting to be the last country that offers nothing, there are, of course, other things besides tariffs that the president could turn to. We're seeing a big fight over visas right now, for example. But there are any number of, as they've talked about, non-tariff barriers and other, you know, even beyond the economy as well. So it's—

If it's not tariffs, it may well be something else. And he just wants other countries to respond by lowering their tariffs or their non-tariff barriers. It can still come back to trade, even if he has to take a different approach at this point. Well, for whatever reason, Megan, if the S&P were to go up 90 points a day, it's...

I mean, it's just below all time highs. So somehow after all was said and done, we are not far from the all time high on the S&P, which is, I guess, yes. But if you, you know, left and went to Mars like Elon Musk for a couple of months and came back, you wouldn't even know anything happened. But Megan Kinsella, thank you.

Elon Musk speaking out about stepping up at least tweeting out about stepping back from his government role in a post last night on X he said

As my scheduled time as a special government employee comes to an end, I would like to thank President Trump for the opportunity to reduce wasteful spending. The DOJ's mission will only strengthen over time as it becomes a way of life throughout the government. As a so-called special government employee, Musk can only work for the administration for 130 days in any calendar year, and the end of May marks 130 days.

since President Trump's inauguration. A White House official confirmed Musk's departure to CNBC and said that he was set to begin off-boarding, they're calling it last night. Separately, the White House plans to ask Congress next week to enact $9 billion of spending cuts actually into law. It's a portion of the savings that the DOJ's department says it has found. The cuts would target funding from PBS, NPR, and also foreign aid.

Meantime, this one raising some eyebrows. New details on OpenAI's deal to build one of the world's largest AI data centers in Abu Dhabi. Sources telling CBC's Kate Rooney that Elon Musk worked to try to stop that deal if it didn't include his own AI startup, XAI. Musk warned officials at the UAE Group on Friday.

behind the deal, that the plan would not get President Trump's approval without XAI's inclusion. And Rooney's also reporting that OpenAI's Abu Dhabi deal was set to move forward until Musk got involved at the last minute, frustrating White House officials who accused Musk of lobbying for his own interests and positioning himself as representing Trump.

The president, of course, this was a big question that had been on a lot of people's minds from the moment that he got involved with Trump. I actually asked Sam Altman about this prospect at the deal book conference. I don't know if you remember back in November or December, rather. And he said that he actually didn't believe that Elon Musk would engage in this kind of thing and he wasn't ultimately worried about it.

Not Abu Dhabi specifically. Not Abu Dhabi specifically. It was just the idea of given the proximity that Elon was going to have to Trump and all of the different variations of deals and transactions and things. And I think actually very early on, clearly it appeared that Sam, look, Sam was standing behind the presidential podium. And if you remember some of the reporting after that about how frustrated Musk was about that. But this reporting that Kay Rooney and the Wall Street Journal and some others now have

sort of suggests that Elon pushed it even further than that and that there was their sort of recriminations even inside the White House about it. Yeah. Should we be happy that if, I mean, did you see DeSantis yesterday, Florida governor?

That said it was Doge versus the swamp and swamp one swamp did win. So we'd be happy about that. Because, you know, you look at what has happened to Musk's reputation and for half the country and everything that he put into that. So the behemoth, the big, unwieldy, you know, Stacey Abrams gets a billion, whatever you want to call it.

It was, you know, it's like Fat Bastard or whatever the hell that was in Mike Byer. So it wins. So are we happy? I don't know if we're happy. Look, I think that the idea of Doge is a very good one. I was always concerned just about unilateral cuts without...

a process around it, but process is what slows stuff down, right? That's process unto itself is both a great benefit and it's what's needed to create credibility and trust among the public on one end, but process can be very dangerous in terms of getting to your objective. - And then Republicans control the House, the Senate and the presidency. Is there gonna be any deficit reduction?

It's just nothing ever worked. It's just here we are. Tell me where you tell me why. No, Elon Musk said a bill can be big and it can be beautiful, but it can't be both. The other interesting thing, I don't know if you noticed all of and I I'm going to come out right now to say it because I disagree. Oh, no, no. There's a whole lot of, frankly, folks on the left who seem to be giddy.

that somehow there's a split, there's a fissure between Musk and Trump. I just want to say that I don't think that there actually is. Oh, OK. I thought you were going to disparage them for feeling that way. But that was my initial point. No, no, no, no. So the swamp wins. Are those same people happy that the swamp wins? I don't know. I'm just saying, you remember when people were taking bets? They were saying, you know, when is the bromance going to end? They're going to get divorced. Right.

I think that they are, clearly, to some degree, because he's going back to work, but not because he's... Look, Elon Musk needs Trump, and I still think, to some degree, maybe lesser these days... Trump needs Elon. Trump needs Elon. Well, the article today is that CBS and Trump, miles apart. Well, they're about $10 million apart, which is not miles, it's just money. But they're apart, and that's who he gives the interview to, to talk about how... That was the point we made yesterday. I know it was. I know it was. So I don't... There seems to be some...

A space between Trump and Musk at this point, no? I doubt that Musk thought to himself, oh, I'm going to really stick it to him. You avoided my question about whether you're happy that the swamp won. You're not. I don't know how I feel anymore. I'm not happy. I know you're not.

Next on SquawkPod, United CEO Scott Kirby on a partnership with a one-time rival, JetBlue. This is not about managing capacity. This is not even a co-chair deal. This is really about a frequent flyer deal that gives each of our frequent flyers access to a larger network. And science in the skies. We've tried it before. Yeah, that's a stupid sound barrier. Physics is a bitch.

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How will you shape the future of energy with confidence? What does it mean to deliver affordable and reliable energy for all?

Welcome back to Squawk Pod from CNBC. Here's Joe Kernan.

united airlines and jet blue forming an alliance philipo joins us and now it's more fluent in la guardia but not because you wouldn't fly into it it worked out because of timing because of timing not because we're going to try to stay away from it we'll ask scott about no he's out in the lobby right now first thing he said to me he goes can i talk about newark i said you think that question's going to come up yeah we'll talk about that first thing i ask you where do you yeah so but let's talk about the news that has just been announced within the last few minutes

United and JetBlue forming a collaboration. They are not calling it an alliance. They're calling it a collaboration. What does that mean? Each will be able to offer flights on the other airline. It's important to note this is not a code share agreement. They're not working each other's schedules. They're independently

doing their own schedules. Customers can earn frequent flyer miles on flights to the other, the respective other airline. And this is important. United will get access to JFK slots starting in 2027. This has long been one of the things that Scott Kirby has talked about that someday when it comes to New York city, as much as they are happy with their hub at Newark, JFK would be huge for them. So as you take a look at shares of Newark,

JetBlue and United. A couple of things to keep in mind here. Again, this is a collaboration, but it is not a code share agreement. And remember, for JetBlue, it needs greater access for its customers to have greater access, I should say, to other flights in other parts of the country and around the world. This allows them to do that. And then for United, as I mentioned, the fact that it can strengthen its market share here within New York with that access to JFK

uh... that that would be huge remember they pulled out in twenty twenty two

Scott Kirby, as I mentioned, he is going to be here joining us on set in just a few minutes. We'll talk to him not only about this agreement with JetBlue, but also about what's happening with Newark, his belief that now more than ever is the time to fly in there because the schedule has been reduced by the FAA. The prices. Have you noticed? Check out prices flying into LaGuardia versus flying into Newark. You will notice a difference. Because people are making the choice. Correct.

I have friends. I have friends when they're saying, I'm going to New York. Should I fly into Newark? You know, I'm not telling them not to. But in the past, I did. Before they got this worked out with the FAA, I was like, hey, man, you don't know if your flight's going to take off. So that's the hangover effect that's there.

We've got Philip Bowe at the table, and he joins us right here with a very special guest with a lot of big news this morning. As promised, Scott Kirby. Just a half hour after you guys announced this collaboration with JetBlue, we're going to talk about Newark. I know you guys have a ton of questions about Newark, but the deal with JetBlue, it's long been talked about. Everybody's known it was eventually going to happen. Why is it so important for United to do this?

to have this greater access to JFK? Well, it's two things for us. It's really a big program. It's all about our customers. It's a great program for our customers. JetBlue is, I think, an airline that has customer service in their DNA at their core and a really good airline. And so a partnership with them makes a lot of sense. It also gets us back into not just into JFK, it gets us back into JFK with our own metal, but also with a partnership with JetBlue, but also will be the

largest airline in Boston. The two of us combined will be the largest airline in Boston now. We'll be big in the Florida and the Caribbean. So it's really complimentary. Those are places that United's the biggest airline in the world, but we're not as big in those key geographies. And putting us, getting a partnership with JetBlue is great for our frequent flyers to really have the biggest. I'm reading the release. I notice you guys do not say anything about asking the Department of Transportation for approval here.

And you know what happened. Everybody knows what happened between JetBlue and American and their Northeast alliance, and it was deemed uncompetitive. Are you going to ask the DOT for approval? We are. It's not clear. This is because a deal like this has never been done before. It's not even a co-chair of the DOT.

and because of that, it's not clear we have to legally, but we're going to. We briefed them yesterday. This is such a pure kind of good customer benefit that, you know, it's not like traditional deals. This is really good for JetBlue customers, good for United customers. Makes each airline more competitive with others. Yeah, we heard that also about American and JetBlue in the past, but you're confident that

I mean, under the Trump administration, let's be clear here, there's very little chance of them saying, I don't know if this is competitive. Well, I don't think it's about the administration as much as this really is a different kind of deal. That was a co-chair deal where they were managing capacity. Right. This is not about managing capacity. This is not even a co-chair deal. This is really about a frequent flyer deal.

that gives each of our frequent flyers access to a larger network. - Just so I understand, there's the DOT, but then is there the FTC or the Department of Justice? - For us it's the DOJ. They could, but again, this one is much more straightforward. - In terms of pricing though, so let's say I'm a United customer, I've got a lot of miles in United.

and then I want to buy a JetBlue ticket. I'm going to buy it through you? You could, but the point is, because we're not code sharing, we're not pricing each other's flights. So you'd be buying it whatever JetBlue sets the price at. So you'd use your miles to buy there. We're also going to sell on each other's websites, so now you'll be able to go to united.com or use the app. Right.

to buy a JetBlue flight if you wanted to fly from Boston to Orlando. So the idea is it's more to make it more convenient for me just to plan around working either through JetBlue or through United. Yeah, it's to give you more options. So if you're a frequent flyer that, you know, you want to use Newark as your home airport, but sometimes you want to fly out of JFK, it gives you more options, which we didn't have that option for customers before. We're on both sides of the Hudson now. Let's say you're Ed at Delta this morning. You're seeing this news.

he's thinking what? Meaning, or flip it around, if he was doing this with somebody and the Department of Justice called them and said, hey, is this good or bad for business? They would say what? Well, it'd be hard to argue it's bad for the customer. You know, Delta's a really, really good airline. They've done a great job. In fact, a lot of what we've done at United has been copying some of the things that Delta did successfully. But this, their number one competitor, JetBlue's number one competitor is Delta at JFK, Boston, even in Florida, the Caribbean. And this makes JetBlue more competitive.

because it makes them more competitive because they're going to get more traffic to their site. Well, because now, if you're a frequent flyer, you know, you like JetBlue, but if you're flying out of New York, for example, JetBlue can get you all over the world. And you get to capture the miles? And JetBlue would get the miles. You could use them, though, to fly at night. So you could...

earn on JetBlue, and then just say, I want to take a vacation to Cape Town. Right. Use your miles to go to Cape Town. So you're looking at a Newark United guy, full on. I would never go to JFK. I would never. I'm a JFK guy. This is actually quite interesting. With all of Newark's warts and whatever you want to call it, I'm so... But by the way, Newark is, we can talk about it, but because the FAA is going to finally

cap the capacity at Newark? Just something to do with JFK. Newark is going to be the most reliable Newark. It is right now. The Memorial Day weekend was the best weekend we've had in our history. That A terminal is pretty nice. It's very nice. I prefer C. Let's talk about Newark because Secretary Duffy was out yesterday with an update saying, look, the runway work may be finished sooner than June 15th.

uh... which means they could move up instead of what is it a a captive twenty eight to move up to thirty four but it's not going beyond that yet through october the reality is the lack of

air traffic controllers for that particular airport that are really going to limit growth for the foreseeable future. I mean, when do you realistically believe that you can go beyond 34? Or do you sit there and say, well, now it's October, but come on, it's going to be like this for the next couple of years. This is really, the important point is at the 34 flights per hour, 34 arrivals, 34 departures.

is gonna be great for customers. You can now book with confidence. This is what we've wanted, maybe the number inches up a little, but there's only one set of parallel runways at Newark. And even in perfect conditions, the theoretical max is about 38. And the problem with Newark has been when you schedule more than 38,

that you wind up with delays that cascade through the day. And so this is like, this is the solution for Newark to be the most reliable of the New York airports. - Are you worried about the hangover effect? Look, I live in Chicago and I hear from all of my friends going to New York, like hell if I'm flying into Newark because I don't wanna get flight canceled or delayed. I mean, it's hurt you guys in terms of traffic. - Yeah, it's been disappointing because first the safety issue

Like, the FAA has tower, TRACON, ground center. So there's three separate systems that can control flights. And if one of them goes down anywhere in the country, it doesn't happen often, but when it does, it's not unique to Newark. When it does, the other two back it up. Then we have a fourth system called TCAS on the airplanes. It's independent of those. So there's four backups for these systems. So the safety's always been high. So that was surprising to me. But the rest of the systems...

But isn't there a hangover effect where you might have people around the country who are saying, I'm going to New York, stay the heck away from Newark. And how long does that last? Well, I hope it didn't last long. We've already seen that the leisure traffic has come back. We did take a big hit, but the leisure traffic's come back. Business is lagging a little. But really, I mean, I think you just need to get people to try it. Because you look at this, it's going to be the most reliable.

The fares are the best this year that they're probably ever going to be because we've lost traffic. The least crowded airport now because the FAA has done, we've been asking for a decade for the FAA to manage capacity there. When were you CEO? When did you become CEO? Right, it started COVID a little over five years ago. Because you remember, this is what I remember, and that is that

Continental was a great airline. I love Gordon. And you remember United and Continental. And there were some issues initially putting them together. And there's some disgruntled United employees. Would you say, and I'm going to show you a chart, and I should get a couple of upgrades from this, but I'm going to show you it.

I'll show you a chart of a three-year XAI versus a three-year United. Is this just solid management? What do you attribute? There it is, Phil. We got United up 63%, the average. Against the airline index. Is that...

- XAL, that's the airline index. - Yeah, that's what I asked for. Yeah, against the index. I also did Delta too, 'cause you have highlighted some of the issues that Ed has faced over at Delta as well. So you're looking at 16 versus 63%. I guess my question was,

Is it all in the past? Everybody's happy? Flight attendants across the world? People seem happier. They are. There were some issues initially, I thought. I say I have the easiest job of anyone at United because I only have one responsibility. Create an airline that our employees are proud of. Because if they're proud of it, they want you to feel that way when you fly. And they take care of you. And really everything I do is focused on an airline that they can be proud of. And that works. Anyone else close to that three-year...

- So minus 21 versus plus 63, anyway? - Maybe not, but also, you know, like Delta, you've talked about Delta. Delta's a really good airline, it started ahead of us. - Is it the CEO or it's the employees? - It's employees. And really, it really is. I mean, it's just, it's about getting them what they're proud of. - Did you know that the outperformance of- - Yes. - You did. - Have you seen my reports?

I have to ask you, because I don't know how long we have you here. A big part of your growth in the future will be the continued improvement of aircraft deliveries from Boeing. And Kelly Wartburg is going to be speaking later today at the Bernstein conference.

how comfortable are you with what you're seeing out of them and do you sit there now and say these are the aircraft we're planning for in whether it's the rest of this year 26 27 are you much more comfortable now that you're going to hit they're going to hit those targets i think boeing has turned the corner and is heading in in the right direction i have to be blunt i think the rest of the supply chain is now getting exposed to engines and by you know all kinds of other places

So I don't think that aircraft deliveries are going to get to the levels that we thought they would a few years ago. I think they're going to be constrained for years to come. The good news for us at United is we over-ordered aircraft, believing that the supply chain would be challenged. So we want to take 100 narrowbodies a year. We ordered 140, thinking we wouldn't get the others.

We're now getting 60 to 80, so it's been worse than we thought. But we're growing. The growth that we have at United is an absolute growth. It's more than any airline in history has done. We're doing it year in and year out despite the supply chain challenges. We can manage through the supply chain challenges, but I do think Boeing has turned a corner. Really?

But you ordered some Airbus or never? We have some. We're 85% Boeing. The XLR is the Airbus A321 and the XLR, which is a narrow body airplane that replaces the 757 to fly. So we're going to add, you know, several destinations, smaller cities in Europe and North Africa that will be able to fly that airplane here out of Newark.

Right. Cool place for you to go on vacation. Good. I need those pods. They're going to have low-lye flat seats on them. That's the future, is it not? And it's hub and spoke. I saw a picture of a, I don't know what kind of jet. It was the biggest jet I've ever seen next to a normal 730. It's staggering. It is. The future really, I think, is customer service and technology. I thought the future was boom. Boom is cool.

stop this is do you think that boom will have a commercial aircraft that you'll be a united supersonic jet yeah when do you think realistically we see that it's hard to predict the timing i i think with it what boom needs to do and i've told blake this is uh extend the range of the airplane uh you know it can't just be an airplane to get you from the east coast to london and paris it needs we need to get it to be able to fly across but if they can get it to

to have longer range then it will be uh but is it longer is it a longer range issue i thought it's an over right part of it's a regulatory issue about being able to fly over land yeah but that's why you're not gonna be able to fly over land i don't think because of the sonic boom um but if you could fly from

you know, the East Coast to Europe where you're over the Atlantic. But particularly if you could fly across the Pacific. So fly out of San Francisco, L.A. across the Pacific, you don't have the sound problem. And that's, those are longer markets. That's a huge opportunity set that opens up. So I think that's the key to having Boom be successful. I'm very, I'm long Blake. I think it's very, very exciting. Yeah. He's a great guy too.

We've tried it before. Yeah, that stupid sound barrier. Can't we change? Can't we change? Can't we change? I thought part of what Blake had figured out was actually how to reduce the boom. Wasn't that the whole point? You got rid of it. Physics is a bitch. You can reduce the boom under certain meteorological conditions. The total pain in the ass. The sound barrier will bounce off the boom.

But it's a lot of fuel. You have high fuel burn there. It's not much faster than the speed of sound. So it's probably...

probably in practice. The Air Force is working on technology though that essentially cancels out the sonic wave. So there's theoretical ties. - What about these other wild planes you're now seeing these-- - Jet Zero? - Yeah. - Those I really think are going to be the future. I don't know how far away it is, but that airplane, it's like the B-2 bomber, but those airplanes are more-- - It looks like a B-2 bomber, but it's a commercial-- - Yeah, those are the blended wing bodies. The whole airplane is a wing. They're more technically efficient

They burn a lot less fuel. There's more space inside. You can carry more cargo. You can do a lot of things. I think those, I think it may be 20 years from now, I think 20 years from now, someone is going to be flying blended winged bodies. Blended winged bodies are going to be the future, I think. And will we have room for them at the airport? We'll have to make changes. Gee, sounds like fun times at the airport coming in the future. Not just those goggles.

Where no one goes anywhere. Oh, where no one goes anywhere? Yeah. No, people are going to do that, too. That's going to be the other version of travel. It's not the same. Either person. It's not the same. I'm telling you. I can't see it. I can't see it. Yeah. I can't see it. I need to be there. We're just trying to get Air Force One up and running, the new Qatari plane. Yes. That's a separate project. Safely. Yeah.

Thank you for coming in. Thanks for having me. Thanks, Phil. Thank you, Joe. Love your reports, Phil. I appreciate it. You know what? I'm going to flag you. Next time I have a report, I'm going to say, Joe, I'm on the air in an hour. You would never preferentially highlight you. I do stuff like that. You don't. You're like Mr. Airline. I have to. OK, we're getting the hook, folks. Thank you. He's will be next.

Coming up on SquawkPod, NVIDIA lost billions from its China market this past quarter. CNBC's Christina Partsenevelis reports from the front lines of the chip war. Despite the China headwinds, NVIDIA's AI story is far from over. And the cost of the giant reconciliation bill making its way through Congress with the president of the committee for a responsible federal budget, she says, not so responsible.

We pivot to the Senate, where it's moving next. Their aspiration, what they've put out in their roadmap for what they are going to try to save is $4 billion. That's their standard out of $86 trillion.

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This is Squawk Pod. Up in Andrew, Q.

You're watching Squawk Box on CNBC. I'm Andrew Ross Sorkin, along with Joe Kernan. Becky's off today. It's just the boys. It's not just the boys. We've got women and others. She definitely chafed on that. We're going to bring... Introduce me. Well, no, but that was just once we do that.

then it's a whole, I'm just here for the ride. It's a whole different story. No, no, no, no, no. Come on. Come on aboard. Shares of NVIDIA sharply higher this morning and up 30% in the last month. Christina Partsinellis is here with us at the table with the boys to talk about what's going on with NVIDIA. Good morning. Good morning. And thanks for letting me join guys. But, uh,

And NVIDIA just proved that even major geopolitical headwinds really can't slow down this AI boom. So the chip giant reported better than expected earnings and revenue. We know that despite getting hammered by U.S. export controls that basically, we can say, banned its H20 chips going towards China. NVIDIA took a massive $4.5 billion hit from excess inventory of those restricted chips and said it would have pulled in an extra $2.5 billion in sales if

if the restrictions hadn't been put in place. CEO Jensen Wang had some pretty pointed words about it, warning that the U.S. government is really underestimating China's technology capabilities. His argument is, if American tech companies can get blocked out, China will just build its own ecosystem, and Huawei's already showing how it's done. Jensen Wang spoke with our Jim Cramer about why staying in China matters so much. Listen in.

That's probably the most important strategic reason to be in China because there are so many developers there and because the world is going to adopt technology from one country or another and we prefer it to be the American technology stack.

So it's better to be just American than be completely blocked out. But the bottom line, NVIDIA projects it's losing $8 billion in Q2 revenue because of these government policies. But the company still managed to forecast $45 billion in second quarter revenue thanks to strong demand for its Blackwell products. That's the latest iteration of its GPU architecture. And as for serving the Chinese market going forward, NVIDIA had some limited options to explore, but when analysts really pressed

CEO on the call on specifics, he was pretty blunt saying we don't have anything at the moment, but we're considering it. So despite the China headwinds, NVIDIA's AI story is far from over and most likely there will be another chip geared for that country.

What do you think of that chip? How diminished will that chip be? Quite diminished. The H20 is already much lower than the Huawei Ascend chip, the 910B, if I remember correctly. So on a scale, it's very, very low. And so that's the argument. If you're going to block an already lowered spec chip, you're just handing that market over to Huawei. Jensen Wang has said many times that they used to have a 95% market share of China. Now it's dropped down to 50%. Of course,

they're spending a lot more on each individual chip and it's still a big portion of sales. But it's an opportunity for them to still maintain a foothold in that market. - You're an expert in this GPU world now. Can you help me with one thing that I can't figure out? So these folks who are building these big, you know-- - Racks. - Racks, these big centers.

The big question in that space and among tech companies is, are they going to need to buy effectively the newest, highest rated chip every year? And if that's the case, what happens to the old chip? And what happens to CoreWeave? Right. And so what is the answer?

The argument from CoreWeave's CEO, who corrected me upstairs here because we were often talking about how these chips become obsolete, and he said, no, there's at least a shelf life of six years. That's what's in all of their financial statements. So depreciation cycle is six years, and that he believes it could be repurposed. However, the H20 chips that we're talking for China, Jensen Wang literally said...

the end there's nothing they can do with those hopper chips they're essentially dead these are more right watered i shouldn't use the word water the whole idea but just like you're going to do all these things these are like seriously depreciating assets yeah and and he's sticking with the annual cadence right what does that mean for every company that buys the hopper now they're switching to blackwell so blackwell chips are 70 of their data center revenue and then the next iteration rubin after that every single year what does that mean for the you know the smaller guy that just spent a lot on those hopper chips

There is this argument that you're going to use the newest chips for sort of like the highest end stuff. You're going to use, then you can use some older chips for some mediums and then the oldest chips for like the easiest kind of queries. They're not completely obsolete. That's the argument. And they can be repurposed. But when at the level of compute that you need it at, you would need the most advanced. Christina, thank you. Thanks for having me. Appreciate it. Guys.

According to the Committee for a Responsible Federal Budget, the House budget reconciliation package will add roughly $3 trillion to the debt, including interest over the next 10 years. And bank CEOs, among others, talking about the economic impact and worries about the deficit. Maya McGinnis is the president of the Committee for a Responsible Federal Budget. She's not happy, and rightly so, probably Maya. If I were to tell you

how difficult it is to make a dent on discretionary spending, you'd say, yes, I understand that. And if I were to tell you that it's a very narrow margin in the House and you've got Republicans that also are very unhappy with this, would you at least acknowledge that $1.6 trillion of cuts is maybe the best that could be expected in this environment?

I sure hope not. Well, first, I would tell you that this isn't actually the discretionary cuts that they're looking at here. That's done differently under the caps. But this is where they're taking the real part of the budget, the mandatory or structural reforms we want to see. It's where the biggest growth in the budget is. And overall, the changes we're seeing are tiny. And let me put it in context to say that, no, I think we should be able to do more in spending cuts. But

Over the same time period, the federal government is going to spend $86 trillion. Okay? So I don't think $1.7 trillion out of that is very large. And then we pivot to the Senate, where it's moving next. Their aspiration, what they've put out in their roadmap for what they are going to try to save is $4 billion. That's their standard out of $86 trillion. So no, I don't think this is serious about reducing spending at all.

And one thing we know is part of the purpose here is for growing the economy. You do that by pro-growth, focusing on pro-growth tax reform and also by as little debt as possible. And so the three trillion that the House would borrow and the more the Senate might borrow is anti-growth. That's one of the big concerns. Right. I mean, in a reconciliation bill, you can't do discretion. I mean, that's what I meant. It's not possible. Taking that off the table. You're totally right. Yeah.

So taking that off and that that needs to be addressed at some point. But but how much could could actually be done here, given not one Democrat is going to vote for this at this point? In their view, by the spending cuts that we're seeing right now, grandma's going off the cliff again in her in her wheelchair from the slightest thing you do to Medicaid. Absolutely.

Absolutely. So first, you're right, discretionary can't be part of this, nor can Social Security. So those are big chunks of the budget, which we should be committing to reform as well. You can't focus on cutting taxes and ignore the fact that we should be doing all these spending parts. Number two, that's right, this is not a bipartisan effort. Unfortunately, reconciliation rarely is something that used to be used to reduce the deficit. Now it's used to increase the deficit, and both parties use it in a way that is not at all inducive to bipartisan work.

which is what we're going to need. You're not going to make any of these difficult choices if we don't have cover of bipartisan work to do it. I'm afraid a huge tax bill will make it more difficult to get Democrats engaged afterwards. I would like to see us focus on a big debt deal. But you are right. Every article I read where there's the description of all the benefit changes as slashing is so...

unfair, kind of been stacked against the fact that a lot of these policies that are structural are going to have to happen and then much more. So there is a huge bias against doing anything hard, which is what fixing the fiscal situation is. But when you've got interest as the fastest growing part of the federal budget, when you have a Senate that may well make a $3 trillion addition to the budget

Worse, not better. You have to start looking at every effort you can. And if it's going to be a purely partisan bill, listen, Republicans have wanted to cut spending for a long time. Now is their opportunity. So I really hope we can do better than one point seven trillion out of a very large budget over the same time period. So why the Treasury secretary? We're at seven percent deficit to GDP. He wants to get to three and you applaud that. This will not will not do it.

Is there any way that you're underestimating the possible growth aspects of where it actually does come in much? That's what most Republicans will come back at you with, that we're going to have much. The CBO doesn't calculate this correctly and the growth could be much more robust than people think. Is there any way you're underestimating that?

Yeah, they will indeed come back at us with that. And we're not actually estimating it as much as looking at the ranges of estimates out there. I would say there is no credible way that this bill is going to generate the kind of growth that the advocates are arguing it would. So listen, outside experts, there is a range of what the growth effects of this bill would be. They range from about negative 50 billion to about 710 billion. That negative number comes because the negative effect of all the borrowing can

can outweigh the positive effect of the economic growth, particularly in a bill like this where a lot of those tax cuts aren't pro-growth. They're actually the opposite. They're cutting up the tax base. We should be broadening the base and lowering rates. But if you've got a range of negative 50 to 710 billion from growth, and then the House budget resolution is assuming 2.6 trillion in growth,

Many multiples. No, I don't think that that is what we should be banking on. We certainly shouldn't assume it ahead of time. Remember, there are things outside of government that are going to be negative on growth, looking at the uncertainty from tariffs and possibly from immigration. So we're not talking about a situation where you should spend all that growth

which nobody except the advocates of the bill are arguing is a credible number ahead of time. I know that's what people who want to make this seem easy say. Don't worry, we're going to grow our way out of the situation. Usually tax cuts generate enough to offset about 20% of the cost of the bill. This is less pro-growth than the previous 2017 version because that had the corporate rate cut, which is where a lot of the growth really came from. How would we broaden, and Andrew once again, but how would we broaden

the tax. What is your answer on, is it on the revenue side or is it purely on the spending side?

I would do as much as possible. Listen, I would love to see a reconciliation bill that would reduce the deficit. We have people who have said out there, and I completely agree, we should not be passing any legislation that makes this worse. Over the next 10 years, we are set, if we do nothing, to borrow $22 trillion more. We will have a debt as a share of GDP that's the record of what it's ever been. So I would start with don't pass legislation that adds to the debt at all. I would increase the offsets as much as possible. If we're not going to do Medicare...

which we should. There's still a lot more we could do in Medicaid. And yes, there will be accusations of slashing benefits, but there are a lot of gaming and gimmicks and taking advantage of the system goes on where we could focus the efforts. I also would get rid of all of the tax cuts that aren't really the fundamental pro-growth cuts and focus on the extension of the existing ones. And there's more offsets we can do in other areas. Yeah, Andrew.

You know, Ray Dalio talks about what he calls the 3% solution, which is basically you have to get interest rates in this country down to 3%. And the only way to do that effectively is using these sort of three levers, if you will. One is cutting costs. But the other, ultimately, he would say is raising taxes. And the last one, which is related to the first two, is getting the interest rates down. Actually, interest rates are the most important piece of this, but of course are a function of the first two.

Nobody is willing to touch the idea of raising taxes at all. And clearly nobody's really willing to touch the idea of cutting spending. And so if you can't, if you can't even touch the first two, you never get to the third. And my question is, what's it actually going to take? I mean, he talks about a crisis. Is it what it's going to take? But how do, how do we, how do we force the issue earlier?

Yeah, first I would like to say absolutely endorse what both Ray and Secretary Besant are saying, which is let's get this deficit to 3% of GDP. It's the right goal. It would require savings of about $750 billion over the next 10 years. So that is, I'm sorry, $7.5 trillion over the next 10 years, clearly moving in the wrong direction. This is something that would bring those deficits up to 7%, not down. Number two, absolutely.

Absolutely what you're saying is true. We have to reduce spending, we have to increase taxes, and we have to do it in a way that promotes as much growth as possible, but has reasonable estimates or assumptions about growth, not these kind of huge wishful thinking ones. We don't have the political dynamic to do this. We have two parties who are in a cage match against each other,

fighting each other by trying to give away more than the other party. And the levels of polarization we have in this country are leaving us making bad choices. The fiscal choices that we are making are weakening our economy, weakening our ability to respond to emergencies, weakening our national security. We had a conference just yesterday with a lot of folks from different areas about what do you do if there is some kind of downturn or emergency because we're so indebted

Any response that we have right now will be much more difficult than it would be. So I'm worried about the political environment. We're we're the plaintiffs. If we went back to pre-pandemic spending, what would that be? And we're not going to do that. I mean, would that would that get us close? We got 15. We got to go, Maya. We'll have you back. You know, I still think it's more spending than we've just blown out spending since the pandemic.

And that is SquawkPod for today. Thanks for listening. SquawkBox is hosted by Joe Kernan, Becky Quick, and Andrew Ross Sorkin. Tune in weekday mornings on CNBC at 6 Eastern. To get the smartest takes and analysis from our TV show right into your ears, please follow SquawkPod wherever you get your podcasts. We'll meet you right back here tomorrow. We are clear. Thanks, guys.

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