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Quest Means Business
Lagarde Under Investigation; New Cabinet in France; Mixed Markets in Europe; Dow Gains 15 Points; US Deficit Larger Than Expected; Russia Denies Gas Shut-Off Plan; Russian Sanctions; Transatlantic Trade Agreement; Egypt Re-Opens Rafah Crossing; JPMorgan Cyber Attack; Air France Suspends Flights to Sierra Leone; CDC Director Warns Against Isolating West Africa
Aired August 27, 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: It's a very quiet day on Wall Street. The market simply could not decide which way to go as the trading day moved on.
It's a long weekend coming up in the United States, and when all is said and done --
(GAVEL HITTING SEVERAL TIMES)
QUEST: Five hits on the gavel from Frankies Mission on Wednesday, it's August the 27th.
Tonight, the head of the IMF under formal investigation. We'll be live in Paris to tell you what she's accused of.
Also tonight, no new sanctions. The EU's trade commissioner tells me it's time to talk to Russia.
And think of this as a brisk day in the office. Tony Fernandes from Air Asia accepts my Ice Bucket Challenge.
I'm Richard Quest, we have a busy hour together, and of course, I mean business.
Good evening. Tonight, a scandal in France is brewing, and it's threatening both the job security and perhaps the reputation of one of the
world's most influential people.
The International Monetary Fund's managing director, Christine Lagarde, has been placed under formal investigation. French prosecutors
are accusing Madame Lagarde of negligence in the way she dealt with a fraud case in 2008. Then, she was the finance minister under President Nicolas
Sarkozy.
The case involved saw a businessman, Bernard Tapie, awarded more than half a billion dollars in compensation. Now, Ms. Lagarde says the move is
without merit. A lawyer said she should not leave her post at the IMF.
(BEGIN VIDEO CLIP)
YVES REPIQUET, CHRISTINE LAGARDE'S LAWYER (through translator): Personally, I can see now reason for her to resign. It's a matter for her
and her board, and I cannot speak either for her or for the members of the board.
(END VIDEO CLIP)
QUEST: Now, this case has rumbled on for many years. Christine Lagarde has been mentioned as a potential witness several times. But this
is the first time she's been formally questioned, and questioning that lasted 15 hours in France. The managing director is now on her way back to
Washington, where she will brief the IMF board.
But if we take a look at the actual crisis, join me at the super screen, and you will see this is a crisis that has embroiled some of
France's most famous politicians and executives. This is the chap at the middle of it all. His name is Bernard Tapie.
It was his sale in 1993, Adidas to Credit Lyonnais. It was an extremely complicated deal. The gist of it, all you need to know, is that
when he objected to the compensation, there was an arbitration process, and he was given a large payout, the best part of half a billion dollars.
The president at the time was Nicolas Sarkozy, and Tapie was a longtime socialist supporter of Sarkozy. And the allegation, of course, is
that the way the two things came together, Sarkozy insured that there was a large payout.
But, it gets more complicated than that because Madame Lagarde, now she was the finance minister, and she approved the payout.
Nobody is perhaps saying that she did anything specifically wrong, and the allegation now is one of negligence, inactivity, or inattention to the
arbitration process.
Then you have to prove just how complicated this is. A man, Stephane, there he is, Stephane Richard, who's the former aid to Lagarde, and now the
chief exec of the French telecom company Orange. He's also -- investigation, accused of, perhaps, organized fraud.
This has got a whiff of something unpleasant about it. And when we need to know what might be happening in Paris, Christian Malard joins me
from France this evening. Is this just politics, or is Madame Lagarde in trouble?
CHRISTIAN MALARD, INTERNATIONAL DIPLOMATIC CONSULTANT: Well, I think it's a lot of politics. And you know what I am thinking about, Richard, is
that IMF is always having trouble with the French. We had sex affair, sex problem with Monsieur Strauss-Kahn, we have finance problem. We should
shot a new movie called "See Sex and Finance" with the French. No problem.
It's political. It's political, Richard, because I think that through Madame Lagarde, once more -- you know France very well, Richard. You know
our justice is leaning to the left wing I this country, and definitely we are in a very tough political period with all the economic mess in which
France is right now --
QUEST: Right.
MALARD: --with Mr. Hollande as the president and with the government. And through Madame Lagarde, I have not the slightest doubt, they they're
trying to shoot at former President Sarkozy, who is not out of trouble, through being listed in different scandals, affairs, whatever.
QUEST: But here's the thing: Christine Lagarde, besides being one of the most-respected women in international politics and finance, she's being
accused inactivity or inattention. Nobody's actually saying she had her finger in the till.
MALARD: Yes, right. I think it's difficult to imagine that she was not aware of what was going on concerning Bernard Tapie. But at the same
time, when you hear today that she has been charged with negligence, what does it mean? How far will it go?
To my knowledge, she's on the way back to Washington today to the IMF, as you said, very quickly and rightly, she refused to resign. I think
people will keep trust in her as long as we have no more development on justice in this country.
And it is true that it's surprising that Madame Lagarde, who was really considered as somebody very reliable, person of trust, would be so
much involved in this affair. But negligence for me tonight doesn't mean much.
QUEST: Now, we need to talk about the other scandal brewing in France. And it is, of course, the collapse of the government, the new
government, Montebourg saying that austerity's a disaster. Hollande's approval ratings -- how serious, with hindsight now, do you think we will
look at the events of this week?
MALARD: Well, I don't know, but it's the worst situation we ever had during the Fifth Republic, as you know. When you have a president in the
rate of polls, 17 percent of favorable ratings, and even the prime minister, Mr. Valls, when he arrived 147 days ago and this cabinet of prime
minister got an average rating of favorable vote of 60 percent, he's now down to 36.
I think we are in trouble. They tried to change. They tried to make a new thing with old things. When you look at the economy today, the
finance secretary, we have a new guy, the substitute for Mr. Montebourg. He's a liberal.
Today, I must admit that when Prime Minister Valls was meeting a consortium of prominent chairmen and CEOs of French companies, he got a
warm welcome about the way he would be thinking of changing the economy, the turn of economy in this country.
But public opinion, believe me, I can feel it today here, they are very skeptical. And a lot of people think that we wouldn't be surprised if
even months ahead, we might have anticipated legislative actions. We are not there yet. That situation is still very critical.
QUEST: We need you again, Christian, don't go -- stay close in the future -- in the future as we see what's happening in France. Good to see
you, sir.
MALARD: Thank you, Richard.
QUEST: Thank you very much, Christian Malard, joining me from Paris.
Now, European stocks hit the pause button on Wednesday. It was a two- day rally that came to an end. Well, not quite. Have a look there. Investors weighed the weak economic data with hopes Mario Draghi and the
ECB may be inching closer to stimulus package. If you look at the numbers, the FTSE was up, the Xetra DAX and the Zurich SMI, they were down.
So to the US markets. This is one of those days where you really don't want to get too excited. They were little changed. I mean --
where's my pen? I can't find my pen. We were up at the beginning, down a bit, then up quite a long way for the course of the day. Who knows what
actually happened around here, but the market turned turtle.
And then right at the end, in those last few moments, it went back up again for a gain of 15 points, just over 17,000.
The US deficit will be larger than expected. The CBO, that's the Congressional Budget Office, said it's around half a trillion dollars in
2014. It is still falling, but if economic growth remains low, then that deficit will go up as tax rates fall off.
Russia's energy minister has denied reports that his country's planning to shut off gas deliveries to Europe. Ukrainian prime minister
Arseniy Yatsenyuk made the accusation less than a day after a meeting between Russian and Ukrainian presidents in Belarus.
(BEGIN VIDEO CLIP)
ARSENIY YATSENYUK, PRIME MINISTER OF UKRAINE (through translator): The situation in the energy sector is difficult. We know of Russia's plans
to completely block gas transit, even for the European Union countries.
(END VIDEO CLIP)
QUEST: As we come to the end of the summer, and of course, the cold winter ahead, the effects of such a shut-down would be very severe.
Because Russia supplies 30 percent of the gas used by the EU. Have a look at the map, you've seen this one before, we've talked about it before.
Most of that, or at least half of it, does come through Ukraine on its way to Europe. And if you look at countries like Poland and Germany, they
get a sizable part of their winter gas requirements from Russia over those pipelines.
Now, I spoke to the EU trade commissioner, Karel De Gucht. I asked Commissioner De Gucht if it was time to ratchet up pressure. Does he now
expect there will be a new round of sanctions against Russia.
(BEGIN VIDEOTAPE)
KAREL DE GUCHT, EUROPEAN TRADE COMMISSIONER: No, I don't think so. I'm just coming back from Minsk, where we had, I believe, an important
meeting with the four presidents -- Nazarbayev from Kazakhstan, Lukashenko from Belarus, and of course, Mr. Putin and Mr. Poroshenko from Russia and
Ukraine.
And the idea of this meeting was to de-escalate the whole conflict, trying to find solutions on the -- what the Russians claim that they are
hurt by the deep and comprehensive free trade agreement with Ukraine. I think we can resolve those problems.
We have agreed about the timeline. Between now and the 12th of September, they are going to restart at the highest level discussions on
energy. And the two presidents, Poroshenko and Putin, also discussed directly, and that's for the first time for a couple of hours, let's say,
the structural elements, the structural building stones of a cease-fire.
So, this is not the moment that I think we should see Europe start working on a fourth list. What you should now do in the coming weeks is
try to de-escalate politically the conflict and also try to find solutions on the economic problems that are -- the so-called economic problems that
are experienced.
QUEST: When we look at the Transatlantic trade and investment partnership, which is by far and away, I would say -- I would perhaps
venture to suggest the biggest issue on your agenda in terms of agreements that you need to complete or that the EU, US are trying to complete.
Where are we going next with this? Because very soon, we've got the midterms in the US coming up. Thereafter, it's going to be politics all
the way for the next two years.
DE GUCHT: My best guess would be that the window of opportunity to come to an agreement, and as you in fact indicated, is next year, because
if we don't do it next year, then you are in the electoral cycle for electing a new president, and then it will become very difficult.
Now, it's not only about the transatlantic agreement that we are discussing. We also very recently, by the way, have a final agreement on
the trade deal with Canada, which is an important one that we will officially initial it in September in Ottawa. But we have a final
agreement on that. So, we are making headway.
QUEST: And what's next for you, sir? What's next?
DE GUCHT: You never know in life, and the only thing you know is that every day you are one day older. I have never hidden my ambition to be the
successor of Cathy Ashton, and that's what I really would like to do.
But of course, to be in a position to do that, well, all the stones have to fall in the right order, the balances between the east and the west
of Europe, between the political parties and you name it, so we will have to wait until the beginning of next week to have a somewhat clearer idea
about that.
(END VIDEOTAPE)
QUEST: And that of course is because the new president, President Juncker, will be creating his new cabinet for the new semester after he
takes over from Jose Manuel Barroso.
And as you heard there, Karel De Gucht is making a full play for what is one of, if not the second or third most powerful jobs in the European
Commission and the European Council, which is the high representative for international foreign affairs.
After the break, Egypt opens the Rafah crossing. It allows desperately-needed aid into the Gaza strip. This is QUEST MEANS BUSINESS,
good evening.
(RINGS BELL)
(COMMERCIAL BREAK)
QUEST: Welcome back. For the first time since 2007, United Nations trucks have crossed into the Gaza strip by the Rafah border crossing. The
convoy carries enough food to feed 150,000 people for five days.
The Palestinians say -- in the territory say Egypt's reopening of the crossing still isn't enough to ensure their economic survival. Our
correspondent Ian Lee reports from the crossing.
(BEGIN VIDEOTAPE)
IAN LEE, CNN INTERNATIONAL CORRESPONDENT: All aid comes to Gaza through this terminal, the Rafah crossing. Behind me is Israel, where this
truck is coming from. And even during the war, aid was still flowing through here.
And in this direction, we have Egypt. And for the first time since 2007, the World Food Program has been able to deliver aid into Gaza.
Talking to Palestinian travelers here, though, they say they want more.
LEE (voice-over): "I was here yesterday and the day before. I was hoping the situation at the crossing would improve. They signed an
agreement. But everything is the same," this student tells me. "We don't want to deal with the Egyptian army. They do not treat us humanely," this
father tells me.
LEE (on camera): While Hamas has claimed victory, and a cease-fire has brought about peace here in Gaza, the Palestinians want more than just
these gates into Egypt open. They want a sea port. They want an airport. They want their prisoners released. And that's going to be a task for
diplomats 400 kilometers away in Cairo.
Ian Lee, CNN, the Rafah crossing, Gaza.
(END VIDEOTAPE)
QUEST: It's another chapter in the wild ride for interest rates in Turkey, where the central bank has unexpectedly cut one of its key rates.
Turkey's new president, or at least reelected president, Erdogan, has put pressure on the bank to lower borrowing costs.
Now, that might be somewhat unusual in most places where there is an independent central bank. But not so in Turkey, as CNN's John Defterios
explains.
(BEGIN VIDEOTAPE)
JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR (voice-over): During the first decade as prime minister, Recep Tayyip Erdogan delivered
economically. His government's policies are credited with creating wealth by tripling incomes in a decade.
Tire maker Pirelli is one of a long list of foreign companies having set up shop in Turkey. Selcuk Yorgancioglu oversees the country for
private equity group Abraaj. They put up nearly a billion dollars, having invested in eight Turkish companies.
SELCUK YORGANCIOGLU, PARTNER, THE ABRAAJ GROUP: Business has done very well in the last over ten years. And they are happy, they continue to
prosper. They can see ahead of them very clearly.
DEFTERIOS: Growth averaged 5 percent for ten years. But the last two years have tested the scrappy former footballer. With months of protest
over Gezi Park development and ongoing investigations into allegations of corruption at the top of the ruling party, charges the government has
denied.
(CROWD CHANTING)
DEFTERIOS: After Erdogan's latest election victory, ratings agency Fitch said political continuity does not eliminate political unrest and
social unrest, adding, this could lead to credit weakness.
The new president has lashed back at the ratings agencies and appears more emboldened than ever.
DEFTERIOS (on camera): Erdogan has designed a massive infrastructure build-out for Istanbul. This includes a new airport to compete with Dubai
as a transit hub, a better than 40-kilometer canal to run parallel with the Bosphorus, and last year, he opened up a new underground train network to
connect Europe and Asia. Some suggest he has his sights on his legacy and not near-term growth.
DEFTERIOS (voice-over): By 2023, the 100th anniversary of modern Turkey, Erdogan wants to see a $2 trillion economy and a more than doubling
of per capita incomes to $25,000. To hit those targets, Turkey would need to grow 7 percent a year. Some analysts say Erdogan could jeopardize
economic stability again.
MARIOS MARATHEFTIS, STANDARD CHARTERED BANK: The higher the growth, the more the economy was overheating and the wider the current account
deficit of Turkey was becoming.
(GUNFIRE)
DEFTERIOS: But with fighting at the country's doorstep in Iraq and Syria, business still prefers continuity.
YORGANCIOGLU: Can you show me a good revolution in the last few years? I think we're happy where things are going. There's confidence in
the system, and the markets and the people are supporting it.
DEFTERIOS: That's if Erdogan's economic policy as prime minister is sustained as president.
John Defterios, CNN, Dubai.
(END VIDEOTAPE)
QUEST: Allow me to update you on some news that we're just receiving at the moment. The allegation is that Russian hackers have attacked the US
financial system in the mid of the month, infiltrating and stealing data from JPMorgan Chase and at least one other bank. The FBI is investigating
who are what was attacked and how much data was taken.
JPMorgan has put out a statement saying, "Companies of our size, unfortunately, experience cyber attacks nearly every day. We have multiple
layers of defense to counteract any threats and constantly monitor fraud levels." There's no further comment at the moment. The FBI aren't saying
anything more, and certainly it's not clear whether or not or what data and the significance of it.
Now, when we come back in just a moment after the break, as airlines are cutting flights to those countries affected and infected by Ebola, the
director of the Centers for Disease Control says isolating West Africa could hinder the fight against the virus. It could actually be a self-
defeating move. In a moment.
(COMMERCIAL BREAK)
QUEST: The head of the African Development Bank has slammed those airlines that have chosen to stop flights to West Africa and said it can
only do long-term damage to the country's economies. Air France is the latest, saying it will suspend all flights to Sierra Leone from Thursday.
Now, the French government had asked the airline to stop flying to the capital, Freetown. The president of the ADB says there's no logic in
introducing these restrictions.
(BEGIN VIDEO CLIP)
DONALD KABERUKA, PRESIDENT, AFRICAN DEVELOPMENT BANK: There's no reason not to come to Sierra Leone. There's no reason not to go to
Liberia, provided you follow the instructions and the advice given by the medical experts.
There's no reason to close shipping to these countries. There's no reason for airline companies to stop coming in. There's no scientific
evidence for that.
(END VIDEO CLIP)
QUEST: The argument is that the potential damage is not only economic. The director of the Centers for Disease Control in the United
States told Nima Elbagir that isolating West Africa in the long-term, it hurts the battle against the virus itself.
(BEGIN VIDEOTAPE)
TIM FRIEDEN, DIRECTOR, CENTERS FOR DISEASE CONTROL: The world cannot isolate Liberia and West Africa. That won't help, and it will make it
harder to stop the outbreak. And ultimately, will increase the risk in other places, because every day this outbreak goes on, it increases the
risk for another export to another country.
So, the sooner the world comes together and helps Liberia, Liberians and West Africans, to stop it, the safer we'll all be.
NIMA ELBAGIR, CNN INTERNATIONAL CORRESPONDENT: The World Health Organization has spoken about an underestimation of the death toll.
They've also spoke about a secret patient caseload. Is that the sense you've gotten here on the ground, that this is actually -- it could be so
much worse than we know right now?
FRIEDEN: It's definitely worse than the total numbers. How much worse, we don't know. But we know that not all the cases have been
reported, not all the cases have been diagnosed, not all of the cases have been tested. So, it's a much bigger problem than anyone anticipated. It
is an unprecedented problem.
ELBAGIR: What is your sense about experimental drugs? We've heard all about ZMapp, and that's been used in some cases, successful in some, in
others not. Do you think that's something that perhaps should be explored here?
FRIEDEN: The key right now is getting good quality care to as many patients as fast as possible. That means helping them with the symptoms of
diarrhea and vomiting, bringing their fever down, giving them medication for pain. And perhaps most importantly, giving them rehydration, oral
rehydration, and whenever possible, intravenous rehydration.
These are lifesaving, proven interventions. Experimental are experimental. We don't know if they work, and we don't have many of them
or lots of them.
ELBAGIR: If there was one myth you would want to bust, what would it be? If there's one thing you'd want people to hear as the truth from you,
what would it be?
FRIEDEN: The fact is, we can stop Ebola. It's spreading by just two routes: caring for people who are sick and touching people who have died.
If we don't touch people who have Ebola when they're sick or have died, and we don't touch their body fluids, we're not going to get Ebola.
We need to work together to care for people, to support them, so that they can get the care they need, they can stop spreading it in communities,
we can bury with dignity, and we can stop the outbreak. It is something we can stop, but the world has to come together to do it.
(END VIDEOTAPE)
QUEST: Some extremely honest and brutal, some would say, views from the CDC.
When we come back in just a moment, the Scottish independence movement says that Scotland will be more prosperous on its own. A business leader
says independence comes at a heavy price for the economy. We will delve into the murky waters of the United Kingdom independence referendum.
(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 mother of a US journalist held by ISIS is making a direct appeal to the group's leaders. Shirley Sotloff says Abu Bakr al-Baghadi to
release her son, saying he has no control over US government actions. ISIS has threatened to kill him unless the United States stops airstrikes in
Iraq.
The United Nations says that the Syrian government and ISIS insurgents are both committing war crimes. Human rights investigators are accusing
the Syrian government of repeatedly using chlorine gas to attack civilians. ISIS militants continue a campaign of fear with public executions and
torture in towns where they are in control.
The US believes Russia may be conducting a counter-offensive in eastern Ukraine. A spokeswoman for the US State Department said today that
Russian incursions are likely underway around Donetsk and Lugansk. Ukrainian military advisors say Russian forces have been firing artillery
across the border.
The International Monetary Fund's managing director, Christine Lagarde, has now been placed under formal investigation. French
prosecutors are accusing Lagarde of negligence in dealing with a fraud case in 2008, when she was the finance minister under the administration of
President Nicolas Sarkozy. Ms. Lagarde denies any wrongdoing.
And Air France says it will suspend all flights to Sierra Leone from Thursday, as West Africa tries to contain its Ebola outbreak. The French
government had asked the airline to stop flying to the capital, Freetown. It also urged its citizens to leave the country, as well as neighboring
Liberia.
Scotland goes to the polls in September to make a decision on whether the country should become independent or remain part of the United Kingdom
of Great Britain and Northern Ireland. More than 100 top business leaders in Scotland have urged voters to not to vote for independence from the U.K.
In this letter which is called the Business Case for Independence Has Not Been Made, they express concerns over job losses, Scotland's membership
with the E.U. and currency issues. The letter was signed by many including Keith Cochrane, the chief executive of the Weir Group. He joins me now
live from Glasgow. Mr. Cochran, the arguments essentially have not changed since this referendum first was mooted or was first agreed several years
ago between the prime minister and the first minister of Scotland when it was first put forward. All that's happened is the voices on both sides
have become more shrill.
KEITH COCHRANE, GROUP CHIEF EXECUTIVE, THE WEIR GROUP: Well good evening. I think it is important that business engages in the debate. We
have followed that debate over the last few years, and particularly since the publication of the Scottish government's white paper with considerable
interest, seeking clarity to some pretty basic questions. And I'm afraid that that clarity is still lacking.
QUEST: Right.
COCHRANE: And as we approach voting date, it is important that the business voice is heard and the debate that's going on in Scotland right
now.
QUEST: The big issue for business of course is the currency and where - you know - obviously if the Rump U.K. does not allow the Scotland to use
the pound which the chancellor has made clear it would not be the case - it wouldn't use the pound. So you've got the currency and you've got E.U.
membership. What do you fear most?
COCHRANE: Well the currency and what currency you use for trading and for investment is perhaps the most basic question that you as a businessman
have to address. And as we look at the options that have been put forward as regards currency and an independent Scotland, it's clear that alongside
the uncertainty that would arise, there will be additional costs for Scottish business and those additional costs will translate into higher
borrowing costs or a requirement for increased taxes to support the currency -
QUEST: Right.
COCHRANE: -- arrangements in place.
QUEST: Are you and do you know if your fellow business leaders - because making plans - even though you want, you know, you want a no-vote
in the referendum - you must obviously be thinking if yes wins, you've got to have plan B for how you'll run your businesses?
COCHRANE: Well speaking for my own business, the Weir Group, we are quite clear in that class (ph) would love to be able to answer the question
of what we would do in the event of a yes vote, frankly we don't have the answers and this gets back to this lack of certainty. And it's only when
we understand the outcome of those independent settlement negotiations will it be possible to form a view. And though they will take some period of
time -- of course the S (ph) for it -- so the referendum will take place on the 18th of September and the Scottish government have proposed it will
take 80 months. My fear it will take longer to complete those negotiations -
QUEST: Right.
COCHRANE: -- and on the one hand that gives you time to understand what it means for your business, but on the other, it creates considerable
uncertainty which I fear will impact on investment and on continuing success for Scottish businesses.
QUEST: Finally, sir, the issue can be boiled down to economics, and you and I tonight have talked about the practicalities and the very real
issues for business of costs, currencies, membership with the E.U. - is it your real fear though that voters go to the polls on patriotic views - on
emotion -- and that sort of gets the blood up, if you like, and logic goes out the window?
COCHRANE: Well clearly I think we're all pro-Scots and I'm sure that that will be an influence to varying degrees on individuals, but what is
clear from all the opinion polls is that the economy and the arrangements to secure the future success of Scotland from a business perspective are
the number one issue that the voters are concerned about.
QUEST: Right. Thank you, sir, for joining us. We will watch the referendum very closely, we'll be covering it even more closely, and we
look forward to talking to you one way or t'other as they say after the result is known. Thank you, sir.
COCHRANE: Thank you.
QUEST: Now, a question for you - in Europe, would you fly business class on Ryanair, and what does business class actually mean on this
airline? It's trying to convince the traveler it can do a business product front o' fare (ph). I've beaten them to it. Let's see how long it takes
them before they use the phrase `low fares' in our interview after the break. (RINGS BELL).
(COMMERCIAL)
QUEST: Think of it as a major turnaround for Ryanair whose chief exec once floated the idea of people standing on flights and getting rid of
lavatories or at least charging people it was to use the lavatory onboard the aircraft. Well, both of those ideas went nowhere, but this is an idea
that has come of its time. It's called "Business Plus." It's the most ardent of no-frills airlines is introducing its own business class type of
product.
Now, forget any ideas of lie-flat beds, five-course meals, lounges and the like. For fares starting at around $100, Ryanair, and this is what
they're going to give you, and this is the business class product that they're talking about. Flexibility on ticket changes, baggage allowance of
20k, fast-track airport security, priority boarding, the choice of extra seats with some extra legroom. It follows a similar move by easyJet which
made a similar sort of move. Jet Blue in the United States, one of the low-cost carriers here, has actually gone the full hog and actually put
something called mint which is a lie - lie flow - lie-flat bed on its transcontinental redeye products.
Ryanair's chief marketing officer Kenny Jacobs joins us live from London. Good to see you, sir, as always. Thank you for joining us. The -
so, -- you've done this or you've done it sort of because easyJet did it first and has proven that there is a demand for a business-friendly
product.
KENNY JACOBS, CHIEF MARKETING OFFICER, RYANAIR: Well it's great to be here, Richard this evening. We've done this because our customers have
asked us to do it for a number of years. We've got a large number of business travelers who choose Ryanair on a regular basis. They have been
asking us for a more flexible ticket, so the features that you've just listed in the business plus product is what customers have been asking us
for, and that's primarily the reason we've introduced it. It also makes great business sense for us. Business travel is a huge -
QUEST: Right.
JACOBS: -- part of European aviation. It's a great market for us, there's good margins to be made for it and it's a fantastic customer base
for us to serve.
QUEST: We have to be honest, you and I, and this is all continuing this policy that Michael has introduced --a turn `round of a kinder,
gentler, friendlier, cuddlier, more user - whatever phrase you want - whatever adjective you want to do - a Ryanair that's not cheap and nasty.
JACOBS: Yes, we've, you know, we've listened a lot to customers. Customers have always loved the lowest fares. I heard you say `don't say
low fares,' but I can say the lowest fare -
QUEST: Ninety seconds! It took you 90 seconds before you put that phrase in!
JACOBS: -- I take exception to low because we give customers the lowest fares.
QUEST: (LAUGHTER).
JACOBS: But we do have the lowest fares in Europe. You know, Ryanair's an exceptional business model. It's founded on simple,
straightforward operations. That drives the lowest cost. We've got a great cost advantage in our business. That allows us to give the lowest
fares. So, that's what's important and that's what's different about Ryanair. What we've been doing is doing a lot of listening to our
customers to say what else would you like? We want to keep on growing and we've got ambitions, growth plans over the -
QUEST: Right.
JACOBS: -- next number of years. We've got 180 new aircraft coming. So, we want to extend the product, we want to make it easier for customers
and business customers primarily to get access to the Ryanair great fares and give them a more flexible Ryanair experience --
QUEST: All right.
JACOBS: -- that's tailored to their needs.
QUEST: One thing I do need to talk to you about tonight - you are - you're throwing your hat in the ring for Cyrus Airways and you're going for
the Cyprus carrier. It's a small carrier, it's got half a dozen planes, you're not interested in those aircraft, you've got 180 and a gazillion
more on the market. This is about routes, isn't it? This is about tapping into Cyprus, beyond?
JACOBS: It's a really interesting part of Europe. The eastern Mediterranean four years ago we had zero customers. Today we've got about
400 million - 4.5 million - customers coming in and out of that area. So, it's very close to some interesting countries in Europe. It would be a
good place for us to have a base, so the acquisition of Cyprus Air is one of the - one of the options that we're looking at to have a stronger
presence in that part of market.
QUEST: Sir, good to see you. Thank you very much. Indeed I look forward -- on "CNN Business Traveller" - we look forward to trying out your
business product and putting it to the test in the future.
JACOBS: Thanks, Richard.
QUEST: Thank you very much indeed. Now, as the budget airlines build their pitch for business consumers, the leisure travel market is booming as
well. Business and leisure. For airlines like Ryanair we need to put this in context - they are absolutely vast. Ryanair is the largest carrier in
Europe by passenger numbers. Well now Isa Soares has the leisure and the business story.
(BEGIN VIDEOCLIP)
ISA SOARES, REPORTER AT CNN INTERNATIONAL: Holidays, once a treasured two weeks of sunshine, are no longer reserved for the summer. According to
the World Tourism Organization, we are holidaying more than ever before and in more creative ways. Last year alone, holidays were up by 3 percent with
holidaymakers outnumbering business travelers by more than three to one.
JILL STARLEY-GRAINGER, "THE SUNDAY TIMES TRAVEL MAGAZINE": Although business travel has decreased for various reasons - companies cutting back,
technology meaning that people don't need to go to meetings in other countries anymore, they can just do Skype meetings. Obviously leisure
tourism isn't affected by this as much. Leisure travel has definitely never been bigger than it is now.
SOARES: Finding that perfect holiday at the right price has made us savvier. Increasingly, more and more of us are getting more creative about
where we go on a holiday. It's no longer just about being by the seaside. More of us are opting for a holiday in the countryside and some time in the
float. Europe has both and remains one of the most visited regions in the world. Last year alone, tourism here increased by over 5 percent, a growth
rate that UNWTO calls remarkable. The Chinese now travel the most. Last year, outbound trips from China jumped 26 percent, with an increasing
number of them buying their holidays using a smartphone. But it's millennials who are driving the new trends in the global travel markets,
using technology and peer-to-peer rental sites like Couchsurfing and Airbnb.
ANDY WASHINGTON, MANAGING DIRECTOR, EXPEDIA U.K.: The biggest change I've seen are really through how people book their travel rather than
destinations that they're going to. For that multi-device usage of a mobile, a tablet or a desk top gives us more opportunity to book and
travel. We're traveling to see friends, we're traveling more around experiences as well as the traditional 7/14 nights in the Mediterranean.
SOARES: But whilst we all want a holiday, not all of us feel like we can take one. Take the United States. It receives 14 holiday days, but
only takes ten, mostly because they find it hard to leave work. In Japan, workers receive 18 days but only take seven. The French, meanwhile,
receive 30 days and they use them all. Yet 90 percent of them say they feel vacation deprived.
STARLEY-GRAINGER: Countries such as America where they actually have very few holidays, they tend to travel much more locally. They tend to
stay within kind of their country and maybe just the nearest countries. I think people still feel like holidays are a vital part of their lives, and
they will make sacrifices in other areas to ensure that they can still have their holiday every year.
SOARES: And as our lives become busier at holiday, even if it's just a dip in the ocean, it's more valued than ever before. Isa Soares, CNN
Brighton, England.
(END VIDEOCLIP)
QUEST: Never get a producer angry, because they will merely take the opportunity to embarrass you and show things again and again and again for
the foreseeable future until -
(BEGIN VIDEOCLIP)
(RICHARD QUEST PARTICIPATING IN ALS ICE BUCKET CHALLENGE)
(CHEERING)
(END VIDEOCLIP)
QUEST: Thank you. It's a phenomenon taking your Facebook feed by storm - the ALS Ice Bucket Challenge. Now, after my own time under the
bucket, I challenged the advertising CEO Sir Martin Sorrell of WPP who we had on the program the other day, AirAsia low-cost boss and Queens Park
chairman Tony Fernandes, and the publisher Moira Forbes to join me in this. Moira took the plunge last week and now Tony Fernandes has picked up my
soggy gauntlet and he did it from QPR's ground.
TONY FERNANDES, CHAIRMAN, QUEENS PARK RANGERS: Hi. I'd like to accept the challenge by Richard Quest - plus many others - in the ALS
challenge. A great effort. I'd like to nominate four people - Richard Branson, Flavio Briatore, Jose Bosingwa and Rebecca Caplehorn.
(LAUGHTER, CHEERS)
FERNANDES: Remember, guys, I'm still chairman of the club.
(LAUGHTER)
Male: No, we won't forget.
FERNANDES: Wipe those smirks off your face.
(LAUGHTER)
Male: Ready? Slowly or quick?
FERNANDES: Quick, please.
Male: Slowly. (POURS ICE WATER)
FERNANDES: Oh, (BLEEP). (GASPS)
(LAUGHTER)
QUEST: Just look how much water goes on top of Tony.
FERNANDES: Do it all together!
(MALE POURS MORE ICE WATER)
FERNANDES: (BLEEP)
QUEST: And look at this one.
(TWO MALES POUR MORE ICE WATER)
QUEST: A whole freezer.
FERNANDES: (YELLS).
Male: One more for good luck.
FERNANDES: (GASPS).
(APPLAUSE)
(END VIDEOCLIP)
QUEST: Now, to all the naysayers who say this ice bucket challenge is a cheap publicity stunt, the ALS Association has now raised more than $94
million in the past month. Ninety-for million. That is 34 times more than in the same period last year. And we're just waiting now for Sir Martin
Sorrell to do it. He has promised to take the plunge at the Burning Man Festival. As soon as Sir Martin dunks himself or has others to do it for
him, we will show it to you. Jenny Harrison is now at the World Weather Center. Good evening, ma'am.
JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: Evening to you, Richard. Yes, (inaudible), although I have to say that's the first time
I've seen you being doused. I liked it. I enjoyed it. I wonder if your suit has recovered. Is it washable - your suit?
QUEST: Well what - what sort of cheap attire do you think that I garb myself with?
HARRISON: (LAUGHTER). I know. It must be ruined. It must be ruined. Your dry cleaner must hate you. Anyway, well let's move on.
Rain? Well, there's plenty of rain if you want to get yourself wet in Europe. Western regions are seeing the rain again on Tuesday. In fact,
this system has been working its way across, and eventually in the last few hours - this Wednesday - we've had some more very heavy rain totals.
You can see here where they are. Romania, Croatia - 74 millimeters and that of course is in probably about 12 to 24 hours. So, the theme will
continue although beginning to warm up again into the southeast. Not hot but temperatures back up to the normal. And then we've got this low system
pushing in to the northwest and that will eventually spread rain Aegean Sea (ph) all the way across into more western areas of Europe yet again.
So, it's a very unsettled picture. A fairly clearly-defined area of low pressure there pushing into the northwest and then elsewhere just one
or two showers. So, it really is a fairly quiet picture for once. We've had lots of bad weather of course at the last several weeks. Twenty-four
in Paris on Thursday, 22 in London. So, again, the temperatures are coming up, and just a degree higher in Madrid than it was today. So, 36 is your
expected high.
Now, have a look at this because this is Hurricane Marie. It is in the eastern Pacific and it is a massive storm. Very, very strong winds.
Luckily, not about to make landfall. However, what it is doing along with Cristobal in the Atlantic and also a disturbance here in the Gulf of
Mexico. But particularly on the West Coast it is producing some very, very high and actually very dangerous surf and some very strong and dangerous
rip currents. In fact, one person has already died in this. Of course the surfers are loving it heading out there, but you really got to know what
you're doing, so the warnings are in place.
You can see Santa Barbara - waves up to three meters into Malibu. We've got waves there even higher up to 4 and 1/2 meters. So, that system,
as I say, moving offshore, and in fact the waves beginning to come down as we head through the last of the week.
This is Cristobal to the west of Bermuda, so there are some warnings in place there. This tropical storm watch actually is what it is right
now, so really shouldn't be a problem. But guess what? It's heading across the Atlantic and eventually it will head up to Iceland. I'll tell
you about that - oh, tomorrow. Richard.
QUEST: You will indeed and we look forward to hearing for it. Thank you very much. Jenny Harrison at the World Weather Center. This is "Quest
Means Business." We're back in a moment.
(COMMERCIAL)
QUEST: The recent release of the gruesome video clip showing the murder of James Foley has sparked a backlash against the violent content
that's often seen on social media. While the technology's available to stop such content from being uploaded, it would appear that companies like
YouTube and Facebook seem reluctant to use it. Our business correspondent Samuel Burke now explains why that should be.
(BEGIN VIDEOCLIP)
SAMUEL BURKE, BUSINESS CORRESPONDENT: There's already technology to stop copyrighted songs, sporting event videos and child pornography from
being uploaded to social media. A digital fingerprint identifies a piece of content and allows social networks to proactively find repeat instances
from being published to their platform. Analysts say this very same technology however is not being used to stop the spread of videos and
photos from groups like ISIS on the world's largest social networks.
J.M. BERGER, COUNTER-TERRORISM ANALYST: Especially in the early stages of distribution, basically what we're talking about is the same file
being uploaded 500 different times. So, it seems to me that that's pretty easy to stop. You know the size of the file, you know its properties. You
can just automatically block it at the point of upload.
BURKE: There are clear legal and financial implications when it comes to copyrights and child pornography, but not so with extremist material.
Twitter tells CNN that it uses what it calls "PhotoDNA to identify and report child sexual exploitation images. All other content removal is
reported to us by users through forums on our site." Then they decide whether to take it down as they did with the gruesome images of the
beheading of journalist James Foley. YouTube and Facebook also rely on users to flag up material. They say they take down anything violating the
policies listed on their websites.
JAMIE BARTLETT, AUTHOR, "THE DARK NET": The difficulty with extremist material is that for all of these social media platforms, social network
platforms, it's trying to work out the point at which something is considered sufficiently extreme.
BURKE: Analysts say social media companies are reluctant to use automated removal for that material because the current technology has a
hard time distinguishing between a legitimate news story posted about the gruesome video and the original video posted by the jihadists.
BARTLETT: Most of the social media platforms have a sort of philosophical objection to them proactively searching out material and
taking it down. They don't actually want to be responsible for the material. They would say we provide a platform, the users decide what goes
on that.
BURKE: While some argue that trying to block ISIS will just drive it to other smaller social media sites. Experts say like the well-oiled PR
machine at any major corporation, ISIS clearly wants its message on the biggest social media networks to spread its propaganda to the largest
audience possible. Samuel Burke, CNN London.
(END VIDEOCLIP)
QUEST: And we'll have a "Profitable Moment" after the break.
(COMMERCIAL)
QUEST: Tonight's "Profitable Moment." So, Ryanair joins easyJet and everybody else with a `business plus' - a sort of product that's designed
for the business traveler. And for very good reason. More and more now in Europe, easyJet, Ryanair, Vueling - the low-cost carriers - are the only
way to get from some cities in between your travels across the continent. And business travelers' demands are different. They need to be able to
change tickets, they want a more comfortable seat. Yes, they do want to be able to get on and off first. So, all in all, it makes sense. But what is
fascinating is the way in which Michael and Ryanair have come to this party late. Because what they really discovered is that there's money to be made
in them there business travelers. 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) - I hope it's profitable. I'll see you tomorrow.
END
