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QUEST MEANS BUSINESS
British Airways Staff to Go on Strike; Dubai Gets $10 Billion Bailout
Aired December 14, 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 INT'L. ANCHOR, QUEST MEANS BUSINESS: Twelve days of travel misery as British Airways staff plan to go on strike.
Twelve days late, and Dubai gets a $10-billion bailout.
And twelve festive days of world at work. Tonight, we're going for gold.
QUEST: There are five gold rings on this Monday edition. I'm Richard Quest. I mean business.
Good evening. British Airways, tonight, is preparing for a long and damaging strike after its cabin crew voted overwhelmingly to walk out. The strike is due to start on December 22, as the holiday travel season gets into full swing. It will last for 12 days. BA's flight attendants are protesting over new working conditions that they say the airline has imposed to save money unfairly.
BA is already starting to prepare for the shutdown. This is the BA's web site. It stopped taking bookings. The Chief Executive Willie Walsh has advised travelers not to buy tickets during the time.
This is a serious issue for an airline, at any time, but as for one plagued strikes in the past, CNN's Jim Boulden is outside, waterside, BA's headquarters.
Jim, BA is basically looking the union straight in the eye and saying do your worst, we'll take it on the chin.
JIM BOULDEN, CNN INT'L. CORRESPONDENT: Absolutely. I asked Willie Walsh point blank, are you going to back down? Are you going to negotiate? Are you going to compromise? He said, absolutely not. These working practices are in place and they are going to stay in place. And as you mentioned earlier, Willie Walsh telling me that people, passengers should not be booking flights during the holiday period. I was quite surprised by that .
But we did have a few minutes with him today, where he explained why. Though he expected this to happen, why he is so furious that the union has taken this decision.
(BEGIN VIDEO CLIP)
WILLIE WALSH, CEO, BRITISH AIRWAYS: What I'm going to do now, and over the next few days, will be to get all of my team working on plans to minimize, if we can, the action that the Unite has taken. But I need to be honest with people. You know, this is a very significant step by Unite. And I'm not clear at this stage what changes, or what plans that we can introduce. But I'll look at all options. I'll look at operational options available to us, legal options available to us. And clearly industrial relations, so I remain available to meet with Unite, and I've made that clear to them when I met with then last Friday.
BOULDEN (On camera): But if these legal steps don't work, and if you don't negotiate, come December 22, there is no way British Airways can take to the skies without cabin crew.
WALSH: That is true. We can't fly all of our airplanes without cabin crews. But we are going to look at all options that are available to us. So I think our options will become clearer over the next two to three days.
BOULDEN: Certainly talking to the cabin crew, as we did earlier today, a number of them were very personal. They were saying this is really Walsh's problem. And they were saying, really, Walsh, you the CEO are the one who can make the change. That they see it very clearly that - they think you are imposing changes on them and they take it very personally.
WALSH: Well, I have made changes. And I think that is the job of the CEO. It is not a easy job, but I've never tried to hide away from the difficult, you know, and challenging position that we're in. British Airways needs to make changes. And I think the changes that we have introduced are very minor. It means the crews that we have Heathrow are now operating to the same crew compliments as our crews at Gatwick. I don't believe it imposes any, any stress or any impact on the operating crew. Indeed, for many of them, it has no impact whatsoever, none.
So, you know, I would strongly urge Unite to stand back from this. I think all cabin crew, and I'm sure you got a sense of that, when you were talking to them today, all cabin crew recognize that changes must be made. Indeed, right across this business we have had change from our people in an effort to address the significant challenges that British Airways faces.
BOULDEN: Is there a chance you will compromise in the next few days?
WALSH: I need to be very clear with you. The changes that were introduced in the middle of November will not be reversed. Those changes are in. The general secretaries of Unite, the joint general secretaries met with me on Friday and I made it clear to them that that was the case. In fact, I pointed out to them that those changes had facilitated voluntary redundancy requests from over a thousand cabin crew; many of those, if not in fact, nearly all of those have now left the business. So they are not here. So even if I wanted to I can't because we don't have those crews available to us. So these changes will not be reversed.
BOULDEN: What about the reputational damage to BA. I mean, that could be many, many years.
WALSH: You know, industrial relations damages any company, every company. To damage British Airways at a time like this, when the industry is in the deepest crisis that the industry has ever been, is I think misguided. I really do. And again, I would encourage them, in the interest of their own members, I would encourage them to back off from this. Because this is only going to damage the future viability of British Airways, at a time when our industry is struggling, at a time when British Airways is actually manage to make significant progress ahead of our competitors. You know, it is really disappointing to me to see this reaction from Unite.
BOULDEN: As of now, passengers should not book tickets on British Airways for the next few weeks? Is that the case?
WALSH: From the dates that have been given, and for the strike action by United, I believe it is the 22 of December, to the 2nd of January. I say I believe, because I have not yet personally heard anything from Unite. I know they have been talking to the press, but they have not contacted me in any way. So, I'm going --
BOULDEN: That is the dates.
WALSH: So, I'm going on the basis of the information that I've received from you. And clearly, you know, I would not encourage anybody to book with British Airways during that period. Because that is -
BOULDEN: That is an incredible statement for a CEO to make.
WALSH: It is. But I need to be honest. At this point, we're facing I think one of the greatest threats we have ever faced. I think that threat is a gross overreaction to the changes that we have made. But at this point, you know, we clearly are going to be focused on trying to deal with the customers that have booked for -with British Airways for flights during that period.
BOULDEN: So, Richard, Willie Walsh there, not blinking, not backing down. I think the key to this is what he said very early in that interview, Richard. And that is they are looking into the legal options and maybe we'll see this going to court in the next few days, Richard.
QUEST: The reality, Jim, the damage has been done. As we showed earlier, on the booking, if you look at the web site, the BA web site, now says, "flights not available". Now although those -we can see on the screen, if you look closely, "flights not available", it says again and again. And this was for flights Jim that basically had extremely -were extremely full and were charging premium prices for.
BOULDEN: Yes, and of course, it is so important for British Airways this time of year, because it has those long-haul premium flights to the U.S., to Australia, to the Middle East, to Africa. And of course that is what it would be counting on. It has had a terrible year as we know. The fiscal year that ended earlier this year was very bad. We know that it could even be worse going into this year.
But I will leave you with this, Richard, both sides said to me, separately, that they still think there is time for negotiation. Of course, Willie Walsh said he won't be backing down. But it is not a done deal yet. The union says it is ready to talk if Mr. Walsh is willing to compromise. So maybe we will see some action. But if not, as we say, devastating times for British Airways, its unions, and of course, its passengers starting on December 22.
QUEST: Jim, one final point. I just need to quickly - I just remembered, BA, today, gave the valuation on the pension deficit, which is now at 3.7 billion, sterling. So the deficit of the BA pension fund, which might also have a connection with the Iberia merger, it is getting worse. BA is fighting on all fronts here.
BOULDEN: Yes, you know, some analysts would say that BA is a pension fund that actually flies airplanes because of this huge hole. We have to remember this is an old state-run, used to be state-run airline, legacy carrier, it has much higher costs. One of those costs, of course, you think of it like the auto industry in the U.S. The legacy of the pension fund, it is massive.
BOULDEN: And that is, of course, just one of the many things that Mr. Walsh is trying to deal with.
QUEST: Jim Boulden, at Waterside, that is the headquarters of British Airways, near Heathrow. Many thanks.
Now, obviously, if you are planning to travel you will want to keep in touch with that story. CNN.com has all the details. And we will bring more details to you, as and when, those negotiations take place.
You are up to date with the main business in Europe tonight. Max Foster now at the London CNN News Desk with the main news.
QUEST: Now it pays to get on well with your neighbors. Take Dubai, they may be up to their neck in debt, but Abu Dhabi has chipped in $10 billion. There is plenty of work to do with that debt. We are going to be talking about that. QUEST MEANS BUSINESS continues.
QUEST: The news that Dubai, and indeed, the financial world has been seeking: Abu Dhabi is, after all, going to stump up the money that Dubai needs to keep its creditors at bay. It is a $10-billion lifeline and it means that the state-owned Dubai World will avoid the embarrassment of defaulting on $4 billions of bonds that were due for repayment today. CNN's Cal Perry is in Abu Dhabi.
CAL PERRY, CNN INT'L. CORRESPONDENT: It was the company Nakheel which needed to be bailed out at the 11th hour and it was Abu Dhabi which did so at just before the markets opening Monday at 10 a.m. local time. The markets clearing over 10 percent growth today because of this bailout, a $10 billion bond handed down by Abu Dhabi to this small company in Dubai which does grandiose properties along Dubai's beach front.
Now we heard from Sheikh Ahmed Al-Maktoum, he is the financial leader in Dubai, and he spoke about the need for more transparency. This is something that is key for investors around the world. Dubai World, which is the conglomerate which owns Nakheel, has been accused by many investors of not being transparent enough.
It is unclear how much money Dubai is really in debt of. We have heard figures as high as $120 billion, leaving many to believe that this bailout is just a drop in the bucket and perhaps the first of many to come.
Cal Perry, CNN, Abu Dhabi.
QUEST: We need John Defterios, who anchors CNN's "MARKETPLACE MIDDLE EAST", to help us understand.
JOHN DEFTERIOS, CNN ANCHOR, "MARKETPLACE MIDDLE EAST": Hello.
DEFTERIOS: There is a lot going on.
QUEST: There's a lot going on. First of all, I don't want to say I told you so, but I told you so. We all told -
DEFTERIOS: Well, in fact, 10 days ago when we had this conversation we did say there was talks taking place at the very highest level. It didn't appear that way last week, because this went all the way down to the 11th hour. But I don't know if you remember, there was a television advertisement, "How do you spell relief?" from an anti-acid and indigestion, and they would spell the name of the brand. This is the case of spelling relief for Dubai, comes in the form of Abu Dhabi.
Indeed, it did come in the 11th hour, and I think that sends a message, in a sense, that we are going to be there, but with certain conditions. And we don't know those conditions just yet.
QUEST: Come on, let's be - let's have a bit of bluntness. Blunt speaking here.
QUEST: This bailout of Dubai, is as opaque as everything other part of dealings in the Emirates.
DEFTERIOS: Well, let's be candid here. It doesn't look like the bailout that we saw of the U.S. banks, so I would agree with you on that sense. But let's take a quote here, from the person who is the chairman of the Dubai Supreme Fiscal Committee. This is somebody who is very well known at the top. He is also the chairman of Emirates Airlines. And the quote says, "Today's actions, taken together, demonstrate a strong commitment as a global financial leader to transparency, good governance and market principles." That is Ahmad bin Saeed Al Maktoum. Now the reason he said this is because they want to know start introducing greater transparency. The only challenge is, we know there is a $10 billion hand out. This is not in the form of bonds.
QUEST: We don't know.
DEFTERIOS: There was a $5-billion bond before. There is a$10 billion bond in February. This was not listed as a bond, but actually as a contribution to the support fund for Dubai. We don't know the conditions. I actually spoke to one banker in the region who said this could be of financial conditions attached to this, but also political conditions. What does it mean for Dubai's foreign policy going forward, as well? How much freedoms does it have to move.
And we also don't know, Richard, to be really candid, if this means stakes are attached. I did have a conversation when I in Kuwait, with somebody quite senior, in the Dubai circle. And he said, Abu Dhabi may be taking stakes in the future. But again, that is still to be determined, but -
DEFTERIOS: One big relief for investors' today, that there is $10 billion on the table and there is not a default on that (UNINTELLIGIBLE) bond.
QUEST: So we have not idea what the collateral against the $10 B is?
DEFTERIOS: Not just yet.
DEFTERIOS: Go ahead,
QUEST: No, you go ahead.
DEFTERIOS: No, I was going to say, there is a very interesting thing coming up in the start of 2010. I mean, Cal alluded to this in his report, but this by no means that there -it does not that there is not payments due in 2010. We have a list of some of the bigger ones.
DEFTERIOS: But there is $9.7 billion of bonds and loans due in 2010; $7 billion of them come in the first half. We have a list of those as well. So Borse Dubai, that is a February 19 payment of $2.5 billion, on a loan, DP World, $1.2 billion, that is at the end of March; $2.1 billion, June 20. And then we have the DIC, $1.25 billion on June 27. So -
QUEST: Now if you accept that they have already used $4 plus billion from the money they go today.
DEFTERIOS: Yes, for the Nakheel payment.
QUEST: For the Nakheel payment. And they are out of cash again.
DEFTERIOS: Yes, this is the challenge. So, the restructuring has to take place. We saw those payments due. There are a dozen loans due in 2010.
DEFTERIOS: So, the hard work begins on restructuring.
QUEST: I need to just ask you quickly, review, we had been told and if we listen, if we listen, quickly, we can hear a senior monetary, a financial official, in Dubai, saying there would be no bailout.
(BEGIN VIDEO CLIP)
ABDULRAHMAN AL SALEH, DUBAI FINANCE DEPT.: The government is a shareholder of Dubai World, but the company was set up that it will, on a commercial basis, are not guaranteed by the government. Considering the diversity of the business it is doing, the risk involved, so it was decided from inception, at the time of establishment, not now, at the time of establishing, that it is a commercial entity, not guaranteed by the government.
So lenders and contractors that have been dealing with Dubai World on that basis, that they consider the viability of the business, the projects involved and they provide financing on that basis, not on the basis of government guarantees.
(END VIDEO CLIP)
QUEST: I understand the real politic means that what you say two weeks ago is not necessarily what you say yesterday.
DEFTERIOS: This is a shift.
QUEST: But this is a shift.
DEFTERIOS: It definitely is a shift, but it is also comes on the day of the GCC Summit, the (UNINTELLIGIBLE) summit, the president of the UAE came in and talked about a great deal unity. They wanted to get this done before that meeting started today in Kuwait City.
QUEST: Please watch this further.
DEFTERIOS: Yes, we'll be talking about it, I'm sure.
QUEST: We will. Many thanks.
QUEST: Now, Abu Dhabi's backing for Dubai came as a relief in the markets. Let's have a look and see how the Euro bourses traded. And small gains, but bearing in mind after what we have seen recently, small gains are better than none. The London FTSE was the best performer of the major bourses; up by 1 percent, 5,315.
Interestingly, London, well the LSC (ph), itself was a major gainer, up nearly 10 percent on the day. Because Bourse Dubai may not now have to sell it's 22 percent stake in the LSC (ph) because it has the money from - well, you get the way this thing is working.
Long story short, which I haven't already, up 1percent in London. The Xetra DAX, where Deutsche Bank gained 3 percent. It was the largest gainer on the market. And Deutsche Banks said is aiming for a pre-tax profit of 14 billion in 2011. That is a long way off, but it is a lot of money.
Finally, the Paris CAC currant, gained the best part of 30 -I beg your pardon -up two-thirds of 1 percent, 3,830. I got slightly confused with all the 38s and all of that.
We will be back with more in just moment. The 12 days of Christmas continues. What goes on these fingers, five gold rings.
QUEST: Now, if any of you are giving true love's five gold rings this festive season, then you have pocketed one of the biggest bonuses we have heard about. And where would you want to spend it? When it comes to looking at five gold rings, possibly at Asprey. Asprey has been selling fine jewelry for more than 200 years. The work of master craftsmen in the workshops on London's new Bond Street.
In the fifth installment of our world at work, the festive version, we are in search of those five gold rings. And it was a perfect place to visit Asprey's head craftsman Steward Gregg.
STUART GREG, HEAD JEWELRY CRAFTSMAN, ASPREY: I'm taking some bands of 18 karat yellow gold, which we have got direct from the bullion dealers.
First, thing we are going to do is niggle it, make it nice and soft. We had to keep it as malleable as possible. Let it cool down. We put it through the milling machine to make it into three sections. And that would also spread the metal and get it into the shape we want.
QUEST: You have been doing this for how long?
GREG: Thirty-five years.
QUEST: Thirty-five years?
GREG: Thirty-five years.
QUEST: After all these years, of working with the stuff. Can you still get excited?
GREG: Yeah, oh, yeah, yeah. O yes, I definitely do. Perhaps not quite as much as I did 30 odd years ago, but yes. It gives you a little buzz and a bit of pride.
My favorite time of seeing gold is when it is actually molten, and rolling around in the bowl, underneath the flame. It is glow is just phenomenal.
Once it cools down, I then start turning into traditional finger shape, just goes around the finger. One we have it formed up into a certain shape, I'll cut through, make sure it has a nice sharp joint (ph). Then I put gold solder on top, clean up the joint on the inside of the band, then I'll put it on a thing called trivlet (ph), which is still not very soft, look at that.
QUEST: I was going to say exactly the same thing. This is supposed fine jewelry and you are taking a mallet to it.
GREG: Yes, exactly.
Well, I'll come across a piece of jewelry, the first thing is turn it upside down, look at the back of everything. Because it is the back which shows how well something is made and how it is all put together. That is the interesting part, as jewelry is concerned.
We can start the cleaning up process, which is basically filing up the join, smooth it all down, and getting it ready for polish. I used to be very intimidated by large diamonds or something like that. But now, I can hold them, and it tends to get a bit blase with them, which is terrible. But we do. We all tend to up them our bench, not even give them a second thought. And that could be worth, a million.
GREG: The engravers what it fully shiny before I start engraving.
Each piece is a one off? That is what makes every day, different.
Now it is dry. There is your finished gold ring.
QUEST: Five gold rings would set you back a pretty penny with today's record bullion prices. Thankfully, Stuart is not short of work this festive season. After all he is a busy man in his "world at work".
QUEST: I assure you, you wouldn't want any gold ring that I had sort of had my hands my hands bashing away at.
Expensive stuff from Asprey. We continue tomorrow, six geese a laying. When we come back in a moment taking top bankers to talks. After the break, President Obama, summons the big hitters to the White House.
It is a heart-to-heart on bucks to bucks.
QUEST: Good evening.
I'm Richard Quest, QUEST MEANS BUSINESS.
This is CNN.
And President Obama rapping the knuckles of some of the biggest names in the financial world, who he called to the White House. And they were discussing how the financial industry would be regulated in the future and how much support they can give to the economy.
Maggie Lake now is in New York.
And there are -- we've had housing summits, we've had -- now we've got a banking summit.
I mean, what good does it do?
MAGGIE LAKE, CNN CORRESPONDENT: Yes, you know, it's very difficult. The president doesn't have much leverage. But it's sort of like being called down to the headmaster's office -- nobody wants to be in that position. It's very public -- a very public scolding, telling the banks you received exceptional assistance from the taxpayer, now it's your turn. You need to get out there and lend to do more to help the economy.
And interestingly, Richard, he also had some tough talk when it came to the thorny issue of financial regulation.
Have a listen.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I should note that around the table, all the financial industry executives said they supported financial regulatory reform. The problem is there is a big gap between what I'm hearing here in the White House and the activities of lobbyists on behalf of these institutions or associations of which they're a member up on Capitol Hill.
I urged them to close that gap. And they assured me that they would make every effort to do so.
(END VIDEO CLIP)
LAKE: So a stern warning that they'd better start walking the walk.
The bankers, for their part, came out after the meeting, talking to the press and said, well, it was a lot of humility, saying, in terms of lending, listen, that -- that same old argument, there aren't as many credit worthy people to lend to. But they admitted that a lot of the ideas brought up in the meeting were good. They're going -- they're going to try hard to implement some of them, including a second look at people who have been turned down.
And also saying we need to do a better job communicating the efforts that we are making in order to try to prop up this economy and that's where our interests are, as well.
So the president sounding a bit more sterner than some of the bankers -- but, Richard, you may notice from some of the video we're playing, the CEOs of some of the most controversial firms -- Goldman, Morgan Stanley and Citigroup -- were not their. Their planes all had trouble getting into Washington, D.C. because of fog. You can imagine they were probably pretty relieved about that.
QUEST: And yet, you know, the one thing about being summoned to the White House, it doesn't matter how much of a master you are in your own universe of the world of banking, you're a minnow at the table of the president.
LAKE: That's right. And, again, you mis -- you said what good is it?
But there is -- there is some financial regulation that's making its way through Congress. So these bankers do have a lot at stake. The rules are going to change how much they change. And that's why the president brought that up.
So they understand the spotlight is on them. And we've already seen - - even if it's not official arm-twisting -- the -- the public rage that -- that's out there is real and it does come at a cost to them.
QUEST: All right, Maggie Lake.
And before we leave you, Maggie clearly did get the e-mail today that we're all wearing red. Everybody seems to be (INAUDIBLE). That's it.
Maggie Lake in New York.
A trading firm at the heart of the London financial markets says it will help staff leave the U.K. if they want to after the British government said it plans to bring in a tax on bonuses. It's the stock brokerage Tullet Prebon. It's one of the first firms to openly offer staff to help quit Britain and avoid the levy. The company is headed by leading city figure Terry Smith. It employs about 700 brokers with offices in Hong Kong, Tokyo and the U.S. state of New Jersey.
And the move, of course, will increase the fears of a bonus tax exodus. The idea is if you can't get your bonuses here or in France, you will go somewhere else.
The finance minister, Alistair Darling, you'll be aware, announced this 50 percent levy on bankers' discretionary bonuses over $40,000 -- that 50 percent levy. And then you've got the income tax of 50 percent, as well.
Now, we're lucky tonight. Bill Winters is the former co-chief exec of JP Morgan Investment Bank -- a quarter of a century with the company. He left in September, just days after he attacked employees in the City of London and on Wall Street, calling them greedy and inept.
In his first television interview since he left JP Morgan, I put to Bill Winters that bankers, to some extent, when it comes to these bonus levies, have only themselves to blame.
(BEGIN VIDEO CLIP)
WILLIAM WINTERS, FORMER CO-CEO, JP MORGAN: To some extent, yes. And then, of course, it's not just the governments that aren't putting up with this, it's the people that support the governments. And I think, to some extent, the customers of the banks, as well. So the pressure on the banks is -- is tremendous. And I think banks are -- are understanding that these extraordinary times require some extraordinary actions. And I think the -- the debate within the banks, I imagine, as the -- the year end bonus setting process plays out, is one where banks will be asking very deep questions themselves, not just about how to -- how to work things through this particular year, but how to change things structurally so that the bonus system doesn't contribute to the kinds of problems that we've had over the past couple of years.
QUEST: What people like myself, to some extent, can't understand is how on Earth did the banks not understand the anger and even want to think about the bonus culture?
Which bit of no don't they understand?
WINTERS: You know, I -- I think that when you get to organizations, organizations, of course are -- are people that come together to form a bigger organization. And the people that were at the center of this financial crisis -- probably there's some exceptions -- but almost without exception, are gone. They don't work for those banks anymore. And including the CEOs of all the banks that were worst hit and the deputy CEOs and down to the -- the trading desk folks that contributed to these huge losses.
And the people that are left haven't associated themselves as strongly to the problems that have been created here as I think the general public thinks they probably should be. And I think there has been a disconnect.
QUEST: But there is a huge disconnect at the moment, isn't there?
And people do believe that bankers shouldn't get bonuses this year.
So where do you stand on the 50 percent levy?
WINTERS: Look, I think the 50 percent levy -- like, I understand perfectly the sentiment behind it and the emotion behind it. I think it's a -- it's a blunt instrument that is -- is intended to -- to make a -- send a strong message and make a strong statement. It will have a number of effects, some of them intended, i.e. To recoup some -- some bonus dollars from the banks or (INAUDIBLE). But some of it will be very destructive, in particular, for -- for the City of London.
It -- it does, on the margin, contribute to banks' decisions to do their business elsewhere.
QUEST: Because it creates an environment.
But do you find that -- I mean saying that, do -- and as a banker, do you find yourself uncomfortable in having to put forward that argument?
WINTERS: I don't know if I'm putting forward an argument against the -- the 50 percent tax and I don't feel uncomfortable making that argument at all. I do think that the banking industry hasn't fully come to grips with the -- the emotion and the sentiments of the day. And the result of that, of course, is things like a blunt instrument tax that I don't think will have all the desired effects.
QUEST: Why do you think they haven't come to -- to the moment of the day?
WINTERS: I think, as I said before, the individuals that are -- that are working the banks today are the ones that -- that feel that they've done relatively well through this crisis. And, of course, a number of banks behaved very responsibly, both in terms of the products that they created and sold and managed their risks well and actually did well through this crisis.
And, of course, there are subsets of -- or divisions of these banks that have also done well.
(END VIDEO TAPE)
QUEST: And you can see the second part of that exclusive interview tomorrow, when Bill Winters and talk about how JP Morgan survived the financial crisis.
What was the difference between those that did and those that didn't?
That's tomorrow night.
I'll be back in just a second.
QUEST: Time to open up the Biz Clinic, where this week, back to the roots of the financial crisis that dominated us over the past couple of years. And, of course, it's the real estate market.
As we approach the end of the year, we set out to check on the state of housing. Our survey ranged far and wide.
Charles Hodson reports on what's happening in London.
Andrew Stevens hit the streets of Hong Kong.
And Maggie Lake visited a penthouse pad with a president and CEO, Pamela Liebman.
LAKE: Give me a sense of where the New York real estate market is right now.
Is it rebounding?
Is it still struggling?
PAMELA LIEBMAN, THE CORCORAN GROUP: No. We're in a great rebound. If you had asked me this about a year ago, I wouldn't be so happy. But today I'm standing here quite, quite happy, because we -- we went down really fast, but we seemed to come back very fast. And when I say come back, in terms of how many people are out there buying, prices still nowhere near where they were.
So is it because sellers are finally getting realistic or...
LIEBMAN: Yes. You got it. When the sellers got realistic, the buyers jumped in. Plus the buyers started to get their confidence back. With everything that's been going on in the economy, buyers started to feel good again about spending some money.
LAKE: Where are we seeing the most opportunity in the New York real estate market?
Is there a part that's really moving faster than anything else?
LIEBMAN: You know, interestingly enough, there's pockets of opportunity that exist in New York City in the very high end, because these -- this is where the prices really came down the most, as much as 40 percent on some of these apartments; also on the lower end, where you have a large inventory of apartments, one bedrooms, small two bedrooms, people - - there's a lot of competition among sellers.
LAKE: And on a scale to one to 10, where would you rate things right now?
LIEBMAN: I would say for buyers, you're close to a 10. For sellers, you're just getting over that hump of a five to a six.
LAKE: Better than where we were, though?
LIEBMAN: Much better than where we were.
CHARLES HODSON, CNN CORRESPONDENT: So just in terms of bullet points, are we out of the woods yet in the London residential property market?
JAMES THOMAS, JONES LANG LASALLE: To a large extent, I think we are. The -- the greater fear of the markets is -- is now behind us. We've seen half price growth now for the -- the last eight months. So I think it's fair to say that the worst is certainly behind us.
HODSON: It's striking, isn't it, that we're not seeing many mortgages approved despite very low interest rates?
It seems there aren't that many keen buyers out there.
THOMAS: Certainly the recovery has been led by the cash rich individuals. And if we look at Central London, a lot of the buyers have been from overseas and they've been attracted by the weakness of sterling. Bank funding availability is still heavily restricted. And I think until mortgage availability is eased, then there will be a number of people that won't be able to enter the market.
HODSON: Is there a risk that as the economy takes another hit next year, with unemployment still high, that we could see the residential property market in the U.K. and London going down again?
THOMAS: As we go into 2010, we believe that we will see half price falls of probably on the order of 7 percent, as a number of factors, including the election, the tightening fiscal position start to wear on the housing market.
HODSON: So on a scale of naught to 10, where naught is a very sick property market and 10 is rude good health, where are we now?
THOMAS: Probably around a six, I would say.
ANDREW STEVENS, CNN CORRESPONDENT: This is the Mid-Levels District of Hong Kong, one of the more desirable places to live. It's just a short way up from the central business district.
What sort of a year has it been for property prices in Hong Kong?
BUGGLE LAU, MIDLAND REALTY: If you're talking about luxury end properties, like the price increased, on average, by 50 percent or even, in some selected projects, it increased more than 100 percent.
STEVENS: And at the other end of the market?
LAU: Well, the other end of the market, let's say the (INAUDIBLE) market, well, it increased by about, on average, about 27 percent.
STEVENS: When we talk about these sort of price increases, particularly at the top end, some luxury properties doubling in value, that says, to most people, a bubble.
Is Hong Kong property in a bubble?
LAU: Well, I think we have all the ingredients of a bubble in Hong Kong property market. But, of course we are not there yet.
Because, simply, if you look at the ultimate mortgage loan, that's one of the ingredients for a bubble is that people tend to over borrow or over (INAUDIBLE). But if you look at the ultimate (ph) mortgage over the past 12 months, they only increased by about 5 percent.
STEVENS: All right. On a scale of one to 10, with 10 being the strongest and one being the weakest, where would you put the Hong Kong property market at the moment?
LAU: I would say if you take 1970 as the benchmark, with 1970 as a 10, (INAUDIBLE) property is a two. And now I believe it is around a five or a six.
STEVENS: Quite conservative.
(END VIDEO TAPE)
QUEST: The Biz Clinic here on CNN.
Now to the weather forecast.
And Guillermo is at the World Weather Center.
GUILLERMO ARDUINO, CNN METEOROLOGIST: Richard, you may have noticed the cold. I think that you are not in bad shape all compared to other parts of Europe. At the same time, I wouldn't be surprised if tomorrow we see some snow here to the west of London or even tonight a little bit more.
Now, we are getting an influx of cold conditions from the north. The humidity is there available. So we may see a problem.
Now, when we compare Britain with the south, look, we are going to get this low developing in Italy; also, the Balearics here, the southern parts of it -- of Spain into Southern France. Needless to say, into Turkey in and France, as well, we see bad weather.
Now, we are not going to see snow over there. The snow is going to be further to the north. But it is because we have a Siberian cold situation in here that is affecting the whole thing. The jet is actually encasing that cold air mass and it's here to stay.
We are going to see snow in many parts we have not seen, so far, snow in those areas. But we will, I promise you, anywhere from Romania into Ukraine, into Moldavia, into Slovenia, Slovakia, the Czech Republic, Hungary, Austria, Germany, Poland, Russia, the Baltics, Scandinavia. Parts of Spain may see some snow, as well.
So it is very cold. Now, when we see the temps, they are colder, of course, as we move to the east. The south, only one city that I know in our -- on our map with double digits. Elsewhere, we see freezing point, below freezing point, problems at airports. I mean I want to summarize all the issues that we're going to see with winds and some snow showers in Madrid likely. Milano with snow showers, the Alpine Region into Torino, with minus five the temperature in Torino, as well. So it's very cold. Zurich may see some snow shows -- snow showers.
Now, Asia sees relatively mild conditions right now, with the northwest monsoon. That's dry conditions on Hong Kong, looking fine.
Now, the north continues to be affected by areas that bring instability, a lot of clouds, some winds even to the south, especially in the Korean Peninsula, is where we see the problems.
And in the States and Canada, the snow is here to stay. It may have shifted a little bit more to Canada, where the -- the cold is really, really bitter. And we see, also, more snow falling into the western parts of Canada, the western parts of the States, you name it, all over the country.
We'll see you on the other side of the break.
Stay with CNN.
QUEST: Now, in London this Monday, the fight between the maker of Oreo cookies and the company that produces Cadbury's dairy milk chocolate has started to get, well, very messy. The chairman of the British chocolate maker, Cadbury, (INAUDIBLE) to reject a $16.5 billion take over offer from Kraft. Cadbury has accused Kraft of trying to steal the company with a derisory offer. That's the phrase being used -- derisory. And Cadbury has said it had received expressions of interest from others.
Chief exec Todd Stitzer aims to preserve Cadbury's independence.
(BEGIN VIDEO CLIP)
TODD STITZER, CEO, CADBURY: We're upgrading our targets and our goals. Our new long-term revenue target will be to deliver 5 to 7 percent revenue growth per annum. Our new operating margin target will be 16 to 18 percent by 2013. And just to be clear, we are still very confident we'll deliver our original goal of good mid-teens margins by 2011 along the way.
(END VIDEO CLIP)
QUEST: Well, Tiger Woods probably could do with some consultants to offer a word of advice. The consulting firm that he's represented for the last six years has dropped him. The world's richest sportsman has made a majority of his fortune from endorsements. Now he says he's not -- according to Accenture, Tiger's no longer the right representative for its advertising campaigns, such as this one.
(BEGIN VIDEO CLIP FROM ACCENTURE AD)
UNIDENTIFIED MALE: Go on, be a Tiger. Accenture -- high performance delivered.
(END VIDEO CLIP)
QUEST: Joining me now, the P.R. and grand strategist, Marvet Britto, who's president and chief executive of The Britto Agcy.
Now, look, people have said to me again and again, hang on a second, the man is obviously good at golf. All right, he's a bit of a rogue in his private life, but he's certainly been very active in that regard.
Now, why should that affect you in something like Accenture?
MARVET BRITTO, THE BRITTO AGENCY: In terms of -- of them backing away from Tiger?
Why not stick with him?
BRITTO: Well, you know, for them, I think, right now it's fresh in consumers' minds, so they see the transgression and they see the product as one and the same, because that's what endorsers do -- they actually bring equity to a corporate company or a product, if you're an -- if you're the endorser.
So it is smart for people to distance themselves. But it's not wise for them to void contracts.
Because if Tiger, like many believe, brings his A game back to the sport of golf when he emerges, they and all the other companies will be at a loss, because he still will be the most coveted brand in the world.
Remember, Tiger, even with this transgression, is still the most coveted...
QUEST: ...but hang on...
BRITTO: ...global sports brand in the world.
QUEST: Ah, but hang on a second.
Is it -- isn't it relevant in this case that what was being sold here was integrity, was sort of like trustworthiness, so that's really why they've pulled out?
And isn't there -- doesn't this exemplify the danger of celebrity endorsements?
BRITTO: Well, what it -- what it does is, remember, it -- Tiger being married, Tiger got married well into his golf career, so it wasn't what he sold in the beginning. Yes, the passing of the children and the fact that he was married and had children was icing on the cake. But remember, the Tiger Woods brand was an already baked cake. So they are leveraging Tiger's equity as the most brilliant golfer in the world.
So, yes, it's tainted now that he's had this issue and this bruise in the Tiger brand. But if Tiger emerges -- like we all know and think he will -- his equity will skyrocket. Right now, Tiger is golf.
So to many of the endorsers, he is still money in the pocket -- in the bank for them. So it isn't smart for them to void the contracts, but it is smart for them to show them less frequently and to make it go away for now.
QUEST: Marvet, we're out of time. But you need to come back on this program again so we can go head to head on this issue.
Marvet joining me from Washington.
I'll have the Profitable Moment in just a moment.
QUEST: Tonight's Profitable Moment.
British Airways is facing another strike. Passengers face chaos. B.A.'s planes are usually chalk full over Christmas, with thousands of dollars in fares that are paid. That is, until a strike is announced. B.A. today turning away business -- preparing for the destruction that the strike will cause.
The question is whether B.A. has decided to go for broke and push ahead with changes, even if it means a long, protracted strike. If that's the case, if a long protracted strike is ahead -- oops, then there's nothing more to be said than make other travel arrangements and prepare to pick up the pieces.
And that's QUEST MEANS BUSINESS tonight.
I'm Richard Quest in London.
And Christiane is after the I Desk.