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Who Is Buying Up Tin?; Kindle Goes Global; 'World at Work' in Cairo

Aired October 7, 2009 - 14:00:00   ET


RICHARD QUEST, CNN INTERNATIONAL ANCHOR: Gold's shine brightens. Oil is on the boil and who bought all of Britain's tin? Around the world, commodities are on the march.

Kindle goes global. Books take another leap into cyberspace.

And tricks of the trade, and the passion of the people. We delve into the "World at Work."

I'm Richard Quest, tonight, I mean business.

Good evening. The rush is on. Gold prices are soaring to new record highs. We've seen it smash this session as investors race to buy up those glowing bars. Across the world, the big story has been one of commodities. And we need to put this into perspective.

Why should commodities be so much in the news at the moment? Come with me and I'll show you what I'm talking about. Gold's new record rise, yesterday we even had a profitable moment about it. We talked about inflationary expectations and worries about the dollar and what was happening there.

Well, on Wednesday, the intra-day high hit 1,048.48, up $9.24. According to some analysts, the charts have been thrown into the bin. It's interesting because there is a thousand and one reasons about why gold is doing so well. But none of them really hold strong water except this idea that the dollar is weaker. We'll talk more about that as the program goes on.

All you and I need to be concerned about is what is happening with gold. Gold against the dollar, look at this interesting mechanism. We know that they go in inverse proportion where you buy gold, you sell the dollar, and vice versa. But that shows quite clearly what is actually taking place.

Gold is a traditional store of value. If inflation is likely to be on the up and up, if there is going to be some worries about that because of growth, fast, moving faster, then gold becomes the currency, if you like, the metal of choice. And back to what we were saying about the dollar, that currency slide, that weak dollar, gold appears relatively cheap, and when you put that into the full context.

So gold at over $1,048 at the moment, that is the way things are moving. And a big talking point in markets.


Traders are like magpies at the moment, and they're going for anything that is shiny and that looks metallic.

There is mystery taking place in London as an investor has snapped up pretty much every scrap of tin on sale at the London Metal Exchange. Hang on, I hear you say, Quest, you started talking about gold and now you say tin is being snapped up? Jim Boulden has been talking to the London Metal Exchange's head of regulation and compliance about why there is this buyer of tin.


DIARMUID O'HEGARTY, DEPUTY CHIEF EXECUTIVE, LONDON STOCK EXCHANGE : Well, it's interesting to non-metal traders because it creates a picture that looks unusual. But it's not rumors, it's true. We publish an awful lot of information about positions and open interest in our market.

And we publish -- and we have published that there is a position -- a nearby position of over 90 percent of LME's stock. Now we publish it as bandings up to 90 on the assumption that over 90 is all the same, is that it's -- as you know from futures markets, it's possible to have more than 100 percent of available stock because you have the stock you have, and then the promises that you're due to take up on all of the trading dates out to the future.

Ours is a daily delivery market, not a monthly, like a lot of commodities. So people are picking up warrants every day.

We have rules designed to deal positions, and they have a cutoff at 90 which says that if you have a position of greater than 90, you're obliged to lend to the market -- in other words, lend back into the market at level, which is at no premium.

JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: So that's to make sure the market stays liquid, that people can buy physical stocks.

O'HEGARTY: Exactly. Because people who have promised deliver want to postpone their delivery, which is what their spread -- it's a spread trade or a rolling the trade, or what we call here, is a carry. So the carry from the nearest date to the next nearest date is what we call "tom- next trading," it's from tomorrow to the next day.

And the price it costs you to trade that is the indication of how much you don't want to deliver in the tin.

BOULDEN: Now if somebody had 90 percent of something else in another market, their would be suspicions, there would be rumors, there would be investigations, but as a regulator, over 90 percent is just a technical number for you. It's not something that you particularly worry about.

O'HEGARTY: Well, we -- our rules deal with any position over 50 percent, you start a trigger of what we call the lending guidance. And it has bandings for 50 to 80, 80 to 90, and then above 90.

What you have for every buyer, there is a seller. And positions (AUDIO GAP) because somebody is buying another (AUDIO GAP) or selling at prices they think make sense.

BOULDEN: Right. So no one is going in there and doing anything untoward, they're buying because people are willing to give them the chance to buy.

O'HEGARTY: Right. And as you can see, the shouting that is going on now is the trade -- we trade a number of metals and in each of them, the buyers are trying to get as low a price as possible, and the sellers are trying to get as high a price as possible (AUDIO GAP) of where they meet.

And really what has been...


QUEST: And we apologize for that. We appeared to be having one or two difficulties with that report. But it was the London Metal Exchange's head of regulation and compliance. And even (INAUDIBLE) interesting problems, it certainly made clear the issue about why somebody was being allowed to corner the market.

A major conference on commodities is under way in London. Kevin Kerr has been speaking, he's the president and chief trading officer of Kerr International Trading. There's not much he doesn't know about commodities.

(INAUDIBLE) because he's going to help me understand what's going on when it comes to gold and to tin. Let's start with tin at the moment. The spot market has been corner by an individual purchaser or a hedge fund. Why would they be doing it?

KEVIN KERR, PRES. & CHIEF TRADING OFFICER, KERR TRADING INTERNATIONAL: Well, obviously this is probably an end-user that is buying up these supplies. So they're buying the physical supply, it sounds like, and also forward contracts as well. The exchange seems awful calm about it. I guess they say it's not a big deal.

I mean, it's clearly -- tin prices are still well below the record highs that we saw even a year ago, I think in may, around 26,000 a ton. So prices aren't really that high yet, but any time you have any one entity cornering the market like this, I think it raises some eyebrows and obviously we don't know who this end-user is.

But really, I don't think it can be any one investor or company investing, it has to be an end-user that is going to actually these physical supplies.

QUEST: It has got an air, like, you know, the Hunt Brothers in the 1980s.

KERR: And that didn't turn out so good.

QUEST: This was a famous case of trying to corner the silver market, which was disastrous for everyone involved, particularly them.

KERR: True, and one of the problems with that was that the exchange actually put a force majeure on it and basically created an only-selling environment, and that forced the market back down. So that really was manipulated by the exchange.

QUEST: But you have used a key word, manipulation. If it is an end- user who needs tin, that is one thing, they need it, they're going to buy it, they're going to take advantage. But if it is a speculator or a hedge fund arbitraging and hedging the market, that is manipulation if you buy the lot.

It's like the -- I can think of another example, the bond dealer in Salomon Brothers in the 1980s who bought every bond that was up for sale.

KERR: Well,this is what we're seeing a lot of in new regulations in the U.S., the calls for that, of course, with the grains markets last year. And now we're seeing the action of the CFTC coming in and basically causing selling in the wheat market ahead of that. So we're seeing it -- regulatory agencies are trying to work on this, but it's very tough.

QUEST: It's tough.

KERR: Yes.

QUEST: I've got a -- now let's talk about gold, I've got a vision of Goldfinger sitting somewhere going...

KERR: I love gold.



QUEST: I love gold. I love gold. Yes.

KERR: Austin Powers says that -- Dr. Evil or something, yes.

QUEST: Absolutely. I love gold. Is that what is going on here?

KERR: Yes, it absolutely is. Look, we are seeing pervasive weakness in the dollar. The story in The Independent here in London helped fuel that to probably the next level. But we've been expecting this for a while, gold to ratchet up above the $1,000 mark.

Of course, last time we saw it up here, it didn't really quite make it past 1,050. This time it may make it as high as 1,100. There is a lot of momentum behind it.

QUEST: How much of it, though, is all about the dollar's weaknesses? How much of it is about inflation? How -- you know, what I can't understand, and I need you to help me is...

KERR: Sure.

QUEST: Is this just, financial-ese, going in circles? Or is this really going on here?

KERR: Yes, I think there is something really going on. And actually the point is, we don't have inflation yet. We have deflation right now. We have fears of inflation going forward and what we're seeing is people are adjusting their portfolios, saying, I've got to hedge myself against this falling dollar.

One of the few places they can do that is commodities. And one of the favorites in the commodities area, whether for better or for worse, is gold.

QUEST: You hold gold. I need to make this absolutely clear in the avoidance of conflict of interest. You hold gold, don't you?

KERR: No tin, but gold, yes.

QUEST: You hold gold. So you're not buying all of the tin.

KERR: I'm not the guy buying the tin. And I didn't put the story (INAUDIBLE) but (INAUDIBLE) either.


KERR: But yes, you know, we look at gold as a good part of our portfolio as a hedge against dollar weakness. We have to hedge ourselves in some way.

QUEST: I love gold. All right. Thank you very much, (INAUDIBLE), lovely to have you coming and talking to us.

Now the market numbers from Wall Street require our attention. These are the way the numbers have closed. Stocks in Europe slipped back on the session. The numbers look droopy after today -- after Tuesday's big gains.

Banks and oil stocks are lower as crude retreats somewhat. It follows a very strong day for Asian stocks, the rise in metal prices boosted asset values across that region. So far so good. You're up-to-date with the way the markets are trading and the way things have been looking.

The news headlines now, Fionnuala Sweeney is at the CNN news desk.

FIONNUALA SWEENEY, CNN INTERNATIONAL ANCHOR: Richard, a legal cloud has now descended on the Italian prime minister's legal future. But a spokesman says Silvio Berlusconi will not resign. Italy's constitutional court undid a law that was protecting the prime minister.

Paula Newton joins us now from Rome with the court's decision -- Paula.

PAULA NEWTON, CNN INTERNATIONAL CORRESPONDENT: Well, Fionnuala, Berlusconi has now confirmed himself that he will not be stepping down. The constitutional court a few hours ago ruled that in fact Berlusconi is no longer immune, that he can face perhaps as many as three pending trials. These are very serious allegations, of influence-peddling, corruption, bribery, all wrong-doing that the prime minister denies.

Having said that, coming out today, Fionnuala, strangely enough, he was with one of the top cardinals from the Catholic Church, viewing an art exhibit entitled "Power and Grace," and no doubt both things on his mind as he came out incredibly angry, saying that this ruling was politically motivated, that it would be a burden on Italians, but not a burden on him.

He said that, in fact, it could touch him. Says he will continue on. He will now try and mobilize Italians who support him. It was really quite an anger-filled speech as he came out saying that, look, these are -- these judges are politically motivated.

And, Fionnuala, you have to say that this is a person, Berlusconi, who has been battling with his judges and courts in Italy for years. This, Fionnuala, now, is a declaration of war.

SWEENEY: So he says he will continue on, Paula. But what are his coalition partners saying?

NEWTON: His coalition partners are saying the same. The thing is, in terms of popular support, while it has slipped for Berlusconi, it hasn't slipped all that much. And the left here, the opposition, still horribly disorganized and Italians are wondering what they have as an alternative.

You know, one thing both sides can probably agree on here, though, Fionnuala, this is a burden for Italians, whether you support Berlusconi or whether you don't, the point is, he is prime minister right now, and this will throw the country just into more deep political infighting, which, right now with the economy not growing at all, is going to be a problem.

SWEENEY: All right. Paula Newton there, reporting live from Rome.

On the eighth anniversary of the Afghan War, U.S. President Barack Obama is meeting his national security team. With the number of casualties spiking and the political situation still far from settled, the White House is pondering the U.S. military's request to send reinforcements to Afghanistan.

Protesters in Turkey's capital fired small rockets and vandalized vehicles Wednesday. It was the second day of protests against a meeting of the International Monetary Fund and the World Bank. That two-day meeting wrapped up Wednesday with an IMF and World Bank call for, quote, "a new world order of economic relations." In Turkey, there is tension over a new IMF loan and the budget cuts it's expected to trigger.

U.S. scientists have discovered a new ring around the planet Saturn, one unlike all of the others. For one thing, it's huge. It would take about a billion Earths to fill it. It's also on a different plane. And it's almost invisible to the naked eye. The new ring was detected using an infrared space telescope.

And those are the headlines, be sure to join me for more on "WORLD ONE," that's at 8:30 p.m. London time, 9:30 in Central Europe.

And finally, Richard, take a look at this, they are super small pigs, but they're getting lots of attention and we'll tell you about the fastest- growing pet craze in Britain. Richard, guess how much one of those would cost you?

QUEST: I've no idea. But I suspect, judging by your question, it has got to be more than the price of the bacon.

SWEENEY: More than the price of the bacon, but less than the cost of a BA flight from London via Shannon to New York.


QUEST: So less than 9,000, my word.

SWEENEY: About a thousand.

QUEST: About how much?

SWEENEY: Thousand, 1,000.

QUEST: Fine, excellent. I'll have five and we'll put them in the newsroom. Thank you very much, Fionnuala, at the CNN news desk.

If you're like me, you have learned that all -- when it comes to reading, it doesn't all have to be crinkly paper. Amazon is opening a new chapter for its hand-held e-book, the Kindle, two years of success in the U.S., the device is now making it's long-awaited debut overseas. We will get to the fine print, oh, oh, oh, in a moment.


QUEST: (AUDIO GAP) your working day began, not when you got out of the car, but when you got into it. As part of our "World at Work," we are, of course, focusing on all sorts of jobs. And it's not quite a desk job that you're always sure of getting a seat.

We're going to take you to Cairo now where our correspondent there, Ben Wedeman, has (AUDIO GAP) who literally keep the city moving as their "World at Work."


BEN WEDEMAN, CNN SENIOR CORRESPONDENT (voice-over): It looks like a mess in Cairo's dense streets, but this really just a complicated ballet of cars being moved around, parked wherever there is a space. And 18-year-old Walid (ph) is the choreographer in this dance.

He's a munadi (ph), a car-parker.

(on camera): So the work of the munadi, the car-parker, is essential in this city of more than 18 million people, because if there wasn't somebody to go to and leave your car with and he'll park it for you so you can go, this chaotic city of 18 million people would descend into utter chaos.

(voice-over): "The most important thing about this work," Walid tells me, "is the money." He's the sole bread-winner in a family of nine.

He won't say how much he makes, but I calculate it must be around $2,000 Egyptian pounds a month, over $350, more than the average wage here.

(on camera): All right. Now these are all of the keys that Walid collects during the day, and of course, hands back to the owners. There is a huge element of simple trust going on here. Many of the people, they don't know him, maybe they're coming to this area for the first time.

But I've done this myself, you give the guy the key, you come back a few hours later, he gives you the key, and off you go, pay him a couple of Egyptian pounds, maybe a dollar, and that's it. That's how this business works.

(voice-over): Walid shares this stretch of road with Sayid (ph), who has been a munadi since his early teens. Is it hard work?

"There is no such thing as easy work," says Sayid. "All work is tiring."

(on camera): And the amazing thing is, they don't seem to have dented any of these cars, yet, as far as we can tell.

(voice-over): And that's thanks to Sayid and Walid and their "World at Work."

Ben Wedeman, CNN, Cairo.


QUEST: Now as part of our "World at Work," we want to know how you earn and spend your money. Whether it's putting up billboard posters, perhaps you're a teacher in a school, or maybe you're just like me, having a muffin at some point during the working day.

Send us the pictures and stories of your "World at Work," and you can find us anywhere in cyberspace. On Facebook, we are at "Quest Means Business," or e-mail me, The Twitter address, of course, is @RichardQuest. In the weeks ahead, we're going to feature more of your "World at Work," because, let's face it, we do it for a living, we might as well enjoy it.

Back in a moment.


QUEST: Welcome back.

Amazon is cutting the price of its popular Kindle e-book reader in the United States and finally offering the service outside of North America, launching in roughly 100 countries around the world. Some questions whether it will be as popular elsewhere as it has been in the United States. From San Francisco, Ian Freed joins me now, vice president of Amazon Kindle.

Ian, first of all, will the rest of the world get the most up-to-date modern version of Kindle that has been in the U.S.?

IAN FREED, VICE PRESIDENT, AMAZON.COM: Well, yes, starting today, for the first time, we're making available Kindle, the same Kindle that we launched earlier this year in the U.S., and we're excited to enable this for customers in over 100 countries around the world.

QUEST: Now will it have the same, if you like, accessibility? And by that, one of the things about Kindle over, say, for example, the Sony e- reader, or the other ones is the online ability, the Wi-Fi ability. And will you be offering that in places like Europe too?

FREED: Well, one of the great things about Kindle...


FREED: ... where we'll be able to enjoy by ordering Kindle starting today.

QUEST: Now, I have to say -- express an interest, I have tried out both the Kindle and your competitors, and I have to say what's interesting is very quickly you do forget that you're reading online. And I think that is the big difference from these new machines versus the traditional ones, isn't it? It's the technology, the sort of black-on-white effect that it has that really is very strong.

FREED: Well, yes, as you can see from Kindle, the screen is unlike any other of the computer screen that you've seen. It's much more like reading a paper book. And we do that so that the technology can just (AUDIO GAP) out of the way of the end customer, and they can get lost in the author's world.

It's something that we've achieved very successfully in the U.S. There is a great amount of excitement. And internationally, consumers will start being able to do this right away, and select from over 200,000 books, probably the largest global catalog that has ever been delivered to this point.

QUEST: OK. Final question, the -- because I have the same skepticism that what I would describe as the crinkle effect. You can't feel that deliciousness as you turn the pages. Have you thought about getting the machine to make a noise?

FREED: Well, again, our goal is to really make the Kindle as simple as possible for customers. And just get out of the way. And if it made a noise or interrupted you with beeps or anything like that, I think it would be more difficult to get lost in what the author is writing, whether that is fiction or non-fiction.

So we really try to make Kindle disappear in the reader's hands, and we found that that has worked incredibly well.

QUEST: Ian, many thanks, indeed, wonderfully interesting and controversial, because there is just -- I know from having done this story before, people will love it and they will loathe it. But, Ian, we thank you for coming in talking about that.

Let's talk about this sense of how the announcement affects e-book marketing and the publishing. Maggie Lake is in New York.

First up, Maggie, let's have a bit of conflict of interest out of the way, have you ever tried Kindle, Sony e-reader? Have you ever tried any of them?

MAGGIE LAKE, CNN INTERNATIONAL CORRESPONDENT: No, Richard. I haven't. I'm exactly the kind of person they're going after because I don't own one and I haven't tried one.

QUEST: Right. OK. So -- and it's important to say that because I have had one and I have to say I had the other one, and I love it and I use it on my travels.

But what does this -- but the e-book market, I mean, is it big, does it stand to become larger? Or is Amazon just whistling in the wind?

LAKE: No, they're not, Richard. It's really at a turning point. And I was speaking to Michael Gartenberg (ph), someone we talk to a lot about that (AUDIO GAP) research firm now. And he said, you know, way back (AUDIO GAP) came out (AUDIO GAP) said it's the first personal computer that's worth criticizing.

And that's sort of where we are with e-readers and the big roll-out of the Kindle. We're at a mass point now where this market is really seen to be -- to be growing, to be blowing out, and it's really going to sort of change the way we do it.

To keep it in mind, though, it's still dwarfed by the music player -- the digital music player, but it's going -- growing very quickly, about 5 million of these things are expected to be sold this year. That's up four- fold from just last year.

So then really at this point, Kindle has got an early -- Amazon with Kindle has an early advantage here -- early-to-market advantage. It has got its own sort of ecosystem. But they're going to really have to keep fine-tuning that along with the price, because as you mentioned, they do have a lot of competitors nipping at their heels.

Sony the best-positioned, but you've got, as you could see -- I think we're going to put up on this screen, Asus, iRex, that's supposed to say, with an X, and Plastic Logic are also coming out with versions. They're all going to be things -- there is going to be a lot of choice.

But I already know what you're thinking, the 800-pound gorilla in the room is Apple. They don't even have a product yet, but they're really the competition that everyone assumes all of these companies are going to have to grapple with.

You know, there is that long-rumored tablet that they're supposed to be coming out with. If they do, Michael Gartenberg and other experts say they will instantaneously be a major player in this market. So, you know, Amazon has got its work cut out for it. How do you compete with a device that's not even out there yet?

QUEST: Whoa, that assumes that the actual e-reader/Kindle genre has longevity and actually is wanted by anybody else other than geeks and travelers like me.

LAKE: Well, this is -- and this is the issue for publishing, you know, how much of this is going to eat away -- does it sort of -- do you get more and more people mass-moving onto books? The argument that you, a lot of other people who are readers anyway, that's not really the audience, some would argue, that they're going after.

It's the people who don't buy books, who don't read a lot, will they gravitate? I don't think -- and this is where I'm veering from the experts, this is just sort of my personal experience, I don't think any of these devices are that transformative experience yet. That you're going to see that sort of knockout.

And that's why everyone is looking to Apple, because they've done it with the music player, they've done it with the phone, do they do it with the e-reader and grab that audience that's not currently participating in that market? That's what everyone is watching for.

QUEST: So if I buy you one for Christmas -- well, you won't want it, you won't use it. All right. Thanks very much, Maggie. Now I know not -- what not to get you for the holiday season. I was going to get them all -- all right. Maggie Lake, who is in New York.

In just a moment, is it the end for (INAUDIBLE) for fashion week? (INAUDIBLE) with why runways may be slipping out of vogue. Designers cut costs and corners, and they're going straight to the showrooms.

We'll be back.


QUEST: Welcome back.


This is CNN.

Delighted to have you on board.

On Wall Street, stocks are taking a bit of a breather. Two excellent days of gains. But now, of course, it's time to take a breath and see what comes next.

Susan Lisovicz, who is in New York, once again they've let you onto the floor of the Stock Exchange. I hope you're -- I hope you didn't sell that gold necklace yesterday that we were talking about. This, you know, there's more money to be made it in today, but not in stocks.

What's gone wrong today?

SUSAN LISOVICZ, CNN CORRESPONDENT: Well, we have the first back to back gains since April. And I think we're -- triple digit gains, I should say. That's a very important note there -- triple digit gains back to back since April.

But I mean I also think, once again, it's a -- it's a very quiet week. And, really, the next shoe to fall is corporate earnings. We're going to hear from Alcoa after the bell and, of course, that will be posting tonight. We'll be talking about it tomorrow, undoubtedly.

But the big flood comes in the next couple of weeks. And I think what you want to hear, what investors -- what analysts are telling me is that they want to see if the revenue picks up, because there's been such a massive amount of cost cutting.

Now, we did hear from Costco. It's a retailer. It's one of these bulk warehouse retailers. And its profits fell, but not as much as expected. Its revenue increased a -- you know, just very tepidly. But that's OK. The fact that if there's revenue growth, the chief investment strategist again Federated says if you just even get a little bit of revenue growth, that will help the profit and that may be something that will push -- continue to push stocks higher.

QUEST: As we look forward into the next week or two or three, Susan, will it be enough to meet or to merely meet revenue expectations?

Let's assume you're not going to beat, but at least not lose.

Is meeting good enough?

LISOVICZ: I would think so. Yes, I think so. I mean it's been a real disappointment on -- on revenue. It depends how low the bar is set, as well. But, you know, remember, this is just a -- a terribly difficult time to get consumers to spend in the U.S. I'm just reading today that Target is slashing toy prices 50 percent for the holidays. This follows Wal-Mart slashing prices on 100 popular toys.

It's going top be tough. It's tough to get sales going in this kind of environment. And the way that we -- we've had profits generated in the last couple of quarters is by cost cutting.

QUEST: Susan, do -- that foible you've got round your neck, have you been ready -- have you been to the -- to the bank to get all the Lisovicz jewels out?

Because, you know, with gold, it's now (INAUDIBLE).

LISOVICZ: Well, you know, I do -- I do recommend a diverse portfolio -- a (INAUDIBLE) portfolio. And there are more -- there are more precious gems, more precious metals other than gold -- for instance, silver and platinum. And this one was also a gift.

So, Richard, you could say I'm gifted, huh?

QUEST: All I...


QUEST:, it wasn't a gift from me.

Susan, take her away.

Susan Lisovicz, who is at the New York Stock Exchange.

I do love the way Susan thinks. You know, we're now out of the summer, we're into the fall. We've got, of course, the holiday season coming up.

The hint hasn't been lost on me.

Let's talk about airlines and the moves that have been made by some of the world's airlines. Things seem to be going from bad to worse. Cost cutting and flying into more trouble. Companies are doing whatever they can.

Ryanair has been back in the news. Boeing and British Airways, of course, seems to be perennially in the news.

First of all, British Airways. The company says new baggage fees, $60 a charge for a second bag in economy. From today, seat reservation charges, they're going to be $15 in economy and up to $95 for Club World long haul, if you want to pre-select your seat, more than 24 hours in advance. The devil is in the details, where their charges are concerned.

But B.A. also announced 1,700 jobs are to go. Voluntary redundancy is -- as part of their restructuring. And as we told you last night, and they say that there are still serious financial difficulties.

Aer Lingus, the national airline of -- of Ireland, which has twice been the target of a Ryanair Michael O'Leary take over bid, rebuffed. O'Leary has said in the last couple of days that he isn't going back for another one. My feeling is, he told us at a press conference he's hoping to just basically, to pick (INAUDIBLE) the airline up, which he believes when it goes bankrupt.

But Aer Lingus further cost cuttings announced. Nearly 500 redundancies, 100 staff leaving the company. And they say, of course, that they have been cutting routes, as well.

Other issues with Aer Lingus. They say that they will be reforming their I.T. systems and they're about to start a six week consultation period with unions.

Michael O'Leary, who has a stake in Aer Lingus, is prevented from bidding at the moment, by and large, says that he is just going to wait until he can pick up the airline, perhaps in bankruptcy.

Jim Boulden, our correspondent, spoke to the Aer Lingus chairman some weeks ago in Dublin. He was talking to Colm Barrington about the airline and the way in which it was going to move forward.

It's worth listening again.


COLM BARRINGTON, CHAIRMAN, AER LINGUS: Well, the airline industry globally is facing huge problems. AIRTA (ph) is now predicting that in 2009, the world airline industry will lose approximately $11 billion. And that's up from their forecast. In the beginning of the year, they were predict -- predicting a loss of about $3.5 billion.

So as you can see, the -- the situation is bad and has been deteriorating.

We are finding in Aer Lingus, that the North Atlantic market is particularly bad. It has huge pressure on yields there. So fares in the North Atlantic are very low. And if -- if you look at B.A.'s results and Virgins results and the other U.S. carriers, also -- and U.S. carriers, also -- you'll find they're having the same problems.

So the market generally is bad. In Ireland -- and Aer Lingus' business is very much into and out of Ireland -- it's been particularly bad because of our own economic and consumer conditions here. So we are facing sort of a -- a very difficult domestic and international situation.

As you know, across the street, we have Ryanair, who is Europe's most competitive airline. And they drive down fares very significantly and we have to get our costs in line to match those -- those fares that are available to us in the market.

JIM BOULDEN, CNN CORRESPONDENT: That means you're going to have to go dealing with the pilots' unions, the -- all the other unions that you have to deal with. It's going to be tough.

Do you expect strikes?

Do you expect walkouts?

We've had that before at Aer Lingus.

BARRINGTON: It's going to be -- well, we haven't actually had strikes at Aer Lingus for some time. But it's going to be tough. I hope that people will realize that if Aer Lingus is to survive and their jobs are to survive and they -- and Aer Lingus is to have a vibrant and profitable future, that they're going to have to come along with the current market realities.

So I hope we won't have strikes. I hope the people will accept what we are going to propose as reasonable. We are not trying to do anything that is not market and we're trying to get a program that will make Aer Lingus profitable and survivable into the future and then come along with us.

BOULDEN: Isn't one of the easier solutions to just give in to Ryanair, who is one of your larger shareholders, and Sir Larry is CEO. They've launched two attempts to take over Aer Lingus.

Wouldn't that just be the easiest way to go, to consolidate what happens in Ireland?

BARRINGTON: Well, I don't think we should always do the easiest thing. I think -- in Ireland, I think having two carriers for the -- for an island population is a good thing. But -- but that's not my job. My job is to look after the interests of Aer Lingus, the shareholders in Aer Lingus are the stakeholders. And I believe that the Ryanair bids have under valued Aer Lingus very significantly. I still believe that, even though our share price today isn't as good as the last Ryanair bid.

But it's -- it's significantly undervalued Aer Lingus. And I certainly don't want to give away value that belongs to Aer Lingus shareholders to Ryanair.

And Ryanair has done a significant damage to Aer Lingus by talking us down all the time and by launching these bids, which, I think, actually, have very little chance of success because they didn't have the -- their ducks in a row and they didn't have the new E.U. competition authorities on their side.

So these bids were -- were actually never going to succeed at the -- because of price and because of competitive issues. And it's actually been quite damaging to us over the last few years.

BOULDEN: But would you say never say never if it came to somebody else coming in and asking for a -- a possible merger?

BARRINGTON: Absolutely I never say never. I mean the board has to look at any offer that comes forward. And this, realistically and rationally, and they're taking into account the shareholders' interests. And if somebody came in with a good offer, we would certainly look at it.


QUEST: Jim Boulden speaking to Aer Lingus Chairman Colm Barrington. That was after the (INAUDIBLE) in September. Well worth hearing again, of course, as Aer Lingus is very much in the news.

When we come back in just a moment, as revealed, we're in with the new. Find out why this iconic hotel chain has been given a billion dollar make-over. And we'll hear how many meetings it took to change that to this.


QUEST: Welcome back.

Look at this -- one of the world's most recognized hotel brands and logos. Since opening in 1952, nine out of 10 traveler have stayed there. In fact, around the world, three people check into a Holiday Inn every second.

If you were the master of that brand, why would you want to change it?

Why would you want to get rid of this and go to this -- the new branding?

More than 1,200 of these hotels have been relaunched under a billion dollar scheme which Holiday Inn says will change in quantity and drive consistency.

The rebranding took seven years to do.

I spoke to the CEO of Intercontinental Hotel Group, IHG.

He's Andy Cosslett.

I needed to know from Mr. Cosslett, the brave man who tinkers with a brand from that to that, an old institution.


ANDY COSSLETT, CEO, INTERCONTINENTAL HOTELS GROUP: For me, I think the big adjustment and the big decision was about the logo, because you pass it everyday. Millions of people pass it everyday. But we changed a logo that has been untouched since 1952, that was part of the pantheon of branding in -- in America. It was up there with Budweiser and Ford and (INAUDIBLE). And the trick was keeping all the -- the -- the sort of the (INAUDIBLE), as we say, of the brand in the scripts and keeping all the familiar -- familiarity, but moving it on. So we're not jettisoning anything that is alive, but definitely making it more contemporary. And that's a real skill.

QUEST: How many meetings did you have to have over this?

COSSLETT: Well, I was just in some of the big review meetings in the end. But I probably had about six of those. There was probably 30 or 40.

QUEST: What?

COSSLETT: Over about two years. Yes. Every -- every couple of weeks, probably.


COSSLETT: We did a (INAUDIBLE) agency. But we looked at everything. We looked at the script. We looked at the colors. We even considered at some point jet stream green going to a more or a different color -- a more modern color. But we soon realized that would have been a big mistake.

QUEST: And what are you seeing here?

COSSLETT: Well, you look for a lot of things. If you -- if you're in a hotel you don't know that well, you're looking at, you know, do the brand standards that you set out, are they being applied?

So the -- the color of the carpets, the wear, the depth of the carpet, what's under the carpet, the under belt. I'm looking to see if there's any sort of wear and tear around here where the trolleys can come and bang it and if it -- if the hotel is not at the right level of repair, you can have big chips out of the doors here, which look unsightly and (INAUDIBLE) after a time out.

QUEST: What's all this all about?

COSSLETT: Well, it's just an opportunity to give -- we actually indicate through the new -- through this new sleeve -- this is a soft pillow. That one's -- that -- there's another one (INAUDIBLE) firm.

QUEST: Oh, I see. Oh.

COSSLETT: So this is -- this is a designation on it, soft or firm.

QUEST: All right.

COSSLETT: So that you don't have to hunt around and phone down. You've got on the bed a choice of pillows. Somebody even stole a toilet once.

QUEST: They did?

COSSLETT: Oh, yes. We've had showers out. We've seen (INAUDIBLE).

QUEST: Showers?



COSSLETT: They actually take the plumbing out, as well. And...


COSSLETT: Yes they do. And they stake the -- they take the taps out. And...

QUEST: Really?

COSSLETT: And some people actually remove the whole -- the whole toilet. Yes. Wardrobes, we've lost.

QUEST: What drove you to do it?

COSSLETT: For us, it's our biggest brand. I mean it's far and away the biggest brand in our portfolio. It's the engine of the business. And it's growing fastest of all our brands around the world.

QUEST: A year ago, when we spoke, you said it was going to be a challenging 2009.

Has it proved to be more or less challenging than you feared?

COSSLETT: It's certainly challenging. I think probably it's about where we expected it to be, about -- at the end of 2009, it will be where we expected it to be. We knew it was going to be tough. I think the -- the occupancy has held up a little bit better than we probably expected right through the year. And, actually, the last few months, it's been stable.

But the price and the rates has been what's come off as the business traveler has basically disappeared.

QUEST: So you were very much decided -- a policy decision. You were going to shift the rate to keep market share and keep occupancy?

COSSLETT: I think there comes a time where even though we're big and, you know, we're the biggest company in the world in terms of the number of rooms, but big though we are, we can't control the whole industrial pricing of the whole hotel sector. So we've had to play our part in making sure that we were offering value to -- for money to customers and guests, frankly, who have been looking for a bit of that in the last six or eight months.

QUEST: In terms of the business, the totality of business, between business and leisure, what were you ending up before the crisis, would you say?

COSSLETT: We were probably 60 -- just over 60 percent business.

QUEST: Right. So this -- 60-40, which will become, what, 50-50 over the...

COSSLETT: So I'd say about 50-50.

QUEST: You're hoping that?

COSSLETT: I think we'll probably get back to that. And I think we'll probably get back to that, you know, in the -- in the near to mid-term.


QUEST: Andy Cosslett, chief executive of IHG International -- Intercontinental Hotels Group, the largest in the world, on rebranding of the Holiday Inn.

The weather forecast -- more, actually, I know that's sort of putting it rather tritely at the moment. Typhoon Melor is impacting Japan with winds and rain. Typhoons, hurricanes -- whenever they come along, that's more than just weather.

Guillermo is at the World Weather Center.

GUILLERMO ARDUINO, CNN METEOROLOGIST: Yes, we're starting to check Marita (ph), in fact, to see if there were any significant delays, but I can't log in. So maybe there is something going on.

But you see the side here it's affecting, especially the southern sections. We see some impact in the north, as well. I was checking out Canadawa (ph) in Komatsu here in the north. We see rain showers. But then Tokyo Yokoto Airport is reporting intense rains.

To the south, Misawa and Nagoya, also rain showers.

This is what's going to happen with Typhoon Melor. You see it's moving extremely rapidly -- 46 kilometers per hour. So the damage is going to be more associated with the winds that are 140 kilometers per hour right now. So it's weakened significantly.

But on top of that, you have -- you have to add the translation speed. So it puts it at 190 or so.

But compared to what we see in the Philippines, Richard -- and this is going to be really, really bad for the Philippines -- Tokyo appears to be in good shape. Actually, tomorrow afternoon, maybe in the morning, we'll still see the winds.

But look at what's going on with Parma. It's coming and going. Of course, there is a relationship between Parma and Melor. Because of Melor is that we see this again.

The northern section that got one meter of rain in the Philippines are expected to get another meter of rain. So imagine the devastation in the area.

Now, let's look at a little bit of good news. And this is for not the southern counties of England, but the rest of England appears to be in good shape in the next hours. But in the southeast, where we see the rain right now, also in the Netherlands. So I'm talking about Jersey in the Channel Islands with thunder; also, Cambridge, Benson, Bristol, Cardiff in Wales.

In northern parts of France, we see some action, as well. Antwerp in Belgium and Brussels with rain showers and rain.

But London it's going to be in good shape on Thursday. Then come Friday and Saturday, we will be with some lingering clouds. But the situation is improving dramatically over here.

In Germany is where we will see more action. We see it raining in Shavet (ph), in Saarbrucken, Munnerstadt (ph), Goeterschloe (ph). So the rain continues all over -- northern, central and southern parts of the country.

In France, also, that same thing. We see action in Dovil (ph), in Paris, Levonge Airport (ph) and into Cannes and Charles de Gaulle the thunderstorms.

So the weather is giving me a lot to talk about in Europe. So soon it's going to improve.

We'll see you on the other side of the break.

Stay with CNN.


QUEST: As the shows get underway at Paris Fashion Week, the runway models may be glancing down and they'll be seeing empty seats. The costly high tech shows are putting a strain on designers' budgets, as our senior correspondent in Paris, Jim Bittermann, explains.


JIM BITTERMANN, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): The designers are still weaving dreams and knitting desires. The models are still whacky (ph), the prints still flowing. But there's fraying around the edges of the Paris ready to wear shows this year. The fashionista mob seemed a bit smaller, as stores sent fewer buyers and magazines sent fewer writers and photographers.

There's no reason the fashion business should be immune to the economic crisis. And in a year in which one major designer went broke and plenty of others are just getting by, there's ample evidence it is not.

Behind the scenes, fewer parties and less work for just about everyone from hair stylists to lighting techs. The dozens of models employed for a show have seen their salaries decline and openly wonder about their future.

JOAN SMALLS, FASHION MODEL: They won't travel as much as they used to (INAUDIBLE) crowded places or your day rate is less. And if you don't get it, there is another model, you know, after you that will.

BITTERMANN: It's no surprise that the accountants are watching the costs. These shows can run upwards of a million dollars a pop -- a pretty expensive 10 or 15 minutes of fantasy that is increasingly coming under scrutiny.

(on camera): The question is, is all this really necessary?

Could you get by without the models, the makeup, the music, the spectacle?

In fact, could you sell fashion without the runway?

(voice-over): Australian creator Martin Grant has already made up his mind. He's dropped off the runway for the past two fashion seasons and instead has invited writers, clients and buyers to his Paris showroom -- something he says has advantages beyond just saving money.

MARTIN GRANT, FASHION DESIGNER: People enjoy, I think, the environment that's more intimate. There's a lot of brush to it. People can touch the clothing and they can see it close up. Also, I'm more available, so I can actually go up to people directly.

BITTERMANN: That idea of addressing clients directly without the filters of fashion critics or even retail stores is behind what was one of the most complex fashion shows this year. Alexander McQueen brought 1,000 people in to see his show in person, but he also turned his runway into a video studio with robotic live cameras to stream the show onto the Internet -- hoping to reach a far larger audience well beyond the room full of beautiful people.

The business has to change, he believes, and it's not just the economy that's driving it.

ALEXANDER MCQUEEN, FASHION DESIGNER: It has got to progress and it's got to move on. I mean I've been doing these shows for up around 15 years now. I mean, I must have done about over 60 shows. And even I get bored with the same concept. So -- so this way I can -- I can see a brighter future for fashion.

BITTERMANN: The traditional runway show, McQueen and many others believe, may not be in fashion for much longer. And an industry that has always preached change to others is now struggling to find a way it should itself evolve.

Jim Bittermann, CNN, Paris.


QUEST: I always remember what Sir Paul Smith told me once covering London Fashion Week. He said, we're not curing AIDS or world poverty, we're making clothes. We'll cover that in the future.

Now, when we come back in just a moment, Profitable Moment. And we're concentrating on your world at work.


QUEST: Tonight's Profitable Moment -- for many of us, work is more than just a way to earn money, to buy food and shelter. Our jobs are part of what we are and who we are and how we express ourselves, whether it's our artistry, our skills, our abilities. We spend hours every day doing our jobs. And on QUEST MEANS BUSINESS, we think it's time to celebrate the achievement.

So we have launched The World At Work -- bringing the address where you can get hold of us and where you can send us. We are introducing you to people who have a passion for their jobs.

Now, they're not unique jobs, but they are unique people involved, from those who put up billboards to those who paint and park cars, the men and women who know the tricks of their trade and a passion for doing it. And we want you to join in.

Send us pictures and photographs, videos and stories, about what you do and why you do it and we'll feature some of the best ones on the show --

And that's QUEST MEANS BUSINESS tonight.

I'm Richard Quest.

Whatever you're up to in the hours ahead, I hope it's profitable.

Christiane Amanpour is next.