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Quest Means Business
GM CEO Testifies to Congress; GM Recall; GM Stocks Down; General Motors in Crisis; S&P Hits Record High; NATO Acts on Russia; Obamacare Enrollment Hits 7 Million; Lufthansa Strike
Aired April 01, 2014 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(NEW YORK STOCK EXCHANGE CLOSING BELL)
RICHARD QUEST, HOST: What a lot of noise and hoopla as the closing bell rings on Wall Street. The Dow is up, the S&P heading for a record, and she this the gavel with the hammer, and it is of course today, Tuesday, April the 1st.
Tonight, safer roads. GM's chief exec says her company's actions are "unacceptable."
Safer skies. IATA says no more planes must simply vanish.
And safer markets and paydays. It's payday for Facebook's chief exec, Mark Zuckerberg.
We have a very busy hour together. I'm Richard Quest. I mean business.
Good evening. There is an old saying in the United States in the economy, as GM goes, so goes the nation. And tonight, the US has been asking tough, uncomfortable questions of the General Motors chief exec and her role in a deadly recall scandal of automobiles. For almost two hours, now, Mary Barra has been testifying before the US Congress. Listen.
REP. PETER WELCH (D), VERMONT: -- came to light in 2006, is that correct?
MARY BARRA, CEO, GENERAL MOTORS: Through our investigation, we'll know when it came to light. It came to light to me on January 31st, 2014.
QUEST: There you are. She's trying to make amends for the company's action. She's been answering detailed questions for the last two hours. And for good reason, 13 people have been killed in crashes linked to faulty parts in GM cars, cars that weren't recalled even after the problems were discovered.
After being confronted with claims GM was trying to save money, Barra herself admitted it's a troubling allegations.
(RINGS BELL)
(BEGIN VIDEO CLIP)
REP. TIM MURPHY (R), PENNSYLVANIA: So, when GM concluded -- and you heard from my opening statement -- that the tooling cost and price pieces are too high, what does that mean?
BARRA: I find that statement to be very disturbing. As we do this investigation and understand it in the context of the whole timeline, if that was the reason the decision was made, that is unacceptable. That is not the way we do business in today's GM.
MURPHY: Well, how does GM balance cost and safety?
BARRA: We don't.
(END VIDEO CLIP)
QUEST: Mary Barra is due to give a news conference later this afternoon, within the hour. We'll take you there when it happens. Our correspondent Poppy Harlow is live for us in Washington. So, you've obviously been listening. How is -- fundamentally, how has she performed?
POPPY HARLOW, CNN CORRESPONDENT: I think she's been pretty reserved throughout, not being able to answer a lot of the questions because she says "that is part of our ongoing investigation at General Motors."
There have been some moments that stood out to me, one that you just played, Richard, where she clearly said things that have happened in the past at the old GM are not part of the new GM. "We are not about cost savings at the new GM. We are about the culture and we are about the customer and we are about safety, primarily."
But those moments have been fewer than the moments where she has had to say, "I don't have an exact answer for your question, Congressman or Congresswoman, that is part of the ongoing investigation." Some lawmakers getting frustrated with that.
Something interesting to note here: the question that I was really wanting raised and that was just raised in the past few minutes is the liability issue here. GM has admitted that it knew about this deadly problem back in 2004, didn't admit it, didn't come forward with this recall until ten years later.
So, will they be held liable for anything that happened before they went through bankruptcy in 2009? Because technically, they don't have to, that's an old company, that's a separate company from the new GM.
She didn't directly answer that, but she said GM wants to do the right thing. They have brought on Ken Feinberg, who you'll remember led the victims' compensation task force, really, after 9/11, after the BP oil spill, after the Boston bombing, et cetera, so they have just hired Ken Feinberg to really hash out with them what victims' families and possibly those injured will get as a result.
We spoke this morning with a number of victims' families, Richard, who were here at the Capitol, holding a press conference, saying that they believe their loved ones died in cars as part of the recall because of the ignition switch problem. I want you to take a listen to one mother. This is Cherie Sharkey. She lost her son, Patrick.
(BEGIN VIDEO CLIP)
CHERIE SHARKEY, MOTHER OF CRASH VICTIM: It all comes down to GM's bottom line. They want the money. They're just -- they don't care about our lives. I'm an angry mother, my family's hurt. I'll never forget that 4:30 in the morning knock at the door from two troopers.
(CRYING)
SHARKEY: I just -- I want justice.
(END VIDEO CLIP)
HARLOW: And now, we don't know who the 13 people are that are included on GM's list of those that they say died as a result of this error. That list of names may become public later this week when they turn information over to the government, but the families that were here believed that their loved ones died as a result of this error.
QUEST: Right.
HARLOW: The House -- go ahead, Richard.
QUEST: Just to jump in there --
HARLOW: Yes.
QUEST: Sorry to interrupt you. I just need to understand, Mary Barra's big challenge in all of this is she can't -- she's not a CEO from outside.
HARLOW: Right.
QUEST: She was working for the company at the time. And although she may have been in a different job, 2004, 2005, she was still fairly senior.
HARLOW: Right.
QUEST: So, are the waters lapping around her office yet?
HARLOW: I think absolutely. She ran -- before being CEO, she ran the global products development for General Motors. This is a company that runs in her blood. Her father worked at GM before her. She was asked today by a lawmaker, "When did you know about this problem and then decide to issue this recall just about two months ago?"
And she said, "It came to our attention that they were looking into it at the end of the December of this year, and then into early January." So she is standing by her statement that she did not know anything about any problem with the ignition switch until just the past few months, and says when she did, she immediately ordered the recall.
The question here is going to be what appear to be possibly some very damaging internal memos --
QUEST: Right.
HARLOW: -- within General Motors that have gone to the House Committee from a decade ago.
QUEST: Does this really come down to bad or incompetent for General Motors?
HARLOW: That's absolutely the question. The representative from Tennessee, Congresswoman Blackburn, asked basically, was this sloppy or was this a cover-up? And that is the key question.
QUEST: Right.
HARLOW: She's going to face it tomorrow again in front of the Senate committee being led by Senator Claire McCaskill, who said that that is going to be her key question as well. Was this a cover-up by GM, and if so, how deep did it go? Or was it a grave, grave error?
QUEST: Poppy, you'll continue watch this in great detail, and you'll report back when there's more to tell us. Poppy Harlow, who's on Capitol Hill for us this evening.
Now, it's been a really bad year for General Motors. That's not gratuitous editorializing. Look at the numbers over at the super screen and you'll see, 7 million cars have been recalled worldwide this year alone. It's the worst of recent years. And several separate recalls across multiple brands.
So, let's start here. You've got the ignition switches, 2.6 million recalls on the Chevrolet Cobalt. That's the first one. Then you have on Monday 1.3 million for faulty steering on four different models -- four different models, 1.3 million cars, it all relates to the steering.
Then, you have -- airbags, 1.2 million recalled on the airbag, serious when the airbags are involved. Putting it further forward, you've got the 300,000 for instrument panels. They were all recalled. And then you have axles, 172,000 for axle problems.
If this wasn't bad enough, the various ones, come over here and you've got 1.4 million recalls for other items. As a former product development executive, Barra struggles to shake off the responsibility.
And what's the longterm effect of all of this? Let me show you the share price. Share price is now down 14.7 percent year-to-date, at $34.49. And of course, even right up to the last moment, the monthly sales figures have been delayed by computer problems.
It all begs the question, in many ways, what if anything can be done to put right what's gone wrong at General Motors? The company struggles on an international scale. Just look at them. GM and its partners build cars and trucks in 35 different countries. You may well recognize some of those from your own country.
GM brands include Chevrolet and Opel in the United States. But then you've got Opel and -- sorry, Opel and Vauxhall in Europe. Baojun in Asia Pacific. Holden in Australia. Now, Holden you'll be remembering, of course, is due to stop production in Australia in 2017.
So, between all these different brands, the GM brand, the Opel, the Vauxhall, the Holden, it's a vast enterprise. Allan Kam is the former -- is a former senior enforcement attorney at the National Highway Traffic Safety Administration, now director of the Highway Safety Traffic Associates. He joins me now. Allan, good to see you, sir. Thank you.
ALLAN KAM, DIRECTOR, HIGHWAY TRAFFIC SAFETY ASSOCIATES: Thank you.
QUEST: Now, I look at these recalls that you just heard, the numbers involved are huge. But GM, of course, is a huge company making a large number of cars. So, it's inevitable that there will be vast numbers involved. Is this systemic to GM?
KAM: Other companies have also had significant recalls from time to time, such as Toyota earlier this year. What seems to stand out about General Motors on the ignition switch recall is that it should have been done ten years ago.
A ten-year delay is extraordinary. It's about the longest that I've ever seen, in my experience. And even then, they started piecemeal with about 700,000 vehicles, then added another 800,000. And now, hundreds of thousands more, they're up to about 2.2 million vehicles being recalled just for the ignition switch defect.
QUEST: Which comes to the question -- I don't know whether you heard me say to our correspondent Poppy Harlow -- it really boils down to bad or incompetent. Is there malfeasance or misfeasance involved here?
KAM: That's a good question. Of course, to the consumer, it doesn't really matter. The point is that there are people being injured and killed on the roads. They seem to have insulated the top officials somehow by saying that a committee below them makes the decisions and they only know afterwards.
When Mary Barra was asked at the hearing today about that, she just kept saying we'll have to wait for this report by Anton Valukas. We don't know yet. We have to keep waiting for the report. It kinda reminded me of Sergeant Schulz on "Hogan's Heroes" saying "I don't know nothing."
And then, when she was asked, "Will you give us the report when it comes out?" she was noncommittal. She just said, we'll release "appropriate recommendations."
QUEST: Right.
KAM: But she wasn't committing to even release the whole report. And mind you, this report is being done by law firms that work for General Motors extensively, Jenner and Block, who Mr. Valukas is associated with, and King and Spalding. I would be more impressed if they got an independent investigator rather than somebody whose company -- whose law firm has been --
QUEST: Well --
KAM: -- doing considerable business with GM. The rule of thumb is you don't bite the hand that feeds you. So, I really wonder how independent a report and objective a report we're really going to get.
QUEST: But they have brought in Feinberg, they have brought in this new chap to look at it. And there is the question, of course, the liability issue. Does the liability stop with the old GM or does it transfer into the new reconstructed or reconstituted GM post-bankruptcy?
KAM: With respect to accidents that occurred after the bankruptcy, GM has liability for those. With respect to accidents that occurred before the bankruptcy but after GM should have done a recall and failed to do a recall, as of now, under the bankruptcy rules, they'd be off the hook.
There may be some talk of trying to get the bankruptcy court to reopen the proceedings on the ground that a fraud was committed against them. Moreover, Mary Barra has said in today's testimony that they just hired Kenneth Feinberg --
QUEST: Right.
KAM: -- to look at this issue, and in 30 to 60 days, they'll make some kind of decision.
QUEST: OK.
KAM: Maybe they will accept some kind of liability. And it's really an outrage that they don't, because they should have done the recall back in 2004. So people who were killed or injured in 2005, 2006, 2007, 2008, before the recall, those people never should have been in that position because the car should have been recalled and the problem fixed prior to their incidents.
QUEST: Good to talk to you, Allan. Thank you for helping us understand this. Appreciate it.
KAM: My pleasure.
QUEST: Many thanks, indeed. The Dow and how closed, it's up over 70 points. The S&P reached a new all-time high. Alison is helping us understand what the market movements were. She's at the New York Stock Exchange now. Alison?
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Richard, it was data that drove this rally today, and investors bought in because the data is looking better. And that's as we're getting kind of a whiff of spring in the air.
We learned that manufacturing activity picked up in March as we slowly leave the harsh winter in the rearview mirror. Plus, new orders, a good gauge of future production, they also moved higher.
You look at the broader markets, the S&P 500 hit a new record high at a level of 1885. And guess what? The Dow's not too far away from its all- time high either. Richard?
QUEST: Alison, perfect. Thank you very much, indeed, with an update on what's happening with the markets. You are up-to-date with how the US markets closed on this Tuesday.
Now, when we come back, President Obama is due to speak on Obamacare. He's hit his targets. The question is, what happens next in the great health care race of America. QUEST MEANS BUSINESS.
(RINGS BELL)
(COMMERCIAL BREAK)
QUEST: Russia's isolation in the world has been compounded further. NATO suspended all civilian and military cooperation because of the country's annexation of Crimea. It says it sees no sign of Moscow pulling troops back from the border of Ukraine.
(BEGIN VIDEO CLIP)
ANDERS FOGH RASMUSSEN, SECRETARY-GENERAL, NATO (through translator): We all condemn the military aggression against Ukraine by Russia. We fully support the sovereignty and territorial integrity of Ukraine as well as the right of the Ukrainian people to determine their future without foreign interference.
(END VIDEO CLIP)
QUEST: Russia has repeatedly said Ukraine will lose out economically through closer ties with the West. Today, Moscow followed through on a promise to raise Ukrainian gas prices. They went up by 40 percent. From Moscow, CNN's Phil Black reports on the latest developments.
(BEGIN VIDEOTAPE)
PHIL BLACK, CNN INTERNATIONAL CORRESPONDENT: NATO says it is intensifying cooperation with Ukraine, but suspending military cooperation with Russia. Ukraine's parliament has passed legislation saying -- allowing for foreign forces to conduct training exercisers in Ukraine.
Russia's response to all of this is we've been here before. A statement from the foreign ministry says the last time Ukraine tried to get close to NATO, it resulted in frozen relations between Ukraine and Russia and pretty prickly relations, too, between Russia and NATO.
The statement says that ultimately, the quality of Russian-Ukrainian relations will be determined by Kiev's foreign policy, and that includes the potential for economic cooperation as well, which hints at the possibility of a financial penalty in the event that Ukraine does move closer to NATO.
Now, NATO's eastward expansion is known to be a major irritant to the Russian president, Vladimir Putin. He spoke about it at length most recently in the context of Russia's policies in Crimea. But at the moment, no one is seriously talking about Ukraine joining NATO.
Instead, Ukraine is clearly looking for ways to ensure and improve its security while NATO -- in particular, the United States -- are looking for ways to send a powerful message to Russia that says Russia just can't do whatever it wants in Eastern Europe.
Meanwhile, Russias state-owned natural gas giant, Gazprom, had done the expected and ended a significant price discount for Ukraine. The end of the discount will see prices rise by around a third. The discount was secured by former Ukrainian president Viktor Yanukovych when he negotiated a broader financial bailout package with Russia back in December.
But since then, Yanukovych has been driven from power. Gazprom says that this decision to end the discount isn't political but necessary because Ukraine isn't paying its bills. It says Ukraine owes around $1.7 billion for Russian gas.
Now, a new bailout package from the International Monetary Fund will cushion this economic impact for Ukraine, but that same IMF package will also ensure that ultimately, Ukrainians are paying a lot more for natural gas to heat their homes because a very strict condition is the Ukrainian government must stop subsidizing domestic retail gas prices.
One small consolation for Ukrainians: summer is coming. So in the immediate future, they're not going to be needing a lot of natural gas to warm their homes.
Phil Black, CNN, Moscow.
(END VIDEOTAPE)
QUEST: Now, today was the deadline for Americans to sign up for Obamacare if they didn't have health care or existing health care. More than 7 million people was the target. The president is now talking at the Rose Garden of the White House.
(APPLAUSE)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Yes.
(CROWD CHEERS)
OBAMA: The truth is, even more folks want to sign up, so anybody who was stuck in line because of the huge surge in demand over the past few days can still go back and finish your enrollment. 7.1 million, that's on top of the more than 3 million young adults who've gained insurance under this law by saying on their family's plan.
That's on top of the millions more who've gained access through Medicaid expansion and the children's health insurance program. Making affordable coverage available to all Americans, including those with pre- existing conditions, is now an important goal of this law --
(APPLAUSE)
OBAMA: And in these first six months, we've taken a big step forward. And just as importantly, this law is bringing greater security to Americans who already have coverage. Because of the Affordable Care Act, 100 million Americans have gained free preventive care like mammograms and contraceptive care under their existing plans.
(APPLAUSE)
OBAMA: Because of this law, nearly 8 million seniors have saved almost $10 billion on their medicine because we've closed a gaping hole in Medicare's prescription drug plan. We're closing the donut hole.
(APPLAUSE)
OBAMA: And because of this law, a whole lot of families won't be driven into bankruptcy by a serious illness. Because the Affordable Care Act prevents your insurer from placing dollar limits on the coverage they provide.
QUEST: Barack Obama giving an assessment of the new law, it's known as Obamacare. Now, before that, there were 45 million uninsured people in the United States. Many said it was a scandal for the world's richest -- or one of the world's richest countries to have that situation.
The White House has announced now 7.1 million have signed up to the president's scheme on the government-run exchanges. We don't know how many of those people were previously uninsured, how many went from existing plans to new plans.
But the 45 million figure will ultimately be impacted. Just to put America's situation into context, nearly 50 countries in the world have attained universal health coverage or something very close to it, according to the ILO.
Ron Brownstein is an editorial director for the Atlantic Media and senior political analyst for CNN. Ron joins me now from Los Angeles. All right, Ron. All right. The launch of Obamacare was by any stretch of the imagination fiasco, disaster, shambles. We can use any adjective you like. But in time --
RON BROWNSTEIN, EDITORIAL DIRECTOR, ATLANTIC MEDIA: Those are good ones.
QUEST: In time, history will judge the result, not the launch.
BROWNSTEIN: Yes.
QUEST: And if the president is right, this is the right thing to have done.
BROWNSTEIN: Well, he -- first of all, they've made, as you suggest, an incredible recovery. I don't think anybody thought at the beginning of October we would be talking about 7 million on the private exchange, possibly 4 to 5 million more through the Medicaid program, and even that with only half the states participating, plus several million more young people on their parents' policy.
So, they've made some progress. On the other hand, Richard, they are really in uncharted waters here. If you look at the other pillars of the social safety net in the US -- social security, passed in 1935, medicare, which is health care for seniors, passed in 1965 -- there was nothing like this in terms of --
QUEST: Right.
BROWNSTEIN: -- the duration of the fight post-passage. So -- and there's no indication that Republicans are backing down. The president has fortified himself quite a bit with this recovery on the sign-up, but the game isn't over.
QUEST: OK. And now, of course, it becomes an economic game, doesn't it? Because now the sign-ups happen --
BROWNSTEIN: Yes.
QUEST: -- we get back to rather tedious actuarial tables in terms of young or old, preconditions and all that. Does the economics work? We find out now if the economics are sound.
BROWNSTEIN: Yes. And I think there are two tracks that you have to keep in mind when looking at the future of this program. As I said, Republicans, I think, will continue to be under pressure to oppose it and call for repeal.
It is likely that the 2016 Republican nominee will call again for repealing it, which is something we've never seen on an entitlement, two elections in a row where that's happened.
QUEST: OK.
BROWNSTEIN: But while -- with this sign-up, not only are you creating a constituency among the people getting coverage, but you're creating an economic constituency within the health care industry --
QUEST: Right.
BROWNSTEIN: -- for hospitals, doctors, and other providers. And that could gradually over time change the political dynamic in the US over this issue.
QUEST: And there's one more milestone when people start getting fined or surcharges, they $95 or $65 or one percent of income.
BROWNSTEIN: Right.
QUEST: Those who didn't take advantage of it, we've still got to hear from them when their fines start hitting in tax year.
BROWNSTEIN: Yes, that's right. And that's something kind of unprecedented. There really are more winners and losers in this plan than in most of our big social safety net programs. There are people who had low-cost coverage who are relatively healthy --
QUEST: Right.
BROWNSTEIN: -- in the individual market who now have to buy something more comprehensive. There are seniors who are annoyed that part of the way this is financed is by slowing the growth of Medicare to help fund the subsidies for the working-age uninsured.
So, there's more of a redistributive element of this program. It does produce winners and losers. Overall public opinion still net negative --
QUEST: Right.
BROWNSTEIN: -- especially on whether it helps me and my family. But again, they are making more progress than seemed possible in beginning to change those dynamics six months ago.
QUEST: And you'll help us understand this in the weeks and months ahead. Thank you, good to talk to you, sir. Thank you very much.
BROWNSTEIN: Thank you.
QUEST: One of the biggest walkouts in Lufthansa's history. It's three days, it's going to affect hundreds of thousands of passengers around the world. It's about to begin. We're in Frankfurt after the break. This is QUEST MEANS BUSINESS.
(RINGS BELL)
(COMMERCIAL BREAK)
QUEST: A little under two hours' time, hundreds of thousands of air passengers will start to be affected by a three-day strike, which is likely to cost tens of millions of dollars. Pilots for Lufthansa and its low-cost subsidiary, German Wings, are walking out.
It's a good, old-fashioned row over pay and benefits. Ninety percent of flights are expected to be canceled between now and Friday, and if a last-minute deal can't be reached. Jim Boulden is on the line from Frankfurt. Jim, Lufthansa, vast airline in Europe. German Wings included as well, so they're getting ready to close down the airline for the next few days.
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT (via telephone): That's right. The airline itself is saying because they're going to cancel some 3,800 flights for the next three days, they think more than 400,000 passengers are going to be affected by this, Richard.
It's interesting. I got to the airport a few hours ago. It's quite calm and collected because obviously passengers have had a few days to prepare for this. The airline says it will cost them a lot of money.
Like a lot of airlines, where the feeling was with economic realities, they're trying to change the tension with the pilots. I'm not sure the pilots see it, and they're going on strike. It's (inaudible) this is one of the biggest strikes they've ever had to face (inaudible) passengers, obviously, they're booking other airlines.
One of the other big impacts I think is interesting is cargo. A lot of people have moved their cargo off of Lufthansa (inaudible) --
(CROSSTALK)
QUEST: Jim, I'm going to have to -- Jim, I'm going to have to jump in, Jim. For some reason, you -- the line is not good and we can barely hear you. So, I apologize for that. But Jim will, of course, be in Frankfurt with a better line over the next couple of days as this strike, the Lufthansa strike starts to bite.
The usual Twitter -- tweet -- tweet tweet! -- @RichardQuest. We'll be back in just a moment.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There's more "Quest Means Business" in just a moment. This is CNN, and on this network the news always comes first. The chief executive of General Motors has told the U.S. Congress she's disturbed by allegations made over the company's recall scandal. Thirteen people have been killed in crashes related to faulty ignition switches in GM cars. In testimony to the U.S. House of Representatives, Mary Barra has promised a full investigation into the incidents.
NATO says it's suspending all civilian and military cooperation with Russia because of its annexation of Crimea. Four ministers from the 28-member military alliance met in Brussels today to discuss the East/West crisis. NATO says Russia's aggression is the greatest threat to Europe's security in a generation. The coordinator of the International search for flight 370 says it could drag on for a very long time. Planes and ships scoured across the Indian Ocean again today with no sign of any progress or debris found. U.S. black Box locator is still en route to the search zone.
A deal is in the works to salvage Middle East peace talks which could also result in the release of an American spy. Jonathan Pollard's been in prison for nearly 30 years for leaking classified documents to Israel when he worked as an intelligence officer for the U.S. navy. West Africa is still struggling to contain an unprecedented Ebola epidemic. The group Doctors Without Borders says the disease has killed at least 78 people in Guinea, and sources suspect there were two deaths in Sierra Leone and one in Liberia.
It pretty much says it all. "We cannot let another aircraft simply vanish." The airline industry says there's no excuse for making not flyer safer in the wake of 370. And those words came from the chief exec of IATA, Tony Tyler, who says more cooperation is needed to improve security by unlocking the treasure trove of passenger data. Every aircraft needs to be tracked.
(BEGIN VIDEOCLIP)
TONY TYLER, CEO AND DIRECTOR GENERAL, IATA: We need to be in a position to track aircraft through the whole entire length of their flights even if they go outside normal radar coverage and so on. Now, the technology to do that is developing - it's being developed literally now with satellite coverage and so on, and we need to now look at the best way, most effective way of tracking aircraft wherever they may happen to be.
(END VIDEOCLIP)
QUEST: The former head of IATA Giovanni Bisignani joins me now live from Rome. Giovanni, in a nutshell, we know we can do it, the technology exists to stream the data, so why aren't we doing it? Is it money?
GIOVANNI BISIGNANI, FORMER DIRECTOR GENERAL AND CEO, IATA: Richard, this tragedy has to become a changeover in safety. Three points for an action plan. First, access to airport. We must be much more careful - we have the information through Interpol, we got - you -- have to be more reliable. Two, civil aviation (ph). Every civil aviation (ph) has to have a specialized team completely independent to run those emergencies. Number three, let's retire the black box. We can do it. It's possible and it's cheaper. I'll give you an example. I've been leading last year discussion with AQ (ph) and Panasonic for all metio (ph). In all times up to now, the metio (ph) was followed by balloons in the air 20 meters. Now, we've moved the situation, we've convinced a certain number of airlines -- 30 airlines -- to use the Wi-Fi system - that is to use for data and for chat, to link it to the metio (ph) so that the metio) can be completely transferred.
QUEST: All right, this is all very good -
BISIGNANI: It's cheaper and it's faster.
QUEST: I'm jumping in here, Giovanni. This is all very good but it doesn't really explain - it doesn't explain to the ordinary man and woman getting on the plane why in 2014 we are having this happen when we have the technology?
BISIGNANI: You know, Richard, this was discussed ten years ago, but at that time it was too expensive and the airline were not ready. I discussed this with Dr. Cote in year 2002. Now, we have the technology, the Wi-Fi technology that all the modern planes now are equipped will make this possible and easy.
QUEST: It makes it possible. What -
BISIGNANI: On the other side, what has been the cost?
QUEST: Right, but what are the issues -
BISIGNANI: -- what has been the cost for 20 countries?
QUEST: Sure. No, I understand that, but one of the issues is always that Tony was saying today is the amount of data. If you've got thousands of planes - and I'm not talking about the cost of data - I'm talking about the mechanisms of dealing with it. All that data having to be shoved up on relatively scarce satellite time and then stored. Is that an issue?
BISIGNANI: But what I say you have to able to transmit the relevant data and the position of the plane. The relevant data cannot be all the data, but those one that really important in order to know what's happening on a plane.
QUEST: Giovanni, thank you for joining us from Rome tonight - we appreciate it. Either one of the pilots of flight 370 or someone else on board committed a criminal act by turning off course. Now, that's according to a Malaysian government source. Nic Robertson joins me now from Kuala Lumpur. Nic, in my introduction there, I've added - we've added the word criminal act because of a source. All the Malaysians officially say is that it was the turning of the aircraft was a deliberate act. So talk me through how we've gone from deliberate to criminal.
NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: They also say that whoever was turning the aircraft had good knowledge of the aircraft and how to control it and how to fly it. The official language remains the same. Sources behind the scenes are putting a more refined point on it - the fact that it was flown off of its course, the fact that that appears not to have been - happened - as a result of a mechanical failure is indicative they say of a criminal act. This should not have not have happened, it should not have taken this course, it should - and the people on board and in the cabin should have been in communications with the air traffic controller on the ground. This is why the source is saying this behind the scenes that this is a criminal act.
QUEST: One question - one brief point here, now Nick. The Malaysians have elegantly I might say side-stepped the really real question of how this plane was allowed to fly back over the entire country and nobody bothered to work out which it was and scramble fighter jets to see if there was an issue on board.
ROBERTSON: One of the reasons that they're able to continue to sidestep that issue is by saying that they're focusing on the investigation, that they won't reveal details of that investigation. There has be some finger- pointings - a former naval general here has pointed the finger at the Air Force and said look, how could this have happened? But he's also gone on to say that perhaps the plane didn't fly across the country in the manner that we know that it - it it - it did in fact do. The Malaysians at the moment don't seem to be prepared to, if you will, take down - take down - their own defense forces. And let's not forget, the acting transport minister who is the international and local -
QUEST: Right.
ROBERTSON: -- face of the government's explanation of what's happened is also the defense minister here. He has something at stake.
QUEST: Thank you very much, Nic Robertson joining us from Kuala Lumpur tonight. We'll have more after the break.
(COMMERCIAL BREAK)
QUEST: So for a major development in the hotel industry, Marriott says it has now become the biggest operator of hotels in Africa. The company has acquired South Africa's ProTea HospitalityGroup. It's a deal worth some $200 million that was announced in January. Now, ProTea Hotels is large. Marriott says it has secured 10,000 rooms across seven African nations, including some major hotels that ProTea has, and it gives Marriott as a group quite a large and substantial footprint now in this vast and growing market. I spoke to Arne Sorenson, the chief exec of Marriott, and I asked him about his goal gaining market share through ProTea in Africa.
(BEGIN VIDEOCLIP)
ARNE SORENSON, CEO, MARRIOTT INTERNATIONAL: We are just thrilled to enter sub-Saharan Africa in this way. One hundred sixteen hotels in one fell swoop, it brings us not only of course the economics associated with those hotels which is fairly fundamental to assessing the deal. But almost more importantly it brings us expertise on the ground in sub-Saharan Africa that we can use not only to run these hotels, but we can use to both address the hotels that are in our preexisting pipeline, and really we think to supercharge our growth going forward.
QUEST: Will you rebrand the names or will you keep the ProTea's name.
SORENSON: Overwhelmingly we will keep the branding as is. There may be a few hotels - I think Jo'burg or Capetown - where there's some upside associated with using one of our other brands to associate more tightly with more of those hotels. But the ProTea brand has got a lot of visibility, a lot of value in sub-Saharan Africa. We don't want to lose that. There's no reason to come in and willy-nilly simply change the name for changing the name's sake. So by and large, the names that are on the assets will stay that way.
QUEST: The risks involved. Africa, as long as I have been covering business and travel, Africa has been a huge opportunity, but with that opportunity only comes substantial risks. And it's not just the risk of economics. It's a risk of war, it's a risk of civil strife, it's a risk of all sorts of issues.
SORENSON: Right
QUEST: It's not - it's not for the fainthearted to be going into this.
SORENSON: Well, it is not for the fainthearted. I think in the last decade or so we have seen for the first time good governments in a number of places. Now, that's not every country obviously, but good governments in a number of places that are focused on economic growth, that are focused on creating opportunities for their folks. And so we see this year for example GDP growth across the continent at roughly double the global average. We look at statistics like since 2009. Dollars spent on travel is up 42 percent. These are signs that there are good things happening there.
QUEST: You've been in Africa for many years, but by taking this larger step, you're going to have to put quite a bit of management muscle behind this as well, aren't you?
SORENSON: Well, we have been pleased to find that the ProTea Group has done business our way. So with a high level of transparency focused on doing business the right way, we obviously spent a lot of time in the diligence process and making sure that that is in fact the case and we understand it. And we will be vigilant about making sure that we do business in the way that is not just required by U.S. law, but is really who Marriott is. And I think in most of these markets that's welcome. We just got to be clear about it.
(END VIDEOCLIP)
QUEST: Some strong words from Arne Sorenson on the ethics of doing business in Africa. And Marriott's U.S. business will be pleased to know a new study on the United States for its tourism-promoted board named Brand USA - you heard them on this program a few months ago. It shows positive results. It says Brand USA generated 1.1 million trips to the U.S. last year. Now, that's 2.3 percent higher than growth would have been without its efforts. In other words, for the money they spent, they actually got more people to come. Which of course rather is the whole point of the whole exercise of having Brand USA in the first place. Chief exec Christopher Thompson joins me now in the C Suite. Good to see you, sir.
CHRISTOPHER THOMPSON, CEO, BRAND USA: Good to see you, sir.
QUEST: Look, I'm not surprised that you're basically coming up with some self-serving figures that say you spent the money, you got more business, therefore give us more money.
THOMPSON: Yes, you know we did this study with Oxford Economics. They have a great reputation and tremendous econometrics, and its econometrics model that basically said figuring everything that they could be taken into consideration, they've been pretty good at predicting, and then what was the only difference , and the only difference was us engaging with our industry.
QUEST: And its eight countries involved -
THOMPSON: Right.
QUEST: Including Mexico, Japan -
THOMPSON: So, it's Canada, Mexico, South Korea -
QUEST: Right.
THOMPSON: Japan, China, Australia and Brazil.
QUEST: And this is the - this is the commercial that you were showing or this is part of the campaign that you were showing.
THOMPSON: Absolutely and -
(BEGIN VIDEOCLIP OF BRAND USA CAMPAIGN)
THOMPSON: -- yes, this - Yes this is our brand campaign. It's called Land of Dreams. It's meant to be (explained) to the aspirational idea of traveling to the United States. It tends to focus on the less iconic things there are to see and do and beyond the gateways. And it is clearly a message -
(END VIDEOCLIP OF BRAND USA CAMPAIGN)
QUEST: But how does it - why do you think this campaign worked? Bearing in mind everybody knows where the U.S. is, all the states or most of the states that have big tourism industries have very large budgets. Why do you think this is - has taken on?
THOMPSON: Because where we deploy most of our resources is in partnership with the industry. So it's the brands that represent the product and they deliver on the experiences and it's the destinations that represent the cities and the states. And we deploy resources in partnership together better than we can do on our own.
QUEST: What are you bringing to it though?
THOMPSON: What are we bringing into it?
QUEST: Yes.
THOMPSON: So, we're bringing an umbrella over the entire promotion of the United States around the world. So instead of having individual voices out there, we're leveraging the resources that we have and that we bring to the table in partnership with that industry, and we're doing it in compelling ways.
QUEST: Right. I would argue that of course the issue that needs to be addressed of course is things like uplifted aircraft, visa, visa waiver. All these other issues have a very dramatic effect on tourism. And instead of making adverts, you might have been - you should have to be lobbying on those issues as well. Or maybe you're doing both anyway.
THOMPSON: I'd say you need both. I actually say that we were the only developed country around the world that was not out promoting itself. Travel and tourism is the nation's number one service export. Twenty-five percent of - a lot of people don't consider it as an export, but it is literally us taking a product, selling the people coming here and experiencing and then leaving. So, the United States and the passage of the Travel Promotion Act decided they would want to be involved in promoting its number one service export, and doing that in partnership with the industry and leveraging resources that brought them to the table.
QUEST: You will be back next year in that chair to explain what happens next --
THOMPSON: Yes, sir.
QUEST: -- and your numbers, good or bad.
THOMPSON: Sure. Going to be great actually.
QUEST: No, no - good or bad you will come back.
THOMPSON: Oh, absolutely. Good, I'll be here. Every time you'll have me I'll be here.
QUEST: Good to see you. Thank you very much.
THOMPSON: All right, thank you much. Yes, sir.
QUEST: Now, Jenny Harrison is at the World Weather Center. Because if you are traveling, whether it's brand USA, brand Europe, brand Australia, you need to know what you can expect when you get there. Good after noon, good evening, Ms. Harrison.
JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: Good afternoon. That's quite a hike you had to take then across that studio, wasn't it?
(LAUGHTER)
HARRISON: Thought you'd never make it. You're right, Richard. I have to tell you, a bit of a change in weather conditions in Europe. I was talking a few days ago about the cold air that was across eastern regions, and in fact we were going to see some snow. This is that particular region. You'll notice still a lot of activity coming up from the southwest though it's mild over there but still very unsettled. Quite a bit of rain coming through. But this snow, believe it or not, in Moscow it's actually the most snow since - look at that Valentine's Day - the 14th of February. In fact, nine centimeters on Tuesday, so even though we are now in April - my goodness, spring is a little bit slow to start in some areas of Europe.
So, have a look at the temperatures. So, for example, let's take Moscow. The average is 6 this time of year. It's not far off - 6 over the next few days - but it's certainly quite cold in the overnight hours -- -7 is expected in overnight low on Friday. And then, when you're headed south and you look at that very mild airflow - look at what it's done to the temperature in Bucharest. In fact in Budapest even. Fourteen Celsius is the average, 23 Celsius from Thursday and Friday and also Berlin is still nicely above the average. So, not too hot, certainly, but it's feeling pretty good out there. This is why. High pressure across the central areas, but as I say, we've got the Jetstream and that cold air coming down across eastern regions. And then towards the west, because that high is blocking all these systems coming in either from the west or indeed the southwest, the wind - and very sort of showery, unsettled pattern. But at least it is not cold, and this is showing you the temperature gradient over the next couple of days. So, cold in the east -
QUEST: Jenny.
HARRISON: -- mild across those central regions, and still windy. Yes, Richard -
QUEST: I need -
HARRISON: -- still windy across much of the north and west -
QUEST: That wind will have to wait, if you'll forgive me, ma'am because we need to go to Washington where Mary Barra is now giving a press conference at this minute.
MARY BARRA, CEO, GENERAL MOTORS: -- we've hired Anton Valukas to do that and we will - he has - there are no holds barred in the investigation that he does. And we will hold ourself accountable, and then finally we will be transparent as we learn anything that we can bring forward that is going to improve the safety of our vehicles and make the whole industry better. We will definitely shore all these things and we will be transparent.
(REPORTERS SHOUTING)
REPORTER: -- a moment there when Congressman Barton said that what you were describing was (inaudible), he didn't seem to be getting information that he needed. You say you want to be transparent, though. That doesn't sound like you made much headway in there even if -- when the Congressman is saying that -- the former chair of this committee - is saying that that's (inaudible) .
BARRA: I think people - there's very technical engineering terms. I think the important thing for people to understand is we're going to make sure all parts and subsystems on our vehicle - in the entire vehicle - is safe, is meeting its performance, is meeting all the aspects that are important. That's what's important. We are holding ourselves accountable to make sure our vehicles' as safe as possible, and we have an unyielding standard. There's very specific things that relate from an engineering specification term that I think was misunderstood.
POPPY HARLOW, JOURNALIST FOR CNN: Poppy Harlow with CNN. Thank you for taking the time. You met with family members that lost loved ones yesterday. I'm wondering what you heard from them and what you said to them in response.
BARRA: Well, I - this was a meeting that they asked for to get closure. I met with them, we agreed to keep the meeting private, and so I need to respect their wishes.
HARLOW: Let me follow that up with one more question since you can't answer that one, and that is when you look back to 2005, GM was already starting to struggle financially, it was at John Fong (ph) status and some are questioning whether or not GM's financial state you believe played into the decision not to order a recall when you knew that there was issue. Do you believe from what you know now that the financial state of GM back then was a contributing factor.
BARRA: Look, we've hired Anton Valukas to do a complete investigation. We'll learn from that. We are definitely moving to a culture that is focused on the consumer, that is focused on the customer, is focused on high quality and safety and that's my direction and that's what we're doing today.
FEMALE REPORTER: Those families and consumers deserve more specific answer from you today. There were many questions that you could not respond to. Don't they need more now from you?
BARRA: As soon as I have the information. That's why we've launched an internal investigation. Remember, we are looking at something that happened over more than a decade. It's a very complex situation. We need to make sure we have the facts and we won't sacrifice accuracy for speed. When we have those - that information, we will share with the regulators, with the legislators, with the customers. We will do that.
FEMALE REPORTER: -- more today?
BARRA: I could not.
FEMALE REPORTER: Ms. Barra, Ms. Barra.
MALE REPORTER: (Inaudible). You were head of quality back in 2011, before that you were head of engineering. How could you have not been aware of the defect? And if you really weren't, are there other defects you're not aware of?
BARRA: First of all, you didn't have my career byline quite correct, but I became aware of an issue that was being examined. I didn't know of the specific issue in December of `13, late December of `13. I became aware this specific incident on January 31st after the recall team made this decision.
(CROSS QUESTIONING)
QUEST: That's Mary Barra, the chief exec of General Motors. She spent several hours giving her evidence before the U.S. Congress. Now she's answering a variety of reporters' questions. The fundamental - basically where this concerns is what did you know? And when did you know it? We'll be back after the break.
(COMMERCIAL BREAK)
QUEST: Oh, my. How the mighty have fallen. Tonight's "Profitable Moment." Who knew what and when did they know it has become the issue of the day when it comes to General Motors. GM having gone through bankruptcy, come out the other side, suddenly being the darling of Wall Street, and seemingly well and truly back on track with its international division, it's great sales in China, its future budgeting around the world. And now facing the most awful reputational crisis, and all because of incidents ten years ago that somebody knew something about but that nobody did anything about - airbags, ignition switches. People died as a result of GM defects. Mary Barra is the chief exec. She has a bit of a problem. She worked at the company during the period when many of these events took place. Not only that, she was quite a senior executive during that period. So, today we got the stonewalling of well, investigations are underway, we must wait for the results, when we get the results we'll let you have it, we will be transparent. But I assure you of this - nobody'll let them off the hook easily. GM may be back in the market, but there are still serious questions to be answered about who knew what.
And that's "Quest Means Business" for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, (RINGS BELL) hope it's profitable. I'll see you tomorrow.
END
