Squawk Pod: David Rubenstein, the FOMC, & saving Spirit Airlines - 04/29/26 | Audio Only

Added: 2026-04-30

[00:00:00]Bring in show music, please.

[00:00:04]>> This is SquawkPod and I'm CNBC producer Cameron Costa. On today's episode, Jay Powell's last FOMC meeting as Fed chair is today. Carile co-founder David Rubenstein on Powell's legacy and the policies of his likely successor Kevin Worsh. He can dream big, but there's a war on. I think he will recognize that getting a Fed funds cut rate now is not going to be easy. As Kevin War said in his testimony, he would like to uh, you know, lower rates. Everybody would like lower rates, but I don't wouldn't expect it would happen overnight.

[00:00:39]>> And the major shift in the Middle East.

[00:00:41]CNBC's Dan Murphy reports on the UAE's epic OPEC departure straight from Dubai.

[00:00:48]>> This is a country that's looking to a post oil future. Is it a break with Saudi Arabia or simply an economic evolution?

[00:00:57]>> The UAE has basically outgrown the optics of OPEC as well and is better off alone as an indispensable partner for Washington rather than a constraint member of a quote unquote cartel.

[00:01:10]>> And finally, a spirited debate about Spirit Airlines. that is 19,000 people between the direct employees and the contractors who will suddenly be out of work, out of their healthcare, people who are getting ready to have babies or in the middle of cancer treatments and everything else. So, we need to think about how we're supporting the American people.

[00:01:28]>> Association of Flight Attendants International President Sarah Nelson and Joel Griffith from the think tank Advancing American Freedom.

[00:01:37]>> This is not due to the current situation in Iran with higher fuel prices. This has been longtime mismanagement and a longtime accumulation of debt.

[00:01:47]>> It's Wednesday, April 29th, 2026, and Squawkpod begins right now.

[00:01:53]>> Stand back by in 3 2 1. Cure, please.

[00:01:58]>> Good morning everybody. Welcome to Squawkbox right here on CNBC. We are live from the NASDAQ market site in Times Square. I'm Becky Quick along with Joe Kernan and Andrew Ross Sorcin.

[00:02:09]Meanwhile, Elon Musk expected to return to the witness stand today in the billionaire's case against Sam Alman and Open AAI. Musk was the first witness called in the case to testify yesterday at that federal courthouse in Oakland, California. He's seeking to hold OpenAI responsible for what he says is the company going back on a vow to remain a nonprofit. Now, on the witness stand yesterday, M claimed that he played a pivotal role in the founding of Open AI, motivated by what he said was a desire to serve as a counterweight to Google.

[00:02:37]He also covered his predictions for AI, saying it would make the world more prosperous or kill everyone. Open AI has characterized Mus lawsuit as a baseless harassment campaign by somebody who's a competitor. And we're going to see whether how much that part of the argument works or doesn't.

[00:02:54]>> You could be both.

[00:02:55]>> You could be both.

[00:02:57]>> You could be both. But it but it's an interesting it so much of the of the defense has been about that that that the person prosecuting is prosecuting based on being a competitor not based on the underlying merit. So it's going to be very interesting to see whether >> the judge stripped out so many >> how the jury complaints >> but how the jury thinks about that >> but I think the judge takes what the jury says into consideration but then gets to do what she wants to do. It's an advisory decision >> and she threw out a lot of the complaints. I think there were 26. It's gotten whittleled down to two. So, this is really very focused on whether a nonprofit can convert into a profitable um enterprise over the objections of one of the co-founder, one of the founders who gave them the startup money, the seed money to begin with.

[00:03:44]>> Yesterday was definitely open AI day.

[00:03:47]That that's for sure. Um with all the stuff swirling around it.

[00:03:50]>> Yeah. three steps forward, two steps back, but that was not great. I mean, are there any doubts? Is there should there be doubts about how bullish everyone is on on AI based on yesterday or is it just growing pains? Maybe it's just growing pains.

[00:04:08]>> I'm more on the growing pains at the moment, camp, only because the anthropic numbers are so wild, >> right?

[00:04:15]>> And the Gemini numbers are so wild and so the the amount of compute that you're still going to need, >> right, >> seems pretty high. And the money will be there for it.

[00:04:24]>> We don't know who >> I'm saying the money if you look at the revenue growth of anthropic the money should be there.

[00:04:28]>> Who's going to get there's going to be shakeouts though, right? There's going to be also >> we just how many how many real competitor and and they do different things but how many real competitors >> the question is whether you think they're all commodities. I mean the other thing is are they are they all so close to each other?

[00:04:45]>> Will they be a top five? Will they be a top 10? Will they be a top two? The commodities commoditization is really interesting.

[00:04:52]>> I think there's two or three of these.

[00:04:54]Only two or three >> because they're all the same. I mean, that's the thing.

[00:04:57]>> Well, it's streaming services, right?

[00:04:58]How many do you have?

[00:05:00]>> Can you tell me about >> Spark M whatever the hell that is? Do Have you looked at that yet? This new meta one that is like horizontal across all I it appealed to me because it supposedly is personal health is what it's like an agentic personal health mono. It's going to do everything for me, you know. You'll see. You know, I know you think you're going to live forever. You're immortal.

[00:05:23]>> I don't think these things. Actually, it'll be great for you with all your or >> I hope so, but I don't think I'm living forever. I And I'm not sure I want to.

[00:05:35]>> The United Arab Emirates shocking the energy world, announcing that it will pull out of OPEC after decades with the oil cartel. CNBC's Dan Murphy joins us live from Abu Dhabi. And Dan, we got this news about 23 hours ago, maybe. Um, a lot of scuttlebutts since then, trying to figure out if this is retaliation because they're upset with not having been better defended by the other Gulf states during this war or if this is a move that's been long in the making. And this just happens to be good timing because you're less likely to crater the oil market when we've seen so much supply that's been pulled off because of what's happening with the war in the Middle East.

[00:06:15]>> Becky, good morning to you. Well, we are following all the angles here and this is historic for the region and for the Arab oil producers. The UAE is out of OPEC after 57 years. This is a major break, but it's not necessarily a big surprise. We know the UAE has had long-held reservations about its own output quotas and the Iran war has also really changed the regional calculus, the security relationships and the energy architecture as well. I spoke with the UAE energy minister Sahel al-Maz Rui as the news broke and I asked the question that everyone is asking right now. Is this a break with Saudi Arabia? Here's how he responded.

[00:06:55]>> This has nothing to do with any of of our brothers or friends within the group. We've been working together for years and years. We have the highest respect for the Saudis. It's a pure policy change. But the timing as I said was taken into consideration.

[00:07:16]>> The UAE energy minister there and while he says this is about policy not about politics. It's also fair to say that the UAE has watched Saudi Arabia dominate the group's agenda for many years now and has ultimately now concluded that independence, not solidarity, is the way forward. Analysts have also told me today that the UAE has basically outgrown the optics of OPEC as well and is better off alone as an indispensable partner for Washington rather than a constrained member of a quote unquote cartel that also includes Iran and Russia. And take a look at how prices have reacted here. You can see on screen WTI holding above $100 a barrel, Brent just below 115. We saw prices initially moving lower on the headline but have since shot up. The conventional thinking is that when the straight eventually reopens the UAE is going to be a free agent ready to flood the market. But we've seen prices move higher because of course the bigger focus right now remains on the straight of Hormuz which brings us to Washington. The Wall Street Journal also reporting this morning that Trump has told aids to prepare for what could be an extended potentially indefinite blockade. The White House believing this economic squeeze is working and Iran is running out of places to store its unsold oil. But the president also made his mood pretty clear this morning on Truth Social, saying, quote, "Iran can't get their act together. They don't know how to sign a non-uclear deal, and they better get smart soon." And of course, that post also came with this AI image of Trump holding a gun, explosions behind him, and the words, "No more Mr. Nice Guy."

[00:08:53]We'll see exactly what that means over the coming hours and days. Back over to you, Becky.

[00:08:57]>> This is not good for OP. This could be it eventually. Uh it almost seems like some of the bad actors get, you know, they don't have to pay attention to the quotas. Some of the, you know, the the uh the actors that feel like they've played by the rules and lowered their their cost of production and they're ready to go and they can't. And I think they feel, you know, like they're they're treated unfairly. The other thing there's this perception >> Saudi Arabia has been able to keep everybody from getting bigger over time.

[00:09:24]>> From getting bigger, right? But those are the two swing producers. But >> Dan, everybody thinks the United States is losing influence in the Middle East.

[00:09:32]This, you just said this is UAE getting even closer to the United States. And that's not the only country. the the the actual action of some of the countries >> sort of doesn't say that that they're they're distancing themselves >> more from the US at this point.

[00:09:49]>> That's true. And we have heard from senior Emirati officials who have suggested that the regional backdrop, this conflict is only going to push the UAE closer towards Washington and indeed closer towards Israel as well. That's also been reflected in some of the commentary that we're hearing from analysts today in the aftermath of this decision to have the UAE essentially pull out of OPEC. And while the minister suggested this isn't necessarily a break with the UAE's regional allies like Saudi Arabia, for example, it also just reflects the growing sophistication of this economy. This is a country that's looking to a post oil future. It's a sophisticated international investor. It attracts top talent from around the world and really they see this OPEC influence as looking a little dated now given the fact that they're also pivoting towards increased diversification. This country no longer needs to have really high oil prices in order to outperform. That is unlike Saudi Arabia for example where the break even is still near the triple digit handle and that country requires higher prices in order to continue the economic diversification drive. And as as much as we're producing here, it it's just much less OPEC doesn't have the juice that it once had. It point out in the journal January 2010, the US was producing five bar million barrels a day. 13.2 million now a day. Uh in January, it's just a it's a totally different world than it was when they could uh choke everything off. Anyway, Dan, thank you. Or you Thank Dan. We can both thank him, >> Dan. Thank you.

[00:11:30]>> Thank you.

[00:11:33]>> Meanwhile, take a look at this. Shares of Starbucks, they are higher following solid quarterly results. The company raising its fullear outlook for earnings and same store sales. US and global comps are now expected to increase at least 5%. That's up from a previous projection of 3% and CEO Brian Nichols saying company has not seen higher gas prices alter the behavior yet. is interesting of Starbucks customers, but he does acknowledge the Starbucks's forecast. Now, that hike was cautious relative to its op out outperformance >> in that second quarter.

[00:12:03]>> This is the turn in the turnaround.

[00:12:04]>> This is the turn of the turnound. This is like probably took took a little longer than they were hoping for, but it it's it's starting to turn.

[00:12:11]>> Used to be Howard Schultz executed turnaround.

[00:12:13]>> Yeah.

[00:12:14]>> Uh this guy knows customers. Taco Taco Bell.

[00:12:19]>> Chipotle.

[00:12:20]>> Oh, Chipotle. Oh, see. But I thought he but then the Chipotle didn't the Taco Bell go to >> I >> Chipotle one of them did I I I thinking about it personally because I was hoping Chipotle would become more like Taco Bell. A lot of people there's two kinds of people in the world right Taco Bell people in >> Yeah. He was Taco Bell from 2015 to 2018. Yeah. And then he went to Chipotle.

[00:12:42]>> You forgot that. Sorry.

[00:12:43]>> I I I could I was vaguely out there but Yeah.

[00:12:46]>> All back to Taco Bell.

[00:12:50]Cheese will be next.

[00:12:52]>> Coming up on SquawkPod, it's Fed Day.

[00:12:54]Carile co-founder and chairman David Rubenstein joins us ahead of Chair Powell's last press conference. His likely successor Kevin Walsh is waiting in the wings. But Powell has a legacy way beyond the drama of his last years.

[00:13:08]>> After the press conference today, that will be the 65th press conference that Jay Pow has had. And so he's revolutionized the way Fed chairs communicate with the public.

[00:13:18]Historically, Fed shares did not talk after FOMC meetings.

[00:13:27]>> Welcome back to SquawkPod. Here's Becky Quick.

[00:13:30]>> It is Fed decision day, believe it or not. The central bank widely expected to leave rates unchanged. It is though expected to be chairman J. Pal's last news conference, and that's why more people will be paying attention to this than normal. Joining us right now is David Rubenstein. He is the co-founder and co-chairman of the Carile Group. And David, let's uh first of all, welcome.

[00:13:51]It's good to see you.

[00:13:53]>> My pleasure.

[00:13:54]>> Uh let's talk a little bit about what we might expect today. Again, this might not be something that too many people were interested in because they're not going to do anything with rates. We expect them to leave it unchanged, but we don't know exactly what Chairman Pal is going to say at his last meeting or if he'll be stepping down from the Fed or decide to stay on a little longer.

[00:14:13]and that might be the biggest reason people will be paying attention. What do you expect to hear? What what's your anticipation here?

[00:14:19]>> I I don't have any inside information, but I'll give you my guess. Uh after the press conference today, that will be the 65th press conference that Jay Pal has had. And so, he's revolutionized the way Fed chair chairs communicate with the public. Historically, Fed chairs did not talk after FOMC meetings. Uh Alan Greenspan never had a press conference after an FOM FOMC meeting and nor did Paul Vulker and so you had to guess a little bit about what the Fed was doing.

[00:14:46]JP Pal has brought transparency to the Fed and I think that's a good thing. Uh he's obviously had to struggle with the president of the United States criticizing him uh for for many years but he's overcome that in my view. Uh today I don't expect that the Fed is going to have any rate cuts. uh during uh JPAL's turn tenure as Fed chair, he's had uh 15 uh rate increases and 12 rate decreases. So, more or less about even.

[00:15:13]But what he had to deal with was one of the hardest problems any Fed chair has ever had. Uh when he became Fed chair, not long thereafter, we went into COVID.

[00:15:21]And as a result, the Trump administration and the Biden administration injected about $5 trillion into the economy with no corresponding tax increases. That obviously produced inflation which went as high as 9%. JPAL had to engineer uh uh a situation where we did not go into a recession but also had to deal with high inflation and fortunately we did not really go into a real recession.

[00:15:45]There was a technical recession but generally we didn't have a recession during his eight and third years as a Fed chair. So I think he deserves credit for engineering that and for being uh transparent and also for uh not uh I would say uh getting into a fight with President Trump. Obviously many of us would probably say it's difficult to have a president of United States criticize you and not respond but I think he basically did not respond to that and and bit his tongue for most of the time he was fed chair. So on the whole I think the country owes him a lot of uh gratitude for doing a good job in engineering the postcoavid uh inflationary situation in the United States.

[00:16:24]David, I I guess just on on the other side, I' I'd say I just keep coming back to and and I know that there's there's uh there's there's different ways different people to blame for the inflation and the 5 trillion. I think you know a lot of it was not necessary. the last three and a half trillion which came later in the Biden administration. But as a result of th those 40-year highs in inflation, real wages dropped during that four-year period when Biden was president. The other thing, the balance sheet expansion that we saw from the from that. A lot of people would say that was very good for people that owned assets and you can see what happened to to the owners of things when when you expand the balance sheet like that and dump so much money. We've got the worst income inequality in the history of the world. A lot of people say that that's totally due to the the the prof uh profleacy is another word of the Fed which enabled Congress to overspend as well. So I mean there's plenty of of negatives that I can find.

[00:17:31]No one wants to have less wages in a 4-year period than when when uh when they began. David, >> I agree. But what would you like to do if you had been the Fed share and you saw COVID coming in and the and the government of the United States is spending $5 trillion? What would you do to respond to that?

[00:17:48]>> Well, they the critique would be they responded too late >> in terms of raising rates >> in terms in terms of raising they were involved in all kinds of climate change. They were involved in all kinds of things but never once, you know, weighed in on on all the money that was that was being spent on all the infrastructure. Although Joe, I will say at the time, Green New Deal. Green New Deal.

[00:18:11]>> Defended Pal the Fed chairman is >> I'm just saying that I'm just playing devil's advocate.

[00:18:16]>> The Fed chairman does not decide what Congress does or the administration.

[00:18:20]Remember, the Fed chairman is the chairman of the FOMC. He doesn't make all these decisions by himself. And so, you have a lot of people on the Fed FOMC making these decisions. These weren't narrowly decided. They were generally unanimous.

[00:18:35]>> Yeah. I I there there's it's always easy to go back and and criticize and critique. Um but the biggest issue he's going to have to and and and by the way I I'm a fan of what Chairman Pal did over this time too. But the biggest critique is always going to be waiting so long to deal with that inflation thinking that it was going to be transitory. That's that's a phrase you you don't forget. I think Janet Yellen and J Pal both said in March of 2021 uh that the inflation that was high then 8 went peaked at 8 to 9% was transitory.

[00:19:06]Later they admitted that that was probably not the best word. I think that was probably something they would all regret. It wasn't transitory. It turned out to be more enduring. However, they did do something about it. And the result is that our economy was went pretty well. We did not have a real recession during that 8-year period of time. uh JPA has been I think the fourth or fifth longest serving Fed chair and never had a recession during his period of time. Um so I think he deserves some credit for that and I think dealing with the problems he had at the White House was was not easy to deal with either. Um so on the whole I would give him pretty high marks. Um I say no perfect no Fed chairman is perfect but I think he did a pretty good job and he he bit his tongue for much of the time and I think all of us would have had a tough time biting our tongue if you're going criticized daily by the president of the United States.

[00:19:51]>> Right. Grace under fire um is certainly a phrase that I would associate with J.

[00:19:56]Pal and and how he's dealt with all of it. The question now becomes, okay, the the the attorney general has that case has been taken away for now. It's going to be referred to within the Senate.

[00:20:08]They're going to be investigating it there through uh their own committees on this.

[00:20:13]You know, Pal has said that he was not going to step down if it still looked like he was in danger of this criminal prosecution. Do you think that he should stay on the Fed u because his term's not up until 2028 or do you think that he should step down at this point since this concession has been made?

[00:20:33]>> Well, he'll have to make that decision obviously. Uh yes, yesterday James Comey was indicted after about a year of nobody talking about his being indicted.

[00:20:41]So, you never know exactly what's going to happen out of the Justice Department for sure. But I think that probably JP Pal's lawyers, and I'm not one of them, of course, would probably say they would want something in writing that indicates he's not being subject to u another potential indictment because, you know, just saying that uh in a leak that they're not going to investigate him any further uh unless new information comes up probably would not be in his lawyer's views enough. But again, I'm not his lawyer and he may have a different view than than I do. I'm just saying that if it were my situation, I'd like to have something in writing that would make me feel I can go about my life and not have to worry about a federal indictment. And I would say it would cost over.

[00:21:20]>> I can understand that, but then you get to the position where you're holding on to this this seat as leverage that that you feel like you've lost it. I mean, maybe it's the prudent thing to do given what we've seen with Comey and others.

[00:21:33]Um, but is it a trade? Like, okay, I agree to I I'll step down and and kind of go my own way with things if you'll agree to stop harassing me. Is that basically what the trade is?

[00:21:45]>> Well, I think that stepping down basically would enable Jay to basically go back about his life and go back to a more normal uh life uh without having uh security around him all the time and having agents follow everything he does.

[00:21:58]and I'm sure he'd be happy to go back to that, but I think he'd like for the comfort of his family and his own well-being to know that he's not being subject to a federal indictment. I don't see a lot of uh interest in a federal indictment by members of Congress against J. Pal. J. Pal theoretically uh wasn't as honest as some people might say he should have been about the cost overruns, but the cost overruns were not something he had any control over.

[00:22:22]They're always cost overruns in Washington DC. the the the ballroom being built was supposed to cost $100 million. Now it's costing $400 million.

[00:22:30]The costs in in in Washington are always exceeding what people project. You how do you know what what the building is going to cost in the in terms of the Federal Reserve? You had a lot of asbestous that had to be dealt with. You had high water plane that had to be dealt with. You had contamination. So it wasn't J Pal's fault that the cost was higher than people projected in my view.

[00:22:49]>> Yeah. And it did happen at a time where construction costs everywhere were rising because of COVID and the inflationary impact that came along with that which >> the biggest challenge going forward is the new Federal Reserve chair uh presumably uh Kevin Walsh um is a very talented person. He's smart. Um he's like J Pal. He's trained as a lawyer, not as an economist, but he has been on the Fed before. And when we have Fed chairs who've come back to the Fed, as Ben Bernaki did, um I generally think they do a good job and he has a lot of experience and he's well respected in the in the in the Federal Reserve community. But I think he will recognize that getting a a Fed funds cut rate now is not going to be easy. I don't think anybody in the financial markets is expecting a a big cut in Fed funds rates in the near term because as long as the war is on, we don't know what the inflationary impact is going to be. So, I suspect as as Kevin Wor said in his testimony, he would like to uh you know lower rates. Everybody would like lower rates, but I don't wouldn't expect it would happen overnight.

[00:23:53]David, I'm seeing glimmers of hope in in the Orioles.

[00:23:59]It's you're only one game below 500. Are you going to like Will you go to every game to Orioles? Will you be going will you be go down tonight at 6 6:35?

[00:24:09]>> I can't go to every game. Um, I like to go to the games when I think we're going to win. No. Um, look, we won last night and >> Houston.

[00:24:19]>> Um, you know, look, I I I go in and give them a pep talk from time to time, but I don't think they listen. I'm an old guy and they're all young and so I'm not sure they're thinking that I know very much about baseball, but uh, the Orioles are doing reasonably well. We're one game under 500 now. And Joe, whenever you want to come to a game, please let me know. I'll let you go into the cage and see what you can do at your age. I I I was invited by by someone that you know near and dear who who I think has a lot of influence over you. So I I already had an invite to come down. Uh >> okay. Well, let me just extend it and say please come anytime you'd like. The players would like to meet you. I know most of the players are watching this show all the time.

[00:24:58]>> How about when the Reds come to town?

[00:25:00]The Reds are in first place.

[00:25:02]>> Well, we're going to go to first. Well, >> Reds come to town. I'll come down and and sit with you and that that other important person.

[00:25:10]>> Please let me know when you can come. We we're all waiting for you and we know you can bring us some good luck. I know you're not really an Orioles fan, but maybe we can convert you.

[00:25:18]>> And Joe's got the curse. Any team he likes tends to lose and you're doing well. That's football. Bring him.

[00:25:23]>> That's football. That might be more.

[00:25:27]>> The invitation extends to to all of you, any of you who are the any of you on the show. Okay.

[00:25:32]>> Okay.

[00:25:33]>> David, thank you and thanks for being with us this morning. Thank you.

[00:25:38]>> Next on SquawkPod, a lively debate over whether the government should let Spirit Airlines just die. Joel Griffith from Advancing American Freedom says that's the way the market goes.

[00:25:51]>> The disappearance of Spirit Air, if it were to fail, uh, this is not going to impact the broader economy. Of course, Spirit Air only has around 3% of all domestic flights. We have 84 other airlines to choose from. But international president of the flight attendants association Sarah Nelson has her own members in mind.

[00:26:08]>> There's a responsibility by the government to look out sure for the markets but also to look out for the American people. There's a bigger responsibility here.

[00:26:16]>> We'll be right back.

[00:26:22]>> This is Squawkpod and Becky Q.

[00:26:26]>> You're watching Squawkbox right here on CNBC. I'm Becky Quick along with Joe Kernin and Andrew Ross Sorcin. Our next guest will weigh in with the pros and cons of a potential half billion dollar federal rescue of Spirit Airlines.

[00:26:39]President Trump actually mentioned the idea in an interview on Squawkbox last week.

[00:26:45]>> I don't like it. No, I don't mind mergers. I think I'd love somebody to buy Spirit as an example. You know, Spirit's in trouble and I'd love somebody to buy Spirit. 14,000 jobs and maybe the federal government should help that one out. You I told my people but but with American it's doing fine and United is doing very well. I know the United people they're doing very well. I don't like having them merge. It's just like all of these aerospace compies and aerospace.

[00:27:13]>> Joining us now is Sarah Nelson. She is the international president of the Association of Flight Attendants, which last week put out a letter supporting the idea of government help for Spirit.

[00:27:24]Also, Advancing American Freedom senior fellow Joel Griffith and and folks, welcome to both of you. Um, look, President Trump said last week here that he would love to see somebody else by Spirit, but if not, maybe the federal government should get involved with this. Sarah, you you put out a letter of support. Why would you like to see government support here? just jobs.

[00:27:45]>> Uh well, this is definitely about jobs, but this is also about a unique moment in the industry. So, Spirit has been recovering from COVID ever since and had uh 40 airplanes set on the ground because of the problems with the recall of the Prattton wind whitney engines.

[00:27:59]And then here we are. What they tried to do was merge with another airline with JetBlue in order to fix their financial situation. And that was called off. Here we are now in this situation where we have a brand new CEO who is taking Spirit to a new place to be able to restructure and in the middle of that restructuring we had the Iran war start where fuel prices spiked. So this is a unique scenario where the rest of the industry is cutting capacity. No one's going to be interested in buying an airline while they're cutting capacity.

[00:28:28]We need to bridge this to a place where we can um get to a place of a merger or spirit being able to exit bankruptcy and exist alone and and keep the service in markets that um really need it. There are some airports that are going to lose service completely. A lot of people will lose choice. uh spirit keeps uh airfares low and that competition is important and this is a unique moment in time where we have real life people who are on the verge of losing health care of losing their jobs and a ripple effect across the economy including the communities that will lose the hospitality and other investments in their communities. So this is a good way to invest in the American people and I I think that that is the definition of freedom actually. Hey Joel, let's talk a little bit about the timing on this because you can certainly argue that the financial crisis was a unique moment in time. COVID obviously a unique moment in time. We're five years past that though.

[00:29:21]Does this rise, you think, to the level of a of a unique moment in time that the government needs to step in and help out?

[00:29:29]>> No, this is not a unique moment in time.

[00:29:31]In fact, the only way this is unique is that we have a Republican presidential administration threatening to nationalize an airline. And look, the Biden administration was wrong to kill the merger between JetBlue and Spirit that killed nearly $30 billion worth of shareholder value. But the solution of this is not now to nationalize or bail out Spirit. The disappearance of Spirit Air, if it were to fail, uh this is not going to impact the broader economy. Of course, Spirit Air only has around 3% of all domestic flights. We have 84 other airlines to choose from. And if air Spirit Air were to go bankrupt, it's not as if the aircraft disappear or the routes disappear. Those aircraft, if it's not an emerger, will be sold to other airlines and including Frontier and Allegent. And guess what? All of those routes, other airlines will have the opportunity to absorb those connections. This will not be a disaster for um air travel. And as someone who enjoys flying Spirit, this is an unfortunate situation, but it's been a long time coming. Spirit Airlines has been m losing money each and every year since 2020. They lose nearly 12 cents for every dollar of revenue. This is not due to the current situation in Iran with higher fuel prices. This has been longtime mismanagement and a longtime accumulation of debt. Hey Sarah, even the Washington Post editorial board, which isn't normally seen as a far-right editorial board, published a piece this week saying America doesn't need another Amtrak of the skies. They say Americans would be better off if the federal government just lit that money on fire.

[00:31:07]That the spirits failure poses no systemic risk to air travel. The administration has no business picking winners and losers in a competitive in a competitive industry. Becky, I do want to clear up one thing. This is not about the government running Spirit Airlines.

[00:31:22]This is about making uh Spirit making it possible for Spirit to continue to operate until it can operate on its own or be able to be strong enough to be merging with another airline. The idea that people are going to pick up Spirit and all of its assets and its employees and uh keep the obligations to them is just not correct. What we're talking about here is simply writing it out through a period of time where Spirit will not be able to exist. We're talking about days here where people are going to lose the tickets that they bought.

[00:31:51]They're going to lose that affordability. Fort Lauderdale, 27% of the market in Fort Lauderdale is Spirit.

[00:31:58]There is in uh the Arnold Palmer Regional Airport, um which provides service for people in western Pennsylvania, Ohio, and West Virginia, that would go away completely. Atlantic City go away completely. We're talking about an immediate harm here that can be staved off. And these are real people who are going to lose their jobs. It's actually 19,000. Can I ask a separate question? Direct employees. Yes, absolutely. Andrew, just one second.

[00:32:23]19,000 people between the direct employees and the contractors who will suddenly be out of work, out of their healthcare, people who are getting ready to have babies or in the middle of cancer treatments and everything else.

[00:32:32]So, we need to think about how we're supporting the American people, those who are buying the tickets and those who are working at Spirit Airlines right now. Sarah, you and I have had uh vigorous debates over the years, especially during the pandemic, about the bailouts of the airline industry, and I and and I had some sympathy, not a lot of sympathy, but some sympathy for those bailouts during that period, given the uniqueness of that moment. My question to you is, do you believe that airlines are ultimately government utilities to some degree? Because if they are, then they should be managed in a very, very different way. Well, what I do believe is that the airline industry is the backbone of the economy and the idea of deregulation was to create competition, but what we've seen is a consolidation of power. The idea that it's going to be a frontier that's going to pick up the pieces of Spirit when Frontier is also struggling is just not correct.

[00:33:24]>> You You supported You supported the merger of JetBlue and Spirit.

[00:33:28]>> Say that again.

[00:33:29]>> You supported the merger of JetBlue and Spirit and now you're telling me consolidation's too much.

[00:33:35]>> No. Absolutely. Andrew, because what we said with JetBlue and Spirit was that the JetBlue Spirit merger was the anti- merger merger. It was going to actually give an opportunity to compete with the big three and inject more competition into the airline industry. So, um that that is our argument with the with the merger of JetBlue and Spirit and we would have liked to have seen that happen because we believe it would have created more competitive um advantage for the American people. But Sarah, don't you think to me either you have to decide that this is a util you're in a utility business, in which case they should be regulated completely and utterly like utilities and and treated as such, or they're competitive business. And by the way, some of these routes you're talking about could ultimately get picked up by other airlines. I mean, >> and in the meantime, people are going to get hurt. So they're not going to get to their graduations. They're not going to get to their families. They're not going to get to their people who are hurting.

[00:34:27]There are many people who say that they've flown on Spirit for the first flown for the first time that they were able to afford it on >> Do you think that the airline industry is is a a special class of people that work there relative to every other industry in the in the country. So any other time a company is about to go out of business, the government's supposed to step in to help them. And that's that's why this is as complicated as it is. What I believe, Andrew, is that the airline industry touches every other industry and touches every single community. And so investing in the airline industry is investing in the American people much. But then they should be treated as utilities. And then you should all be government employees and we can have a different conversation.

[00:35:08]>> And and where we are right now is that it is a competitive market. But this is a moment in time where this has been disrupted in a major way by decisions of the government, both administrations.

[00:35:20]And so it's time to step in and make sure that they can be propped up, not lose those tickets for people who are able to travel and and invest in the American people. This is going to hurt the economy at just the wrong time. And so it's not just about Spirit Airlines.

[00:35:35]This really is about how this is going to impact impact the American people across the board. I just think it's really great to see you and President Trump on the same page.

[00:35:46]I just that that's what really warms the cockles of my soul. Uh is and and mad at the Bidens for Biden administration for not letting the merger go through this.

[00:35:56]>> Well, listen, I I think that there's a responsibility by the government to look out sure for the markets, but also to look out for the American people.

[00:36:03]There's a bigger responsibility here and so I agree that it's time to uh invest in spirit in this way. There will be a return to the American people and the government is not going to run this airline. That is not a good idea. I agree with Joel on that. Magera, >> but we have a great CEO who can Dave Davis who knows how to say it. I can't you know >> Magera I never thought I don't have another word. I just want I just need to say to Sarah Sarah, you know, when Microsoft lays off 10% of its workforce or you hear about 10,000 employees getting I mean, it's just it's wild to me that we're having a I understand the importance of airlines, but again, it's wild to me that somehow you believe that your team of people is a special class relative to every other American. And if you believe that these airlines are so important in terms of travel, which it is, then I think you should be arguing and lobbying for them to become government utilities. And you should be a government employee. That's what it should be.

[00:36:54]>> To be clear, I don't think that airline employees are a special class. I don't think that those layoffs at Microsoft should have happened either. Uh we need to be investing in the American people.

[00:37:03]That's how we grow a strong economy. And so this isn't just this is about the immediate issue at Spirit. We will not be able to put this back together.

[00:37:11]>> Sorry, I got to let Joel have another word. They've been trying to wrap us for three minutes and Joel has only gotten one Joel has only gotten to talk once.

[00:37:17]So, let's let Joel say something before we have to go because we're way over time. Joel, >> thank you Beck. Thank you, Becky. Let's keep a few big things in mind here. Uh, first of all, Sarah's union has been part of the problem. The labor contracts have been negotiated at Spirit have not been in the best interests of of Spirit employees or the company. And that's because those contracts have >> employees have taken Joel. They've taken concessions.

[00:37:39]>> If I if if if I can finish one second here. um the new conduct that went into place in increase labor costs at Spirit to be more on par with some of the higher cost airlines like Delta and more importantly diminish the flexibility of those labor arrangements. That's part of the reason why Spirit has not been able to bounce back postco but this is not a situation wait for one one more second here. We also need to keep in mind Spirit only has about 4% of the total market share for domestic flights. This is not going to impact most most flyers.

[00:38:10]those routes going to be absorbed. And uh this underscores that this is not just the bailout of the hedge funds that bought up Spirit debt at 40 cents in the dollar. They're going to double and triple their money. This is also a bailout of the union leaders at Spirit who have run Spirit into the ground. And sure, they don't want those contracts to Joel. That is not fair. This is about average. It's not about union leaders.

[00:38:33]The fact that Spirit employees make on average about 30 to 40% less than those mainline carriers. So what your argument is just simply not true.

[00:38:43]>> That shows up in the financial statements each and every quarter unfortunately.

[00:38:47]>> Oh, >> okay. As a percentage of what Spirit is paying to all of its employees and all of the revenue, but those the those employees are making way less than the other mainline carriers. And that is competitive. The labor costs are competitive. What we're talking about here is the cost rising costs in fuel and the disruption of Pratt Whitney and um the the fact that Spirit needs the opportunity to adjust to the new market here where people want a a a range of choice not just the lowcost carrier and they need to be able to restructure. I'm sorry we have to end this conversation today.

[00:39:23]>> I I'm sorry I can't let it keep going on and on. Sarah, Joel, I want to thank you both for being here today. I appreciate the conversation. And Andrew, you know, you used the word uniqueness.

[00:39:34]I would like to propose a uniquity. I I just think it's and I looked it up. It's not a word, but it was a word back in the 16th century in in text and it didn't gain enough usage. But isn't uniquity better than uniqueness? I just think it it has a good sound to it. I'm asking the OED. It's like remember Sarah Sarah Palant had some some good ones.

[00:39:55]Remight remember what was that? Oh, misrep.

[00:39:59]>> You can talk to to Webster about that.

[00:40:00]>> I want to talk to the o the the Oxford English diction. Refudiate.

[00:40:04]>> Yeah, refute.

[00:40:05]>> Refudiate should be a word. Uniquity.

[00:40:09]>> That does it for Squawk Pod today. Thank you for listening today and every other day. Squawkbox is hosted by Joe Kernan, Becky Quick, and Andrew Rossorin. You can catch all three live weekday mornings on CNBC from 6:00 a.m. Eastern all the way until 9:00. You can always get the best bits of that TV show right into your ears here on SquawkPod as long as you follow us wherever you're listening now. We'll meet you right back here tomorrow. Have a great day.

[00:40:38]>> We are clear. Thanks, guys. Thank you so much.