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QUEST MEANS BUSINESS
European Stocks Clock Best Day in Young Century; U.K. Banks Agree to Limit Exec Payouts; BA Chief Hopes for Iberia Deal
Aired September 30, 2009 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN INTERNATIONAL ANCHOR: Remember the bull market? Well, it's back. European stocks turn in their best performance this century.
A breakthrough on bonuses, Britain's biggest banks agree to limit their payouts.
And BA's chief executive tells me he hopes a deal with Iberia will be done by Christmas. I'm Richard Quest, a busy hour that we have together, because I mean business.
Good evening. Doom and gloom, not if you've been holding shares over the past three months. 2009's Q3, the third quarter is now over and on European markets no one around here can remember the last time there was such a spectacular performance. Markets rose and even allowing for corrections, there were impressive forecasts.
Now remember, this is generalities. Your portfolio might not have done nearly as well. But if we take a look, the third quarter that has just come to an end, the trend is pretty impressive.
Take, for example, the London FTSE, the trend down here, you see the start of the quarter, up it went. We had a couple of interesting and minor glitches. But that 20 percent gain over the course of the quarter is the best performance that it's (ph) ever.
Notwithstanding that, it's still 5 percent lower than the market was this time last year. But a solid -- that trend is pretty much a perfect of what you hope markets do, grow, correct, grow, correct.
Today on the market, energies were off. Royal Dutch was down, BH (sic) Billiton. Marks & Spencer, the retailers, were off 3 percent through a Q2 trading update prompted profit-taking.
Now the CAC 40, the graph looks similar, much sharper at the beginning of the quarter, but continued solid growth with minor corrections on the way, right the way at the top, up almost 21 percent in the third quarter.
For today it was BNP Paribas down 3 percent, Societe Generale, autos were down as well. Obviously Peugeot, Citroen, and Renault.
Now the DAX, (INAUDIBLE) you had the FTSE, you had the DAX -- the CAC, and then you had the DAX. Here we have a very sharp, steep rise which then just continues again with minor corrections. The gain for the DAX over the whole thing was 18 percent. So not as impressive as either London or Paris. Today it was Deutsche Bank that was off. BMW was down.
So that's the way the quarter looks. Those sort of numbers are exactly what investors have probably been hoping for. Economically, German officials had to state the obvious after their jobless data, unemployment crisis isn't over. They had to point that out because the number of people actually out of work fell in September, down by 12,000, adjusting for seasonal effects. And a jobless rate of 8.2 percent.
The government says it saw a traditional rise in unemployment (INAUDIBLE) at the end of the summer, holidays, the longer-term trend is expected to be higher.
That number out of Germany isn't what we expected. It's not better than expected either. In other words, the number of jobless in Germany is starting to become the key talking point, as I heard from Elissa Bayer from Charles Stanley.
ELISSA BAYER, STOCKBROKER, CHARLES STANLEY: I think Angela Merkel has been doing some interesting things, probably better, I think, than the British economy. And I think Germany has a better focus.
But nevertheless, numbers are going to rise, and I mean, they're rising in Germany and they're certainly going to rise in the U.K. And I think over the next six months you'll see this is a pattern. So although I think there is improvement, you're going to see higher unemployment in Europe as a bigger feature.
QUEST: This is very difficult for people to understand that there can be the tail of rising unemployment is that much longer even when growth is restored.
BAYER: I think that's right. I think it is difficult. But I think certainly in the U.K., you're going to have to see major cuts coming through at the same time as some businesses have, you know, already done the necessary.
I think where you're going to see it in the U.K. is in the public sector. And that will make the difference. But I do think you're going to see unemployment as a rising trend over the next year, 18 months.
QUEST: But putting it into the context of the stock market where we're just coming to the end of the quarter, and again we're getting numbers that are -- that don't seem to bear relation to the reality of people's ordinary economic lives.
BAYER: Well, this is where, of course, you've had interesting things because people are seeing different curves, they're seeing different patterns. Is it a W curve or a Y curve, or all sorts of different curves? The answer is the stock market is certainly way ahead of what's going on.
You've seen a 30, 40 percent rise in most markets, the U.S. as well. But it came from a very, very low base. When last year happened, 12-15 months ago, and you had Lehman, everything just fell. And there was nothing on fundamentals, you just had prices wiped out. So what has happened is you have seen a restoration, but at a pretty fast rate.
On the other hand, if you look at trading levels, July-August, on an international basis, they were actually very low. So prices rose but not on very much trading. But I do think there is some -- there is some encouragement. And I don't think markets at this level are too high.
The other thing is it's very stock-specific, certainly look at most countries, you're looking at commodities, you're looking at financials, that's where the big rises have been.
QUEST: Now let us take that, what you are basically saying, if I understand it correctly, is that the pendulum which went this far has only really started to come back. And we are roughly where we should have been. It over-swung on the downside and we've really come back to something approaching fair value.
BAYER: I think so. And I think now -- but I think there is different value in different companies. And I don't think if you look at prices a year ago we are where we were. Certainly commodity prices, commodity shares in the U.K. are probably 25, 50 percent of the levels they were a year ago. So there is still quite a lot to go from.
QUEST: Fascinating. But now our traffic light, I don't think you've had a go at our traffic light before. Pretty much like any other light. Red, of course, is we're still stuck in recession, going nowhere. Amber, things are getting, but perhaps not as fast as we would like or we're still in that middle bit. Green, things are powering forward quite nicely.
Which is it to be for you today?
BAYER: Being female (ph) obviously I would like a bit of everything, slightly. I'm green-orange. I think I'm going for orange.
QUEST: You're going for the orange.
QUEST: Would you like it flash?
BAYER: Yes. That's very good.
QUEST: There we are.
BAYER: That's very feminine, I feel.
BAYER: I think that's what it should do.
QUEST: A flattering orange, we'll leave it.
BAYER: Thanks very much.
QUEST: We'll leave it there. Thank you very much.
QUEST: Elissa Bayer and there is her flashing amber.
What is fascinating, over the last couple of weeks, not only have we seen some flashing ambers, but we've started to see the first greens coming through. Just switch that off. And that, of course, as I've said to you, we will keep showing you the traffic lights for the foreseeable future until we get a preponderance of greens which clearly tells us that economic recovery -- well, that we are all properly on the road to recovery.
The U.S. government says economic downturn hasn't been quite as bad as they have been telling us. GDP Q2 shows the economy shrank by 4.7 percent -- that's by 0.7 percent last quarter is the official figure, final figure. Two earlier estimates were more pessimistic.
And so that figure suggests that the economy is better than expected. The figures are backwards-looking to appear that it ended through June, since then the economy has moved on. Ben Bernanke, the head of the Fed, said the country has probably emerged from recession. On that, there is perhaps consensus. Private economists and government economists agreeing on that. Let's join Maggie Lake.
M, we all knew that Q1 was disastrous at over 6 percent. Q2 much better. But these revisions, they're better than expected, and it -- well, you tell me what it suggests.
MAGGIE LAKE, CNN INTERNATIONAL CORRESPONDENT: Well, I mean, I think that the -- overall, Richard, I'm feeling pretty nervous and pessimistic about everything, but I'm going to start with the positive for you. I know, what a surprise.
The positive is that I think that GDP revisions are telling you that some of those sort of tweaking and emergency stimulus worked faster than people thought they were going to, you know, "Cash for Clunkers" comes to mind, some of that -- some of those quick hits helped turn things more quickly.
That's about the best you could say about that. It's backward- looking. We know we're going to get a big rebound in the third quarter. It's what happens in the fourth quarter, and even more importantly, what happens next year.
And the thing that makes me nervous and worried is that when you look at a lot of other indicators, especially jobs, and we had other data that came out today that -- private sector ADP that showed that we are still losing a significant amount of jobs a month. And a lot of economists say without jobs, it's hard to see how these good GDP numbers are going to continue through 2010.
How can this recovery be sustained? And when you look at the stock markets, they don't seem to be paying attention to that. And that's what makes me nervous.
QUEST: All right. And I'm not quite going to join you on the nervous bandwagon yet. I'm still -- a little bit more optimism, perhaps, than you. But I can certainly see that as cutbacks and budget deficit-spending reduces next year, the more public sector jobs go as Elissa Bayer was saying earlier, and a self-defeating cycle begins.
LAKE: Yes. And here's the other thing, Richard, that really sort of set off my alarm bells. Everyone is -- all of these analysts I talk to sound so nervous about these big problems, right? Debt, mortgage resets, which we're going to be talking about in weeks to come that are kind of looming here in the U.S.
And yet I read the newspaper article and I see that retail people who have sat out since March because they were too scared are calling their broker about buying stocks, after we're up 50 percent. That makes me very nervous.
QUEST: Right. So this is the argument that says the time to get in is not when everybody else is already in, the time to get out is when others are getting in.
But, Maggie, Maggie, you and I are being roundly condemned by our bosses, by our viewers, by everybody, because they say that you and I and others are self-fulfilling miserable people who just can't see good news.
LAKE: I mean, I think that's true. But you know, somebody a long time ago, an economist said, you know, they say, buy what you know, look around and do a gut check. And when I look around and you talk to people, there are still a lot of problems out there.
And so it's not that you're negative long-term, it's that if you were in since March and you regained a lot of your money, and you are very unclear about what is going on, it's not good to sit in it because you see momentum players pushing these markets higher.
Nothing wrong with taking some cash, moving to the sideline until we get a little bit more clarity. At least that's what I think, anyway. And I think there are people sitting at home who see these stock markets go up every day despite the data and they think that means everything is OK. And I'm not so sure it does.
QUEST: All right. Maggie, I think you're wearing a new watch. I don't know. But anyway, we'll talk about that on a future occasion. It's looking like a large timepiece on your hand. Maggie Lake, who is in New York.
The news headlines and Fionnuala Sweeney. Good evening.
FIONNUALA SWEENEY, CNN INTERNATIONAL ANCHOR: Hello, Richard.
Seven-point-six magnitude earthquake struck Indonesia on Wednesday. The Red Cross says at least 75 people have been killed. An Indonesian health ministry official says thousands of people may be trapped inside collapsed buildings and homes.
The quake caused widespread power and phone outages, so getting up-to- date information from the area is difficult. Emergency relief efforts are getting under way in the Samoa Islands, a day after a tsunami flattened entire villages and killed more than 100 people.
The deadly wave was triggered by an 8.0 magnitude earthquake. The U.S. has sent emergency aid to its territory of American Samoa. Officials fear the death toll could spike as rescuers reach remote villages.
In Southeast Asia, people are cleaning up and counting the dead from a killer storm. You're looking at the aftermath in Vietnam, just one of several countries in the path of what was Typhoon Ketsana. The death toll is now topping 320. Most of the deaths occurred in the massive flooding in the Philippines.
Israel wants a recent videotape to prove this soldier, Gilad Shalit, is still alive. And in return, the Israeli government says it will free 20 Palestinian women from detention. Shalit was captured during a raid by Palestinian militants nearly three years ago near Gaza. Hamas is confirming the deal.
Those are the headlines. Be sure to tune in to "WORLD ONE" at 8:30 p.m. London time for more on those stories. That's 9:30 p.m. in Central Europe. In the meantime, back to you, Richard, in the studio.
QUEST: Thank you, Fionnuala Sweeney. We'll be with you then.
Would you be willing to shell out $9,000 for a roundtrip flight from London to the U.S.? That is what British Airways hoped to charge for their new premium service from London to -- the chief executive, Willie Walsh thinks so. He is banking on it. I was on the flight. After this.
QUEST: It was 18 months ago that British Airways announced it was going to start a new flight from the heart of London's financial district, the city, to New York City. It would be a new flight with a twist. It would stop on the way while the plane refueled. It would also be a premium product. How could this be? Which frequent business traveler is prepared to pay more for a journey that might take longer?
Well, we found out when I went aboard BA001, the little plane that could, which stops in Shannon, Ireland.
UNIDENTIFIED MALE: Thanks (INAUDIBLE), sir. And here we go, your boarding pass.
QUEST (voice-over): They gave the new flight Concorde's old number, BA001, a call sign of importance for a passenger and airline alike.
The Airbus 318 is small and when fully fueled to cross the Atlantic, is too heavy for London City's short runways. So BA added the Shannon stopover in Ireland where the plane lands for 45 minutes and its tanks are topped up.
For passengers, this would normally be wasted time, but not at Shannon, which has a U.S. pre-clearance center inside the airport.
While the plane is being fueled, passengers complete U.S. immigration and customs procedures. This potentially saves more than an hour standing in long queues like Kennedy Airport's in New York.
UNIDENTIFIED FEMALE: Welcome to America.
QUEST (on camera): Thank you.
UNIDENTIFIED FEMALE: You're welcome.
QUEST (voice-over): Plane refueled, passport stamped, within the hour, we're back in the air. This is the first trans-Atlantic flight that allows passengers to use BlackBerrys and mobile phones in flight.
With 32 passengers on board, BA hopes to charge more than $9,000 for the round trip fare, a 10 percent premium over normal business class.
(on camera): So I've arrived at Kennedy. Normally I would continue down this corridor, past the door, and onto immigration and customs. But I've already done that hours ago in Shannon, Ireland.
So today I enter as a domestic arrival, straight into the terminal, no waiting. This is progress. No passport. No immigration. No customs. No queues.
QUEST: It's a lot to ask, $9,000, for that particular flight, especially when IATA is estimating the aviation industry will lose $11 billion this year.
For British Airways, having lost $640 million in the last financial year, they've been cutting free meals, raising money by charging people to pre-select seats, so the idea of launching a business class-only service between London and New York, two of the most affected financial areas in the world, and they say they expect it to be profitable within a year.
What on earth is Willie Walsh, the chief executive of British Airways, thinking of? I asked him because he was on board the plane.
WILLIE WALSH, CEO, BRITISH AIRWAYS: We put a lot of thought and a lot of effort into trying to make this work for a business traveler, try to use the time available in the most efficient way. So on the westbound flights, we have to do a technical stop because of the length of the runway at London City.
So we've picked Shannon so that you can do customs and immigration pre-clearance, or use that time on the ground. It means that when you arrive at JFK, you're straight out the door.
We reckon within five minutes you can be off the aircraft and in a cab. It's about connecting business people. This flight is probably the best flight to connect business people. And I think it's going to be a great success.
QUEST: At a time when there is such recession and business class travelers under such strain, to be launching and all business class service, some would say brave, others would say foolish.
WALSH: Well, I think brave is the better word to use. I think it is a brave move. I think it's innovative. I think it's what people expect of British Airways. And I believe we're launching this, OK, difficult times, but we're launching this as we see the recession at least bottoming out.
So I believe things will get better. Business travel will recover. And we want to be in the right place at the right time when that happens.
QUEST: The numbers may return, will the yields ever return?
WALSH: Yields will take a bit longer, I think, to return. But they will get there over time. But what we're doing is we're changing the business to reflect a lower yield environment. And that's why we've been restructuring our business to lower our cost base.
So we believe that we can be profitable, even in this changed environment. And that's why we've been taking the steps at the -- to make these changes earlier than most of our competitors.
QUEST: The gap between BA as a full service airline and the low-cost carriers is getting inexorably tighter.
WALSH: The gap is the width of the Atlantic. You forget that these low-cost carriers have been moving all of the time. They're now at the point where they're charging you to check in. You know, they've just about unbundled every single part of the product and they're charging you extra for it.
We're nowhere close, nowhere close to what they're doing.
QUEST: But two years ago it would have been an anathema that BA would have charged to select your seat.
WALSH: I think five years ago it certainly would. Two years ago we were talking about new revenue streams and how we could generate additional revenue. So I think every business is looking to do this. You know, we're doing it at British Airways. I know many of our competitors have looked at these ideas as well.
QUEST: What does Willie Walsh think about the deal with Iberia? How is it going to go? When does he hope to sign it? And as for American Airlines, is that ever going to happen? You'll hear the second part of my interview with him in just a few moments.
Also in a few moments, the Irish go to the polls in a few days' time, some say it's not so much say it's not much the fate of the country as that of Europe is at stake. We'll find out.
And a time when there was less and less of people's (ph) bank accounts, the big British banks put a curb on executive bonuses. In a moment. Good evening.
QUEST: Britain's five largest banks have agreed to accept curbs on their bonuses for executives and trades. The U.K. finance minister, Alistair Darling, made the announcement an hour or so ago.
(BEGIN VIDEO CLIP)
ALISTAIR DARLING, U.K. FINANCE MINISTER: The banks have made it quite clear that they will abide by the agreement we reached at the weekend and the new FSA rules. What we want to do is to make sure that bonuses are paid for the right reasons, not for taking excessive risk and causing all of the damage we've seen over the last year or so.
So it's a major step forward. I welcome it. I want to see it implemented now.
(END VIDEO CLIP)
QUEST: The banks that have signed up for this agreement, Barclays, HSBC, Lloyds, RBS, which, of course, Lloyds and RBS both de facto government-owned. And Standard Chartered.
The new regulations include limiting the amount the five can devote to their pool of bonus cash. Deferred payments for executives and traders, deferred, of course, so results can be achieved or at least sorted out, and claw-backs to recover money if the deals go south.
The rules are in-line with that agreed by the G-20 leaders at the recent Pittsburgh summit and in accordance with so-called "best practice."
Now earlier, and before this announcement was released, I spoke to Peter Sands, the chief executive of Standard Chartered. He earns a salary of $1.5 million, and a bonus of $4.5 million in 2008. Again, emphasizing that we spoke before the announcement was made. I still asked him what he thought about the role of government in the banking industry.
PETER SANDS, CEO, STANDARD CHARTERED: Banking has become a much more political industry. And we have to recognize that fact. I'm not saying necessarily it's a bad thing, I think we have to recognize that banks play a very important role in society and that the actions of banks, and indeed through the crisis, the actions of the banks and the failure of the banking system has had very harmful consequences for the society. And that inevitably has a political impact.
So I think as an industry we have to acknowledge the fact that we are in a much more political environment. And we have to think through very hard the political and social consequences of what we do.
QUEST: Now the process begins of unwinding many of these government holdings. We've already heard that the U.S. is looking to get rid of part of its shares in Citi. It won't be long before RBS and others have to start to unwind their government holdings.
What are the risks and what, as a private -- you know, as a bank yourself, what do you fear could happen as governments unwind their holdings?
SANDS: Well, I think you're right to focus on the unwinding process and the risks that go with it. I think it's going to have to be managed very carefully and with a considerable degree of coordination.
In fact, probably the easiest bit of it is the bit that most commentators have focused on, which is the repayment of capital, either through the sale of shares or the reimbursement -- repayment of TARP, because in a way that is relatively institution-specific and discrete.
The bit that is more -- that has more systemic implications is the unwinding of the provision of extraordinary amounts of liquidity by central banks, and also the pulling back of some of the guarantee scheme arrangements.
And I'm not really talking about the retail depositor schemes, I'm talking about guarantees that have been extended to corporates and to other bank counterparties. I think it is necessary to unwind these parts of the interventions that were made.
And it was a good thing that those interventions were made, because if they're not unwound, then the market will lack any sense of discipline. But it has to be done very carefully.
QUEST: In my studio here in London, I have a set of traffic lights. We know that we're probably not on red, which is stops of the economy. But which would you like? You can have a choice with them, red, amber, or green for where you think the economies of the world are at the moment.
And I know it's a mass generalization, but as you look at it with your vantage point, red, amber, or green at the moment?
SANDS: Well, the likely -- the conventional wisdom -- the way the markets are feeling at the moment points towards a sort of orange-y green. I'm afraid to say I'm still fairly cautious. I would put us still on amber because although I think sentiment has improved, there are clearly some very encouraging signs in some parts of the world, there are still some fairly big structural imbalances, de-leveraging, there is still some fairly big problems that need to be sorted out.
QUEST: There you are. You have an amber from the head of Standard Chartered. And two ambers in one program, but at least we haven't got a flashing one.
When we come back, we'll be live at the New York Stock Exchange. This is QUEST MEANS BUSINESS. Good evening.
QUEST: Good evening.
I'm Richard Quest, QUEST MEANS BUSINESS.
This is CNN.
The New York markets are open and doing business. What an interesting day it has been. From over 1-1/2, maybe 2 percent lower at one point during the day, they literally completely reversed and went higher. And now, of course that's started.
Let's bring in Susan Lisovicz at the New York Stock Exchange.
I cannot find any, if you like, path -- patang (ph) -- to put my hat on as to why the markets did such a turnaround.
SUSAN LISOVICZ, CNN CORRESPONDENT: Well, we had a weak manufacturing report. That certainly took what air there was in the modest open, Richard. And I think that we've had this tremendous run in the third quarter for the Dow. It's the best third quarter since the late 1930s. So we're revisiting the '30s, but I guess in a favorable way.
You know, there's the sense that well, you know, you're going to take three steps forward and one or two steps back when you get a disappointment at this point and manufacturing was a disappointment; also that -- the jobs report for the private sector was a disappointment, as well, even though the job loss was the lowest since we've seen in July of last year, the fact is the number overall was greater than the consensus.
QUEST: And we are now in this deliciously uncomfortable position as with -- as Q3 has come to an end and we hope you're going to join in the Q25 as we get our Apple...
QUEST: Yes. And we -- we're still trying to find plastic vases, by the way. We're (INAUDIBLE). And he said, you know where there's a gross of plastic vases?
Well, we're in this difficult position, aren't we, where we are waiting to see what the earnings season looks like?
LISOVICZ: No question about it. And I -- and as -- as a optimistic that I am, I think that you should spring for the crystal vases. I think it's time that you coughed up a few extra bucks, because that's one of the things hampering the recovery is that -- is our -- we're very frugal, Mr. Quest.
Having said that, I do think that we've seen earnings in the first and second quarters come in better than expected. That was -- one reason why is because the bar was set so low. The other reason why is because of massive cost cutting.
And I do think that we -- that is, the community, the financial community is going to be looking at -- more closely at just how much cost cutting contributes to the bottom line and if revenue is going to show actual improvement.
QUEST: And you will explain to the chief exec of Time Warner why we have cut glass vases on our expenses.
Susan Lisovicz. There will be no cut glass vases on this program, at least not this side of the new year.
Earlier in this program, you heard us talk to the chief executive of Willie Walsh about the general industry trends that are taking place in the United States and around the world for the airline industry. B.A. has launched its new business class flight.
What about B.A. itself?
What's actually happening there?
There are two issues. One surrounds its anti-trust immunity application with American Airlines; the other, its outright merger with Iberia.
I put it to him, what would it mean for British Airways, when you look at the American deal that was denied ATI?
(BEGIN VIDEO CLIP, COURTESY
WILLIE WALSH, CEO, BRITISH AIRWAYS: I think it leaves us as a strong, independent airline. But I think it raises a big question over the ATI that the other two major airlines have, Star and Sky King. I think this is a critical move to level the playing field in terms of competition between the airlines. I think the regulators will have a very big question to ask -- how can you give ATI to Star and Sky King and not give it to Oneworld?
I -- I'm very confident that we will be successful.
QUEST: And on the question of Iberia -- and it's taking a very long time -- some might say too long. But the moment you make the -- there's always a moment for every deal to be done, Willie.
Has the moment passed?
WALSH: No, no. Definitely not. No. And I would agree with you. You know, this has gone on for a long time. But I -- I think you'd better understand, you know, that there were issues within Iberia that needed to be tackled and there were issues that we needed to address within B.A. So it hasn't distracted us. If it was a distraction, I would have called a halt a long time ago. It hasn't been a distraction. It's not an issue in terms of timing. So I'm -- I'm very relaxed, I'm calm and I...
WALSH: ...I think the deal -- I think the deal is still there to be done.
QUEST: Your -- your two big deals, ATI and Iberia, are both up in the air, pardon the pun.
WALSH: Yes. They're complex issues.
But would you prefer that we stand back and do nothing or, you know, to try to make these issues work?
I'm -- I'm -- I'm absolutely convinced that consolidation will benefit our industry. I believe consolidation will be part of the solution. It is not the solution and I'm not prepared to do a deal at any price. The deal has got to make sense. It's got to make sense for the shareholders of British Airways. It's got to make sense for the shareholders of Iberia. And it's got to create an entity that together is stronger than we are as separate entities today.
And if we can do all of that, that's a deal that will be done.
(END VIDEO TAPE)
QUEST: Willie Walsh talking about Iberia and American Airlines.
And those are two stories we're going to watch very closely on this program between now and the end of the year.
T5 at London's Heathrow -- some of you may have been through it.
Did you notice a funny man -- well, he wasn't funny, but a man sitting in the corner?
This is the man. He either was scribbling or typing away.
But what was he writing, a new report or perhaps a spreadsheet or a book?
Ah, in a moment.
But, also, the Irish go to the polls. It's all about the Lisbon Treaty.
And this time will it be a yes or a no?
QUEST: The critics say that if at first you don't get the answer you want, just keep asking until you get the one you do. So, for the second time in a year, the Irish will hold the fate of the European Union in their fate. That's how Irish politicians are putting it, because on Friday, voters are being asked to once again give their verdict on the Lisbon Treaty.
The last time they did this, of course, they were the first major country that said no. Other countries haven't bothered putting the Lisbon Treaty to their populations. They've either followed parliamentary or other methods of approval.
So it's been left to Ireland and the Irish people to have the final say. And on Friday, they'll vote again.
Will the Irish vote yes this time?
What they got out of further negotiations, of course, the Irish got certain concessions from the European Union. Their concessions, they are now told, are the absolute extremity before the whole treaty will have to be reopened and renegotiated.
Brussels says Lisbon is vital because it streamlines E.U. decision- making. You can't have 27 people all agreeing by -- by -- with unanimity on all issues -- a president of the union, foreign policy and all these sort of things.
Of course, the opponents say it just moves further on toward federalization of Europe.
The economic fear in Ireland, where the unemployment rate is near 13 percent, if Ireland were to say no again, then, of course, there could be a slump in the Irish market and the Irish business community, not to say what it would have done to the European Union treaty. Which is why the tea shuffler (ph), Brian Cowen, the prime minister, is sounding the alarm, saying that a yes vote is vital for the Irish economy, struggling under 13 percent, and for the European Union.
So far, so good. Whether or not it -- business has shifted toward this idea of a vote, yes or no, is something Jim Boulden explored from Ireland.
JIM BOULDEN, CNN CORRESPONDENT (voice-over): Ireland may be suffering the worst recession for any developed nation since the 1930s. And the economic mess is not improving. In an effort to revive lending and reignite the economy, the government wants to pay nearly 60 billion euros to take toxic property assets off the books of Irish banks.
(on camera): Along with plans to bail out the banks, the government is now discussing budget cuts. That's made many people upset, especially people who work in the public sector. And that has brought protesters into the streets.
(voice-over): Ireland is bracing for cuts in public sector pay and in pensions; in services and in welfare benefits.
RICHARD BOYD-BARRETT, PEOPLE BEFORE PROFIT: Much of the money that could go into protecting jobs and services is now going into bailing out the banks that caused this economic crisis in the first place.
BOULDEN: The prime minister says there's no choice.
BRIAN COWEN, IRISH PRIME MINISTER: The situation is simple. We have a -- we have a spend of 55 billion and we have a tax revenues coming in about 32, 33. And that's not sustainable.
BOULDEN: For the first time since the Celtic Tiger economy took off, emigration has returned and unemployment has roughly doubled in one year.
Gary Howard is a face behind that statistic. The 21-year-old bricklayer spent three years working in Dublin's Docklands. The father of two has been out of work since June.
GARY HOWARD, UNEMPLOYED BRICKLAYER: So just hopefully this country starts to pick up soon and we all get employed again and things turn out good.
BOULDEN: The property bust here was so swift, there are idle cranes hovering over unfinished buildings in the Docklands, just where the boom started in the early 1990s. Tax breaks lured dozens of financial institutions here, on the north side of the River Liffey. That coincided with the likes of Microsoft, Intel, Dell and Google setting up European hubs in low cost Ireland.
That advantage disappeared earlier this decade, when property prices soared along with salaries. No matter. Ireland entered a buying and selling property frenzy.
FRANK MCDONALD, AUTHOR, "THE BUILDERS": People forgot any kind of folk memory they ever had about this country ever having been poor before.
BOULDEN: Frank McDonald chronicled the rise and spectacular fall of the men behind the Irish property boom.
MCDONALD: Developers weren't just satisfied in traveling around in -- in cars, even, you know, very expensive cars. And they felt they needed to have helicopters to get around and even private planes and all the rest of it, because they now were presiding over a kind of a multinational property empire.
BOULDEN: Many of those empires crashed, taking ordinary Irish with them. House prices collapsed, but only after speculators built thousands of new homes.
(on camera): And here's an example near the airport -- rows of homes that have been finished, but never sold, standing next to the ghostly outline of homes that have yet to be completed.
(voice-over): With nearly every home here on the market, there are few "for sale" signs. But you do see another recessionary sign everywhere -- the lit signs of expectant taxi drivers. It was once hard to find a cab. Noel Christopher just hopes for the occasional fare.
NOEL CHRISTOPHER, TAXI DRIVER: There are too many taxi drivers, there's no doubt about that. But I can't -- I'm not in a position to complain about it, because I only got my taxi place three years ago.
BOULDEN: Of course, a taxi bill is fixed. Other expenses are falling, to the delight of some companies. Though Dell has largely left for cheaper shores, Intel vows to stay.
JIM O'HARA, INTEL IRELAND: I've been very vocal about energy costs, for example. They've started to come down a bit. I've been very vocal about the construction costs. They've started to come down a bit. And wage rates are moderating and I think we're increasing our competitiveness.
BOULDEN: But this small business owner says the banks have got to start lending again.
(on camera): But there's no guarantee the banks will start to give money -- loans to -- to homeowners. There's no...
LOUIS RUANE, SENATOR WINDOWS: No, there isn't. And there's -- there's going to be a lot of pressure (INAUDIBLE).
BOULDEN: A lot of pressure?
RUANE: A lot of pressure...
RUANE: ...from developers, homeowners, from the government, from everybody. So I think they'll -- they'll have to.
BOULDEN: (voice-over): Have to for any green shoots to appear on the Emerald Isle.
Jim Boulden, CNN, Dublin.
(END VIDEO TAPE)
QUEST: Of course, we'll have full details of that vote when it takes place and the results on CNN.
The weather now.
Guillermo is at the World Weather Center -- and, Guillermo, you've been extremely busy with these earthquakes and tsunami warnings of one sort and another.
GUILLERMO ARDUINO, CNN METEOROLOGIST: Yes. And, also, I've been busy taking a look at the European weather. We have a storm in the south that I was worried about. I don't see any problems in the north, Richard. Actually, I see some rain showers popping up here in England, in the north, and into Scotland and Ireland, but not in London.
You know what?
We have 20 percent -- 20 percent chance of rain only in the next three days in London.
So very low, huh?
And -- but you may have noticed that it's cooling down big time, as well. We're talking about 18, 15, 16 degrees, but in the morning or in the evening, late is when the problem come -- comes, because it feels colder. So Thursday we may see some sunshine there. Then it's going to go away, with these clouds that you see here. They are coming, but first we're going to see the rain in Scotland and the clouds stay in England. But we will not see clouds early tomorrow. We will see some, but not so much.
This is the area that I'm talking about. You know, the Balearics; also, Corsica. It is getting better in many parts. This low is bringing winds and also unstable weather into Italy. It's going to clear, finally, for Barcelona and Girona, the Balearics and Southern France moving into Italy. And we will see some rain, but it's not going to be that bad.
To the north, the temperatures continue to be cold. We have rain in Cologne, in Germany; rain in Scandinavia; coastal parts of Norway; and into Sweden, as well; the winds in Denmark.
But look at the overall trend here. The north getting much cooler, the south still very nice and comfortable, though, in Italy because of those storms. And that storm actually is popping up here in two days, the southern parts of the boot in Italy. And then it's going to move into Greece. Nice in Turkey for the next two days. Nice in Cyprus and in the Middle East. Weather-wise, we have OK conditions. No significant delays.
I mentioned Copenhagen with windy conditions. We may see that. Apart from that, you know, Germany with rain showers. And because of that storm in Italy, Rome may see some delays at airports.
In addition to the tsunami and the earthquakes, I'm focusing on what's going on with the cyclones that we have in Asia, in the Pacific, especially, Richard, I am very concerned about Parma, this typhoon that is going to come too close to the Philippines, to Luzon. We have mountains there. We saw Ketsana over Luzon, so it caused floods. The terrain is saturated. So even if we don't get a direct landfall, it is within the cone of uncertainty and it is too close to bring a lot of rain and a lot of winds in the area.
These words on this stone that I'm trying to convey is worry, because I -- I know that it's going to be really bad in the Philippines in the next three days, because (INAUDIBLE) a third when we expect the cyclone near Luzon.
Richard is back -- Profitable Moment is back, as well.
Stay with CNN.
QUEST: Now, I'm actually spending a whole week at an airport or even longer. It's a nightmare, but for one man, it's true. For others, it's not quite such a horror -- for this, my next guest, and myself.
My next guest spent nearly a month at the airport. Alain De Botton spent seven days and seven nights, at least, at London's Heathrow T5 -- there he is. He was there to muse on the world of flight, delays, passport controls and future (INAUDIBLE) and, of course, passengers.
His book is "A Week At the Airport." It comes out this Thursday.
Alain joins me now.
And I ought to warn viewers and there's going to be a lot of plane and flying geekery in this interview, because we both rather like the -- the love of flying.
What did you learn?
If there's one thing that you've learned from this experience, what was it?
ALAIN DE BOTTON, AUTHOR, "A WEEK AT THE AIRPORT": I think people secretly love airports. All the talk is how awful airports are and the cues and the security. And, of course, that's true. But the amount of people who came up to me while I was writing this book and said to me, you know what, secretly, I love airports and I love planes. And these were ordinary people. They didn't look like geeks. And I think it's a universal thing. There's something amazing about taking to the air.
QUEST: Is it because it is magic, we still don't really understand it?
Is it because it's glamorous, because it's certainly not if you're flying some low cost carriers -- and they know who they are?
And -- or is it just -- what is it?
BOTTON: Well, I think it starts with the departure board. You look down at the list of destinations and you've got a lot of names...
BOTTON: ...and just that gives you a sense of possibility. You know, it's the opposite of the mundane. We're constantly told that we live in a modern world, which is about globalization and technology and all these things. They sound like abstractions until you get to the airport.
You get to the airport and you suddenly realize, yes, the world really is modern. It's the most complete technological experience that most of us will ever have.
QUEST: What was the biggest surprise that you found (INAUDIBLE)?
BOTTON: The biggest surprise -- I loved -- there was a wonderful moment in the B.A. control room where the guy showed me how they plot air - - how they plot each aircraft on each route. So, you know, you'll see the -- the flight from New York becomes the flight to Mumbai.
BOTTON: The flight to Mumbai comes back and it becomes the flight to Hong Kong. And so a...
BOTTON: ...the incredible complexity. It's a city of experts.
QUEST: But isn't (INAUDIBLE) at the passengers, because your book talks about the passengers and -- and the people you saw. You saw the lovers that were saying hello and they're saying good-bye. I always think, for example, of Sydney Airport, one of the saddest and happiest places in...
BOTTON: That's right.
QUEST: ...in the world, people saying good-bye for the last time. But you talk about that a great deal.
BOTTON: Yes. I saw some lovers. It was hilarious. They were -- they were weeping and because I had this badge saying "writer in residence, BAA," I was able to go up to this woman. And she had been crying for a good 10 minutes. I said, you know, I'm terribly sorry to intrude, but, you know, what -- are you going away for a long time?
She went, no, no, I'll be back on Monday. I thought this is a woman with a happy relationship. You know, but we all could be...
QUEST: Or in need of help.
BOTTON: Well, we all don't weep that much. But, no, this is full of emotion. That's what the airport is all about.
QUEST: On this program earlier tonight, we've been hearing a lot from Willie Walsh. You actually, for the book, you did get to meet and -- and interview Willie Walsh.
BOTTON: That's right. He was a slightly formidable figure. I've got a picture of me and Willie here.
BOTTON: And it's some -- you know, he was a great guy. But, you know, I -- I read the interviews that he did with -- he does interviews all the time with the media.
And I thought what am I going to talk to this guy about?
He's not going to tell me the true secret of the B.A. pension plan and share prices and everything.
QUEST: Did you...
BOTTON: So I...
QUEST: Did you...
BOTTON: I starting talking to him about -- about planes. He is an ex-pilot, of course, and he loves planes. And we had a deep conversation about the -- the thrill of flying and the moment when a plane takes off. And he loves all of that. And we had -- we had a great time. By the end, he was getting up on his chair and pointing to a model of an A-380, a giant, almost life-sized model he's got in his office. And, you know, we - - it was boys' toys. It was fun.
QUEST: Did you get the feeling with Willie Walsh that he knows where he's taking British Airways?
BOTTON: I think so. I think so.
QUEST: Well, I've touched a nerve there.
BOTTON: Yes, I don't know. I mean he play -- he's so good at playing the modest guy, you don't know. This is a genius sitting opposite you, you know, with Joe Average. I think he's a pretty switched on there, a pretty clever guy. I also asked him for a job, but he turned me down.
I said to him, can I be the British Airways writer in flight?
I said, I've had such a good time. And he -- he thought I was joking.
He said, what about the in-flight entertainment?
I said, no, no. This is something different.
But anyway (INAUDIBLE)...
QUEST: OK. Some quick questions.
What did you think, T5, good or bad, yes or no?
BOTTON: It's -- it's one of the most beautiful airports. It's certainly better than anything in North America. It's (INAUDIBLE) good tunnel and we should celebrate. We should be very proud of it.
QUEST: And your favorite airport in the world?
No one will agree on this, but we're coming to an end.
Your favorite airport in the world?
QUEST: Oslo. That was my next bet. And I thought it was...
QUEST: Your -- your most hated airport in the world.
QUEST: LAX. OK.
And the place where you'd like to spend a week next time?
BOTTON: I think just simply in the engineering shed, in the B.A. engineering shed. I -- I would be happy not to stray from it. It's a cool place.
QUEST: We'll see what we can arrange.
Thank you very much.
BOTTON: Thank you very much.
QUEST: We love to have you.
We've talked a great deal about aviation and planes tonight. Geeks in the world unite.
I'll be back in just a moment, Profitable Moment.
Oh, yes, guess what?
It's more about planes.
QUEST: We have talked so much about aviation, we shall continue to talk more about, of course, the planes. Tonight's Profitable Moment. It is a brave decision for any airline to launch a new flight in these difficult times. Airlines are losing money hand over fist. Airta (ph) estimates that $11 billion will be lost this year alone.
According to CEOs like B.A.'s Willie Walsh, things aren't any worse, but they're certainly not getting any better.
All of which makes this new business class flight from London City to New York the more interesting. Three all business airlines have failed in recent years. And that's just Eos and Silver Jets.
So why should this flight be successful?
To be fair, it is well thought out. It is extremely convenient for those bankers in the City of London. But giving this flight number BA-001 told me all I needed to know. This is about being exclusive. Whether it's first class or business class, the recession hasn't changed one basic human trait -- we still aspire to travel at the front of the plane.
Because we can.
And that's QUEST MEANS BUSINESS.
I'm Richard Quest in London.
Whatever you're up to in the hours ahead, I hope it's profitable.
Christiane is next after your headlines from the I. Desk.