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Quest Means Business
British PM Johnson Stable, Remains In Intensive Care; U.S. Stocks Rise, Dow Further Out Of Bear Territory; Lockdown Lifted In Wuhan, China; Acting U.S. Navy Secretary Resigns Amid Feud With Ousted Captain; Trump, Bankers Discuss Help For Small Firms; Wizz Air Switches To Humanitarian, Medical Flights; Lower League Football Faces Huge Financial Hit; 3M To Import Nearly 167 Million Masks Made Overseas. Aired 3-4p ET
Aired April 07, 2020 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:18]
RICHARD QUEST, CNN BUSINESS ANCHOR: Sixty minutes of trading left as the markets get ready once again on a difficult day. Second straight day where
we've seen the good gains early on evaporate as the day moved on and the gains are being held. Are we in a trading range? We'll talk about in just a
moment.
Those are the markets, the reasons why and what's affecting trading today.
The White House is planning more money for small businesses, the Payroll Protection Program, we'll talk about the White House plans during this
hour.
Lufthansa is shutting down Germanwings. It is part of a much larger restructuring. All European carriers wondering what comes next. We've got
the CEO of Wizz Air on the program.
And as countries look towards the lifting lockdown, tonight, we have the CEO of Marriott on what they hope will be the future of the crisis.
We are live in the world's financial capital, New York City on Tuesday. It is April the seventh. I am Richard Quest, and on the rooftop, I certainly
mean business.
A very good evening to you and a warm welcome.
The British Prime Minister, Boris Johnson remains in hospital and in intensive care, but he's described as being in a stable position, breathing
as on his own as he battles COVID-19. Now, he has been moved to intensive care, as you'll be aware, roughly about this time yesterday, we got that
announcement.
His deputy and First Secretary of State is Dominic Raab, the Foreign Secretary. He said he's received very clear instructions and he is
confident the Prime Minister will pull through.
(BEGIN VIDEO CLIP)
DOMINIC RAAB, U.K. FOREIGN SECRETARY: He is receiving the very best care from the excellent medical team at St. Thomas' Hospital. He remains stable
overnight. He is receiving standard oxygen treatment and breathing without any assistance.
He has not required any mechanical ventilation or non-invasive respiratory support.
He remains in good spirits and in keeping with usual clinical practice, his progress continues to be monitored closely in critical care.
(END VIDEO CLIP)
QUEST: Now the Foreign Secretary says the Prime Minister is a fighter and will recover. He has asked Raab to deputize, but there is no formal
succession in place, which begs the question, God forbid, if the Prime Minister's health situation was to deteriorate, who would take over?
Michael Howard is with me. Lord Howard is with me. He has served as leader of the Conservative Party and as Home Secretary. He knows the ropes of
government extremely well.
Michael, obviously everybody hopes for the best in these situations with the Prime Minister, but how robust is a succession plan, if even
temporarily, somebody has to take over?
MICHAEL HOWARD, FORMER BRITISH HOME SECRETARY: Well, good evening, Richard. Our thoughts obviously are with the Prime Minister and his loved ones. We
all want him to get better very, very quickly. And we are very concerned about his condition.
We have in the United Kingdom, as you know, a different system of government from for example, in the United States. We have a Cabinet
government and our Cabinet which is composed of very senior politicians is a collective decision making body.
So while the Prime Minister is in hospital and is unable to take the reins himself, the Cabinet will reach collective decisions under the temporary
leadership of Dominic Raab, the Foreign Secretary and First Secretary, as you've described.
QUEST: The Prime Minister within that Cabinet -- as a phrase, you're familiar with that primus inter pares, first amongst equals, but he does
bear the brunt in a sense, and the weight of responsibility. That's what they all go for. So at what point do you think there needs to be a formal -
- a more formal recognition of transference of duty or power from Prime Minister to deputy?
HOWARD: I didn't -- I didn't see that happening. I think what we have now is a perfectly formal process. We have -- as I've said, we have Cabinet
government.
[15:05:07]
HOWARD: The Cabinet will be chaired by Dominic Raab. Boris Johnson set up a very clear set of Cabinet subcommittees dealing with various aspects of the
coronavirus, and they will continue to operate. So we have it. It's not an informal process. It's a perfectly formal process. And we will continue to
have effective government while the Prime Minister is ill.
QUEST: You had been at the head of government. You've been at the seat of power in some of the most difficult times. What's it like? I mean, the rest
of us stand on the outside and either criticize or say what should have been done, but you've been around the Cabinet table when there have been
crisis. What's it like?
HOWARD: It's tough. Government is full of -- it is all about making very difficult choices, and in this situation, this terrible situation in which
we and the rest of the world, find ourselves at the moment. There are no easy choices. There are no easy decisions.
You have to weigh up conflicting, competing priorities; conflicting, competing objectives, all of them desirable objectives. And you have to try
and strike the right balance between them.
And no one pretends that it's easy. It's very difficult, of course. You're subject to constant scrutiny as you should be, constant criticism, some of
it justified, some of it not. So it's difficult. It can be lonely, but that's what politics is all about. That's what government is about.
QUEST: Back to Boris Johnson. The critic say, of course that the U.K. was slightly slow off the mark in terms of testing that is sort of character,
it gave us sort of an insouciance perhaps to what was going to come? Is it your view that, and I know it's been clever with hindsight, but is it your
view that the U.K. should have done more sooner?
HOWARD: Well, you can always look back with hindsight and speculate as to whether what might have happened if this was done or that was done. I think
on the whole that the government has reacted pretty well to this terrible crisis.
They have made it clear throughout that they've been acting on the basis of the best medical and scientific advice available to them. They've taken
that advice seriously. They've acted on it. They've been remarkably transparent.
We've had daily briefings in which the scientists and the medical experts as well as the politicians have explained to the nation exactly what the
current position is.
And I think on the whole, the government got it about right.
QUEST: Michael Howard, thank you, sir, for joining us. I appreciate it.
Now, the central agenda of the markets, the gains of the day have sort of evaporated -- excuse me -- as the more positive approach and the numbers
that's being seen in New York as the story. The Dow is rising further. It's no longer in bear market, technically, but it is in a rage with the year-
to-date down 19 percent.
The low was down 35 percent two or three weeks ago on March the 23rd. Julia is with me.
I know, Julia that you are cautious. You have cautioned me to be cautious, and your caution is always cautious. However --
JULIA CHATTERLEY, CNN BUSINESS ANCHOR: Very cautious.
QUEST: Can we say we are in a range. We are in a range somewhere between down 18 percent and down 23 percent, and that's where we will be for the
foreseeable.
CHATTERLEY: That's a very interesting question. I'm not confident enough to say that we've seen the lows for the stock markets and that says something
with all the stimulus that we've seen around the globe, even when I frame that compared to what we're seeing in the markets and I'll tell you why.
And I'm talking specifically about stock markets. We can take a snapshot of the markets and say, this is what it's saying about what the earnings
potential are for these companies. But wait until we hear in earnings season and we hear companies going, we can't give you guidance, because we
don't know.
And I think the cost of borrowing more money and many of these companies will need to, is only going to be exponentially increased by the length of
time that we are in this lockdown situation.
And Richard, I always bring it back to that point that, again, the beginning of this is getting on top of the health crisis. So the shift that
we've seen from deep despair to a degree of optimism based on case numbers of the coronavirus around the world makes some degree of sense to me, but
the asymmetries here in terms of information are still too high.
[15:10:05]
QUEST: Ah, but Julia, now, look at it this way. The lows that we saw, were predicated by the idea of crisis. The price that we're seeing now, factors
in those things that you said.
CHATTERLEY: I'm not sure it does, Richard. I don't have a crystal ball. I don't know what the economic damages, the persistence of unemployment is
going to be. The people that even have savings.
Let's take the United States for example, 40 percent of households can't write a $500.00 check in an emergency. What damage has already happened
over the past few weeks and will continue to happen as long as this lockdown takes place.
I don't even know what the playbook is for getting back to some degree of normality. So if you are a long term investor and you look at these markets
and these stocks individually and say I see value, go for it, but just be prepared to accept that we could see lower lows. You could see a negative
balance on your stock portfolio at this moment. You could see a lot of volatility and the hope is in the future, they will be a lot higher, but,
oh boy, it could be a wild ride even now, over the next couple of months.
QUEST: Julia, that's why you kept the shirt on your back with that sort of prudence and sensible advice. Julia Chatterley will guide us through this
crisis right the way through. Thank you.
Now, as we continue tonight, we will have the Marriott Chief Executive, Arne Sorenson is with us after the break. He says the coronavirus is worse
than 9-11 and the Great Recession combined. Arne is with us after the break.
(COMMERCIAL BREAK)
QUEST: When you look at the skyline and the beauty and the majesty of what's taking place here in New York, it's hard to put it all into context.
The Empire State Building and the Chrysler Building. It is a picture perfect spring day.
But we do turn to our business agenda and the serious nature of. Marriott shares -- they are very strong this session, but they are down 50 percent
so far this year.
I mean, it's obvious why. The hotels are empty and in many cases, they've been closed. The company is expected to furlough tens of thousands of
workers. Nobody's traveling.
[15:15:10]
QUEST: And the Chief Executive, Arne Sorenson tell staff it's the worst crisis the company has ever faced.
(BEGIN VIDEO CLIP)
ARNE SORENSON, CHIEF EXECUTIVE, MARRIOT INTERNATIONAL: I can tell you that I have never had a more difficult moment than this one. There is simply
nothing worse than telling highly valued associates, people who are the very heart of this company, that their roles are being impacted by events
completely outside of their control. I've never been more determined to see us through than I am at this moment.
Well, it's impossible to know how long this crisis will last. I know, we as a global community will come through the other side and that when we do,
our guests will be eager to travel this beautiful world again.
(END VIDEO CLIP)
QUEST: Arne Sorenson, the Marriott CEO is with me now. Arne, first of all, thank you for taking time to talk to us. I want to divide our time together
in to two sections.
Let's talk about the company and what you're doing during the crisis. And then we'll talk about the company itself. So first of all, across the range
of the company, you're helping out in major ways, aren't you?
SORENSON (via Skype): Yes. It's been obviously an extraordinary crisis starting in January in China in late January, and we've watched it move
around the world, obviously, over the course of the last few months.
From the beginning, we've been thinking really about four communities, if you will. Our associates around the world are about 750,000 people that
wear a name badge. Our guests, of course, which we serve every day, and welcome every day. Our hotel owners, which many people don't understand,
but our hotels are owned, typically by third party, real estate investors.
And then lastly, Marriott, as a company, of course, to make sure that we're protecting ourselves.
QUEST: So when I look at the way in which you're making hotels available, for example, to first responders, and to those who work in the industry,
what has been your message about what resources the company is prepared to put at play for people who need them? The homeless, for example, you're
opening up some of your hotels to the homeless?
SORENSON: Well, we've got different initiatives underway in different parts of the world. And of course, some of them are about what we can do, really
to provide either free rooms or rooms that are supported by other charities so that they're free to guest.
We are working often with local healthcare authorities or local states to make sure that we're making facilities available to them for the needs that
they have. And then we've also rolled out at deeply discounted healthcare providers' rate, which is not free, but it's generally set up for folks who
are working somehow in the healthcare system, maybe reticent to go home at night because they want to protect their families. Maybe because they're
working someplace away from home, because they they've come in to help a place where there is more of a crisis.
And we have -- it's hard to know exactly -- but we have many dozens of hotels that are already engaged in one or another of these efforts around
the world, including very much in the United States.
There are operating issues here. Of course, we tend to prefer that a hotel, either if it's going to be engaged deeply in the healthcare crisis itself,
be in that space and not necessarily be serving other guests who don't intend to be checking into healthcare facilities.
But we're working through those kinds of operational issues as we speak.
QUEST: In terms of Marriott itself, the difficulty that you will face, restarting the group, the amount of damage that has been done, for
instance, how many of those hotel owners do you think won't survive?
SORENSON: Well, obviously a lot of that depends on how long this lasts, but we are quite optimistic that as we get through the healthcare crisis, we
will get back to a place where people quickly get back on the road.
Now, I think that the important point there is when we get through the healthcare crisis. People need to have confidence that the threat to their
health is behind us.
And I think that will come back in different parts of the world faster. We've mentioned previously that we're already seeing some green shoots in
China, where the markets are opening up again a bit.
Now, if you looked at our numbers today and compare them to last year, they would look pitiful, but if you look at our numbers today, compared to 30
days ago, they're meaningfully improved in China.
And so there is some sign that when the green light starts to flash, and tells folks it's safe to go out again, we think they're going to want to
get back to life and we suspect the overwhelming majority of our owners will be able to navigate through this time.
QUEST: And in terms of running a company, a vast company across multiple jurisdictions, how difficult is it for you as the CEO with excellent
people, I understand all of that. But now you're in your own home, and you're having to lead the effort. How difficult is it? What's your
challenge?
[15:20:18]
SORENSON: Well, it's very -- it is very difficult. It is a mind boggling challenge, obviously, to deal with the kind of decline in business that
we've had.
And to not be together with, whether it's the leadership team of the company, or associates in hotels on a face-to-face basis means we're
reliant on tools like this, a video that we send around or a Skype interview that we're doing today.
But it's fundamentally important that we be transparent with our team around the world, that we be visible to that team around the world, that I
get input and the team around the world get input from our people who are on the front line of trying to navigate this in the markets where we're
doing business.
And of course, in trying to do that in an environment in which we've all been encouraged to stay at home in which very little travel is happening,
it means we're using new tools and new technology.
But in a way, that's an interesting process, too, and I think we're finding that there are tools that work well for us.
QUEST: Arne, I hope you're keeping well and your family please, all is well. And we'll talk more in the future, sir, about these new ways of
working when they become the norm. I am grateful you took time to talk to us, sir. Appreciate it. Arne Sorenson.
SORENSON: Thank you, Richard.
QUEST: The CEO of -- thank you -- the CEO of Marriott.
Now the Wuhan lockdown ended at midnight, local time. For the first time people can leave the city since late January. Health screenings continue.
On the line now, David Culver, he's our correspondent. He is in Shanghai. He was among the last to leave Wuhan when the lockdown was imposed two
months ago. He joins me now. Now, it's not a full scale reopening all at once, is it?
CULVER: It's important to note this, Richard, and you're right, we were 76 days ago among the last trains to get out there out of Wuhan. What this is,
is not the floodgates opening and everything coming back online business- wise.
What you're seeing here is the easing of travel restrictions for the outbound travel in particular. Now, it is significant because you have
people who have been within the city of Wuhan, who traveled there for the Lunar New Year back in January, and who are looking to get back to work and
were stuck there and couldn't get back on a train or on a plane or in a car because this city shut down.
Now, you're going to see that they are allowed to leave and we're already seeing that as of three hours ago, a little more than that. They've been
allowed to start leaving.
And so what you're going to also see is then companies for example, many of these travelers were told, according to state media, heading to Southern
China, a big manufacture part of Mainland China and they'll be able to contribute then to getting things back online manufacturing-wise in the
industry.
QUEST: David, square this circle for me. I'm hearing lots of -- you know, we're hearing reports that the new cases in China are all imported cases.
So are they still fearful of a resurgence in the virus in China? A second wave?
CULVER: There is major concern over this second wave idea, Richard, and it was interesting listening to us speak with Marriott CEO because he talked
about seeing, for example, occupancy coming back up within Mainland China.
What that is, is folks who are from China, mostly Chinese travelers who are going from place to place and occupying hotels, it is not folks coming in
from other parts of the world. And to that effect, it's because of nearly all foreigners being banned from entering into China.
For example, if I were to leave even though I have a visa, I wouldn't be able to come back in. That's the case for the majority.
The concern is that now you have not only these imported cases, but also Richard, these asymptomatic cases, the folks who are not showing symptoms,
who as these restrictions begin to ease are going to begin to move around a lot more and we saw that even this past weekend, people come together for
picnics here in Shanghai. We saw people going on hikes in Anhui Province. They're starting to get more and more comfortable and that is making some
pretty uneasy.
I mean, for me even witnessing it, you've got a question and wonder, is it all happening too quickly?
QUEST: David Culver joining me from Shanghai. Jim O'Neill is with me. Jim is the Chairman of Chatham House and a former British Commercial Secretary
and, of course, former Chief Economist of Goldman Sachs.
Jim, it's always good to have your perspective. I know, you're probably going to tell me at some point, the uncertainties are so great that it's
difficult to make any prognostications, however, Jim, give me your best guess for how deep and how unpleasant this recession is going to be?
[15:25:07]
JIM O'NEILL, FORMER CHIEF ECONOMIST, GOLDMAN SACHS: Well, it's pretty clear from the business surveys and other bits of data we've seen that is already
as bad, probably worse than 2008. While we have absolutely no idea about is whether it's going to get even worse from here, and if it's not, how bad
we're going to stir these low levels, or whether we can have some kind of V-shaped recovery.
And candidly, it seems to me as we discover a lot more sophisticated forms of social distancing we can have, the very blunt ones we are all using now
is probably going to determine the answer to that.
It's very interesting that the stock markets have recovered quite a bit in the past two weeks now. It seems to me that essentially trading the
infection curb and obviously without very improved news in many parts of the developed world in the past week, and that's probably going to get
better.
So the markets might become less pessimistic further. But, you know, there's a lot to be determined yet based on policy.
QUEST: But on that point, do you think it's wise for the market to be trading the infection curve?
O'NEILL: Well, you know, the market is the market. Markets go from fear to greed, and what we probably heard about a fortnight ago was a very
extensive outbreak of ultimate fear and I have to say that until I started to see some signs of a slowing in the rate in Spain in particular, you
know, we have no idea where this thing can go, so the markets were right to fear the complete loss of everything.
But I think we now know there is a way to get through stage one. I just caught the interview you were doing with your guy from China. What we of
course don't know is how the early countries, particularly the Asian ones can show extensions to the recovery they are showing, but it's not -- it's
not impossible to rule out some kind of V-shaped recovery in my view, but I wouldn't say it with huge confidence, but it's not impossible.
QUEST: I guess -- so if you take the infection curve as sort of one strategy to some extent, then you add in the monetary stimulus and the
Central Banks and the fiscal work by the government, effectively, at least in the developed countries, a floor has been put under the economies for
the time being.
O'NEILL: I will tend to simply say that that is the case. Obviously, not every major country has done the same thing. A lot of European countries
have done something similar. But the specifics, obviously in the states are quite different than many European countries, U.K. included.
But I think that's a reasonable thing to think for the time being. But again, it sort of depends on how long it goes on for the U.K., in my view.
It has come up with a reasonably -- I mean, it's a crazy word to use, but if you're in these remarkable circumstances, a reasonable framework to deal
with it for three months.
But if we started to worry that we will be locked down on this for six months, then I think we'd have a whole set of dramatically bigger and worse
problems. So a lot does relate to the whole issue of testing and tracing and moving to a more sophisticated version of social distancing than the
block one we've all got.
QUEST: Jim, it's good to talk to you, sir. I appreciate you taking time to be here today. Thank you, sir, for joining us. Jim O'Neill joining us now.
The President and his top economic team are meeting with small businesses and the Small Business Administration with the President of the United
States. It's a highly controversial scheme that they put up -- well, the fact that the implementation -- the scheme itself isn't controversial --
the execution has been poorly done and that is controversial.
You're looking at live pictures now of a video conference call that the President is having. We'll talk about that, and others after the break. It
is QUEST MEANS BUSINESS. We are live in New York.
(COMMERCIAL BREAK)
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(COMMERCIAL BREAK)
QUEST: Hello. There's more QUEST MEANS BUSINESS in just a moment. I'm Richard Quest. And let me tell you what we still got to come. We'll be in
Washington. President Trump is in a virtual talks. Well, he's in talks but virtually, you know what I mean, it's a video conference, and with Wall
Street top CEOs on saving America's small businesses, they're talking about the PPP, the Payroll Protection Program.
And passenger numbers are very heavily down. The CEO of Wizz Air will be with us in this half hour to talk about how the company is helping the
national efforts in Hungary and criticizing in some way, the airlines getting help from national governments. We'll find out what he wants in
just a moment. As you and I continue tonight, this is CNN, and on this network, well, the news and facts always come first.
The coronavirus death toll in France is now topping 10,000. The officials say the pandemic there has not yet reached its peak. France has reported
more than 1400 deaths on Tuesday alone, as the largest death toll so far on a daily basis. Japan is declaring a month-long state of emergency over the
pandemic that will impact under half the population that includes Tokyo. It also announced a stimulus package nearly $1 trillion. Infections in Japan
have doubled this week.
And breaking news to bring you on CNN, the acting U.S. Secretary of Navy has submitted his resignation after calling the ousted aircraft carrier
captain, either naive or stupid. Captain Brett Crozier was relieved of his duties after the letter he wrote to his superiors warning about
Coronavirus, and the outbreak on his ship was leaked to the press. It also revealed the audio. The acting Navy Secretary Thomas Modly, calling Crozier
either naive or stupid or guilty of leaking the memo to the media. He has now resigned.
President Trump is discussing the Small Business relief. He's doing it in a virtual conference call with leaders of banks and CEOs. It's a $350-billion
package that is running into some severe problems.
[15:35:02]
Firstly, many small businesses say they can't get online through their bank to apply for it. Secondly, the amount of money involved is limited.
Thirdly, the banks are giving priority to their existing customers and those who've already got loans and won't be enough money. The report is
that Steve Mnuchin, the Treasury Secretary wants to increase it by $200 billion. Lauren Fox is in Washington. It's a very good scheme, Lauren, I've
looked at it closely. It's a very good scheme, but it's been very badly executed.
LAUREN FOX, CNN POLITICS CONGRESSIONAL REPORTER: Well, that's been the concern, both from the lender side, Richard, those who are giving out this
money and processing the loans on behalf of the SBA, and personal business owners who are trying to access that capital. And what I've heard from the
lender side specifically, is they have had trouble uploading the information from these customers to try to actually get the applications
for these loans into this small business administration.
And that system actually shut down multiple times yesterday. So, that meant for a period of time throughout the country, no lender was able to get
online and actually get their customers' information into the SBA queue to actually process these loans. That's significant.
Meanwhile, you have businesses who are sitting on the sidelines waiting, concerned that this amount of money could run out. And this is why you have
seen Treasury asking now for 250 billion additional dollars in an effort to try to shore up this account and send a message, even though all the money
hasn't gone out yet, they want to make sure that small businesses know that the government is going to be there for you.
If you don't get this first batch of money, there's more money coming. And there may be more even after that, Richard, because the perception they
want to create is that the federal government is not going to let businesses just have to shutter because of what has been an unanticipated
pandemic around the world, Richard.
QUEST: But, Lauren, let me ask, was it inevitable? I mean, government programs are introduced all the time. And people may apply in the
thousands, the tens of thousands, maybe even hundreds of thousands, but no system could ever realistically have coped with the shared deluge of
applications. So, is it fair to criticize the administration for a poor rollout of this plan?
FOX: Well, look, I think that lenders and banking business groups, everyone is cognizant of the fact that you're dealing with the Small Business
Administration, typically, they process a little more than $25 billion in loans in an entire year. Now, you're handing them $350 billion and they are
responsible for getting that money out the door in a matter of days?
I mean, that is a significant ask. And that is one of the major stumbling blocks that we've encountered from the Capitol Hill side. You know,
lawmakers are saying look, this was inevitable, but what was our other option? Were we supposed to wait a week, two weeks? That is the difference
between being able to stay open and keep people on your payroll and having to do mass layoffs or potentially even close your small business, Richard.
So this was really a balance between speed versus perfection. As one industry executive told me yesterday, we are literally building the
spaceship as we are launching to Mars. There are a lot of things that are going to have to be worked out about this program, but we're just a few
days in. And obviously there are major technical glitches. Although, I am told from multiple industry sources today that things do seem to be going
better than they did at least yesterday, Richard.
QUEST: I love that line, building the spaceship as we're getting ready to take off to Mars. I shall shamelessly use it. Again, thank you, Lauren,
have a good one. Thank you, Lauren. In a moment, the CEO of Wizz Air joins me, Jozsef Varadi. And the airlines taking on a new role.
But it's also highly critical of those airlines that are being bailed out or some of them in Europe, claiming that is keeping those in business. They
should be allowed to go to the wall. It is QUEST MEANS BUSINESS, we're in New York. Good evening to you.
(COMMERCIAL BREAK)
[15:40:00]
QUEST: There is hope, there's always hope. And indeed, as you can see, the green shoots. Now, we haven't got green shoots of recovery yet, but on the
trees here in New York, we certainly got the green shoots of spring starting to come in. It's hopeful, when you see them, it's hopeful. Seasons
change and we will get through this.
Now, Lufthansa is already making plans for how the airline will be after the crisis. It's permanently reducing its fleet by some 21 planes by
closing the Germanwings subsidiary. Now, Germanwings was de facto, almost gone anyway, it was part of Eurowings, but it is now being shut as a name.
It's also cutting capacity at hubs in Frankfurt and Munich. The Hungarian low-cost airline, the European airline East European Wizz Air switching
focus. It's bringing Hungarians back home repatriation flights, and it's bringing in medical results from China and it's bringing in people in from
the United States. It's involving the airlines first transatlantic flight.
Jozsef Varadi is the CEO of Wizz Air. He joins me now from Budapest via WebEx. Jozsef, good to see you, good to talk to you. Your airline, not
flying passengers at the moment, commercial buses but well and truly involved in the Hungarian relief effort, isn't it?
JOZSEF VARADI, CEO, WIZZ AIR (via WebEx): Good evening, Richard. As a matter of fact, we are still flying around five percent of our capacity for
shuttle passenger services. And on top of that, being engaged with new lines of businesses, as you said, we are flying Chinese medical cargo,
medical appliances to Hungary, but not only Hungary, also to all countries in Europe, and at the same time, we've done quite a number of repatriation
flights. One of them which was very remarkable who is bringing Hungarian, Slovakian, and Slovenians from the United States to Europe.
QUEST: Are you doing these flights -- I mean, when I say on a commercial operation, I don't mean necessarily making money. But are you doing them on
behalf of the Hungarian government?
VARADI: Yes, we are doing it on behalf of the Hungarian government. I think they are just recognizing our role as an airline in this very circumstances
that we need to do what's nice for our country, what's nice for our people here, and people are in need of medical aid and this is what we try to
contribute to.
QUEST: You've been critical of bailouts for other European carriers. I mean, look, you know, I'm not being unduly flattering, Jozsef, when I say,
you run an excellent airline, you're very, very stern on costs, and you're one of the most profitable, and you have one of the lowest cost basis. Are
you at risk of seeing your competitors being bailed out?
VARADI: Especially here's the problem. I think the states should be getting involved to try to get resolution on the -- on the situation by easing some
of the costs associated with the operation of the airlines, like infrastructure costs, airports, and navigational charges also should be
half will be the employment costs because simply, as airlines are unable to fly in their schedule, people have become unproductive and governments can
help allies out by easing their costs.
[15:45:19]
But when you are (INAUDIBLE) airlines, that's kind of distorting the market. And it's in a way, unfair because some airlines have been managed
for hard cash. I think we are one of those businesses and others, you know, have been blown out by the wind as Coronavirus broke out, and as a result
now they are begging for money from governments and governments are aiding them. And that distorts the market, and I think that is unfair.
QUEST: Have you had to call on your cash lines? Have you drawn down your lines? So, I know you've got a very healthy cash buffer to start with, but
are you going to need more money?
VARADI: Going into Coronavirus situation, we had 1.5 billion euros of free cash. And we have pretty much preserved that cash position to date. And we
believe that even if we are grounded for 18 months, we are still a survivor and we are still in business.
So, certainly, our liquidity is strong enough to take us through this crisis. And as a matter of fact, I think we're going to be emerging as a
better business as a more formidable competitor by the end of the crisis. So, I think we can leave our liquidity, of course, we are considering
additional liquidity, but more like as an insurance policy.
QUEST: And then, finally, the idea -- one of the interesting things I find about looking at what you're up to, is you're still proposing to take
aircraft. It's almost as if -- and I don't mean this in a nasty way. But you know, never waste a good crisis. You're putting yourself in a position
and you're still talking about expansion, and I find that unusual.
VARADI: It is unusual because you're going to be seeing the industry sort of going backwards. But be -- if you're going to be one of those few
airlines, which actually will be going forward and we are looking at this situation as an opportunity for our business. I mean, let's not forget, we
are the lowest cost producer in a commodity business. And as such, I think we have a unique position to step change our presence in the marketplace,
because simply in good times, everyone sort of shines but in difficult times, you will really see the difference.
And I think we have a position here where we are going to exploit, and we are still looking at growing the business and taking advantage of the
situation and we will see a lot of cheap SSBBC (ph) much more access to our airport capacity. We see a lot of demand on (INAUDIBLE) airlines simply
because they are not in a financial position to do so. And I think that gives us the opportunity to step up and this is what we are planning on.
QUEST: Good to see you, sir. Thank you. Chief Executive Wizz Air.
VARADI: Thank you.
QUEST: This is QUEST MEANS BUSINESS. We're live in New York.
(COMMERCIAL BREAK)
[15:50:00]
QUEST: FIFA is urging the teams and players to show solidarity in football. The English Premier League, the players have rejected a blanket pay cut,
claiming it would hurt the National Health Service. Let's go to our Voice of the Crisis for tonight. We're showing you the entire range by the way
industry and business. Danny Macklin is the chief executive of Leyton Orient Football Club. It plays an English League Two club in London. Danny
is on the line now.
You don't really have that problem of whether it's pay cuts for players or whether you're laying off staff. You have a much deeper problem in a sense,
don't you? Keeping the work and all the workers on. How are you balancing that at the moment for Leyton Orient?
DANNY MACKLIN, CHIEF EXECUTIVE, LEYTON ORIENT FOOTBALL CLUB: Oh, hello there, Richard. It's -- it is a balance what we are, we're a family, we
make sure we treat whether whatever part club you are, whether you're a buyer, whether you're a board director, member of staff, we all treat
everyone the same.
And we're trying to give as much comfort as we can in these challenging and difficult and unprecedented times, as much as we can to every single one of
our stakeholders and with our board with the experience that they've got and the (INAUDIBLE) they want to make sure we give as much comfort as we
can, but (INAUDIBLE) in March and April but with the support of the, you know, U.K. government (INAUDIBLE)
QUEST: Right. So, after the -- after the scheme, I mean, there's no sign of football being played anytime soon. And you could end up with empty stands
and a no matches. What do you do? What do you do, Danny, as this goes -- looks forward? What's your plan?
MACKLIN: Yeah, we're missing football (INAUDIBLE) London, there's no doubt about it. What we're having to the moment is be patient, about the same
time plan for every scenario, that might be using our streaming services behind closed doors and appeal to our fans as well as fans across London,
across the world, as well as the ideal scenario (INAUDIBLE) in front of a packed stadium again, and at the moment, all we can do is scenario plan.
Look after the welfare of all of our stakeholders, as I said, and it is -- it's very difficult times, but, yeah, first and foremost, the health and
safety and the wellbeing of all of our family. And you know, we've got an awful lot of people in there that that will be praying that we can get
active football in a safe environment as soon as possible.
QUEST: The fans, of course, want the games when they can be played safely. Are you feeling the weight of responsibility for your employees, for your
players, for your fans, and so many different constituents looking to you for to get the game back up again? Do you feel the weight of
responsibility?
MACKLIN: I think that's on all of our shoulders. It's -- you know, we're working very closely with organizations such as the AFL Professional
Football Association, the League Managers Association, as well as all of our board to make sure that we're doing everything we can to think outside
the box and be creative (INAUDIBLE) how we can come out of this and thrive in it. But first and foremost, let's focus on the priority of the wellbeing
of all of our staff, and all of their families and friends.
QUEST: Good to talk to you, sir. We'll come and watch a match when playing starts again. We'll be there to watch. Thank you joining, Danny Macklin,
with that.
MACKLIN: Thank you, Richard. Okay.
QUEST: Thank you. Voice of the crisis, an essential part of our coverage. Those 3M, well, that got bashed by the president and now it seems to kiss
and make up. 3M has agreed to provide over 100 million masks and various medical supplies. Clare Sebastian is with me for that. Clare, this was a
really nasty, the President made some very unpleasant comments about 3M. So, how's it been settled?
CLARE SEBASTIAN, CNN INTERNATIONAL CORRESPONDENT: Well, in the President's words, Richard, he says it's ended happily with 3M. The deal is as follows,
3M is going to import more masks from its factory in China, a total of 55 and a half million every month for the next three months. They had already
agreed with China they'd be able to import an extra 10 million, so this ramps that up quite significantly.
In addition, and this was the big sticking point for 3M when Trump invoked the defense production act last week was that they were worried it would
prevent them from exporting from the U.S. to countries like Canada and Latin America which rely on their masks. They are the primary provider.
They were worried that would lead to humanitarian issues in those countries, particularly for medical workers.
[15:55:09]
So, they have said they will be able to continue doing that. They said that they worked with the administration to ensure the plan does not create
further humanitarian implications for countries currently fighting COVID- 19. So, more imports, Richard, and it looks like 3M will be able to continue to export, as well.
QUEST: Okay. So, related to this, is the President currently having any arguments with any companies at the moment?
SEBASTIAN: (INAUDIBLE) I haven't seen anyone being sort of shut down via his Twitter feed today, Richard, which tends to be how these things go. We
saw the similar pattern with G.M. heavily criticized on Twitter, then they invoke the Defense Production Act to try to get them to produce more
ventilators, as well. And that's really been the similar pattern with 3M. I think it's interesting, a senior administration official did tell Jeremy
Diamond that The Defense Production Act made a significant difference here, that it led to a change in attitude at 3M. Really brought them to the
table, really led to this deal.
So, it's interesting to see that act being employed. But also, Richard, I think, a great benefit that it avoided the level of protectionism that
we're seeing increasingly around the world that you and I have talked about multiple times that could actually lead to less of this critical PP
equipment being available overall.
QUEST: All right, Clare Sebastian with the 3M story. I'm going to leave you with a look at the markets for tonight, and how they are trading. The
markets, well, it's been a very strange sort of day overall. We are in a range, whether we're up or down on any given day. That's really a matter of
dispute on any given day. I'm Richard Quest in New York. Whatever you're up to in the hours ahead -- the bell is her -- I hope it is profitable. I'll
see you tomorrow.
(COMMERCIAL BREAK)
ANNOUNCER: This is CNN Breaking News.
JAKE TAPPER, CNN HOST: Welcome to THE LEAD, I'm Jake Tapper. The Coronavirus battle continues in what could be one of the worst weeks in the
United States for this pandemic. Right now, there are more than 81,000 reported deaths worldwide from Coronavirus and 12,021 of those just in the
United States alone.
At this time last week, the number of deaths in the U.S. was 3,662. The number of reported cases around the world now more than 1.4 million, that's
globally, about 383,000 of those are in the United States, though, of course, there continue to be major questions about the availability and
accuracy of Coronavirus tests throughout the world and in the United States. And of course, there are continued questions about the reliability
of any of the data coming from places such as China, Russia, or Iran.
END
