Return to Transcripts main page
QUEST MEANS BUSINESS
Bolivia Seizes Latin American Portions of TDE; European Unemployment and Manufacturing Woes Drag Down Market; Dita von Teese Expands Brand; European Weather Outlook; News Corp Supports Murdoch
Aired May 2, 2012 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST: Good evening to you. Expropriation and aggression in Bolivia. The EU Trade Commissioner tells me it's intolerable.
Toil and trouble, it's a double. Jobs figures falter in Europe and the US.
And Dita's latest tease. Tonight, the woman, the brand and, now, the perfume.
I'm Richard Quest. I mean business.
Good evening. Europe says it will not tolerate Bolivia's corporate aggression following the seizure of the Latin American part of the Spanish power company by soldiers acting on the orders of the Bolivian president.
Tonight, European leaders say the takeover of TDE, part of Spain's Red Electrica, is "unacceptable," and European politicians are calling it "politics by announcement." Spain's economy minister says he fundamentally disagrees with the move.
And the shares in the company are down more than 2 percent. TDE says it respects what is essentially the nationalization of its Bolivian arm, so long as international law is respected. Red Electrica is 20 percent owned by the Spanish government.
The Bolivian president, Evo Morales, ordered the troops to move on Red Electrica plants across the country on Tuesday, claiming the company had not invested enough in Bolivia's power grid. Red Electrica denied those claims. Meanwhile, the president praised the military, saying the units now belong to the people.
(BEGIN VIDEO CLIP)
EVO MORALES, PRESIDENT OF BOLIVIA (through translator): We salute the military personnel for organizing this nice operation, not just here, but in all of Bolivia.
We have the branches in La Paz, in Maso Cruz, in Oruro, Vinto, Potosi, Canto Marca, Santa Cruz, Guaracachi, and the principle office of the Transportadora de Electricidad, which we took rightly, so the company can be in the hands of the Bolivian people.
(END VIDEO CLIP)
QUEST: The EU's Trade Commissioner says Bolivia's actions will not be tolerated. Karel de Gucht says it's the wrong signal and the wrong policy, and he's still unraveling the mess from when Argentina's government seized control of the oil firm YPF out of Repsol two weeks ago. The commissioner explained his stance on these two matters to me earlier.
KAREL DE GUCHT, TRADE COMMISSIONER, EUROPEAN UNION: It's the wrong signal, because what those -- both countries need is investments and a good business climate, and this is certainly not conducive for neither the investment climate nor the business climate. I think this is the wrong signal.
But something is whether you can forbid this. It is possible to expropriate a company, provided that you're following the rules. But it's not helping those countries. It's the wrong signal, I think, the wrong policy.
QUEST: Does Europe have to send the strongest message that there will be consequences? Even if you're entitled to do it, this is not something that the EU and the EC is prepared to tolerate?
DE GUCHT: We are not prepared to tolerate it, and we already made it very clear to the Argentinian government, I wrote a letter to my counterpart, Minister Timerman. We are presently looking at what precise action we could take. For example, we are looking at a possible suspension of the general system of preference with respect to Argentina.
So, we will give the right message to make it clear to Argentina that we simply do not tolerate this kind of action. With respect to Bolivia, it's very premature to say anything about this, because it's -- it just came across today, so we will have to reflect a little bit more closely on this. And there's also the difference that they already have been proposing compensation.
DE GUCHT: But in both cases, it's a completely wrong signal. It's doing politics by announcement, and that's not the right way to act.
QUEST: One final question, sir. Again, and I know it's not strictly your area, but anybody in politics at the European level must be concerned, once again, these unemployment numbers that we are seeing in the eurozone, in the EU. Unemployment, the jobless, the job crisis is the biggest issue you are all facing, now, isn't it?
DE GUCHT: It certainly is, and jobs in Europe also depends on our trade and investment relations with foreign countries. Tens of millions of jobs depend on external trade, so this is a very serious political fact that is taking shape before our eyes, and that's why we are so vigilant and that we will take action.
Spain is in a difficult economic situation. On top of that, for example, a company like Repsol would lose about 30 percent of its revenues. We cannot tolerate this. This is also about our own prosperity.
We have to come to a solution that respects, of course, the sovereignty of the countries concerned, but that also respects the obligations that those countries have and the responsibility those countries have for the world economy and for our trade relations between those countries and the European Union.
QUEST: Now, not surprisingly, Spain's finance minister says he fundamentally disagrees with the move. Having already had to deal with Argentina and Repsol, where the no question of compensation so far has been discussed or agreed. Luis de Guindos says he now expects compensation in this case to follow.
(BEGIN VIDEO CLIP)
LUIS DE GUINDOS, SPANISH FINANCE MINISTER (through translator): The information that I have available by the Minister of Industry and Foreign Minister is that the Bolivian government is willing to pay a fair price, is willing to offset what the cost that has been incurred by Red Electrica and what has been the investment and maintenance of Red Electrica.
(END VIDEO CLIP)
QUEST: That's the economics minister of Spain, a story we'll watch closely in the days ahead. Coming up next, job growth blues have got investors on Wall Street seeing red. We'll get to the New York Stock Exchange for the details. The Dow is off, as you'll see, 20 points. QUEST MEANS BUSINESS.
QUEST: Europe's sickly economy is showing more distressing signs, and they all point to one diagnosis and one serious issue, and that is recession. Let's begin here, the March unemployment numbers. Figures from Eurostat show that the eurozone lost 170-odd thousand jobs.
It pushed the block's unemployment rate up to 10.9 percent from 10.8 percent. Now that, of course, is pretty extraordinary, bearing in mind several years after the first recession ended, tepid growth, and jobs still being lost as the eurozone and, indeed, the EU, goes down into the second wave of the recession.
The manufacturing numbers are what is large here, three-year low for PMI, Purchasing Managers' Index, it dropped to 45.9, it's the lowest level since 2009. Anything below 50 signifies a contraction.
And what's worrying analysts and what's worrying the market generally is that as unemployment goes up, so that continues the downward spiral of consumer confidence and the cyclical economic activity which, of course, leads to further manufacturing down, which leads to further unemployment going up, and so this, far from being a virtuous cycle, this spiral of despair and decline becomes entrenched.
And that is why you're seeing these sort of numbers today, with just a small gain out of Paris, mainly on French election news. But otherwise, it is the Italian market down, the Spanish market down, even the German market was all down. All falling by banking shares on what's been happening.
Let's go to New York where the market is open and doing business. You are just basically off a tad. There's no mass selling, if you like, or serious selling, as we've seen in some markets in Europe.
ALISON KOSIK, CNN CORRESPONDENT: Exactly. In fact, stocks are off their lows, so you're seeing stocks right now, Richard, mixed as the Dow only down about 22 points. This is after a payroll processing from ADP coming out today and saying that the private sector employers only added 119,000 jobs in April.
Now, ADP has been wrong in the past as far as compared to what comes out with the US government jobs report, but the problem is, with this report, Richard, is that it's far short of expectations for a gain of 170,000, that's the number that should have come in today.
So, what some are doing is actually blaming the slowdown on the unusually warm weather during the previous winter months because it had more employers hiring, especially in sectors like constructions, so what analysts -- some analysts are saying, at least, is that instead of the slowdown happening in the cold months, when it normally would, that it's happening now.
But either way you look at it, it certainly puts a dent in the idea that the US is on a solid path to recovery, at least when it comes to jobs. This report is meant to be a precursor to that big government jobs report coming out on Friday. It doesn't leave much confidence for what the number is going to be on Friday, though. The expected number is 160,000 positions added overall, Richard.
QUEST: OK, all right. So, we need to start squaring the circle, if you like, Alison, because we're coming to the end of Q1 reporting, and earnings were -- they beat estimates, but they -- in most cases, in many cases, but they were not that good. They were not gangbusters by any means.
Factoring in these unemployment numbers, and suddenly, we end up with a very uncertain -- very shaky ground.
KOSIK: Right. Well, it becomes -- that worry comes up again, that -- you think about the number that came out in March, 120,000 jobs were added in March. That was a big miss, as well. So, the worry is that at least with the jobs market is that you're seeing this sort of back-stepping going on, this backpedaling that the jobs recovery is losing its momentum.
And it's not so far-fetched when you think about that GDP number that came out last week showing -- that first reading of GDP for the first quarter showing 2.2 percent growth. That's not much. So, even that number's not enough to support enough job growth.
So, that is also worrying investors today, because those numbers certainly do jive if, in fact, the numbers do match the disappointment that came out today in ADP.
QUEST: Alison Kosik, who's at the New York Stock Exchange. And we'll have that number on, and it will be close to it.
QUEST: And I suspect what we're seeing in the market is a great deal of just moving backwards and forwards, not much -- not too many overnight positions being taken ahead of that job numbers.
KOSIK: Yes, sounds reasonable.
QUEST: All right. Well, there we are. We agree. Not a first, but many thanks, Alison. See you tomorrow.
OK. Now, Currency Conundrum for you tonight, and you'll need this one, and you need to concentrate. Concentrate closely for tonight's Conundrum.
QUEST: In post-war Hungary in 1946, 100 million billion pengo may have sounded like a lot, it's a one followed by 20 zeros for those at the back of the class. The question is, how much was that actually worth? Was it 1 US cent, 20 US cents, or C, $2? We will give you the answer to the Currency Conundrum after the break.
And now, the currencies for today, a hundred million billion euros will buy you slightly fewer dollars than it did yesterday. It's down about two thirds of one percent against the greenback, as is the Swiss franc. The pound's holding relatively steady at $1.62. The rates to the break.
QUEST: Ah, you don't get this on other programs. Dita von Teese, a symbol of pleasure. Whoo! And to many, she's the ultimate femme fatale. She is the glamorous burlesque artist -- or artiste, is perhaps a better way of talking to her.
She has curated her image with extraordinary attention to detail, and it's paying off. Forget the library. Tonight, join me in the boudoir.
Now, if we take a look at what she has been doing, in the Dita von Teese, she may be a burlesque striptease artiste, but she is a brand in her own right. Let's start with the lingerie, for example. She has the von Follies range, which has launched in Australia and will be coming to the US and the UK later this year, in neo-burlesque movement.
And her view is lingerie isn't about seduction, it's about being a woman. That's the lingerie -- it's not often we discuss lingerie on this program, but you get the idea.
On the more general fashion area, she has a high-end dress capsule collection, again, launched in Australia and will go global. She says she advocates glamour every day, every minute. "I advocate glamour every day, every minute."
On to the cosmetics, which is 1940s inspired, high-end range, which will launch in -- later this year. And her philosophy is less is more.
If this isn't enough -- so, we've got lingerie, fashion, cosmetics. She even does Cointreau work for whom she's the ambassadress since 2007. Recreated "Be Cointreauversial" show. That's not too easy to say.
And now, this is why we're talking tonight, she's talking about the fragrance Dita von Teese. She described it as being not for the girl next- door. Now, of course, many people from the original Elizabeth Taylor Diamonds to Jennifer Lopez, Kate Moss, Paris Hilton, Kate -- all of them have at some point had their own perfumes.
So, I was very fortunate. I got to spend time with Dita von Teese in London launching the new perfume, and I asked her, OK, she is a brand, she's got lots of different aspects, but what does the perfume say?
DITA VON TEESE, BURLESQUE STAR: I think in the world of celebrity fragrance, there's a lot of sweetness, everyone kind of wants to be commercially -- OK for everyone, so they have to put vanilla and sweetness and fruit and citrus and all these things.
And I just want to do something really womanly and feminine and sophisticated and elegant and a little unusual at this price point, which was important to me, I think, to bring a sophistication and glamour to it.
QUEST: So you'd agree, then, it's not for everyone.
VON TEESE: Right. In fact, I wanted to for a little while, but marketing people don't let you say these things, so I said, "Can we put, you have to be 18 to buy it?" It's not for little girls. This is for adult women. You have to be careful.
QUEST: Can we -- can we have a --
So, what's it telling me? You tell me what it's supposed to tell me, and I'll tell you --
VON TEESE: I think it's supposed to speak of sophistication and glamour and smells expensive and sensual. That's what I want you to think. I want you to think, this is the perfume for a seductress, for like the wicked city woman. It's not for the girl next-door.
QUEST: When we look at the range of activities that you're now involved in, tell me about the balancing act that you have to do between the von Teese brand and where you think the line has to be drawn. Because frankly, you could put your name on anything, but I suspect you don't --
VON TEESE: Not jeans.
QUEST: But I suspect you wouldn't want to.
VON TEESE: I think all of my projects from the perfume, I have a cosmetics line, I have a lingerie line, I have a dress line based on some of my favorite vintage dresses in my collection, they're all things that are relative and, in fact, I do my own makeup, I am my own stylist, I worked in a lingerie store when I was a teenager, I used to sell perfume.
So, I think everything I do not only are they to me stepping stones of glamour, but they're also things I genuinely know about.
QUEST: You genuinely know about, but you -- where would you not take a Dita von Teese brand.
VON TEESE: To anything that I wouldn't wear myself. I'm a little bit of a snob about a lot of things, and I like the best stuff, and I can't imagine putting my name on something that I'm not personally wearing and using.
QUEST: Celebrities put their names on products, and the hope is that the celebrity's name attracts the seller -- the buyer to the product. But you can exhaust the brand and the name, can't you?
VON TEESE: Definitely. I think everything just has to be genuine. I have to have my hands on everything. I enjoy the entire process of creation, I don't have people designing things for me and then having me sign off, so it's really important to me that there's an integrity and authenticity.
QUEST: Do you fear eventually succumb to that concept, simply by virtue of the size of the market. People say, well, now we've got to have a piece of furniture, and now we've got to have a bit of brocading, and bubububububu --
VON TEESE: Well, I have been afraid, I don't want to spread myself too thin. I want to make sure that I can still be hands on with everything, and so I get a little bit nervous when I'm overwhelmed trying to do too many things.
So, I've been trying to put people around me that I admire what they do and they can kind of help guide me, but ultimately I still want to be really involved.
QUEST: Dita von Teese. That certainly cheered up the daily business agenda, I think you'll have to agree, whether the market was up or down. That cheered us on.
Jenny Harrison's at the World Weather Center, and I know we've got a bit of blustery weather out there, so that blew away a few cobwebs, too.
JENNY HARRISON, CNN METEOROLOGIST: Yes, all of that. All of that, yes. It hasn't really improved too much, has it? It has to be said over the last couple days, even though that low responsible has sort of moved slightly off towards the west.
But look at this the last few hours. Another sort of -- a suite of showers and thunderstorms working their way up, some very heavy thunderstorms for a time across eastern France in the low countries, and then easing off again.
But now, that line of thunderstorms actually heading on towards East Anglia. We've had this cut-off low in this scenario for the last several days.
When we say cut-off low, really, all it means is an area of low pressure that has been cut off from moving anywhere further because of this high, which is ahead of it, as you can see, across Central and Eastern Europe. So, we've had this persistent rain and strong storms in the west, and then to the east, we've had nothing to interrupt this area of high pressure, so we've had that record-breaking heat.
But just going back to the northwest, first of all, to the UK, so overall, then, the entire country, 175 percent more rainfall than usual in April. Remember, it's the wettest April ever on record. And England, by far, saw the bulk of that rain.
Northern Ireland coming in just below the average, so you can see how the figures all add up. But that low that has been responsible for the heavy rain of the last few days, as I say, is pushing to the west, but not really moving.
That little system moving through now, that'll sort of come and go. And then, we've also got a front coming down from the north, but at the same time, it'll eventually cool off across eastern areas to below average in some cases.
But look at the temperatures back at the weekend. Munich, 32.2, that's over double the temperature for April, so that is just how warm it has been. And even on Wednesday, already, temperatures 32 in Budapest, 31 in Bucharest, so feeling more like July than just the beginning of May.
And have a look at this. Where are we? Well, we're in Warsaw in Poland, and it's been very warm there, although the temperatures have fallen back down to average, now. And you can see here the temperature trends for the next couple of days. That hot air is retreating eastwards, things sort of evening out more across Western Europe.
And then, look at this, to the north of the UK, I'm afraid there's a front sliding through, bringing temperatures well down after Thursday. Berlin temperatures well down, as well. This is s heat wave graphic, but really, it's sort of a heat wave from a cold snap in just a couple of days, so well below the average from what has been above.
Vienna staying very nice for the next few days. You're in a dry slot with those sunny skies. And then Kiev, although it got some thunderstorms by Friday and Saturday, temperatures still about 10 degrees above average.
So, rain coming in from the west again, all courtesy of that same air of low pressure. That little system zipping to the north instead of winding out as it does that. But we have got some warnings into Thursday morning for some possible strong thunderstorms.
And then, delays at the airports on Thursday, quite a bit of low clouds around, so quite a few delays, but they're not particularly lengthy. And 18 in Glasgow on Thursday. Get ready for Friday. It'll be about 9 degrees as that front sweeps in from the north, Richard.
QUEST: We thank you for that, Jenny Harrison, at the World Weather Center, and those lovely temperatures, at least in certain parts of Central Europe, which no doubt we look forward to continuing and spreading to the rest of us.
Now, before we take a short break, I need to just bring you -- News Corporation has released a statement from New York. You'll be aware, of course, and you'll remember that yesterday we were talking about Rupert Murdoch being declared not a fit person to run an international company by a select committee at Westminster.
According to the board of directors of News Corp, they met today and announced full confidence in Rupert Murdoch's fitness and support to continue to lead News Corp into the future.
The board based its vote of confidence on his vision and leadership in building News Corp, his ongoing performance, and his demonstrated resolve to address the mistakes of the company identified in the select committee's report.
Now, you may well say, well, that's hardly surprising, a board made up like that would offer its full support. But the fact is, it is -- it's full confidence, and it is quite unambiguous in its message, there. Rupert Murdoch receiving the full confidence of his board of directors despite the report coming out yesterday.
Coming up next in a moment, one last chance to impress France's voters. Nicolas Sarkozy and Francois Hollande, they are getting ready to debate, and the future of Europe's fiscal compact -- well, at least the scene from France -- depends on it. QUEST MEANS BUSINESS.
QUEST: Hello, I'm Richard Quest, more QUEST MEANS BUSINESS in a moment, this is CNN, and on this network, the news always comes first.
The blind Chinese activist who escaped house arrest last week is now being treated in a Beijing hospital after taking refuge for several days at the U.S. embassy. A deal was struck on Wednesday for Chen Guangcheng's freedom. And despite some concern from other activists that he was forced out, the U.S. maintains Chen left the embassy on his own decision.
Deadly clashes in Egypt's capital (inaudible) in plain clothes attacked demonstrators who were protecting against the disqualification of an Islamist presidential candidate. Now we are getting conflicting reports on the number of people who've died. A health official says at least 100 people have been wounded.
The Taliban say this suicide car bombing is their answer to President Obama's visit to Afghanistan. The bomb went off two hours after the president left Kabul, exploding outside a house complex for contractors and aid workers. At least seven people were killed.
Myanmar's pro-democracy leader Aung San Suu Kyi has taken the oath of office and her seat in the country's parliament. She and other newly elected members from her party have been boycotting parliament over a disagreement in the wording of the oath. She says she agreed to take a seat from a request of her constituents.
The $2 billion sale of the LA Dodgers has been finalized and the new consortium is owned by -- or led by the basketball star Magic Johnson, alas, making baseball -- I do beg your pardon. I can have people up in arms here. The Dodgers' baseball team was put up for sale last year as previous owner Frank McCord dealt with an expensive divorce.
QUEST: In around 30 minutes from now, two men will lay out their visions for France and the economic future of Europe. President Nicolas Sarkozy and of course his challenger, Francois Hollande will stage the first and only televised debate for the French presidential election, just days before the second and decisive round at the weekend. And each man has a very different economic path. Let's start with the incumbent. Let's give him the blue corner.
Now this is crucial. He obviously negotiated the fiscal compact on budget deficits and on European fiscal integration, so he's intending to keep it. He also wants to reform the welfare system, which he believes is still too big and too expensive in France.
He thinks there should be a cut in immigration numbers, which maybe perhaps plays to the popular vote, and he believes that entrepreneurship and competitiveness needs to be improved. One of the core issues for France is it faces potential recession and a slowdown in growth is its uncompetitiveness (sic) and, of course, the euro.
As for the challenger in the red side, this is what is going to get people talking. He has threatened to renegotiate the fiscal compact. If he does so, all bets are off. Perhaps along with Warren Buffett and the U.K. and others, he wants to tax what wealthy people higher, some say at the 60 or 70 percent, and he wants to increase corporation tax.
But there's more for Mr. Hollande. He says there should be a $26 billion job creation, and he wants to retire or lower the age of retirement. There are two absolutely diametrically -- I won't be politically, I'll be politically correct, and I will use a political color that can't be -- two directly opposite views on the way forward for France at the moment, the incumbent and the challenger.
Tobias Blattner is the European economist at Daiwa Capital Markets. Regardless of what the polls say, who does the financial world look to for this one?
TOBIAS BLATTNER, ECONOMIST, DAIWA CAPITAL MARKETS: Well, clearly, I think the markets are still trying to figure out what is rhetoric head of the elections and what do they really imply. And one thing that's relatively calm so far, but obviously they are worried about some of the statements that Francois Hollande has been making so far.
QUEST: Which of his policies is giving most cause for indigestion?
BLATTNER: Clearly the one that he would raise spending, that he would try to actually lower the retirement age, because these are non-starters at the current period because we all know that consolidation is a must right now. What the markets like is the fact that he doesn't want to frontload all of this austerity but maybe he wants to stretch it a little bit more.
QUEST: He -- so this goes right to the heart, doesn't it, of the austerity versus growth, and for the first time there is a leader, standing before the public, saying more growth, less austerity at the time being.
BLATTNER: Precisely. And I think this is something that the markets are embracing right now. They are needing that in some way.
QUEST: How can a market be so out of touch, if you like, or how can some politicians? I mean, Merkel, Schobel (ph), yesterday to -- have made it clear, austerity continues.
BLATTNER: Closely, but I think, you know, they're somebody now that eventually enter in this political arena, and he's obviously representing the second largest economy in Europe.
So there are hopes that he might eventually be that guy that can actually influence the -- this approach that has been taken so far, that I think everybody agrees in principle is the right way to do, because there have been many countries that have been spending too much for too long.
But the question is more about how much do we do in a very short period of time, and I think there the markets are definitely in consensus that we can't do too much austerity in a very too short period of time, because that kills growth.
QUEST: If Hollande wins, and he attempts to reopen the fiscal compact or not sign up to it, is that almost a nuclear option for that fiscal compact?
BLATTNER: Well, I think the biggest risk here that obviously we are going back to that period and eventually this political vacuum (ph) that we had at the end of last year, in which now we don't any more have this French-German tumnum (ph) that actually can pull the euro out of the crisis, so in that sense it's certainly threatening, I think, our overall policy approach in handling the crisis.
QUEST: The voters will have their say this weekend.
QUEST: The people will speak. Many thanks indeed for joining us, good to see you (inaudible).
BLATTNER: Thank you.
QUEST: All right.
Coming up next, (inaudible), no refunds and no exceptions. The merchant carrier Spirit Airlines in the U.S. is under fire for refusing to refund a dying man. The chief executives on this program next. And you can't argue with his results. They are stellar. QUEST MEANS BUSINESS (inaudible).
QUEST: Spirit Airlines does not do refunds in the United States, not even for a Vietnam veteran who found out he had terminal cancer and couldn't fly. The low-cost U.S. carrier said it's its policy, and there are no exceptions.
They were very sorry and they hoped that he would recover and would fly in the future, but you know, get your money back. Spirit's chief executive Ben Baldanza joins me now live from Miami.
We will talk more about other issues, but we do need to discuss this seemingly brutal response from your airline, even if it is the rules, where's your humanity?
BEN BALDANZA, PRESIDENT AND CEO, SPIRIT AIRLINES: Well, you know, certainly the U.S. and all individual people in the U.S. owe a huge debt and thanks to all the men and women who served in the military and kept this country free for over 200 years.
Spirit offers the lowest fares in the United States. One way we can do that is all of our fares are non-refundable. Mr. Meekins got one of these non-refundable really low fares that was non-refundable --
QUEST: OK. What --
BALDANZA: And we understand that non-refundability at times can have certain restrictions to it, so we also offer a very low price insurance product at only $14 that would have protected Mr. Meekins --
QUEST: OK --
BALDANZA: -- and protects many others. So the issue, Richard, is that what Mr. Meekins asked us to do was give him the benefit for free, what hundreds of thousands of other people pay for, we think it kind of cheats those people if we do that.
QUEST: All right.
BALDANZA: (Inaudible) to our policy.
QUEST: All right. But was it worth the barrage of abuse, no Spirit Airlines; good riddance, Spirit; losing millions, no compassion. Is it really worth, even if you had to give him the money out your own pocket, Ben, not just saying --
BALDANZA: The reason for that, Richard, is that the media has chosen, just like Mr. Meekins made his choices and we made ours, the media has chosen only to report the emotional side of this story, not the side that there were options available that were not chosen, that many other people play by the rules and follow those rules and it doesn't seem right to make an exception for someone just because they stomp their feet.
QUEST: All right. Let's talk about your earnings. They are stellar and what's interesting is you have managed to break $50 in ancillary revenues for -- which I believe is the first time --
BALDANZA: And we're very proud of that.
QUEST: And I'm sure you are. But listen, look, I believe -- I -- look, I'm a great lover of ancillary revenues. But I do believe that you have to have common sense. And if a fee can't be avoided, it should be in the booking ticket, don't you agree with that, too?
BALDANZA: You mean a seat assignment? I mean, we give seat assignments to all of our -- all of our customers. The difference is if you pick specifically where you want to sit, you pay at Spirit. If not, you'll be randomly assigned to seat assessments.
QUEST: No, what I suppose I mean is can ancillary revenues simply be used as a back door when actually you'd be better off putting it on the ticket price?
BALDANZA: Here's why we don't think that's really fair, because what that does is that charges every customer for the full product delivery, even if they don't use that product delivery. Let's say, for example, that I included bags, checked baggage in my ticket price. I'd have to have higher ticket prices.
But what if you don't check bags? Why should you have to pay for the baggage infrastructure? We believe that what the ancillary does is it gives customers the power to save, to say I'm not going to use that part of the system and I'll save the money, as opposed to make everyone pay for everything.
QUEST: We've got to leave it there, Ben. We'll talk more about this in the future. Come back on the program again, certainly I know Michael O'Leary, who's a regular person on this program, would also agree with you, and I'm sure you know Michael well.
Many thanks for joining us, Ben. Wish we could put (inaudible). Spirit Airlines is not the only one sticking to the policy. The U.S. Federal Aviation Administration is issuing an official warning to a passenger who used his iPad to capture the moment birds struck his aircraft.
(BEGIN VIDEO CLIP)
QUEST: That noise was the fourth Delta flight making an emergency landing at New York's JFK after birds went into the engine. The FAA wrote to Grant Cardone and told him he shouldn't have had his iPad on, and they were putting his actions on record for two years. Mr. Cardone spoke exclusively to CNN's Soledad O'Brien.
(BEGIN VIDEO CLIP)
GRANT CARDONE, CEO, CARDONE TRAINING TECHNOLOGIES: What I'm concerned about is what watch list am I on? Am I now a terrorist for the FAA? Am I going to get double screened? All I'm trying to do is promote a book out on the road.
I'm a business consultant. I'm forced to fly around, help out businesses, help out the American economy and I'm going to get a letter saying, hey, instead of us sending you a fine -- by the way what would that fine have been? They just need to clarify what the deal is. If these electronics are dangerous to the American public, ban them from the planes today.
(END VIDEO CLIP)
QUEST: Joining me now to talk about issues in travel is chief executive of Abercrombie & Kent, and the chairman of the World Travel and Tourism Council, Geoffrey Kent. Good to see you.
We do seem to have entered a world -- we'll talk about the numbers in a minute -- but travel has become a chore of regulation, whether it's Spirit or Ryanair or Air Berlin or even the rules and regulations.
GEOFFREY KENT, CHAIRMAN, ABERCROMBIE & KENT: No, I don't think so. I think people love to travel. people will take in the sort of minor hindrances to get to the places they want to go to, and travel is growing. Actually, it's more popular than ever.
QUEST: OK. But if we look at the overall trend, look, we'll come to luxury in just a moment. Tell me about the overall trend that we are seeing. We know people still want to take holidays. But is it counter- cyclical or recession-proof?
KENT: What is happening, you have different areas that are increasing, for instance, China is up probably 10 percent, people coming from China. Europe is down, slightly down. Other areas increasing, others are falling back, but travel on the whole is growing. Just different areas are growing.
QUEST: And if we look at the affluent area, your company's celebrating its anniversary --
QUEST: -- 50th, 50 --
QUEST: Fiftieth anniversary?
QUEST: Do you mean from when it started?
KENT: 1962, 26th of April.
QUEST: All right. I was only about two months -- three months old then. What's the big trend in affluent, in luxury travel, the sort of travel we all aspire to?
KENT: Well, what people really want today, they want experiential travel. They were there all there, the intelligent people, they're curious. They want to go to the furthest corner of the Earth, they want it to be seamless. They want to be looked after, every single speck of the way, and they like to travel often with their families and grander families, i.e., children and/or grandchildren.
QUEST: In that environment, are you seeing luxury travel at the top end holding up, and if it is, is it the middle classes who can no longer afford, if you like, that extra bit of trip?
KENT: Abercrombie & Kent is holding up very much at the top end. We have more business to Antarctica, more business to Africa, more business to South America, Galapagos, et cetera, and maybe some of them, the middle classes are falling off a little bit, but that's not what we handle.
QUEST: Right. Many thanks (inaudible). Turning you're currently the chairman of the (inaudible).
KENT: I was about to say, I'm the immediate (inaudible).
QUEST: You're the immediate --
KENT: About three weeks ago.
QUEST: You're the immediate past.
KENT: Immediate past.
QUEST: Have they made you emeritus yet?
QUEST: Many thanks indeed for joining us, Geoffrey. Good to see you. Come back again.
KENT: Thank you very much (inaudible).
QUEST: Now -- many thanks. Coming up, super fast, super cheap and nowhere to be seen. We'll look at why U.S. mobile startup LightSquared is off the airways and at risk for bankruptcy.
QUEST: The answer to our "Currency Conundrum," how much 100 million billion tengo (ph) was worth (inaudible) like this stuff in 1946, the answer was 20 U.S. cents.
It was an ambitious idea, building the U.S.'s fifth mobile phone network from scratch, and that's the plan behind LightSquared. It was formed in 2010 with billions of dollars of backing from the investor Philip Falcone. Now it was meant to deliver 4G service, 4G, to 92 percent of America by 2015.
In January 2011, the pieces started falling into place. The FCC said it would allow LightSquared to use the spectrum it owned to run high-speed network, but on condition it addressed issues around interference with GPS satellites. A potentially fatal blow came in February this year when the FCC decided those GPS concerns hadn't been addressed and blocked LightSquared from switching on the power.
In New York, CNN's Felicia Taylor found out that Mr. Falcone isn't giving up on LightSquared and he's ready, willing and able, he says, to solve its problems.
(BEGIN VIDEO CLIP)
PHILIP FALCONE, HEDGE FUND MANAGER: Hockey has been a big thing in my life.
FELICIA TAYLOR, CNN CORRESPONDENT (voice-over): Phil Falcone came from humble beginnings in Chisholm, Minnesota, where a talent for hockey earned him a ticket out of the Midwest and gave him an education at Harvard.
Next up, Wall Street, where Falcone made a multi-billion dollar fortune and then lost much of it on a few bad trades. Falcone is banking on his next big gamble, broadband spectrum, the invisible highway where all wireless transmissions travel.
FALCONE: I focused on spectrum as being a finite asset. And that is why I bought SkyTerra.
TAYLOR (voice-over): Falcone has already invested billions in SkyTerra or LightSquared as it is now known, with a plan to become the fifth major carrier in the U.S., selling wireless on a wholesale basis, providing competition to AT&T and Verizon.
FALCONE: We were an alternative to that. We had a block of 59 MHz of spectrum that we were going to deploy as LTE spectrum. That would have been the country's largest block of spectrum. That competition would and could and should lower pricing, as well as we were very focused on rural America.
UNIDENTIFIED FEMALE: Imagine, the exponential power than an open wireless broadband network brings.
TAYLOR (voice-over): But his multi-billion dollar push to get LightSquared up and running has come to a dead stop, even though when he bought the company in 2005, it had the much-needed license from the Federal Communications Commission, which regulates telecommunications in the U.S.
FALCONE: They have the green light to build out 30 or 40,000 towers. The FCC order in 2005 eliminated the caps on the power levels for the radio base station. So they had all the ingredients in the toolbox already done, which is why I stepped in.
TAYLOR (voice-over): The future for LightSquared is in jeopardy due to claims that LightSquared interferes with GPS signals that navigate everything, from farm equipment to jets.
REP. Paul BROUN (R): You couldn't use your GPS to go where you need to go to do stories that you do. It would interfere with it. Airlines would have problems navigating. The military would have problems, the scientific community would have problems. It just cannot happen. LightSquared needs to go do something else.
TAYLOR (voice-over): It's that concern that led to the FCC suspending the license last year. The FCC says it clearly stated from the outset that harmful interference to GPS would not be permitted. The commission will not lift the prohibition on LightSquared.
Falcone admits that his initial approach to Washington may not have been the best.
FALCONE: I think that when we first started out we maybe started out with too big of a hammer. I think the company took the approach that, well, this is my spectrum, get off my spectrum. And I think now we -- or I should say I have come to the conclusion that that doesn't win.
You just have to have the perseverance. You have to -- you just can't give up.
TAYLOR (voice-over): But Falcone is determined to win this battle and find a solution.
FALCONE: We believe that the law's on our side, that we've got the license. We're ready, willing and able to have an open discussion how to solve this problem, because I think it's too critical, it's too important for this not to be solved.
TAYLOR (voice-over): LightSquared now faces possible bankruptcy in the coming weeks, which would stave off creditors and keep control of LightSquared in Falcone's hands, buying him time to get on the information superhighway -- Felicia Taylor, CNN, New York.
(END VIDEO CLIP)
QUEST: Fascinating story and reporting there by Felicia Taylor in New York.
We shall show you the markets and how they're trading in New York. Obviously a difficult day on both sides of the Atlantic. It was unemployment numbers in Europe.
In the United States, it was the ADP numbers and everybody is now getting ready and wondering what happens next as we move towards the jobs numbers, which comes on Friday. So the Dow Jones, which had actually been at its highest level since 2007, getting back just a few, but still comfortably over 13,260.
When we come back in a moment, it will be a "Profitable Moment", and we will consider the question of those ancillary revenues of the (inaudible).
QUEST: Tonight's "Profitable Moment", in tonight's program, Geoffrey Kent was talking about the luxury end of the market, where people take their sisters, brothers, uncles -- Uncle Tom copy and all -- on holiday. Well, at the other end, in today world, a la carte travel is all the rage. You pays your money, you takes your choice.
And by picking and choosing exactly what we want to pay for, we've opened up a whole new world of low-cost travel, so many more of us are going and traveling, paying the baggage or not, paying for seat selection or not.
And I'm all in favor of ancillary revenues. It allows you and me to pick and choose what we want and not pay for yours instead. Sometimes, though, airlines need to remember that they are essentially the public transport. And I believe where charges can not reasonably be avoided, such as booking fees or in Ryanair's case, check-in fees, that it should be included in the price.
Travel is supposed to be an uplifting energizing experience, enriching our lives. No more bowing and scraping of bygone years. But we do expect a joyless, utilitarian experience or we expect it to be enjoyable? And that is QUEST MEANS BUSINESS for tonight. I'm Richard Quest from London. Whatever you're up to in the hours ahead, I hope it's profitable. I've got the news headlines.
QUEST: The two French presidential candidates are about to hold their one and only televised debate. This is Nicolas Sarkozy's last major opportunity to gain ground on his socialist rival. Opinion polls show Francois Hollande with at least a 7 point lead ahead of Sunday's runoff.
The blind Chinese activist who escaped house arrest last week is being treated in a Beijing hospital after taking refuge in the U.S. embassy. A deal was struck on Wednesday for Chen Guangcheng's freedom, despite some concern from other activists that he was forced out. The U.S. maintains Chen left the embassy on his own.
Deadly clashes in Egypt's capital. Witnesses say thugs in plain clothes who were protecting against the disqualification of an Islamist presidential candidate. We are getting conflicting reports on the death toll. A health official says at least 100 people were wounded.
The E.U. trade commissioner has warned Bolivia Europe will not tolerate the tactics used to nationalize Spanish-owned power company. Speaking on this program, (inaudible) group said Bolivia was using the wrong policy to send the wrong signal to international investors.
You are up to date with the world news headlines and the stories we're following for you on CNN. Now from New York, Christiane Amanpour, live.