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QUEST MEANS BUSINESS

BA Strike Averted; Interview With FedEx CEO

Aired December 17, 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, HOST, QUEST MEANS BUSINESS: A million Christmases saved, the BA strike is off, but the dispute is far from settled.

In Copenhagen heavy hitters may be landing and now they have got to break the climate deadlock.

And going green and the saving of your business in terms of a packet of parcels from the chief exec from FedEx

I'm Richard Quest, I mean business.

Good evening, the ruling is in, the dispute if far from over. Even as Britain's high court called off the strike that threatened to ruin a million Christmases. Now the war of words has begun in earnest.

Before we look at the actual legal ruling and what it means for both British Airways and Unite, let's go first of all to Michael Holmes, who is at Heathrow Airport.

Because the most important part, Michael, is what does this mean for the traveling public. Bring us up to date on that score.

MICHAEL HOLMES, CNN INT'L. CORRESPONDENT: Yes, Richard, yes, I can tell that we have been talking to people all day about this and it has been a mixture. There's been a lot of relief from people, saying, well, that's great. We can go about our business now. But there is also been a bit of anger as well. About the timing of this and the fact that a lot of people, of course, had to be somewhere over this crucial holiday period.

And so we talked to one girl, an American student, and she said she was here studying in Europe with 16 other students and half of them had to go out and buy another plane ticket, pay out more money, up to $2,000 in one case, just to get home in time for Christmas.

And we spoke to somebody else from India who was in the same position where they had to buy another ticket.

QUEST: One thing I noticed late this afternoon, the BA web site, which had refused to take bookings over the Christmas period, or the strike period, now suddenly has an anomaly attached to it, when it came back on line. Explain?

HOLMES: You got me, there, Richard. I'm not sure about that. I haven't been able to keep up with that one.

QUEST: I beg your pardon. What I was referring to, the way in which BA is now selling cheaper prices. My apologies that should have been a question to another of our correspondents covering this story. My notes have got a bit mixed up there. My apologies, Michael Holmes, for that.

The long standing -the miserable taste in the mouth that this dispute has left, when it is all finished, is anyone left standing, do you think?

HOLMES: Well that, of course, is the great danger is that, OK, let's say the strike doesn't happen at all. Of course, it may still happen after a new ballot is taken of British Airways workers. But let's say it never happens again, the great risk here with an airline that is already hemorrhaging, financially, is that a lot of the people who, OK, they are going to fly now, between December 22 and January 2. But are they ever going to come back again?

What damage has been done, long-term, to British Airways in terms of customer loyalty? I mean, a lot of these people, as I said, had to change plans, were worried their vacations weren't going to happen; and in some cases, had to spend more money. Gee, are they going to turn around next year and book their Christmas vacation with British Airways? And that, obviously, has to be a great fear for British Airways executives. They now have got to do some damage control and win back some customer loyalty that surely has been damaged by all of this, Richard.

QUEST: All right. Michael Holmes, many thanks indeed. Michael Holmes at Heathrow Airport.

And what, of course, I was talking about when I was referring to the web site. British Airways' web site, which had been showing prices in thousands of pounds for prices across the Atlantic, all of a sudden was now showing prices to New York, at just a couple of 100 pounds to New York. It all made for an interesting time, if you decided you were going to cross the Atlantic at short notice.

Now, to our Correspondent Jim Boulden, who is outside the high court.

Jim, this particular issue, this particular case; the judge - I can't -having read part of her ruling I can't quite work out, was it based on the legality or simply the inconvenience at Christmas, or both?

JIM BOULDEN, CNN INT'L. CORRESPONDENT: Well, very clearly the legality was the issue. Did the union take this ballot and allow members of the cabin crew who were leaving British Airways to vote and that was clearly yes. There were several hundred BA staffers, of 800 union members were voting who should not have been voting. And that made it an invalid ballot, as far as British Airways is concerned. And that is why they took the union to the high court.

Now, it is also very clear that British Airways made it quite clear that it was timing as well, that it would be over this critical period, that it would inconvenience an enormous number of people. And it would put British Airways at a financial disadvantage. And that is why they said they would need an immediate injunction and I have to say that was the very -that must have weighed on the judges' mind as well, Richard.

QUEST: All right. Jim Boulden at the high court in London, where it has been cold and wet outside. Go and get warm.

The law may have spoke, the worry now is that this war could drag on outside the legal framework. Industrial disputes that eventually might turn into guerilla warfare. I put this question to Jamie Bowden, and airline consultant and former cabin crew manager at British Airways.

(BEGIN VIDEOTAPE)

JAMIE BOWDEN, FMR. BA CABIN CREW MANAGER: Well, it is that some people will call in sick, but not too many, I think. I think most cabin crew know that they are probably being watched at the moment to see how many will go sick.

I think the important thing about the injunction today is that it is a fantastic victory for the million passengers that would have found their Christmas travel completely disrupted. But also I think it shows that the union let their own members down. It seems to have been completely badly executed. It is clear that the union decision to go on strike for 12 days has spectacularly backfired on them. They court has said that it was unacceptable to go out for 12 days, effectively. Many cabin crew themselves did not want to go out on strike for 12 days and I think they know, they are commercially aware, the know that that kind of length of time to go on strike would have been catastrophic for BA.

QUEST: Whatever happens now, BA still has the knowledge, though, that its cabin crew, its front line crew, interfacing with the public, are unhappy and voted for a strike. And probably will vote for another strike in the future.

BOWDEN: Well, it depends on what the union tells them. A lot of cabin crew, I think, over the past few days who have been calling me, have said, although they wanted to make a protest, they did not expect to be taken out for 12 days. They also said, though, which I think is quite important, that the union never gave them any context about what they actual context of their strike was going to be. They just said, do you want to strike?

QUEST: Right. But BA, I mean, certainly doesn't have industrial relations with its cabin crew.

BOWDEN: Well, they have better industrial relations with pretty much the rest of the airline than they do with the union negotiators for this cabin crew union. One of the things that is important, I think, going forward from now is to find a way that they can sit down, where there is compromise on both sides, perhaps. But I think Willie Walsh now is in a position where, like any other airline in the world, he has to find cuts. And if he finds cuts that can go through and be acceptable, BA at least has a future.

QUEST: And that, I think, is probably the message tonight, isn't it? That whatever happens, for both BA and union alike. They have to find an accommodation, because it cannot business as usual. It can't be business as usual.

BOWDEN: It can't be business as usual. The airline industry is changing every single day. BA are on cost to make somewhere in the region of a 700 million pound loss, this coming year. They made a 400 million pound loss a few months ago. It is now like it was 10, 20 years ago. Every airline in the world is having to make dramatic changes. If we look at people like Japan Airlines, they are only afloat at the moment because their government has given them a bridging loan. I think that people who work for British Airways, not just here in the UK but around the world, understand that in a way the good times of 20 years ago have gone. There are far more competitors now and they have to understand that going forward from 2010, they have to make sure that they are fit enough to do business in a modern world and not a world from 1975.

(END VIDEOTAPE)

QUEST: Jamie Bowden talking to me earlier. Now to bring you up to date with the news headlines, Fionnuala Sweeney at the CNN News Desk.

(NEWSBREAK)

QUEST: Focus on the time left, not the time lost, those the words from U.S. Secretary of State Hillary Clinton as time runs out in Copenhagen.

(COMMERCIAL BREAK)

QUEST: Welcome back.

The clock is ticking. The U.N.'s two-week climate conference is now meandering towards its final day. Actually, it is not meandering, it is going helter-skelter towards the Friday. The remaining hours are crucial. The goal is a binding agreement on cutting greenhouse gas emissions. And it is needed by tomorrow, when more than 100 world leaders gather for Friday's summit finale. They will negotiate all night, in Denmark.

ANGELA MERKEL, GERMAN CHANCELLOR (through translator): I am aware of the fact that all over the world there is good will. But I am also aware of the fact that many are disappointed with each other. And this is why we absolutely have to succeed in these remaining hours to work toward a solution consequently.

HILLARY CLINTON, U.S. SECRETARY OF STATE: We must try to overcome the obstacles that remain. We must not only seize this moment but raise our oars together and row in the same direction toward our common destination and destiny. And the United States is ready to do our part.

(END VIDEO CLIP)

QUEST: Now, to that end Mrs. Clinton has come along with a fresh offer aimed at jump starting the talks. She says the U.S. will contribute to a massive fund to help poorer nations cope with climate change. It will provide $100 billion a year from 2020. The fund that is.

The OECD, the Organization For Economic Cooperation and Development, is a key player in these climate talks. It's Secretary General Angel Gurria, is with me now from Copenhagen.

Now you jus finished showing a side event at the talks. Substantially we are really down to two issues: the emissions to be offered up, and the funds that will help the poorer nations. What role can the OECD, in this sense, bridge that gap?

ANGEL GURRIA, SECRETARY-GENERAL, OECD: We have been playing a role all along, but right now is a crunch. And as you say, you know, we have about 24 hours more, through the night. But there is a lot of political will accumulating, and by the moment, more leaders arrive. We got the tool kit and all the elements that are necessary. The sources of the financing can be the fight against carbon, itself. We know the enemy. The enemy is carbon, we know its ugly face. We know it is all the wrong things it produces. By fighting it, by having a tax on carbon, by having an auction for emissions permits and getting resources from there, we can finance the fight of actions against emissions.

QUEST: Right. But - but, does the

(CROSS TALK)

GURRIA: We know that any cost of actions is higher than inaction.

QUEST: Right, well, everyone accepts all of that, Secretary-General, but do they accept that the onus is more on the developed countries to provide the impetus. Or is it the developing countries that still have to have their own industrial revolution?

GURRIA: It is too late to start pointing fingers and saying you and they. If it is not done together, it is not going to happen. China and the United States, themselves, just those two countries are of the emissions of the world. And have more of the 50 percent of the secrets of the success here, but all the other leaders are going to have to weigh in. The financing is not a problem because the numbers of the financing that give the changing over time, it is a mechanism, it is a commitment. And it is also, remember, this is too important to urgent. Copenhagen is not the end of the road. It is an important station, but it is not the end of the road. There will be COP 16 in Mexico. We have to get out of Copenhagen with a very strong political signal and then continue the work.

QUEST: Now, hang on a second, you are suggesting, get out of COP 15 with a political signal. So by now, have you written off, for want of a better word, a summit treaty, an agreement, a binding emissions target. Is that just simply unrealistic now?

GURRIA: The commitments for emissions targets are all on the table and they have been submitted by the countries themselves. That's going to be happening, but all the commitments together, today, are not enough. There is going to have to be more of a effort. There is going to have to be more of a push, both on the developed and the developing countries side. It won't happen if both sides don't do better than they have done so far.

QUEST: What use does it have -and you have been a student of these meetings, these large meetings for some years, what use does it have when you get the leaders themselves in the room? Many viewers will say, well, hang on, if they haven't managed to do it in two weeks, what difference does it mean when the top men and women arrive?

GURRIA: The difference that it made, for example, when the leaders got together to address the financial and economic crisis. It was not solved until they got together. This is what the political leaders bring, the political will, and to finance the differences, to do the extra mile, to stretch things a little bit, to make an extra offer and to bridge and to proceed where the potential for agreement is. This can only be done by the leaders.

QUEST: Secretary-General, many thanks indeed for joining us. Please come back again. Thank you very much.

Now, that is basically, in a nutshell, you have just heard him say why it is so important that Wen Jiabao, President Obama, Medvedev, Sarkozy, Brown, Merkel -I'm running out of leaders that I can think of off the top of my head -but that is the reason why it is all so important in the last 24 hours. Because they are the only ones who can do the deal.

Well, a collapse or a last-ditch deal? Tonight on "AMANPOUR", Christiane talks to the U.N.'s point person on energy and climate change. "AMANPOUR" 20:00, 21:00 in Central Europe.

Which by my reckoning is about 40 minutes from now.

`Tis the season for giving and maybe you are doing the Christmas shopping on eBay this year. eBay wants to give something back. It has come up with a way to help the rich invest in the poor, in a moment.

(COMMERCIAL BREAK)

QUEST: The boss of the Federal Reserve is back in the chair for another four years. Ben Bernanke stays in his post. He won the approval of the Senate Banking Committee. It voted 16 to seven, in favor of keeping him. By Fed standards that was unusually contentious vote. The last time Bernanke received almost unanimous confirmation. Some senators use the occasion to voice frustration over the events that lead to the financial crisis. And Mr. Bernanke is not expected to face any serious dispute when the matter comes for a full vote on the floor.

The markets in New York are open and doing business. You may not -if you are of nervous festive disposition you may wish to look away. Down a ton, 101 points, just under 1 percent. That has come back a bit. They were off 1.3 percent. At 10,340.

The reasons for this, of course, FedEx, which of course has given some warnings about what is happening in the economy - Citigroup. And unemployment claims having had a very good number at some 7,000 last month. They are now back up over 480, 000 for U.S. unemployment claims.

We are well into the holiday shopping season and more of us are doing it from our desks and our armchairs. According to Comscore, online shopping spending is up 4 percent from last year, after a record breaking week.

Online auctioneer eBay will be one of the outlets that will certainly feel the benefits. eBay is trying to give something back. Its web site, Microplace, connects small investors with worthy projects in poor countries. Today I was joined by the chief executive of eBay. Always good to have John Donahoe on the program. He was in London and he explained why he liked Microplace.

(BEGIN VIDEOTAPE)

JOHN DONAHOE, CEO, eBay: The entrepreneurial spirit is alive everywhere; eBay has got 25 million entrepreneurs that sell on eBay. Largely in developed markets, but there are many countries where the entrepreneurial spirit still exists, even in poverty, but they don't have even the seed capital to do something like buy a sewing machine so they can start a small sewing business.

QUEST: The devil is in the detail with all these things. Whether it is fraud, incompetence, money going missing, whatever it might be, just being siphoned off. Getting right so the money gets to the end on the entrepreneur is the significant difficulty.

DONAHOE: Well, we work with partner organizations around the world that have established track records, of getting the capital that we provide, through Microplace, into the hands of entrepreneurs, without corruption, safely and effectively. And so, Microplace is very careful with whom they do business in each market.

QUEST: Let's take a look at how eBay is performing at the moment, at this holiday season. What are you seeing in your business?

DONAHOE: What we are seeing this holiday season is that people, by and large, want to buy gifts for their loved ones. They maybe buying something that is less expensive, than they otherwise would. But they are out there and we are seeing, we are encouraged by, we're seeing the consumer come back into the market; 5 million people visit the eBay U.K. site, each of the last two Sundays. They are buying something every 14 seconds. So, what we are seeing is they are back and they are engaged. They are often buying things that are less expensive than they would have two years ago, or three years ago. And that plays to eBay's benefit. So they buying -they are not buying the brand new item. They might be buying a refurbished.

QUEST: Ah, but are you seeing different spending trends? Because I know there is no single, killer, blockbuster must have.

DONAHOE: Yes, it is interesting there isn't. You know, typically these tend to come from consumer electronics. And there is not a sort of killer consumer electronic this year. Here is what is really interesting though, that we have seen all year, consumer electronics are now necessities. I used to be that it was you know, your food, your gas, your clothing were the non-discretionary items. And a consumer electronic, a cell phone, a computer, was considered a discretionary item.

But we saw clearly, even through this, even through this, even through this last year, very tough economic times. The cell phone, the netbook, the laptop have become an essential and so I think part of the reason we are not seeing a burst of buying is that people have been buying these things very consistently throughout the year.

(END VIDEOTAPE)

QUEST: Donahoe, so now, remember, when you want to ask Santa to bring you a laptop, say it is not a discretionary, it is an essential. See how far that gets you.

In a moment, we are going to hear from the chief exec of Federal Express about the company's outlook for 2010. The outlook took the Dow Jones down with it! What does it mean for the broader U.S. economy? We've had a glimpse today.

(COMMERCIAL BREAK)

QUEST: Good evening.

I'm Richard Quest, QUEST MEANS BUSINESS.

This is CNN updating you on the top story if you're traveling -- the strike that threatened a million Christmas holidays has been averted less than a week before British Airways cabin crew were due to walk off the job. Britain's high court in London ruled the planned strike illegal. Of course, as the union had balloted workers who had already decided to leave the company. And that made it illegal.

BA hailed the decisions, saying it was delighted for its customers. Unite, the union, called the ruling a disgraceful day for democracy.

A down day for investors in New York. This is the way the Dow Jones Industrials were holding steady at just about 101, just off 1 percent, 10030, and it's -- it's all to do with a variety of issues, now among the day's big losses are FedEx shares -- not only FedEx shares, but also unemployment numbers.

If the economy can have seasons, then this was the year from it. From the dark days of winter and gloomy market numbers to the green shoots of spring, well, we've seen it all. And we could be forgiven for seeking out a little comfort.

Adrian Finighan and the financial analyst, Jerry Wattenberg, found some food for thought at an all-American diner.

(BEGIN VIDEOTAPE)

ADRIAN FINIGHAN, CNN CORRESPONDENT: So, Jerry, here we are, taking refuge from the British winter in an all-American diner.

Does -- does this kind of place make you homesick?

JERRY WATTENBERG, JTW INTERNATIONAL: It does, actually.

FINIGHAN: Yes?

WATTENBERG: It makes me think about milkshakes and hamburgers again.

FINIGHAN: Do places like this exist still in the States or...

WATTENBERG: Rarely.

FINIGHAN: Right.

WATTENBERG: You know, I think there are lots of places that look like this, that, you know, are new but feel old, you know.

FINIGHAN: I suppose for an American, this is comfort food. And -- and, boy, has -- has this been a year when we've needed comfort food. And I suppose -- I mean, you -- you look at what's happened on the markets and -- and you can compare the events in the market with the seasons. You know, they've reflected the seasons, haven't they?

WATTENBERG: Yes, you know, I think, you know, the last year has been feeling much more like, you know, 10 years in the financial markets. You know, when we started off in the winter kind of following and completing all of them and the credit crisis with Lehman Brothers, you know, doom and gloom, a mirror to what was going on in the weather. You know, everybody was depressed. You know, the markets were depressed and things began to accelerate down.

Banks were failing. Governments were stepping in. Nobody knew what was going on. And it was a real concern that we were heading toward the abyss.

FINIGHAN: Yes.

WATTENBERG: Which really reached, you know, the depths of winter with the depths of the market in March.

FINIGHAN: Yes.

WATTENBERG: And then everybody looked around and the stock markets were at multi-year lows where the gains had been wiped out. Interest rates were coming down like falling rain and snow. And we had no idea what was going to go on.

FINIGHAN: Spring arrived and lo and behold, it sounds cliched, but green shoots began to appear.

WATTENBERG: Yes, the green shoots, you know, phenomenon kind of started right after the depths of, you know, the Ides of March, let's call it, right, in April and -- and May, where, all of a sudden, you know, value investors started to pick up cheap stocks and cheap investments. You know, governments were absolutely resolute in keeping money low. Rates had reached 300 year lows, you know, across the world -- historic lows everywhere you went.

So this massive wall of liquidity meant that investors around the world really had a choice between zero or possibly something bigger. And all of a sudden there was a little bit of a sense that the government will save us, the government will help us -- any government -- any bank, any government.

But the banks all of a sudden said no, maybe we're too big to fail and maybe the governments are going to help us. And then, really, it was coming down to the pack -- taxpayer that was very upset.

FINIGHAN: Spring turned to summer and -- and what a summer it was.

WATTENBERG: Yes, I mean the markets continued to run. There was a real sense of, you know, I think optimism that the tide has turned, so to speak, that we would not get back to those levels. There was still uncertainty about, you know, would expectations match reality and can you turn a tanker around that quickly -- you know, something that had been going down and -- and economies had been collapsing.

But I think there was a sense of stability. And when there was stability versus complete instability, that gave investors confidence to put more money to work.

However, you know, one of the things that was clearly evident, you know, through the spring into the summer was extreme volatility.

FINIGHAN: Yes.

WATTENBERG: You know, you would have multiple days of up, up, up and multiple days of down, down, down hard. So the market was still very unsure, albeit if you look back historically, it was a nice trending higher market.

FINIGHAN: Absolutely. As the leaves began to fall, those -- the markets began to look a little more shaky, didn't they?

And so as -- as the weather began to change from the glorious summer and -- and winter began to approach, so did -- the mood turned...

WATTENBERG: Yes, I think the...

FINIGHAN: I think, a little wintry.

WATTENBERG: Yes, that's a great example. I think what really happened was, you know, there was a -- reality started to happen...

FINIGHAN: Yes.

WATTENBERG: ...and, you know, summer was over. You know, the beach times left, everybody got back to work and all of a sudden it's like wow, you know, companies are making more money, but they're actually making more money because they're cutting costs.

You know, interest rates now are low.

How do you reverse out of this situation?

How did government become less indebted?

And certain -- then there became a real diverseness in the market. Some countries began to actually raise interest rates. Commodity countries like Norway and Australia began to actually jack up their interest rates, while other economies and countries like the U.K. continued to...

FINIGHAN: Yes.

WATTENBERG: ...keep rates very low. So suddenly, there was not such a clear, easy path of everybody and -- and low rates. And -- and that kind of caused the market pause.

FINIGHAN: And here we are in another winter, looking back on -- on a -- an amazing year, I mean, really. When you -- when you think of all that's happened in the -- in the last 12 months. I mean looking forward, are we -- are we through the worst of it now?

are we going to have another roller coaster year like we just had, do you think?

Or -- or are -- are -- are we on more stable ground now?

WATTENBERG: Well, I think you're on stable ground that's a little bit shaky.

FINIGHAN: Right.

WATTENBERG: So I don't think you see the depths like you'd seen before. I don't think, you know, you had the hard -- large credit crunch that you had before, the recent situation in the Middle East. The market has kind of taken it in its stride. I don't think it has, you know, has brushed it off completely.

But what it does tell us is investors are a lot wiser. Prices have moved up now so investments have to be much more thoughtful.

FINIGHAN: Yes.

WATTENBERG: Interest rates are still going to be low, so it's very, very difficult to park your money in -- in just bonds and things like that. And I think the next part of the year is going to be a real, you know, point of reflection.

FINIGHAN: Yes.

WATTENBERG: And companies earn money to match their stock prices that have been up 50 or 60 percent from the lows.

Can government start the process of reversing these historically low interest rates without putting a shock into the system?

Can the housing markets, you know, in certainly levered (ph) economies like the U.S. and the U.K., continue to rebound or stay stable?

FINIGHAN: Given all -- all of that, I -- I think that -- I'm -- I'm not quite so sure that -- that I'm looking forward to next year after all. More comfort food, I think is...

WATTENBERG: Yes.

FINIGHAN: ...is what's required.

WATTENBERG: Certainly we're more -- more chips and milkshakes for us all.

FINIGHAN: Absolutely.

Stuck in (ph), Jerry.

It was great to talk to you.

Many thanks, indeed.

WATTENBERG: Thank you very much.

(END VIDEO TAPE)

QUEST: Among the day's loss makers in the markets were FedEx shares, which are losing more than 5.7 percent right now. After the liberty -- delivery giant posted a 30 percent drop in second quarter profits.

Could going green save FedEx a packet (ph)?

Poppy Harlow has been talking to the company's chief executive, Fred Smith -- and Poppy now joins me from New York.

And there -- there are two, always, aspects to FedEx -- I mean, what happened in the quarter gone...

POPPY HARLOW, ANCHOR, CNNMONEY.COM: Right.

QUEST: ...and what happened -- and what they're looking forward to. And because they are to enmeshed in other companies...

HARLOW: Sure.

QUEST: ...it's really -- it's really significant, Poppy.

HARLOW: Yes, it's a great barometer of the global economy. And Fred Smith, the CEO of FedEx, talked to us this morning. And despite their lower earnings -- I mean, Richard, their earnings were off 30 percent from sort of the depths of the recession last year, but yet his outlook for fiscal 2010 is very, very strong.

But he's got some concerns about what is next. He's got a lot of concerns when it comes to the fuel costs for the company. That's huge for FedEx, what fuel costs them and where they hedge that and also in terms of energy policy here in the United States, what that's going to look like as we see the Copenhagen talks going on right now.

So that's a concern and also tax laws in the United States, is something he really touched on as a concern for their business.

Take a listen to a portion of our interview that came from just earlier today.

(BEGIN VIDEOTAPE)

HARLOW: What would Cap-and-Trade mean for your business, Fred?

FRED SMITH, CEO, FEDEX: Well, Cap-and-Trade would -- would simply be a cost on carbon, which we would pass along to our customers the same way we pass along in our fuel surcharge...

HARLOW: Sure.

SMITH: ...increases in -- in fuel costs.

HARLOW: Yes.

SMITH: We believe that -- that a straightforward tax and -- and a reduction in payroll tax, having the -- the tax on fuel or CO2 offset the tax on employment would be a better way to go. But there is a lot of momentum toward Cap-and-Trade.

HARLOW: Yes, there's -- there certainly is. And when you look at your business being so global and so much growth outside of the United States, you're a big proponent, Fred, of free trade. And when you look at the taxation issues in the United States, do you feel like it stifles your growth in this country and therefore you're moving more and more abroad, where -- where, you know, the tax laws aren't as they are in this country?

SMITH: Well, we're not moving more and more abroad. We are a global company that -- that serves, as you mentioned at the onset, over 220 countries. But obviously our biggest businesses are in the United States and the U.S. is still 25 percent of the world economy and I suspect we'll remain so for a long period of time.

The biggest problem, from our perspective, is the tax rates in the United States at 35 percent at the federal level, which we pay a full 35 percent...

HARLOW: Sure.

SMITH: ...is not competitive with the tax rates charged by other countries abroad. And they should be lowered, because that would increase investment and increase employment.

The same thing is true about taxation of equipment. Expensing of capital would be a much better way to go, which would incent industrial companies like FedEx to grow faster and increase our employment.

So those are the two things that they would strongly recommend.

(END VIDEO TAPE)

HARLOW: So, Richard, I thought that was so interesting, him really poignant on that point of the tax laws in this country, he doesn't think are fair for growth for global companies like FedEx. So some interesting points there.

You can see that full interview with Fred Smith on FedEx. It's one of our top stories on CNN Money today -- Richard.

QUEST: And one of the greatest things of all is to have these interviews.

Many thanks, indeed, Poppy Harlow from New York, CNNMoney.com in New York.

It's freezing outside and we're going to take a little bit longer, if you like, when we come back because we're going to need to get the weather forecast for you around the world, particularly if you're in Europe, where, frankly, it's downright cold.

(COMMERCIAL BREAK)

QUEST: Now, it's worth us taking a moment or two more just to consider the weather forecast in Europe tonight, as we head toward the weekend. Another day to go.

Guillermo at the World Weather Center.

Where is the locus particularly of this nasty storm and -- and how bad is it going to get for some?

GUILLERMO ARDUINO, CNN METEOROLOGIST: I think that we have a week of very cold conditions and a lot of snow for everybody.

Right now, there are a couple of systems that are bringing more snow to some areas, for example, here in the south. And you'll understand when I roll this.

We have a low in Italy that is going to complicate things in the Balkan Peninsula again. And then a second system is coming our way through Saturday. So we'll be getting a lot of snow.

Now, a little bit of a sampling, now, Richard, of what's going on.

We start with Belgrade in Serbia. We're going to roll 10 seconds or so and then I'm going to ask Mark (ph) to -- to put it at gates to start with Paris.

But the problem is that there's a Siberian air mass that is all the way down into the Mediterranean Sea. So we have the cold air in place. And on top of that, we have the storms.

Now, what about the temperatures, because they feel -- there is where we see a -- a dramatic difference. The east is much colder than the west. Also, the Alpine Region, of course, because of altitude and in the middle of the continent it's really cold. Look at Torino right now, minus nine; Munich, minus six; minus seven -- if you are watching from Milano, you know it's cold. And even cold in Budapest.

Now, let's see north. London at one right now, but in the Midlands and also in Scotland is where we have snow as we speak. Minus four in Copenhagen and Helsinki, minus 15. It's snowing there. It is snowing in Vienna, it's snowing in Zurich. We are going to see snow tonight in London.

How much?

Well, look at the figures here. This is in centimeters. And then -- but look at Italy and the Balkan Peninsula. It's going to be even more severe. Around Venice, we will see up to 12 centimeters of snow. So anywhere from England and Scotland, too, to France, where we -- we'll get hammered, and into the Balkan Peninsula, as well.

Now the east appears to be much worse -- Ukraine, again; Belarus; Moldova; Romania; Bulgaria.

Why do we get so much?

Because of that jet stream that I was talking about before. That -- that actually engulfed the entire continent and allowed the cold air to stay here. And it's going to stay here for days, until next week. So we may see a white Christmas in many parts.

This is the next 48 hours, Richard, in Britain. You see the new system that is coming toward us, especially Friday, Friday evening. Is it going to bring more snow. And after the snow event in France, then we're going to get a little bit of a temporary lull.

Now, the -- the perspective of Europe, the east, you see, we can't underestimate what's going on in the east. That is much worse. The west with Spain we see snow, as well. We see snow in Madrid. And the temps are going to be more severe -- severe, especially around Germany and the Czech Republic, Austria, Slovakia.

We're going to see pretty much the numbers that we're seeing right now. The problem now is not that -- well, what's going to happen, it's how long it's going to happen. And we're dealing with a week -- a week of problems over here.

Before I go, look at the complications at airports.

And we're talking about the British Airways case, you know, since yesterday, and now what the courts are saying.

What about the weather?

It's going to complicate the weather plans, as well. So the next days are going to be very, very difficult for many people.

Stay with us.

After the break, more QUEST MEANS BUSINESS.

That's Paris, by the way.

(COMMERCIAL BREAK)

QUEST: Can there be anything more enjoyable than each night we will bring you the Bach Choir singing 12 Days of Christmas?

Well, we've reached the eighth day of our festive World At Work.

Now, in the song, it's eight maids a milking. This really set my producer a hard task. We had to go down on the farm, we thought. Not a bit of it.

One very famous milkmaid could be found -- for a time, at least -- at the Metropolitan Museum of Art in New York. The curator, Walter Liedtke, told us about the painting, "The Maids A Milking."

Well, his World of Work is the passion for art.

(BEGIN VIDEOTAPE)

WALTER LIEDTKE, CURATOR, METROPOLITAN MUSEUM OF ART: I came here in '79 as a research fellow for one year. After a while, I asked to stay as the curator. The position suddenly opened up and I lived happily ever after.

"The Milkmaid" is like four years after the earliest paintings by Vermeer we know. That's extraordinary when you think how quickly he essentially taught himself.

She's not a milkmaid, she's -- the painting has been called "The Milkmaid" for some 200 years. But she's a kitchen maid who is pouring milk. And I think, at the same time, she's -- while doing this rather automatic task, she's dreaming a bit about her emotional life, where things are more interesting. And one of the things that fascinates me most about Dutch painting -- and I stepped back to it from 19th century painting -- is how a guy like Vermeer is using known artistic conventions and refining them to make the look of reality.

I'm fascinated by the relationship between how we see or experience reality and how you make a work of art out of that experience. The colors look perfectly natural and yet it's the three primaries, red, blue, yellow. The shadows look so naturalistic, but Vermeer frequently puts the brilliant contour against shadow and the deep shadow against brilliant light. And all of these have an artistic effect.

It's that interplay which takes the genius to -- to pull off.

I'm very much a historian. I love reading and writing, doing a good job at conveying the importance or excitement or attraction just quality of works of art.

I guess the most exciting is actually with real people. What I like is that the challenges keep changing. Questions of display, what to put out, how to arrange a room, frequently the purchase of a thing -- do we want to commit X hundreds, thousands, millions of dollars to something in particular, the real cost of which is maybe three other things.

To actually work with the real objects in my Dutch and Flemish field, you get to know them in a deeper way and more intimately and in a way you don't have at all in classrooms, where you're working with reproductions.

I am like a kid in a big playpen. And that's, you know, you feel, boy, 28 years and it's still fun to be here.

(END VIDEO TAPE)

QUEST: Now, that I call genius, to get maids a milking to the Vermeer's, "The Milkmaid," which was only on loan to the Metropolitan Museum. That is now -- the painting is now back at its home in the Rijksmuseum Amsterdam.

Tomorrow, well, we have nine ladies dancing. When you think about it, that could be quite easy.

Where are we going to find it?

It is going to be Cancan?

Is it going to be something more exotic?

Or are we going to go for the classics?

It's nine ladies dancing, as we have our 12 festive days of Christmas.

when I come back in just a moment, a Profitable Moment -- is there anything left to be said about the British Airways strike?

You'll find out.

(COMMERCIAL BREAK)

QUEST: I've already spoken a couple of times this week about the BA potential strike and perhaps you'll grant me the liberty of just having a final word -- a Profitable Moment, maybe in an unprofitable industry.

British Airways and the other global airlines are facing some very serious problems in the years ahead. Just this year alone, Arta (ph) estimated they'll lose $11 billion collectively. And next year, the losses will still be in the billions.

So the need to restructure, the need to consolidate and the need to find new ways of flying passengers at lower costs for the legacy carriers has never been more important. That's the battle that British Airways has been in over the past few weeks.

The fact that it's come at the cost of its staff and its unions is one of the fights that still has to take place in the weeks and months ahead. Where British Airways has been so far, other airlines undoubtedly will end up.

And that is tonight's QUEST MEANS BUSINESS.

I'm Richard Quest in London.

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

Christiane is after the I Desk.

END