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CNN Live Event/Special

World Business Today

Aired January 28, 2011 - 04:00   ET

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

PAULINE CHIOU, CNN ANCHOR: Hello and welcome to WORLD BUSINESS TODAY. I'm Pauline Chiou at CNN Hongkong.

CHARLES HODSON, CNN ANCHOR: For CNN London, I'm Charles Hodson.

JOHN DEFTERIOS, CNN ANCHOR: And coming to you live from the World Economic Forum in Davos, I'm John Defterios. The top stories on Friday, January 28th.

CHIOU: Egypt is on edge as the country reels from the biggest anti- government uprising in decades.

HODSON: Spain's job lines just got longer as unemployment reaches 20 percent again.

DEFTERIOS: And as inflation pushes commodity prices higher, I'll ask OPEC's secretary general if it plans to pump out more oil. The World Economic Forum in Davos into its third day and now the delegates are getting their teeth into some big issues.

In the next hour, attendees will hear from British Prime Minister David Cameron and U.S. Treasury Secretary Timothy Geithner. The future of the euro has been high in the agenda as many European countries continue struggle with crippling debt.

Some economists here say the European currency is in jeopardy and question how many more bailouts the euro zone can handle. But the euro has some heavy weight defenders, not the least European Central Bank Chief Jean-Claude Trichet who is rallying governments around the single currency. He spoke to my colleague Richard Quest.

(BEGIN VIDEO CLIP)

JEAN-CLAUDE TRICHET, PRESIDENT, EUROPEAN CENTRAL BANK: More needs to be done on an individual level, all European countries, all European countries have to do the job. They're all committed to do the job and extraordinarily important that they all are ahead of the curve. On top of that we call for a very significant reinforcing of governments.

(END VIDEO CLIP)

DEFTERIOS: And Greek Prime Minister George Papandreou, whose country has been at the center of Europe's sovereign debt crisis also says European governments won't give up on the euro.

(BEGIN VIDEO CLIP) GEORGE A. PAPANDREOU, GREEK PRIME MINISTER: They think some months ago where there was a discussion of two Euros or a break-up or some countries leading, I think that discussion has ended and we have all the strong will to defend the euro and do what is necessary to defend the euro.

(END VIDEO CLIP)

DEFTERIOS: Key to Europe's fortunes is the price of oil which is high at the moment. Coming up, I'll be talking to the OPEC Secretary- General Abdulla El-Badri. So stay tuned for that.

HODSON: Well, let's hear how European stock markets are reacting after very, very scant gains on the Dow overnight. We are actually seeing again a little bit of profit taking off by about two thirds of a percent in the case of the London FTSE.

The miners are being hit quite hard. Lower metal prices hitting (inaudible). Paris CAC off by about a third of a percent. Disappointing news on its breast cancer drug and some hopes definitely dashed there and Sanofi Advantis was off by more than 4 percent last times I looked. And Zurich SMI, which was hit hard actually in Thursday's trading edging down very slightly. DAX led up by BMW actually. Goldman Sachs was put it on a buy list.

Let's have a look at the leading index in one of the Europe's most troubled economies and that is Spain. So here's the Madrid Ibex 35. Investors are looking for signs of recovery in that country. We'll be taking out the latest unemployment numbers. They show that 20.3 percent of Spaniards are now out of work. I guess that can't be a surprise because we are seeing the market moving up as against other European markets. Spanish government though were hanging tough, raising their retirement age and cutting back on pensions to try to shore up the country's finances.

And by the way, that is a rise of half a percentage point from the third quarter unemployment, which we saw edge down below 20 percent. Now, in terms of the euro, we have seen similar determination to that of the French president Nicolas Sarkozy at Davos on Thursday.

Mr. Sarkozy promised that he would never give up on the euro, even though economists have raised concerns that Europe's debt crisis could spell the end of the single currency.

(BEGIN VIDEO CLIP)

NICOLAS SARKOZY, FRENCH PRESIDENT (through translator): Never and listen to me carefully here. Never will we turn our backs on the euro. We will never drop the euro or abandon the euro.

(END VIDEO CLIP)

HODSON: So for a currency that some people are saying won't be around for much longer, it is doing quite well. It's risen just over 3 percent against the dollar in the past month. What's behind that is the fact that the idea that the ECB might be forced to raise interest rates in the euro zone.

Inflationary pressures are clearly building up there and in other countries. So we're looking at -- it's pretty flat against the greenback today at 1.3690 up very slightly I believe.

The dollar actually is gaining against all of these currencies and also against the dollar and the yen down just a shade 82.65. Pauline?

CHIOU: All right, Charles. The yen plunged a little bit and then recovered during the session and here in Asia, most of the markets finished lower led by Tokyo. The Nikkei lost more than 1 percent by the close. It was the first opportunity for investors to react to Japan's recent sovereign debt downgrade.

Standard & Poor's cut its rating from AA to AA minus on Thursday saying Japan will most likely struggle with the fiscal deficit for several more years. The Hang Seng in Hongkong and ASX 200 in Sydney both lost nearly one percent. Resource stocks were lower in Australia.

Now the Shanghai composite gained just slightly, about four points despite a lagging performance by some property stocks and those stocks lagged because a new residential property tax started today in both Shanghai and Chung Ching. The taxes will range between half a percent to more than 1 percent for luxury homes as China tries very hard to rein in soaring real estate prices and speculation.

The U.S. markets managed to tick higher on Thursday, pushing the Dow and the S&P to their highest levels since the summer of 2008. The Dow just into the positive range, but basically flat there and earlier in the session, it did hit the 12,000 mark again. The Nasdaq gained more than half a percent and the S&P 500 added a quarter of 1 percent.

HODSON: The tensions are ramping up in Egypt as police and protesters prepare for what is expected to be the biggest day of demonstrations there yet. Egypt has been rocked by violent, anti-government protests since Tuesday.

Many people are angry over President Hosni Mubarak's economic policies. The turmoil is also taking a toll on the markets. Trading on Egypt's benchmark exchange was suspended briefly on Thursday after the Cairo market sank for a second straight day. It lost more than 10 percent by the close and it's down 20 percent for the year. The market, of course, is closed on Fridays.

Well, the Egyptian Nobel reform activist has also returned to Egypt to take part in protests today. A Facebook group puts the total number of intended participants at more than 80,000. Well, our Frederik Pleitgren is following it all from Cairo.

So Fred, we understand that the government is doing what it can to cut communications and stop these protests and arrested large numbers of people, right? FREDERIK PLEITGEN, CNN CORRESPONDENT: Certainly has, Charles. Arrested was one of the leaders of one of the largest opposition groups here in this country, the Muslim Brotherhood. Apparently, we have learned that police raided his house at around 2:30 a.m. this morning and arrested this gentleman.

However that has not so far derailed the plans of the Muslim Brotherhood, which is the largest opposition group here in this country to participate it says in the protests that are going to be happening today.

If you look around Cairo today, you can see there is a lot of police movement. You can see a lot of vans with riot police in them already moving down the streets seemingly getting ready for what many believe to be a big and possibly also a very violent day here in this country.

Right now, it's still fairly early here. You don't have gathering here. We are looking for an hour from now, after Friday prayers, we believe that these demonstrations are going to start in central Cairo. You're absolutely right. The Egyptian government is trying to also seemingly stop communications here between the protesters.

We are seeing a lot of internet access being blocked and 3G network appears to be blocked. There's only one small provider of internet that is still up called "More," which is still actually able to function.

That's mostly used by the banking system here in this country. Otherwise, it is very difficult and the past couple of minutes, we have been also seeing cell phone network deteriorate considerably so it's quite difficult, Charles.

HODSON: What do we hear about the leadership? As far as we know, where is Mubarak? Presumably he is still in Cairo. Are we hearing anything in an official level from the government at all?

PLEITGEN: Well, as far as we know, yesterday, Hosni Mubarak was in Sham El Shake. His son, however, was here in Cairo. There was also a press conference yesterday by the ruling party here in Cairo where it sort of said that it was willing to talk to some of the protesters, but also, felt that most of these protests were coming from a couple of what they call troublemakers.

So it didn't seem as though the government was really willing to negotiate with these people. It's going to be very interesting to see how all of these stuff pans out today, how heavy handed the security forces. There are going to be on the street. We'll certainly see that later as the day progresses, Charles.

HODSON: OK, Fred. Joining us there live from the Nile, actually, hazy Nile there in Cairo. Many thanks to you. John --

DEFTERIOS: The rising cost of commodities is a major focus and a major concern here at the World Economic Forum this week in Davos. The worry is rising. Commodity prices could undermine the global economic recovery. In fact, the head of Kuwait's petroleum corporation said here at Thursday that OPEC may have to increase production to rein in prices.

Although it just recently pulled back the cost of crude reach almost $99 a barrel just two weeks ago. OPEC Secretary-General Abdulla El-Badri joins me live here in Davos.

Look at the markets and the plans for OPEC in the future. Good to see you again. Thanks for joining us on the program. We are entering an unusual phase where in the front end of a recovery, although the demand from China is strong, prices are above $90 a barrel. Is this the -- can I call it a new normal for prices?

ABDALLA SALEM-EL-BADRI, SECRETARY GENERAL, OPEC: You know, now we are talking about Brent. Brent is not usually -- doesn't represent the crude oil. We used -- we used the WTI. Now we are coming back to Brent. I don't know why you are talking about Brent.

DEFTERIOS: OK, but --

EL-BADRI: WTI is $85 now. Brent is $90. So Brent does not represent the whole crude.

DEFTERIOS: So your view is you're going to still use WTI, West Texas, as a benchmark?

EL-BADRI: Yes.

DEFTERIOS: OK, so even so, $85 a barrel you'd say, Secretary-General, is a high price at the beginning of a recovery, a fairly sluggish recovery in the United States and Europe. Wouldn't you say that's a fairly high price?

EL-BADRI: No. We are producing 29 million barrel a day. We have 6 million barrel a day excess capacity. We have a stock of 60 days. So, we have even if loading storage of 62 million barrel, so there is a lot of oil in the market. There is no shortage.

And this is my -- this is our problem at OPEC because the ministers there are asking, but we don't see any shortage. OPEC would interfere when there's a shortage.

DEFTERIOS: OK.

EL-BADRI: Physical shortage in the market. Interfere in 2004, 2005. When we see there is real shortage. We don't see it unfortunately.

DEFTERIOS: Let me clarify if I can.

EL-BADRI: No. When we see a shortage, we will act.

DEFTERIOS: OK, very good. So you are not looking at the price so much, that won't prompt you to put more production on the market. You're looking at the five-year running average and right now, there's oil in the market to clarify what you're saying. EL-BADRI: Excess capacity and stocks, 60 days. Sixty days is a lot of days, usually 53 days average. That's why I'm saying there's no shortage whatsoever.

DEFTERIOS: OK, the international energy agency as you know about 10 days ago said that this price could undermine the recovery in the G7 or the industrialized countries. Do you agree with that premise?

EL-BADRI: You cannot look at the barrel today and see 85 or 95 or 96. We have a high price, let us open the valves. To open the valves you need two, three months and when you open the valves and there is nobody's buying it so you are reading problems. You cannot go back and close it. We have to see a real shortage in the market.

DEFTERIOS: OK. One final question because we're a little bit short on time. Is it the low interest rate environment right now, which is prompting all that hedge fund money to go into the commodity money and drive in say an extra 10 percent to 15 percent on the price of oil today would you say?

EL-BADRI: Yes, some of it because you have the stimulus packages. Money is in the banks. People go to the banks. Borrow money without any interest whatsoever.

DEFTERIOS: Right.

EL-BADRI: And then instead of investing in very -- in a very beneficial product that will take some people from unemployment instead they go to commodities and they buy any commodities. You know?

DEFTERIOS: OK, one final question for you. We saw a daily demand of 2.7 million barrels a day, pretty high for 2010. What's your best estimate at this stage and the research within OPEC for daily demand growth for the year?

EL-BADRI: For 2011 -- forget now about 2010.

DEFTERIOS: Yes, of course.

EL-BADRI: Let's say about 2011, 2011 our forecast is 1.2 million barrels a day increase. We are very close as far as increase in demand.

DEFTERIOS: OK, so decent.

EL-BADRI: We are ready. We have excess capacity. If the market need it, we will, for sure.

DEFTERIOS: OK, good to see you again.

EL-BADRI: Thank you.

DEFTERIOS: Thanks for joining us on the program. Well, the political unrest in the Middle East and North Africa is also a prime concern here at Davos. Coming up, I'll speak with the International Monetary Fund specialist on the region about foreign investment there and what reforms might help ensure long-term stability. Stay with us.

(COMMERCIAL BREAK)

DEFTERIOS: People attending the World Economic Forum here in Davos, Switzerland, are keeping a watchful eye on the huge street protests in the Middle East and North Africa.

The demonstrations appear to be primarily about economics. Millions of young people are without work, and therefore, right now at least without hope. So what's the prospect for foreign investment and reform to encourage jobs and growth in the future?

I'm joined by Masood Ahmed, he's director of the Middle East and Central Asia for the International Monetary Fund. It's great to have you on the program. Thanks for joining us.

MASOOD AHMED, DIRECTOR, MIDDLE EAST AND CENTRAL ASIA INTERNATIONAL MONETARY FUND: Thank you, John.

DEFTERIOS: I'd like to get a very honest assessment because many people don't want to talk about this, but even a personal assessment of what you see unfolding right now in North Africa. You have been a proponent of reforms for years, asking to reform quickly, structurally to get job growth there. Is that what's really at the heart of this and the reason it's moving so fast?

AHMED: I think the situation obviously of each country is different, complicated, but there is a common feature running through them and I think the common feature is that in all of these countries, growth has been too slow to provide enough jobs for a young and rapidly-growing population.

As you said, young people get out of school, get out of university, they come into the marketplace. They can't find jobs. They don't see a future. So the key for a lot of these countries now is to accelerate the process of improving their business environment that will bring in foreign investment.

And at the same time to look and see whether the skill set they're giving their young people in the schools and colleges is appropriate anymore. A lot of these kids were trained to do public sector jobs.

DEFTERIOS: This has been a discussion for a long, long time. It's a mismatch on the education system into the jobs, but let's take both Tunisia and Egypt as examples here. The last five to seven years, even Tunisia even longer, 10 years of reforms, but some say we didn't go far enough. We reform, reform, but don't touch me at the board room level, the president's level. They didn't go that 100 percent. They got about 75 percent. Is that fair?

AHMED: I think that's right. In Egypt, for example, they've gone through in the mid-2004, '05 set of reforms and you begin to see the effect. You see investment picking up. You see growth accelerating. Just not fast enough.

Tunisia, same thing, relatively high rates of growth. The macro numbers look good. When you go underneath and start looking at the business environment, you discover that it's not the same for everybody to start up a business.

If you're connected, you can get your business going faster. So I think the next phase is really to generalize the process of reform to make sure you or I or anybody else can start up a business can do so. Make sure that the banks are providing financing to everyone not just to a few and make sure that foreign investment that wants to come in could come in and invest, and also look at barriers to trade across the countries of the region.

DEFTERIOS: OK. We don't have a huge amount of time here. A very honest assessment, what happens next with the changes going on, can they keep up the economic reforms and actually reach those at the bottom of the ladder, you know, 20 percent, sometimes 40 percent that are still in poverty, if you have this much chaos at the top level now with all this change?

AHMED: I think there is going to be a period of transition right now and no doubt they'll have an impact also on economic growth for the year, which probably a little bit lower than the 4.5, 5 you're projecting. But I think the imperative now is to accelerate reforms because without that, the problem isn't going to go away.

DEFTERIOS: OK, just leave it there. It's good to see you again.

AHMED: Thanks.

DEFTERIOS: Thanks for joining us on the program. We're going to turn our focus back to the energy sector again. I'll be taking closer look at the sector with chairman of oil giant shell about the competition and his expansion plans for the near future. Stay with us.

(COMMERCIAL BREAK)

CHIOU: Welcome back to WORLD BUSINESS TODAY live on CNN.

HODSON: Earlier on in the show, we saw Spain's latest unemployment numbers up by half a percentage point and more to 20.3 percent overall. So that makes it obviously a huge problem as far as the economy is concerned.

CNN's Al Goodman is on the line from Madrid. This is quite a serious setback. I mean, the labor market is bad in Spain, very bad, and getting worse, Al.

AL GOODMAN, CNN CORRESPONDENT (via telephone): Indeed, Charles. There had been a bit of a breather in the third quarter of 2010 when the rate dipped below 20 percent for the first time during its crisis, but now, it's back in force.

It's nearly 4.7 million unemployed that's highest absolute number of unemployed that we've seen apparently since records started being kept at the Spain's transition to democracy back in 1976.

Now in terms of the rate, 20.3 percent rate, that's highest in 13 years so very bad news for the socialist government, which - they see the light at the end of tunnel. Now, this comes at a time when there has been relatively good news this week for the government and the unions and overall the feeling in Spain as the government and the unions reached a deal.

And the cabinet at this hour is approving this as a decree law going to parliament to raise the retirement age from the current 65 to 67 that will be less pensions for people down the road, but it's seen as something that is showing the world that Spain is trying to get very serious about their finances.

Also, the government has put new requirements in for the savings banks, which have been troubled. They have been a lot of local political control at the savings banks requiring them to have a lot more assets, a lot more capital and seen as another sign to the world, to the financial markets internationally Spain trying to get serious. Those are two good pieces of news for the government generally according to analysts across the board and then this horrible news on the job front. Charles --

HODSON: OK. Al Goodman joining us live from Madrid. Thank you very much. Pauline --

CHIOU: Well, stubbornly high unemployment is also plaguing the United States and a new study shows just how damaging it's been for Americans out of work. It found that more than 30 percent of the 14 million Americans who were unemployed in December have been jobless for more than a year now. That's more than 4 million people, 25 percent increase over the previous year.

HODSON: Well, still ahead on WORLD BUSINESS TODAY, from green power to black gold, the talk in Davos is being heavy on energy. Coming up, chairman weighs in.

CHIOU: And the cost of fueling up hit airlines where it hurts last year. As part of our coverage of the new reality, we'll find out what airlines can expect in 2011.

(COMMERCIAL BREAK)

CHIOU: Welcome back to WORLD BUSINESS TODAY. I'm Pauline Chiou at CNN Hongkong.

DEFTERIOS: From the World Economic Forum in Davos, I'm John Defterios.

HODSON: And I'm Charles Hodson at CNN London. Let's take you straight over to the markets again. It's 92 minutes into the trading day, Friday trading and look and see where they stand at the moment.

We are seeing a little bit of edging back there, particularly in the case of London FTSE off by two thirds to three quarter of a percent, led down by the minus lower metal prices are hurting BHP Biliton and Xetra Dac. Paris CAC off by a third of a percent.

Sanofi Advantis is off. Disappointing news there on a breast cancer drug is clobbering the stock of by 4 percent last time I looked. Zurich SMI after a bit of drubbing actually and certainly some selling on Thursday, a little bit - faring a little bit better, off very slightly and same story for the Xetra DAX.

CHIOU: Well, Charles, here in Asia, most of the markets finished lower led by Tokyo. The Nikkei lost more than 1 percent by the close. Standard & Poor's cut Japan's sovereign debt rating from AA to AA minus on Thursday saying Japan will most likely will struggle with the fiscal deficit for several more years.

The Hang Seng in Hongkong and the ASX 200 in Sydney both lost nearly 1 percent. The Shanghai Composite actually gained slightly despite a lagging performance by some property stocks.

And let's go now to John again in Davos. And John, I'd like to get your take on what's going on in Japan. It made big news here with the downgrade by Standard & Poor's. Exporters fell. Banks and financials fell. The yen fell and then regained a little bit. Is this something that they're talking about there at Davos?

DEFTERIOS: Not particularly, actually, Pauline. Traditionally, as Charles knows, there's not a big presence here by the Japanese delegation at Davos. For example, from Asia, it is the South Koreans and the Chinese dominating even though there's not a lot Chinese government officials, the delegations, the largest they've ever had.

But I would put it in another category right now, Pauline, and that is, this financial repression discussion we're having within the G7 that we could have a long period of very sluggish growth that lost decade we have talked about in Japan over the last 10 years likely to continue because of the debt levels that we see both in the U.S. and Europe.

Well, here in Davos. I have been able to pry Peter Voser away from forum discussions to talk about the direction of the energy and oil sector. He, of course, is the chief executive officer of Royal Dutch Shell.

I started by asking him something that's a big conversation in the halls of Davos this year, the so-called new normal with prices around $90 a barrel.

(BEGIN VIDEO CLIP)

PETER VOSER, CHAIRMAN, SHELL: There will be a lot of supply coming on next few years. We have still OPEC production shut in, but on the other side, you are right. Likely China and India driving the demand side. I think it's too early to say what's the new norm, but I think OPEC has calculating 70 to 90 and we are 50 to 90. I think that's the range where I see it long term.

DEFTERIOS: A $100 a barrel in 2012. We see a full stage recovery unrealistic then is what you're saying? VOSER: No, I'm not saying it's unrealistic. I think it can happen, but that's not the way we look at long-term forecasts in our business. But it can happen depending really on how fast the recovery will go in these energy-hungry emerging markets at this stage.

DEFTERIOS: It's fascinating. During the recession you really revved up spending, $30 billion of capital investment to be ready for the recovery. How that positioned you now in terms of additional production coming online?

VOSER: It positioned us very well. We will actually have 13 projects coming on stream in 2010 and '11, which delivers us 11 percent growth if you compare to '09 in terms of production. So we are really going into the harvesting period now, which positions us well to delivering to our demands, gross, which is going to come.

DEFTERIOS: What are the new frontiers for you where you're looking? Because it's sometimes more expensive to go into Brazil, offshore, West Africa, the field in Kazakhstan, which is a challenge for the gigantic field. Where else are you looking right now for new finds?

VOSER: For new finds, I would say Australia is key for us. We are very good expirations success there. In the Gulf of Mexico, we have good expo ration success and obviously you mentioned some areas, but Qatar for us is very important. We have two major projects coming on stream there. So we are concentrating at the moment across the world in five to six countries and we have got good prospects there.

DEFTERIOS: There's an interesting trend emerging in the business right now. The international oil companies such as yourself or Exxon Mobile and then national oil companies like a Petronos, Petro China, the major players, Qatar Petroleum.

When do we get to point the national oil companies will compete head to head with you? Right now they are partners, but when will they nudge you out because they have their own cash?

VOSER: Yes, I think they're competitors today. That's fine. We are used to competing in the market so through our technology, innovation, our brand we can compete but we have more than 20 of those partnerships already, some very international partnerships, as well. And this has been part of the business model for last 20 years so I think it is what it is and we'll just deal with it.

HODSON: Well, Peter Voser there, the boss of Shell and one wonders, actually, how long it will be before the ripples from Tunisia and now Egypt do affect the oil company's operations in the Far East.

But meanwhile, what is the buzz if you like on Egypt? Does Davos think that Mubarak is on his way out, John?

DEFTERIOS: Well, I tell you, it's on a knife edge, Charles, to be candid, but one thing we didn't talk about in the last few days because of all the protests down there. This government is very predictable for business. The current president and this discussion of a transition to his son, this was the plan for the business community investing in the market of 80 million consumers with growth of 5 percent to 6 percent.

And now as we discussed on Richard's show last night, you speak to some bankers saying it's a coin toss. We don't know which way it will go. Today will be a very good indicator of the public unrest and the public feeling well beyond Cairo.

People coming from the suburbs on this Friday so a lot to talk about, in fact, on "MARKET PLACE MIDDLE EAST" following WORLD BUSINESS TODAY, we're going to have the central bank governor of Saudi Arabia, Tony Blair and a full panel of business leaders looking at Egypt, Tunisia and throughout the Middle East and North Africa. Charles --

HODSON: John, thank you very much. John Defterios, live there in Davos, of course. In Davos this week, the focus on organizers call the new reality, that's the name of this annual meeting. For the airline industry that could mean the rising cost of doing business from in-flight meals to fueling up.

As part of the continuing Davos coverage, CNN's Aisha Dervy, he looks at what airlines can expect in 2011.

(BEGIN VIDEOTAPE)

AISHA DERVY, CNN CORRESPONDENT (voice-over): The end is in sight, but there is still a long way to go before the aviation industry can start to celebrate and emerge stronger. The last two years have been difficult riding out the economic storm that saw airlines spiral into debt.

Keeping costs down and saving wherever possible has paid off. Profits in 2010 beat expectations but the total of $15.1 billion. Even so, the International Air Transport Association (IATA) forecast that profits this year slip to $9.1 billion.

GIOVANNI BISIGNANI, DIRECTOR GENERAL, IATA: Good numbers but not enough for an industry that has revenues of $560 billion. This is 2 percent margin. It's peanuts. We are not a charity association. You have to make money and what do we see in front of us? Some clouds.

DERVY: The biggest threat to economic recovery is rising fuel prices. Hedging can be a useful profit protection tool. The Center of Global Energy Services recommends a rolling hedge of 30 percent to 40 percent.

LEO DROLLAS, CHIEF ECONOMIST, CENTRE OF GLOBAL ENERGY SERVICES: The Saudis are getting a little bit nervous from what we understand about the prospects of the global economy with $95 oil the plus and rising to 100. They're getting nervous.

They don't really need the price to go that high to fulfill their obligations this year. So they might release more oil and allow the price to drift down again to I think around $80 a barrel. Don't over hedge because you might get a pleasant surprise as it goes -- as the price goes down.

DERVY: One sure bet is there's safety and profitability in numbers. We'll see more consolidation this year as the survival strategy where a smaller or struggling airline can slot into a bigger family.

SIMON CALDER, TRAVEL EDITOR, THE INDEPENDENT: What's really exciting is we have now three big, heavyweights in Europe. Lufthansa, the largest, of course, which is recently being -- sweeping up all the smaller carriers that it can, Air France, KLM and BA combined with Iberia to increase the scale and to increase their muscle. You need to have fewer, bigger airlines if the aviation industry is going to be in sensible shape for the future.

DERVY: After a two-year hiatus, there is optimism that airline operating cash flows will come full circle and get back to pre-crisis levels by the third quarter. With passenger demand steadily rising, this may be the break the industry's been hoping for. Aisha Dervy, CNN, London.

CHIOU: And that's it from Davos for the time being, but we'll have more from industry leaders at the World Economic Forum and in just a few hours, CEO Paul Walsh joins us WORLD BUSINESS TODAY that's at 9:00 a.m. if you're New York, 10:00 p.m. here in Hongkong.

And Bill and Melinda Gates talk to "QUEST MEANS BUSINESS." That's 8:00 p.m. in Berlin, 7:00 p.m. if you're watching from London.

Now before we wrap things up, a quick preview of what's coming up later on CNN. Taiwan-based next media's animated spin on real news events are a viral sensation on the internet. You might remember that Tiger Wood's video.

Well, now CNN's Christie Lou Stout and new stream get the animation treatment. Meet the man behind it all. Jimmy Lie of Next Media tell us why and he does it that's tonight on "NEWS STREAM" right here on CNN.

And that is all for WORLD BUSINESS TODAY. Thanks for watching. I'm Pauline Chiou at CNN, Hongkong.

HODSON: And from CNN, London, I'm Charles Hodson. Stay with CNN for "Marketplace Middle East," where the turmoil in Egypt continues. We'll here from the country's minister for trade about the desperate need for new jobs and that is next.