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Quest Means Business

European Airline Misery Spreads To Lufthansa As Pilots Strike Today

Aired February 22, 2010 - 14:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

MAX FOSTER, CNN INT'L. ANCHOR, QUEST MEANS BUSINESS: We have been discussing at some length today the story coming to us out of Frankfurt, Lufthansa pilots threatening to go on strike.

We have some breaking news for you because we understand there is a development which may well affect your travel plans if you are due to travel with Lufthansa. Let's cross to Fred Pleitgen. He is in Frankfurt.

Fred, what can you tell me?

FOSTER: Hi, Max.

Well we have just heard that in Frankfurt's labor court, only a couple of minutes ago, both the Lufthansa and the Lufthansa pilot's union, have agreed to suspend the Lufthansa strike which of course has crippled air travel here in Germany, across Europe, and really internationally for a lot of passengers.

They have agreed to suspend that strike, apparently, I'm hearing right now, until March 8. They want to go back to negotiating table, renegotiate. Now, what we are hearing from inside the courtroom, right now, apparently the session is actually still going on, but what we are hearing from inside the courtroom right now is that the strike will end at midnight tonight German time. That is 23:00 GMT; that is 1800 Eastern Time. So the strike will end there and then air travel here, of Lufthansa, is due to resume. Now, one that that the pilots' union is saying is that of course, it has to inform its striking pilots before they can come back to work. So, we are expected to see some pretty heavy delays and also a lot of cancellations in air travel tomorrow.

Of course, also, a lot of passengers whose flights were canceled today will have to get rebooked on other flights. So, certainly there are going to be major hiccups in air travel tomorrow. However, the strike itself, for now, is over at least until March 8. Both sides are going to return to the negotiating table and try and work something out. Something, of course, that they haven't been able to do until right now. But certainly this will be very good news to a lot of travelers, not just here in Europe and Germany, but also people in America.

And, again, as Lufthansa has been saying, throughout all of this, please do check the Lufthansa web site before going to the airport to see whether or not your flight has been cancelled, indeed if you are traveling with Lufthansa, or a Star Alliance partner that might put you on a Lufthansa leg, somewhere within your air travel.

What we are hearing right now, from the Frankfurt labor court, from in downtown Frankfurt, is that both sides have mitigated in the strike that has been going on and have decided to suspend the strike until March 8 to negotiate and try to come to a conclusion in this labor dispute, Max.

FOSTER: Fred, thank you so much for joining us. We are going to cross to Charles Hodson now, because he is actually at the court which Fred was referring to, just then. He's going to give us the reason for this change in tact on behalf of the union.

Charles, explain what happened at the court, where you are.

CHARLES HODSON, CNN INT'L. CORRESPONDENT: Well, it has been, really, a remarkable process. And it has taken only about two and a half hours, and really, we heard legal arguments for only about half an hour. And a lot of time was spent on a couple of lengthy adjournments, during which the lawyers representing Vereinigung Cockpit, the pilots union, and those representing Lufthansa went away and huddled and made telephone calls. In the Lufthansa case, back to the board, meeting somewhere else, presumably in Cologne, where the headquarters is.

And out of it really came what looks like a kind of face-saving formula. It is complicated but really what it is makes this essentially a pay dispute, rather than a slightly messier dispute concerning the jobs or the future of jobs and the growth and number of jobs for Lufthansa pilots working on the core routes.

It does look very much as if there will be a suspension within the next few hours. Though, clearly, a lot of people were making clear, in the court, as the final agreement literally being negotiated in front of the press, and in front of everyone in the public gallery. A lot was being made of the fact that practicalities would dictate, it would take quite some time, some hours, possibly a day or two to get back to normal working for the Lufthansa timetable, Max.

FOSTER: Charles, exciting stuff, at the corporate level, but still and absolute disaster for many passengers because the worst thing that they want is uncertainty. They don't know when this strike will reemerge. They don't know whether they should book or rebook, or what is going on. What sort of advice can those passengers get from the authorities on what they should be doing.

HODSON: Well, I think Fred said-gave very good advice a moment ago. And that was that people should obviously check the Lufthansa web site to check if their particular flight was fine. I mean, some flights, obviously were not affected; 1,000 out of the 1,800 flights did fly or will have flown in the course of Monday. But looking to the future, certainly the date which people who are thinking of flying with Lufthansa need to mark in their dairies, is Monday the 8 of March. That is the point at which this current suspension will expire. So, unless there has been an agreement on the broad ranging pay dispute, or the ongoing pay negotiations between the two sides, then Monday March 8 is the point at which the union will be in a position again to call a strike if it so wishes. It simply said that it will not call one until then, Max.

FOSTER: What is your hunch, Charles? How determined are the management to win this battle? Because this is a major structural issue for them, it is not just an issue about a few pay packets, is it? This is about the whole future of the airline, Europe's largest?

HODSON: Well, I agree with you. But I think what has changed in terms of the analysis that you have just given is that this whole structural issue has been back pedaled. It has been essentially boiled down to a pay issue, first and foremost, with the structural issues really being put on a back burner. And that is crucially important. So, it has to be seen as some kind of victory for Lufthansa although they may find themselves having to pay their pilots, the core pilots, the Lufthansa pilots, those who are not in the recently acquired subsidiary, quite a bit more to compensate them for the risk that the process of buying those subsidiaries may reduce the number of jobs.

I know this is getting complicated. But it has been, I must say, I did need a consider number of cold towels wrapped around my head to understand what was going on at this tribunal. And I'm only giving you a bit of an inkling as to how difficult it has been. But clearly, the two sides to understand each other a whole lot better now. And my hunch is that this has been a face-saving exercise. In other words, the union wanted to have some kind of face-saving measure, something which looked like a concession before going back to the table. And that seems to have been achieved. So, if you like this has been an elaborate piece of choreography, Max.

FOSTER: Charles Hodson, in Frankfurt. Thank you very much.

Well, if you were flying Lufthansa, and re-booked with BA, more bad news for you because today BA cabin crew-a lot of them, at least, the majority of them, really-voted for a strike at British Airways, although, they haven't set a date. Jim Boulden is at Heathrow.

Explain this one to us, Jim. How are passengers going to be affected by this vote?

JIM BOULDEN, CNN INT'L. CORRESPONDENT: Well, we're not sure yet, Max. Because even though this strike has been voted positively by the cabin crew more than 81 percent, or close to 81 percent, voted yes this time around. More than 90 percent voted the last time around.

Different this time, the union has decided not to announce a strike date and not decide the length of the strike. The last time there was going to be a 12-day strike over Christmas and New Years. And a judge stopped that and a lot of people were very worried that their holiday plans would be disrupted.

But this time, Max, the union says they are still in negotiations with BA and they wanted to discuss if further with them before they make any decision on the length. But it is also, I think, important to note that fewer cabin crew this time voted yes to strike.

FOSTER: Is there something in that, Jim, because one wonders what has changed since the, you know, the attempted Christmas strike, and this strike, which they say won't affect Easter. They're being very careful about that. They are saying they don't want to cause too much disruption, whereas last time they didn't seem to care too much about the disruption. Has something changed?

BOULDEN: Well, I think a lot of the other unions who had already negotiated settlements with British Airways were not happy that the union, the cabin crew union, was taking such a drastic action, over the Christmas and New Year period. In fact, a couple of pilots have agreed to participate in a program that BA has put together to volunteer to learn how to become cabin crew, if in fact this strike were to go ahead. And there has been a three week course that other members of the British Airways staff have been taking in order to fill in for some of the cabin crew. And I have to say that during that period, of course, passengers were very unhappy that this was happening and that they weren't given a lot of notice, even though the two sides have been at loggerheads really for-well, I'd say for more than a year.

But BA says very clearly it needs to cut costs. It needs to do this unilaterally, if the union will not get together with them. But importantly the union says that they know that these changes have to happen. They know that these airlines are losing a lot of money. And what is very important is the unions say they should be deeply involved in how these changes take place, not only for their members, but they say they too, of course, care about the passengers. And they want to see a thriving British Airways in the long run.

FOSTER: OK, Jim, at Heathrow. Thank you so much.

Well, looks look at our industry view then, because I've been speaking to the aviation expert Simon Calder. I grabbed him because he was at that union briefing, the BA union briefing. And he was talking there, about the industry, how the industry is being impacted, and how there is a link, actually, between the BA strike-or the industrial dispute there, and the one at Lufthansa. This is what he had to say about linking those two disputes.

(BEGIN VIDEO CLIP)

SIMON CALDER, TRAVEL INDUSTRY EXPERT: The root of the problems at Lufthansa and BA are the same. They are well-rewarded groups of workers who fear that their jobs are going to be given to people who were brought in from outside at much inferior terms and conditions. Lufthansa's pilots are on strike because they think that foreign pilots and people like BMI (ph) will be brought in. And, of course, British Airways cabin crew are threatening to strike because they are worried about a new tranche of lower paid, inferior cabin crews being brought in and basically replacing them.

So, it is the kind of death throes, I guess, of the very strong legacy airline unions. And I think in the 21st century we'll strike a lot of people who are bitterly trying to earn a living and that these unions are people to take strike action that disrupts so much in terms of the economy, in terms of people's personal plans in order to further disputes that a lot of people say simply are outdated.

FOSTER: A lot of people think staff at Lufthansa and BA are pretty tasteless considering the state of the economy, the lack of jobs at the moment. Even in the airline industry, under huge amounts of pressure, they're not being realistic about the future. Because it doesn't the whole industry have to change, structurally, and in a way in order to survive?

CALDER: British Airways cabin crew are enjoying the kind of contracts that were signed in the olden days, before Ryan Air became the biggest carrier in the world, in terms of international passenger numbers, before EasyJet replaced British Airways as the U.K.'s national airline. Now, all the old airlines, like BA, like Lufthansa, are struggling to try to come up with ways of earlier profit. And one way to do that is to cut their costs and that is why they are looking for the agreements with BA cabin crew, with Lufthansa pilots, trying to drive costs down. And I must say, for an awful lot of passengers we find that they have tremendous uncertainty. They are simply not going to feel much sympathy with the strikers.

FOSTER: So, a good opportunity for the management to push changes through, because as you say, there is not simply amongst the passengers, or the wider public.

CALDER: I think more than one airline management is going to be using the appalling economic situation for the airlines, which this year are probably going to loose between-about 7 billion pounds, and to drive through all kinds of changes that they will say are long overdue. The cabin crew, of course, will say: no, the only reason BA managed to make record profits two years ago was because of us. The (UNINTELLIGIBLE) I feared last summer is that these two sides are so far apart, I fear that the dispute is going to drag on for a while longer.

(END VIDEO CLIP)

FOSTER: Simon Calder, there, the BA cabin crew, then, voting for strike action. But we have not gotten a date on that.

The other bit of breaking news we have for you is the union striking- for striking Lufthansa pilots, has agreed to suspend their walkout until March the 9th. More on this at half past the hour.

Now the disruption doesn't even end there. French air traffic controllers are also on the verge of walking out. The four-day strike starts on Tuesday. At Orly airport, near Paris, half of the daily flights will not take off. At Paris Charles de Gaulle, a quarter of all services will be lost.

And it is not much better if you go by road either. French motorists are filling up with fuel while they can as a strike by oil refinery workers drags into a second week. The oil workers union says it could soon lead to shortages. Although the government says it won't let that happen.

Total says around 100 service stations, out or more than 4,000 it operates in France, have run short though. And staff at six refineries involved in the action which is to protest Total's announced-that it is mothballing a refinery in Dunkirk.

There you are, let's find out what's breaking from the newsroom right now. Fionnuala Sweeney joins us now from the London news desk.

(NEWSBREAK)

FOSTER: Now, one economic union, 27 countries, trillions of dollars of debt. A budget deficit crisis exposing the frailty of one of Europe's- the European-parts of the European economy. In just one moment at look at one country eager to avoid comparisons, though, with Greece.

(COMMERCIAL BREAK)

FOSTER: Investors were in a cautious mood across Europe this session. After five straight days of gains it was time to pause for breath. London's FTSE closed slightly down. Drug makers GlaxoSmithKline lost more than 2.5 percent. A U.S. Senate inquiry has revealed concerns about the side effects of its popular diabetes drug, Avandia. Mining and banking sectors did well, among the winners Royal Bank of Scotland and Lloyd's. Both report earnings later this week.

Now, banking stocks also strong in Frankfurt. Commerzbank, the days' best performer there, up more than 3 percent. It is expected announce results on Wednesday. Lufthansa was down, unsurprisingly, 1.7 percent on day one of the strike we've been telling you about, which now has been suspended.

And in France, telecom equipment maker Alcatel Lucent surged more than 5 percent after Bank of America and Merrill Lynch recommended the stock.

Now, all this week we have been focused-we are going to be focused on the Euro Zone's most troubled economies. In the days ahead we'll look at Greece. We'll look at Spain, Italy, and Ireland. But we start with Portugal, a country of 10 million people and a member of the European Union since 1986.

(BEGIN VIDEOTAPE)

FOSTER (voice over): Portugal's president has reason to be worried. His small nation has racked up huge debts and now its finances are under the international spotlight.

CAVACO SILVA, PRESIDENT OF PORTUGAL (through translator): Portugal cannot afford to get deeper into debt at the rate it has been doing so over the last years.

FOSTER: For decades Portugal's competitiveness has been based on its low labor costs. But with the larger European Union came new problems. With the eastward expansion of the bloc, Portugal found itself losing its edge to the newer EU members, whilst also having to compete with its richer European Union neighbors. Today it has one of the slowest growing economies in the EU.

Adding to that, the crisis of confidence over its deficit situation. Portugal's Socialist Prime Minister Jose Socrates is facing increasing pressures at home and abroad to get his financial house in order.

And here is why: Last year alone the budget deficit soared to 9.3 percent of GDP as the country grappled with its worst recession in decades. Unemployment has spiraled to 9.5 percent, its highest level since 1986.

Portugal's finance minister says he'll seek all measures to get the country back on track.

TEIXEIRA DOS SANTOS, FINANCE MINISTER, PORTUGAL (through translator): Between 2010 and 2013 I'll take up all legal and political instruments to preserve the objectives we pledged in our state budget.

FOSTER: In its recent budget the Socialist government vowed to reduce its deficit to below 3 percent of GDP by 2013. Prime Minister Socrates is pledging to do this through additional spending cuts and by imposing a public sector wage freeze. This is stirring social discontent, though, with the leading public servants union calling a nationwide strike over wages in early March. The prime minister insists these measures are essential.

JOSE SOCRATES, PRIME MINISTER, PORTUGAL (through translator): The crisis still has not finished. It is necessary that the state does all it can to support families.

FOSTER: The prime minister is hoping his track record will help raise confidence in Portugal's ability to address the crisis. When Portugal's deficit rose above 6 percent in 2005, his government brought it down to below 3 percent in just two years. This time around, though, the prime minister may find his challenge may be far greater.

(END VIDEOTAPE)

FOSTER: Well, earlier I spoke to Filipe Garcia. He is an analyst with Informacao de Mercados Financeiros. I began by asking him about the state of Portugal's finances and unwelcome comparisons to Greece.

(BEGIN VIDEOTAPE)

FILIPE GARCIA, ANALYST, INFORMACAO DE MERCADOS FINANCEIROS: These last couple of years were bad for Portuguese finance. We have to keep in mind that that we have a financial crisis and our cutting (ph) position was not very good. But we can see in the Portuguese accountancy-in the last year-some deterioration because tax collection was very low. And that is probably the biggest factor that worsened our public accounts.

But I think we are not in the same position as Greece. We have better deficit values, we have a lower debt value, and I think our accountancy, public accountancy, is a lot more rigorous than the Greek accountancy. And I think that is a major factor in terms of confidence.

FOSTER: You are referring there to the term, perhaps Greece wasn't entirely honest about the amount of lending it was going into, whereas Portugal has been honest. So, it has always been honest with the investors so there is no reason for investors not to trust Portugal?

GARCIA: Yes, I agree with that sentence. Of course, we have some expenses that are not in the budget and that happens in partnerships with privates (ph), but in terms of its weight on the GDP, that is not too significant.

Of course, we have problems. I don't tend to hide them. We have a, for instance, a high level on expenditure on wages and public servants. That is probably our worst factor in terms of public accounts. But I must say that in terms of rigor we are-I think we have really pretty fair accountancy, public accountancy part (ph).

FOSTER: Nevertheless, you are being put in the same boat as Spain and as Greece, so even if your finances are fairly stable, if they are not brilliant, and you have been honest about your accountancy, that may be irrelevant, because if people loose faith in sovereign debt in Greece, then they are going to look to Portugal, and think, actually we don't want to buy bonds from there, either, so, this maybe out of the government's control. It may-the damage may have already been done by Greece?

GARCIA: Yes, I tend to agree with that. You see, a lot of the credibility that Portugal has at this point is because it is under the euro. If it were not under euro, probably our currency would be-well a lot devalued, and we would have some problems. I don't know, if like, Iceland's problems, but we would have some problems. But you are right, if the markets loose faith in one Euro member, that is a kind of crisis that could spread. That is why I think that the European government and the (AUDIO GAP) will be very careful in terms of not allowing the markets to loose faith in the euro and all the members of the euro.

(END VIDEO CLIP)

FOSTER: Well, soaring government debts in countries like Portugal are leading many to question the credibility of the euro; its value has slumped to a nine-month low against the dollar. And all week we are asking on our blog, was the euro a bad idea? We have had lots of comments, please join in the debate there.

Now, when it rains, it pours, for the management of Toyota, as tension builds ahead of a hearing of the U.S. Congress. The company's top man gets two new headaches. The details just ahead.

(COMMERCIAL BREAK)

FOSTER: Times are changing and they are getting tougher by the day for Toyota, but it doesn't seem to be helping itself. Just two days before the head of the company is due to appear before a hearing of the U.S. Congress, it has stumbled into a new public relations headache. Maggie Lake will be following this for us as the developments unfold. She joins me now with more.

What more can go wrong, Maggie, for this company?

MAGGIE LAKE, CNN FINANCIAL CORRESPONDENT: Max, it seems a lot. This is a PR nightmare, and a serious problem with Toyota. There are new questions about whether Toyota acted properly when it came to safety issues surrounding some of its best-selling vehicles.

In an internal memo, that has been provided to U.S. lawmakers ahead of that testimony that you mentioned, Toyota executives trumpeted the fact that they had successfully negotiated an equipment recall on Camrys and Lexus, saying it saved the company $100 million. In fact, it was listed on this presentation under the wins column. Now, equipment recalls are more limited and they often involved a repair of an accessory or a non-essential part of the vehicle. They cost a lot less.

And this presentation, by the way, dated July 6, 2009, was given by Toyota's top North American executive. This internal document flies in the face of what Toyota has been trying to push out there in a blitz of television advertisements saying that it is customer safety, not profits, that is the company's top priority.

FOSTER: All these messages get through to the customers in the end, don't they, Maggie? I mean, it is too early to tell how sales will be affected or anything, but what sort of impression to you get about how they are going to be reacting or are reacting.

LAKE: Well, so far it seems like Toyota customers have been taking a kind of wait and see approach. You know, their sales were down in January. They weren't off a cliff. They are going to be hit by the fact that they stopped production, but there could be a real problem with this latest development.

In fact, we know now that the Securities and Exchange Commission, a federal grand jury issued a subpoenas for more of those documents. If the customers feel like Toyota made a problem-made a mistake, that is one thing. If they feel like they are being disingenuous sending out this blitz of advertising while at the same time there are all these documents showing that they, you know, were putting an emphasis on profits. That could be a problem. And they have spent a lot of money and put a lot of ads out. Have a listen to what they have been saying.

(BEGIN COMMERCIAL CLIP)

ANNOUNCER: We are working to restore your faith in our company by providing you with safe reliable vehicles, like we have for over 50 years.

For more information-

LAKE: Now, these are very difficult economic times. People are very reluctant to part with their hard-earned money. If they feel like Toyota has been pulling one over on them, it is going to be even harder to fix this PR problem. Remember a lot of vehicles have been affected. There seems to be a host of problems. It makes this week's testimony by top brass even more critical for Toyota.

FOSTER: Maggie, thank you so much for that. And we will be speaking to you over the week as we hear more on this, of course, as the president of Toyota actually appears in Washington before lawmakers.

Now, the affects of the European airline strikes meanwhile, won't be confined to Europe. When we come back we'll go live to the United States to see how travelers and officials are bracing themselves for the shockwaves coming from across the pond.

(COMMERCIAL BREAK)

FOSTER: Welcome back.

I'm Max Foster in London and this is QUEST MEANS BUSINESS here on CNN.

Now back to our top story, the strike by Lufthansa pilots and the threat by British Airways' cabin crew, as well, to follow suit.

Our Richard Roth is at Newark Liberty International Airport. That's a major air travel hub just outside New York City.

We've got reaction there to today's news, having an impact even there then.

RICHARD ROTH, CNN SENIOR UNITED NATIONS CORRESPONDENT: Well, people here really just want to get home. And the news of a suspension in the strike has not really affected them, because they've already been greatly affected. They haven't been able to go to Dusseldorf or Frankfurt, two of the main evening New York time flights from this airport to German cities.

Earlier, I spoke with several passengers who weren't that happy to already be aware of the strike, but then have to struggle to find another flight, to get somehow as close as they could into Germany and then on to their eventual destination.

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE: I fly to Dusseldorf and my flight was canceled. And now I'm -- I don't know what I should do because I don't know how I get back to Germany.

UNIDENTIFIED FEMALE: I actually want to fly home today to Dusseldorf, but we are not quite sure what's going on right now, because the screen says that our flight is canceled and somebody told us we just have to wait here and wait what will happen.

UNIDENTIFIED MALE: I heard some news on my mobile and we called the travel agency in Germany, Munich. We live in the south of Munich. And they arranged this flight this night and therefore we had to go from the JFK to Newark.

ROTH: Did you have to pay for the taxi?

UNIDENTIFIED MALE: No, no. Lufthansa paid it.

(END VIDEO TAPE)

ROTH: Now, the Lufthansa management has been here after a few hours, when people didn't really know what was going on and they talked to the passengers, tried to expedite matters once the airline counters opened. You can see here at Lufthansa, not exactly busy. The one main flight going now from Lufthansa departure gate areas to Munich, Germany. And they've done their best to get passengers on that plane and on the many code share flights of Lufthansa -- United, USAir.

So they haven't been, you know, that drastically affected, Max, in terms of a shutdown or anything. They have 48 planned flights today from the United States and Canada. Eight are flying. If the strike had continued, they would have been hit a little harder, said Lufthansa officials.

I asked one spokesman for Lufthansa just what was the impact for the airline.

(BEGIN VIDEO CLIP)

JENS BISCHOF, LUFTHANSA VICE PRESIDENT: I think we've prepared very well over the weekend and we know, of course, about the entire size of that strike. So, yes, we're good prepared and customers can obviously expect what they typically expect from Lufthansa, which is a premier and world class service, even in a very challenging situation like this.

(END VIDEO CLIP)

ROTH: So Dusseldorf and Frankfurt flights were canceled. People were now going to wait five hours to go to Munich.

That's the story here in Newark, New Jersey, across the river from Manhattan. There were no Lufthansa flights leaving from the JFK Airport. Flights left from Chicago, Vancouver, Dallas -- Max, back to you.

FOSTER: OK, Richard.

Thank you so much for joining us from the U.S.

Well, earlier, I spoke to Len McCluskey.

He's an assistant general secretary of the Unite union, the union which represents British Airways' cabin crews, because they've been voting today on a strike -- actually, the vote wasn't today, but the details came out today. They voted overwhelmingly in favor of a strike, but they haven't actually given a date about when that strike will be -- another big flag carrier in Europe affected by industrial relations.

Let's have a listen to what he had to say to me about an hour ago.

(BEGIN VIDEO CLIP)

MCCLUSKEY, ASSISTANT GENERAL SECRETARY, UNITE: Well, I would suggest to you that the people who created British Airways by imposing the changes that have brought about the ballot for industrial action (ph).

You've got to remember, though, believe Christmas, 90 percent of our members voted for a strike action. Eighty-one president have voted for strike action now. These are not mindless militants set on bringing the company down. These are ordinary, decent men and women who -- who do a highly professional job.

And very evidently, they have a deep sense of grievance. So all (INAUDIBLE) a simple one. British Airways needs to recognize that grievance and needs to resolve it through negotiation, not litigation, not confrontation and certainly not intimidation, but through negotiation.

FOSTER: Reports are that litigation -- there has been various pieces of litigation around this, as it were, conferences...

(CROSSTALK)

FOSTER: -- one high profile (INAUDIBLE). But actually what B.A. was asking for was less than extreme change and the changes weren't unreasonable. That's an impartial view.

So aren't you asking too much from (INAUDIBLE), who actually (INAUDIBLE) that most people in the U.K. are pretty well paid and have great benefits?

MCCLUSKEY: Well, first of all, let's deal with the great benefits. I'm not going to apologize for our members having good paying conditions. Your listeners need to know, wherever they're listening to us, that if you join a union, then it's a fact that you get better pay better conditions. So we're not going to apologize for that.

As regards to the litigation in court last Friday, that's a technical legal matter and is absolutely irrelevant to the act of the...

FOSTER: But away from the relevance...

MCCLUSKEY: -- absolutely irrelevant...

FOSTER: (INAUDIBLE) was...

MCCLUSKEY: -- absolutely irrelevant.

FOSTER: -- it's unreasonable.

MCCLUSKEY: It's absolutely irrelevant to resolving the industrial dispute. We have an industrial dispute and it's deeply complex, far more complex than the simple issues that were being dealt with in court, much more complex than that. And that's why we've said to British Airways, resolve this through negotiation, not through litigation.

FOSTER: The problem that companies like British Airways have got -- and Lufthansa is in the news today, as well -- have got is that these are premium class airlines. They're both -- you probably agree. And the industry is changing so rapidly and the world economy is changing so rapidly, they have to adjust, otherwise they're not going to survive. And you're stopping them from adjusting and becoming more efficient.

MCCLUSKEY: No, quite the contrary. We accept that the world of aviation is changing. We accept that change is needed. We accept that British Airways are in serious financial problems. That's why 30,000 members of Unite who work for British Airways, including the cabin crew, are prepared to make their contribution to make British Airways a competitive company going forward.

Why would we not want to do that?

They want to be employed and continue to have work at British Airways.

So we are engaged in meaningful discussions to help British Airways with that. The problem we've got is that British Airways decided to impose change instead of do it through negotiations. And that's brought about the current uncertainty in the current climate.

FOSTER: Can you offer some solace to passengers hoping to travel in the next month on B.A. that at least you're saying when there will be or there won't be a date for a strike?

MCCLUSKEY: Well, of course we have to make certain that we give seven notice for a strike action. We've already indicated that we won't be taking any strike action over the East -- Easter school holiday period. That's the first two weeks of April. And what the passengers need to understand is that we will be working tirelessly to resolve this dispute. That's the way to deal with their concerns. And that's the way to make certain that British Airways continues to go forward and continues to be the premier brand in world aviation.

(END VIDEO TAPE)

FOSTER: Well, getting stranded at an airport used to mean getting stuck in an information vacuum with only airline staff to help. Not anymore, though. Now passengers can get the latest travel updates and vent their frustration online, of course.

CNN digital producer, Phil Han joins me now from London with more on what imprint the strikes are leaving on the Web.

Is this something that's very much discussed at the moment?

PHIL HAN, CNN DIGITAL PRODUCER: Yes. And it's a very interesting and a very new way that airlines are kind of getting and reaching out to their customers.

We had the QUEST MEANS BUSINESS blog, which went up on the site, I think it was on Friday, just asking travelers who were going to be disrupted by this strike to kind of vent their frustrations at the airline.

Now, over the weekend, we got dozens and dozens of people writing in, saying that they were very angry with the airline, they were disappointed by Lufthansa deciding to strike for four days.

And what was really interesting, though, Max, was that we actually had a Lufthansa spokesman who was reading our blog, incidentally, and they decided to actually post their very own comment.

So what this Lufthansa spokesperson did was she actually replied directly to some of the customers who are -- who are angry at the airline. And -- and it was really interesting because -- sorry.

FOSTER: Yes. So your P.R. department actually going out there to see where the discussion is taking place and getting proactively involved.

Is that -- is that unusual?

HAN: Yes, it's very unusual and it's very new, from what I understand. We also found their Facebook profile. Lufthansa has around 20,000 fans on their Facebook. And they've essentially turned their Facebook profile page into an updated itinerary of the latest flight cancellations, where people who are fans of the site can, you know, read the latest from what the Lufthansa staff want to write, as well as leave comments of their very own, whether they're happy or whether they're angry.

And Lufthansa also, in a very interesting thing, is using their Twitter feed to respond directly to angry Tweets of the airline from around the world.

So what seems to be happening is that Lufthansa is just searching in Twitter for Lufthansa, their name -- and they're finding hundreds and hundreds of angry people writing about the -- the flight strike. And the Lufthansa Twitter page has actually turned into a list by list account of the airline directly replying to angry travelers on whether they're -- they're upset or whether they're angry by the airline and offering some sort of respite in -- in terms of the strike.

So the -- the big question, though, is whether this will have any real impact. It's a massive P.R. push by the airline.

Will customers be satisfied with this?

That's a question, really, that's yet to be understood.

FOSTER: It obviously works for the airline.

I'm just wondering what -- is there a response on these social networking sites about whether they -- they feel satisfied that they are getting responses?

Is everyone feeling satisfied by that?

HAN: Well, I think a lot of the cases is the phone lines are so busy, they can't really get any information through e-mail. So what you're finding is that travelers are actually Tweeting or leaving messages on different forums around the world.

And in a way, they're going to -- they're going to be satisfied because at least they're getting some sort of direct contact from the airline...

FOSTER: Yes.

HAN: But...

FOSTER: Someone will have a similar problem, so they can look to their -- the response to that Tweet, as it were.

HAN: Yes, but whether, you know, it satisfies angry travelers who are disrupted, who knows about that?

FOSTER: Interesting to see what the number of fans looks like if you're (INAUDIBLE).

Thank you very much, Phil.

Now, behind closed doors at Ten Downing Street, is the prime minister a bullying boss or the victim of a smear campaign?

We'll have that story next.

(COMMERCIAL BREAK)

FOSTER: We've been reporting on CNN about the dreadful situation on the Portuguese island of Madeira. There were flash floods there which are causing landslides and multiple deaths there. And, actually, the situation may get a bit worse.

Jenny is at the Weather Center to give us the latest on that.

What are they expecting there -- Jenny?

JENNY HARRISON, CNN METEOROLOGIST: Well, in actual fact, Max, weather conditions for the next few days have calmed down quite significantly.

Let's have a look at those pictures you're talking about, because, indeed, as you say, these are some really dramatic images -- absolutely and completely terrifying. At least 42 people are known to have died. There's 120 people injured. And there's been nearly 250 evacuated. Of course, there are still some people missing, as well. So that is why they're concerned.

But obviously, the death toll may rise further.

Now, just look at the torrents of completely mud filled water coming down. Let me show you exactly what happened to actually bring about this situation. It was an area of low pressure that was heading to the north of Madeira, a very intense area of low pressure, very strong -- very, very strong winds. You can see these are some of the highest wind gusts that were reported, nearly 95 kilometers an hour and the rain up to 150 millimeters in Funchal.

Now, this is getting on for about a month's rain and it all came down in about between six and eight hours. And so, of course, that amount of rain on some already fairly saturated ground is really what has caused the problem.

But you also need to factor in the actual topography. Look at Funchal. Look where it is, obviously a low lying coastal town. And then literally, just five kilometers in from there, we've got mountains over 1,000 meters high.

So the rain, of course, comes down and then came careening down the mountainsides and actually bringing all that mud, the rock, everything with it, why we have seen so much damage, destruction and also death from this system.

Now, of course, it's evening hours now. Temperatures certainly on the decline, not particularly cold. Humidity is typical this time of year and this time of day going up. Winds from the west at 22 kilometers an hour. And for the next couple of days, it really should stay mostly clear.

There is some more rain in the forecast. Here it comes. But as I say, that was a couple of days away. And hopefully, in the meantime, some of those floodwaters should actually start to recede.

But that same system is now pushing on toward Portugal and Spain. A very unsettled picture generally across in Europe. And so it does mean that a warning is in place for the strong winds, large and possibly damaging hail and again, some heavy rain, which could lead to some flash floods.

Now, the temperatures are mild out toward the west. Look at these temperatures right now across northern and Eastern Europe. You factor in the wind, it feels even colder. Even in London, it's minus one.

A new system heading across pretty much the same path as the last, which is to say that in Scandinavia, some very heavy snow in your forecast; and also snow, as well, into the UK; and, of course, all the while we've got rain and snow further to the south.

Now, the heavy accumulations, again, will be along the line of the alps and then particularly across into Scandinavia.

But you can see that we've got that snow also across into the U.K. and Germany.

The delays, of course -- there will be a fair few of them. You can see on mainland Europe, again, of course, Germany impacted. You've got that snow to Copenhagen. In Zurich, we've got some rain and then maybe some snow mix and in London, late in the morning hours on Tuesday and Milan.

Now it's time for a short break here on QUEST MEANS BUSINESS. Max is back with you in just a moment.

Stand by.

(COMMERCIAL BREAK)

FOSTER: Now a row over bullying is rocking the office of the British prime minister. It all began with a new book on the P.M. that accuses Gordon Brown of abusive behavior toward some of his staff. Mr. Brown's allies quickly dismissed those allegations, but then the head of an anti- bullying organization came forward.

Our Sasha Herriman picks up the story.

(BEGIN VIDEOTAPE)

SASHA HERRIMAN, CNN CORRESPONDENT: The headlines speak volumes here: "The Prime Monster," Scared Downing Street Staff Called Anti-Bully Helpline." Let's get a look at another of the main headlines in the U.K. papers, as well. "Brown Hit by Fresh Bullying Allegations."

This is all one very big storm in the Westminster teacup. It all centers on a new book, which was written and has talked about bullying allegations coming out of Number Ten.

Now, the prime minister's office has denied all of this. And that, in itself, caused the head of the anti-bully helpline here in the U.K. to come forward and say yes, they did actually receive calls from worried staff. Three or four calls, they actually talked about.

I spoke to her earlier on to hear what she had to say.

CHRISTINE PRATT, NATIONAL BULLYING HELPLINE: Whether he's a bully or not, whether it's real or imagined, this is all about processes that are in place to be followed to ensure that the employer can put his hand on his heart and say to a judge in a tribunal, we've taken this seriously. We want to ensure that our employees feel that they can come to work in a safe and stress-free environment, which is what the health and safety (INAUDIBLE) requests no less and -- and that -- and that any employee would feel comfortable about speaking up.

HERRIMAN: Now, the fact that the head of the National Anti-Bullying helpline has actually come forward to talk about this has itself caused accusations of a breach of confidentiality -- should this actually be being talked about in the public domain?

PRATT: We have dealt with the calls to the helpline confidentially. What we were concerned about this weekend was the denial from an employer that we would have hoped and expected would know better.

HERRIMAN: So what about the public?

What did they make of this story?

UNIDENTIFIED MALE: Well, I think it's just a big news over hype and I think it's just the charity trying to make -- make itself known, really. I think it's really blown out of proportion.

UNIDENTIFIED FEMALE: I can't see how he can be a monster. He's just doing his job like everybody else does. I mean if he has to tell people what to do and they're not happy about it, well, that's society today. No one can do that to anybody.

HERRIMAN: As a result of this story hitting the headlines, the patron of the National Anti-Bullying helpline charity has quit his position. That's because he's worried about those concerns of breach of confidentiality.

It seems this is one storm in the Westminster teacup that's not going to die down any time soon.

Sasha Herriman, CNN, Downing Street, Central London.

(END VIDEO TAPE)

FOSTER: So how difficult is it to identify bullying in the workplace?

In one person's passionate -- is one person's passionate boss another abusive manager?

I'm joined now via Skype by Dr. Gary Namie.

He is the director of the Workplace Bullying Institute in the U.S. state of Washington.

Thank you so much for joining us.

It was very interesting hearing one of those sound bites suggesting that Gordon Brown isn't a monster, he's just doing his job.

What does define a bully?

That's the difficult thing, right?

GARY NAMIE, DIRECTOR, WORKPLACE BULLYING INSTITUTE: I just -- I think that's true. And I -- and I read in the BBC the -- the definition used about negative actions is so vacuous. That's partly an academic definition.

I think if you raise the standard of what is truly bullying, what is psychological violence, you would get at it. You'd be able to sort this thing out, whether or not the prime minister is a bully or not.

But, you know, I -- so many key things there that are -- that are so generally stated. You have the -- the eloquent spokesperson for Ten Downing Street, the woman, come out and talk about how we strive everyday to make this a safe, stress-free environment, blah, blah, blah. They all say that. That -- that's -- that's to be expected.

You hear the other people on the street -- it sounded like they were on the street. They said, let the man do his job. And there's an intriguing double standard going on here, where people feel they want more personal rights in the workplace, but when a -- a high -- high profile, celebrity, government or entertainment industry person goes over the top -- and if there is, indeed, evidence for it -- I don't know whether it's hearsay or it was literally witnessed and that's what's in the book. I don't know.

But if there's evidence, how it's always discounted, how people are more than willing to let the high profile person off the hook, if you will. So that's...

FOSTER: Well, but...

NAMIE: Boy, that -- you're -- you're -- you -- it's roiling over there now. I can hear it.

FOSTER: Yes, but nothing is proven in this case, as you say.

But some people would defend someone in Gordon Brown's position, saying they're doing such a stressful job and they care about their job, they're very passionate about it. And maybe they do shout and scream and things, but, actually, it isn't bullying, it's actually just trying to do your job in the most effective manner under a lot of pressure.

NAMIE: Isn't passionate the new -- the new adjective for you must deal with my over the top, anti-social behavior as if I'm the drunk uncle in the family and you all must learn to walk on eggshells.

Can we stop discounting over the top behavior?

You know, there's no personal responsibility for people like Brown. And I think after you've been -- had years and years of experience of people parting the waves, if you will, in your presence, you come to have a sense of omnipotence, you have an inflated sense of self.

Narcissism is a large, large part of bullying. All bullies are narcissistic, ego-centric...

FOSTER: One of the...

NAMIE: -- but you should define -- but, Max, you've got to define bullying with health harm.

FOSTER: OK.

NAMIE: If you call it health harm -- health harm -- repeated health harming mistreatment, I think you could sort it out.

FOSTER: OK. One thing that we do know happened here is that the Anti-Bullying Helpline, which is meant to be an anonymous service, revealed that an organization had faced allegations of bullying and that several members of the Bullying Helpline now have resigned in protest.

Explain why they're so angry.

NAMIE: Oh, I think that's problematic. We do the similar thing here in the States, where people call us anonymously all the time and sometimes they'll reveal their employer. It would be unfathomable for us to then go and contact that employer and say, you have been outed. It's really not our place.

They -- when you call a bullying hotline, I think it would be -- I don't want to step on anyone's toes there, but since we do this similar work, just help the individual. You're not there to go and try and implement a -- a consulting arrangement with an unwilling, involuntary employer.

FOSTER: OK.

Dr. Namie, thank you so much for joining us from Washington and for your insight.

Good stuff.

We'll be back in a moment with the news from the markets.

(COMMERCIAL BREAK)

FOSTER: Let's take a look at the U.S. stock markets before they head into the final hour of trade then. The Dow into the charts, actually, making it five straight days of gains. Let's have a look. It is up marginally. It could fall back, but it's looking positive right now.

Ben Bernanke due to testify before Congress this week and speculation about his comments driving things economically there.

Also, commodity stocks falling -- metal and natural gas prices also down.

Stocks in Europe closed down a little this session, ending a five day winning streak for them. Let's have a look across-the-board, all of them down, but not in a -- in a particularly significant way today, so not too bad, the news there.

That is it for QUEST MEANS BUSINESS.

I'm Max Foster in London.

Whatever you're up to in the hours ahead, do make sure it's profitable, as Richard would say.

"AMANPOUR" is next, after the news headlines.

END