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QUEST MEANS BUSINESS
Top Pentagon Officials Speak on Syrian Strike; Explosions Near Borussia Dortmund Team Bus in Germany; United CEO Issues New Statement Amid PR Disaster; Mattis Says No Doubt Syrian Regime Behind Gas Attack; Geopolitics Weighs on Wall Street; Trump Meets CEO Advisers at White House for Strategy Session; United Airlines in Damage Control Mode. Aired 4-5p ET
Aired April 11, 2017 - 16:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:00] RICHARD QUEST, CNN ANCHOR: .let me just go through the main points of what Secretary Mattis said. The key points I thought, Rick
Franconia, was firstly that they were absolutely positive, there was no doubt in their mind that the evidence showed that the Assad regime was
behind this attack. He was asked about this several times and he repeated, "We can't tell you the evidence but there is no doubt in our minds."
Then on the second point, which again was raised, what's the difference between thousands dying in barrel bombs and those being killed by chemical
weapons? Again, and again he said, chemical weapons have never been used since world war I, they weren't used in Korea, they weren't used in World
War II. He said the message was clear, the use of chemical weapons will evince a very, very stiff price. Lieutenant Colonel Rick Franconia, what
did you make of it?
RICK FRANCONIA, CNN MILITARY ANALYST: I thought it was about what we could expect. There was no real new information in here. I think he basically
underscored what already has come out. They were very sure that the Syrians, in the words he used, planned, authorized, and executed, I thought
that was very significant, he did say that. He did kind of discriminate between the 20 percent versus the 20 aircraft that were destroyed. And I
think he's probably right, the Syrians have about seven squadrons of fighter bombers and if we took 20 aircraft out, that's about 20 percent of
their fighter bomber force. So that was good to know. And I was very interested to hear him distinguish that our policy has not changed, that
ISIS is the priority in Syria and that's what they're going to continue to do.
QUEST: The former U.S. defense secretary joining me from Washington, good to see you, William Cohen, thank you, sir. Always good to have you. Is
the administration still balancing this very, very narrow line between not shifting from their existing or previous policy of engagement in what the
secretary said is a full-bore engagement, versus not allowing them to cross the -- the Assad regime to cross the line with chemical weapons? It's a
narrow distinction and it's getting ever narrower.
WILLIAM COHEN, FORMER U.S. SECRETARY OF DEFENSE: It is a narrow distinction but it's an important one. I think what Secretary Mattis made
clear is that we're not prepared to engage in another full-blown war in the region. That our goal has been to degrade if not eliminate ISIS, and that
we're committed to doing that.
I think the most important thing coming from Secretary Mattis was his manner. He was very calm, very reassuring, very precise. And I think it
calmed a lot of anxieties that have emanated from conflicting statements coming out of the administration. What has not yet been made clear is what
our overall policy, strategic policy is going to be going forward in the future, other than saying we're still committed to defeating ISIS. But
that has to be brought to a broader context in terms of are we going to remain engaged in global affairs? Are we going to remain engaged in NATO
and the EU? Or are we going to, as some of the president's critics are now claiming, abandoning the America first concept and becoming more
isolationists? I think that remains unclear at this point to me. I'm hoping in the near future we'll have a comprehensive strategy that will set
forth what the United States will be doing on a global basis.
QUEST: Secretary Cohen, on that point, there still requires an element of clarification over exactly what the administration sees its role vis-a-vis
Assad, and whether or not -- I mean, you hear some saying that he cannot stay or at least in the near future, but at the other time the president
specifically sort of says -- Sean Spicer says, you have to deal with the reality of him being there. What do you understand the strategy, where
Assad himself is concerned?
COHEN: I think the ultimate strategy is, number one, to remove ISIS. But secondarily, and importantly, is to see a peaceful resolution on the
ground. And I think what the president is saying, what President Obama said, is that as long as Assad remains in power, the struggle is likely to
continue at some level of creating continued turmoil and disruption, that you're not going to settle this with bombs or bullets ultimately, and any
kind of a peaceful solution is going to require Assad to step aside, have some small segment left, in terms of territory or something. But she can'
he can't remain the father of Syria given what he's done.
[16:05:00] QUEST: Rick Franconia, if the administration strategy, as we've just heard from Mattis and Votel, if there is a very targeted strategic
limited role to send that message of red line to the Syrian government, has it succeeded or has it -- and I don't use the phrase "quagmire," but I give
you the impression of, put the U.S. administration on a slippery slope, or have they managed to ring fence by the action they took, the limited
FRANCONIA: We don't know answer to that yet, Richard. We don't know if the message has been received and understood in Damascus. It depends on
what Bashar al Assad does now. Is he going to take that message and not use chemical weapons anymore? Many of us where surprised that he even
bothered to use chemical weapons, he doesn't really need them. He's got the upper hand militarily. So, the use of them was really a big
miscalculation on his part. Hopefully he won't use them again. But we won't know. The question is, if he does, are we prepared to re-strike?
Then you get into the slippery slope they'll keep doing this.
QUEST: Well, you have to, Rick Franconia. I'm going to suggest to you, bearing in mind what Mattis, what Secretary Mattis has just said leaves no
room for doubt. I'll remind you, very, very stiff price. If there was to be, god forbid, another use of such heinous weapons, the U.S. surely would
have no alternative but to respond.
FRANCONIA: And if that happens, where do we stop? Do we keep ratcheting this up? Pretty soon we're in a shooting war with Syria.
QUEST: Right. Let me quickly go to you, Secretary Cohen, just to get your thoughts on that. Factoring in Russia where Secretary Tillerson is
tonight, and what they have said, give me an impression. Are we looking at a seriously deteriorating situation that's going to be very difficult to
pull back from the brink?
COHEN: It doesn't have to be. That's why Secretary Tillerson is there. And frankly I think it would be a mistake for President Putin to snub him
as such and not meet with him. I think it's important that we understand and make clear to the Russians that they're going to be held accountable.
And when this is all is said and done, if they in fact had any kind of complicity in this attack by knowing it was going to take place and not
stopping it, they're going to ultimately be held accountable for this as well, as a war crime. War crimes are more or less like pornography. We
know it when we see it. When you start dropping sarin gas and other chemical weapons, then you've crossed the line. The Russians don't want to
be in the position of saying, it's OK with us if he does it. I think they'll put a stop to it if in fact they can.
QUEST: Gentleman, thank you both for joining us. Giving us such useful insights into what we've just been hearing. I appreciate it.
Over the last couple of hours, I need to update you with the breaking news that comes to us this evening from Germany, where it's after 10:00 at
night. Dortmund police say there were three explosions near the bus of the Borussia Dortmund football team ahead of its UEFA Champions League match
tonight with AS Monaco.
Windows on the bus have been shattered, and police are working to confirm what caused the explosions. Defender Marc Bartra is hospitalized. The
game that was due to take place has been postponed. It's now rescheduled for tomorrow. And the police say there was never any danger to the people
in the stadium.
We've really got to discuss what sort of explosive device this was. What was the purpose? Who might have been behind it. And we do so with Julian
Reichelt. He's the editor-in-chief of Bilt Digital who joins me from Berlin. This is really the crucial question tonight, Julian, whether this
is lone wolf/fanatic/lunatic or whether this is part of a concerted attack by a recognized, if you like, terrorist organization.
JULIAN REICHELT, EDITOR-IN-CHIEF, BILD DIGITAL: Richard, so far, it's a very inconclusive picture we are seeing here. We have thoroughly checked
pictures of the bus. We have talked to our reporters there on the scene. And the bus, it has been confirmed to us, glass, the windows could be
called bulletproof, they have been shattered. They have been partly blown out. It looks like the bus took kind of a heavy blow. We've also seen
what you already mentioned, it was three synchronized explosions, which obviously is quite difficult to pull off. So far, it's inconclusive in
terms of who did it. But certainly, the person or the persons who executed this put a lot of effort in the planning, which is very disturbing.
QUEST: Right. Very disturbing indeed. If we just extrapolate this, Julian, first of all, you have the, if you like, the very different attack.
[16:10:00] Which is the truck and the lorry that plows into pedestrians in a normal city and village. But then if you start having football teams or
other well-known groups attacked, that adds a different element.
REICHELT: It absolutely does. And, you know, Richard, the European football scene is kind of radicalized. There are radical elements within
the different fan groups. But still you would see firecrackers, fireworks, stones maybe. But explosives is something we've never seen in this kind of
scene. There are things that are still sacred even to this radical scene of football fans. And again, this event, with all the planning involved,
someone apparently knew where this bus would be going. Someone obviously did reconnaissance. Someone managed to synchronize three explosives.
We've also talked to the police again with our reporters, because there were some elements of the bus that just look like bullet holes. They
confirmed to us, no, it was not someone shooting at the bus, it was something they called serious explosive devices. That certainly indicates
it was a person, individual or a group that was really serious about doing harm. So far there is no indication, which spectrum, from which
environment it may have come.
QUEST: Julian, thank use, sir. The editor-in-chief of Bilt Digital joining us from Berlin. Of course, sir, the moment there is more we would
love to hear back from you and discuss this.
CNN's World Sport is Patrick Snell who joins me now. And well, first of all, give us a thumbnail, if you will, of the team, its current position,
and the significance of tonight.
PATRICK SNELL, CNN WORLD SPORT: Richard, yes, this is disturbing whichever way you look at it. Borussia Dortmund are one of European football's
biggest clubs. There's no question about that. They're one of Germany's truly big two, if you like, with Bayern Munich, the all-conquering
champions as of right now and Borussia Dortmund. But Borussia Dortmund played their home games at a Westfalenstadion. This is a stadium tonight,
Richard, that has a capacity around the 80,000 mark. The stadium was not packed to capacity when these devices went off.
But just to give you an example of the pedigree in the tournament as well, they won it before. The Champions' League is European football's most
lucrative tournament. They are the 1997 winners. And the team they are playing Monaco also has decent pedigree in the tournament, they got to the
final in 2004. I want to show you a tweet, showing you the example of wonderful camaraderie between these two clubs. The Dortmund fans coming
out from the official twitter feed basically thanking the Monaco fans. Because these Monaco fans actually started chanting the Dortmund name in
support given what actually happened. Which is great to see, Richard.
QUEST: Tell me about Marc Bartra, who has been injured and is in hospital, we believe, we don't know any more about that. But give me some details
about him please.
SNELL: Marc Bartra is a 26-year-old. He's actually a Spaniard. Who's actually places club football in Germany for Borussia Dortmund. He's a
young player. He still is a developing player at 26 years of age. But he has good experience behind him. He plays at center back. He's played the
best part of 20 games for Borussia Dortmund this season.
And the reports are indicating that he was hospitalized in the aftermath of these explosions, reportedly with arm and possible hand injuries. We're
certainly watching and monitoring that one very, very closely indeed. But he's one of these young Borussia Dortmund players upon whom much is
expected of course. But right now, Richard, the focus is not so much on the team and the team's prowess, and the players individual skills, it's on
what happened and how these players can refocus. They're supposed to play within 24 hours, Richard. As I've been saying on air earlier, these
players are human beings. It will be tough for them to focus.
QUEST: One wouldn't be surprised if there's a further delay of the match. We'll only find that out in the next 24 hours. Patrick Snell who is at the
CNN Center, thank you for that, sir.
I just need to update you, one line that is now being reported by Reuters, the Dortmund place are saying, and I think we just heard it from Julian at
Bilt. The police say, "After the initial investigation we assume this was an attack with serious explosives." But they are not prepared to yet go
that extra further bit and sort of say that it was a terror attack, although frankly we know the difference, an organized terror attack, any
form of explosive attack would be legitimately described as terrorism.
When we continue tonight, QUEST MEANS BUSINESS coming to you tonight from London. In the last hour or so, United Airlines' chief executive, Oscar
Munoz has done a full mea culpa. Describing the removal of a passenger from a plane as truly horrific and saying we accept responsibility and we
will put it right. We'll have that after the break. QUEST MEANS BUSINESS.
QUEST: The message is clear tonight from United Airlines' chief executive, "I promise you we will do better," says the chief exec, Oscar Munoz. With
a new statement in the last hour -- let me read you, "The truly horrific event that occurred on this flight has elicited many responses from all of
us: outrage, anger, disappointment. I share all of those sentiments and one above all, my deepest apologies for what happened. Like you, I
continue to be disturbed by what happened on this flight and I deeply apologize to the customer forcibly removed and to all the customers aboard.
No one should ever be mistreated this way." It goes on, "I want you to know we take full responsibility and we will work to make it right. It's
never too late to do the right thing."
By any standards, this has been a public relations nightmare for United, which has lasted two days. The shares opened down roughly about 4 percent.
At one point a billion dollars was wiped off United's value. But by the time the day was over, shares with off just 1 percent at $70. All because
of these pictures that you've seen over and over again.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: Oh, my god. Oh, my god.
UNIDENTIFIED FEMALE: Oh, my god. Oh, my god.
(END VIDEO CLIP)
QUEST: I don't think anybody would disagree with Munoz's description of this as truly horrific. Particularly if you think about the man that
actually paid for a seat. Several passengers filmed the scene at Chicago's O'Hare. The man refused to give up his seat and was forcibly removed by
three Department of Aviation security officers. The man then ran back on the plane. His face had been bloodied by the encounter. It's believed he
hit his head on the seat arm as he was forcibly removed out of his seat.
Our aviation correspondent is Rene Marsh and joins me from Washington. Oscar Munoz says tonight it's never too late to do the right thing. Now,
you can argue, Rene, it was going to take time to put together a considered response, which is what we've got tonight, but it begs the question, why on
earth they put the other two out when this is the one they need to.
RENE MARSH, CNN AVIATION CORRESPONDENT: You know, Richard, when I saw this statement, the first thing I thought was, third time's a charm. Because,
you know, this statement that you talked about, that came out just a short time ago, this was the CEO's third message, and he final got his tone
[16:20:00] It took two days of viral video and just fierce outrage from just about anyone who saw that video before the airline made this sort of
direct apology to the passenger who was dragged off of that flight by the arms. And it was because that flight was overbooked on Sunday night.
Now, I do want to add that the CEO said that there would be a thorough review of how the airline handles oversold flights and that it will be
looking at how it works with law enforcement. He said that this review would be completed by April 30th. So of course, we'll be watching and
waiting on that. But as you pointed out, you know, this comes after he doubled down in an email that he sent to employees, defending the flight
crew and calling the passenger disruptive and belligerent.
And then his very first statement, he only apologized for having to re- accommodate passengers. This really has been a disaster, to put it mildly, for the airline. It's really been crickets also from the press office.
They've kind of just gone into a hole, and occasionally quietly updating the website with a statement, but they really haven't been answering any
additional questions from reporters covering the story.
One last thing here, Richard, coming from Washington, we are starting to see lawmakers react. They are demanding the findings of the Department of
Transportation's review of this incident. We reported yesterday that the Department of Transportation announced that it was going to be looking into
whether that passenger's rights were violated.
QUEST: Rene Marsh in Washington, thank you, you've brought us up to date beautifully with the events of the day so far, thank you for that. We'll
talk more about it, because United is being attacked on numerous fronts. The airline is not strictly at fault in each of the cases or at least it's
at fault in the way they handled it, but that's if you go through them.
First of all, the question of overbooking. Questionable whether this flight was overbooked, whether four crew members suddenly turned up late.
But overbooking is a reality of the airline industry. And the truth is, it keeps the costs down for airlines and it keeps passengers' fares lower
because the airlines can keep selling the seats. But the object is to get your overbooking just about right, rather than over-overbooking.
Secondly, the passenger's removal itself. It wasn't United that dragged the passenger off. It was the Chicago police authorities or at least the
aviation's responsible. And indeed, by the letter of the law, the passenger is obliged to leave the plane. United is taking responsibility
and at least now saying they are responsible and they will put it right. But as Renee said, the true problem was the first two letters. The email
and the statement. And the lack of apparent compassion to the staff that focused on keeping staff happy. Sara Nelson, the international president
of the Association of Flight Attendants. She is also a former public relations director and flight attendant for United. You represent the
flight attendants at United. Your organization does. Sara, all right, come on, brass tacks, Ms. Nelson. I mean, who is to blame here?
SARA NELSON, INTERNATIONAL PRESIDENT, ASSOCIATION OF FLIGHT ATTENDANTS: This was truly a disturbing scene. And as Oscar said, horrific. Aviation
workers across the industry were identifying with this as totally horrific and need to be called out as such. But, you know, this was an escalating
set of circumstances, Richard. As you know, flight attendants, as aviation's first responders have to manage conflict on board the aircraft
all the time. And the way you keep problems from escalating to a bigger problem is to keep them off the plane. So much of this, many people are
saying, should have been handled in the gate area, we would probably agree with that. So, Richard --
QUEST: Let me jump in. On the question of Oscar's letter yesterday. Now, we know morale has been pretty appalling at United. And we know that as a
result of Oscar's policies and the way -- I mean, he's a thoroughly decent guy and a nice chap. But he's a good CEO, from what we can see. But his
priority yesterday seemed to be keeping his own staff, that I empathize with you and stand with you all the way. That was significant for you,
NELSON: It was very significant for flight attendants. And there have been flight attendants across United's system, whether they are main line
and part of the original operation or part of the express carriers such as this was on Republic, who have expressed incredible thanks for that.
Because they are taking a beating out there. They were really not a part of this offensive, disturbing event. In fact, their job every day is to
maintain order in the cabin.
[16:25:00] His immediate action to tell the staff, I stand with you to continue to fly right, not -- I don't stand with that sort of behavior,
that wasn't his message. The employees heard loud and clear that this management team stands behind the people who make flying safe, secure for
everyone on board and maintain that order in the cabin on a daily basis with thousands of flights taking off all the time.
Richard, you know United really well. You have seen it through its ups and downs. And it really is a disaster place before Oscar Munoz became CEO.
And my experience with Oscar Munoz, is that he is one who takes these issues very seriously. He is not one to sign off and let something go. He
will delve into it. He will hold people accountable. The statement that was put out today is very much in line with who he actually is. My
experience with him over the last year.
QUEST: So, if you take -- and let's not go back too far to United broke my guitar, we can all remember, that was a long time ago. But if we take
leggings, and if we take this incident, and by "this incident" I'm not talking about the dragging off the plane, because that really is the
responsibility of the Chicago law enforcement authorities. I'm talking about the incident leading up to the need to remove the passenger from the
plane. Is this not an indication that Munoz and the senior team still have much work to do at UA?
NELSON: But United Airlines was so broken before he took over. And yes, there is still work to be done. But I will tell you is the employees
immediately responded to his statement. And we are seeing an entirely different turnaround at United. This wasn't right until the statement that
he put out an hour ago, like you said, that was desperately need. But the employees understood what they needed to do to keep the airline moving in a
positive way. And as you put it yesterday, to fly right.
QUEST: Sara, good to see you, as always, thank you very much, Sarah Nelson, joining me. You're in Hawaii.
NELSON: Yes, I am. I'm talking to you from Hawaii.
QUEST: Sympathy has evaporated in Hawaii. Thank you very much for the beautiful weather that you're probably enjoying there. Thank you very
much, Sara. Good to see you as always.
At QUEST MEANS BUSINESS, we continue tonight. The markets, take a look and see. The big board was down very sharply during the course of the day,
fell by about 145 points. Then it rallied, then it fell back a bit and then came roaring back up again. What a volatile day. It's all about
uncertainty in geopolitical events. Which is what we'll talk about after the break. QUEST MEANS BUSINESS, good evening.
[16:30:07] QUEST: Hello, I'm Richard Quest. There's a lot more QUEST MEANS BUSINESS in a moment. Before we get to it, you're watching CNN, and
on this network, the news always comes first.
Within the past hour, the U.S. Secretary of Defense said there was in his words no doubt the Syrian regime was behind the chemical attack that left
dozens of people dead. James Mattis also said the U.S. military policy had not changed and that defeating ISIS remains the main goal in Syria.
Police in Dortmund in Germany are investigating three explosions that went off near a bus carrying the Borussia Dortmund football club. Some of the
bus windows were shattered and the team tweeted that the defender Marc Bartra was hurt. Their match against Monaco was postponed until tomorrow.
Shares of United Airlines closed lower after the company lost a billion dollars' value earlier in the session, a fierce backlash from the video
showing up the forcible removing of a passenger from a flight on Sunday. The chief executive says the incident was horrific and said that United is
Investors seem to be looking for safe havens at the moment. And certainly, the volatility index was down. The Dow recovered from a triple-digit loss,
it was off over 145 and off just six and change at the close. Investors are moving out of stocks into gold and treasuries. In fact, the mere
movement of the market shows just how uncertain people are at the moment. The New York stock exchange trader Alan Valdes says it's geopolitics.
(BEGIN VIDEO CLIP)
ALAN VALDES, SENIOR PARTNER, SILVER BEAR CAPITAL: It's all geopolitical, it is
Syria and North Korea they are weighing on the market.
(END VIDEO CLIP)
QUEST: Stephanie Flanders, the chief market strategist for the U.K. and Europe for JPMorgan asset management. Is he right?
STEPHANIE FLANDERS, JPMORGAN ASSET MANAGEMENT: I hate to contradict a trader but these things are weighing on the markets because they haven't
had a lot of good news to focus on recently. There's been a gap between the euphoria we saw at the start of the year and the soaring confidence
numbers we've seen globally in the U.S. and elsewhere, and what's happening in the hard data. You've got the gap between softer survey data and the
hard data. We're just not quite there yet, we don't feel we're completely confident in this reflationary mood. Then we start worrying about
unpredictable geopolitics, will president Trump do something surprising, those kinds of things.
QUEST: When you have the Russians saying this is the worst state of relations since the Caribbean crisis, and then you also have, for instance,
North Korea deteriorating and warships being sent to the region, I wonder, what are we worried about? What's the market focusing on? Are they
focusing on whether this will get really nasty?
FLANDERS: Of course, you don't want to make light of the uncertainties and the fact that we've moved so quickly with the U.S.-Russian relationship in
the last week or so. That relationship tends to set off alarm bells, people look to the impact on oil price and commodities. When you get to
these things and look at what could plausibly happen, what the size of the market is that's involved, usually it's hard to really join the dots,
assuming that it doesn't completely escalate, assuming that we've got the grownups in the room in this, I think we're still looking really at just
need for reassurance from the market about the global economy.
QUEST: Right. So, if we take the data, the hard data versus the soft data that we're not seeing yet, but you have had for example the failure of the
health care, and you haven't got a viable tax plan put forward yet by the administration, and Brexit is about to begin, so -- I was the U.K.
inflation numbers today, 2.3, that seemed to be moderately --
[16:35:00] FLANDERS: It's going up. It's the same this month but the underlying inflation is going up. We've got that to worry about. If you
look at what's driving the markets since last year and the feeling of positivity, some of it was forecasts of what Donald Trump might achieve
with taxes and infrastructure, you saw that reflected in stocks that might have benefitted. Some of it was improvements in the global economy. It's
not fantastic, we're not accelerating global growth, but we've got more synchronized growth. Even if we don't-- we are looking at a more balanced
picture of growth globally. That should be good news if we can get past these humps.
QUEST: Thank you so much.
Donald Trump today met again with his panel of top chief execs who sit on the so-called strategic and policy forum. The president announced his
administration will have pleasant surprises regarding NAFTA and he spoke about the plans to streamline and potentially eliminate the Dodd-Frank
regulations. The head of the group says he expects real results on a wide range of topics.
(BEGIN VIDEO CLIP)
DONALD TRUMP, U.S. PRESIDENT: We've been looking at trade, education, and workforce development, energy and the environment, regulatory reform, and
infrastructure. All these things are really important. And we're focused. The people in the administration are also focused on working together.
Hopefully, we'll have a bunch of really good outcomes.
(END VIDEO CLIP)
QUEST: So, there you have the head of the forum, Cristina Alesci has been talking to him. Cristina joins me from New York. Steven Schwartzman has
tied himself thoroughly to this forum and now has to make it work so it isn't just a talking shop but that strategy follows from it, real policies
that actually end up becoming laws. So how did you find him today?
CRISTINA ALESCI, CNN CORRESPONDENT: I pressed him on that point, Richard. To many people, this looks like a photo opportunity with the president.
But what I see is an interesting dynamic emerging. I see these CEOs potentially doing some real work on policy issues. We can't know for sure,
because these meetings are behind closed doors. But they seem to be putting together a list of regulations that they want to see cut or culled
so they can go ahead and make the investments that Donald Trump would like them to make. And that would increase hiring and in exchange, these CEOs
get an audience with the president, which is extremely valuable. So, there does seem to be real work going forward. When you talk to Steve
Schwartzman, he is very interested in the U.S. relationship with China. He's got a lot at stake there. Take a listen.
(BEGIN VIDEO CLIP)
STEVEN SCHWARTZMAN, CHAIRMAN AND CEO, BLACKSTONE GROUP: The president is basically looking for, whether it's reciprocity or equivalency, pick the
right word, but it means basically we should be paying a certain amount to enter China and they should be paying sort of the same to enter the United
States. At the end of this, if it's done well, there should be more trade between the countries, because more U.S. goods will be able to enter China.
ALESCI: You mentioned trust being critical to these talks, talks between China and America. A lot of the rhetoric that president Trump has used has
not gone too far in engendering trust between the two countries. Have you personally urged him to change the language around China?
SCHWARTZMAN: Those of us who understand both countries would like things to work out for everyone. But I'm optimistic that these things will be
worked out in time. It doesn't necessarily have to be with no difficulties. We'll always have some difficulties. But I think the
endpoint will be a good one for both countries.
ALESCI: So, let's switch gears a little bit to the meeting. Steve Mnuchin was out there talking about tax reform by august. What is the realistic
time frame for tax reform?
SCHWARTZMAN: I'm not the world's expert on that, Cristina. I think Gary Cohn said something about by year end. In terms of tax reforms, I think
there's only been one major one since -- including 1986. There's a reason that it's taken 30 years to get to the table again. And it's complicated.
So, it will take a while.
(END VIDEO CLIP)
[16:40:00] ALESCI: So, what's really interesting here, Richard, is Steve Schwartzman's tone in terms of getting stuff done in Washington, DC. He's
taking a way more conservative approach than Donald Trump is taking. He cautioned that there needs to be bipartisan support for certain things in
order for them to happen, like tax reform, like the infrastructure spending that Donald Trump would like to see. And ultimately, what is very
interesting is this dynamic between the CEOs and the president, because the president does need these CEOs to pick up hiring in order to deliver on the
promise that he's been talking about every single time we've heard from him. More jobs, more jobs. Well, the CEOs of these companies have to hire
more people in order for Donald Trump to deliver on that promise, Richard.
QUEST: Cristina Alesci in New York, thank you.
As we continue on QUEST MEANS BUSINESS, more on United Airlines, getting the perspective of a former chief executive of JetBlue who now runs his own
airline in Brazil and knows only too well what happens when scandal hits and the news turns extremely bad.
QUEST: United's chief executive, Oscar Munoz, says he takes full responsibility after a video showed a man being dragged off one of his
airline's flights went around the world. It snowballed from a brutal attack on a paying passenger into a PR disaster, and as you might expect,
there was outrage online. The former chief executive described the original message to the staff saying he was standing behind them and
describing the passenger as belligerent, "this is one of the most tone deaf corporate emails ever sent, and I should know." Fellow airlines have not
wasted a moment to poke fun. Emirates is running an ad, fly the friendly skies with a real airline. This is a reference to Munoz's comments back in
March, those gulf airlines aren't airlines.
That's absolutely bitterness and bile coming from both sides over, of course, the open skies battle between the U.S. and the Gulf. And an
international incident for United in China with a number one trending topic that calls for a United boycott, accusing the airline of discrimination.
This perhaps is essentially extremely serious, because United is the largest U.S. carrier to China, opening new routes every year with a view to
China being one of its most important markets.
[16:45:00] So to put all this together, and our guest has founded JetBlue and most recently is running Azul, the Brazilian airline. He has
experience with airline PR quagmires. For instance, JetBlue's organizational failure during a winter storm back in 2007. Now, that was
so dramatic it led to his resignation and a change in the U.S. law. After Azul made its debut on the stock exchange today, he joined me to give me
DAVID NEELEMAN, CEO AZUL, FORMER CEO, JETBLUE: I think it's unfortunate. Sometimes, you know, the CEO of United is a good guy, Oscar is really
focused on his people. He's standing behind him, which is great. I think what he needs to look at is, do the people have enough tools to be able to
offer maybe more money to be able to get those people to entice them off an airplane. Hopefully you know, I think they'll look at it and say, hey, in
these kind of extreme circumstances, you know, one in every 2 million customers gets bumped off of a flight at united airlines, it's minuscule.
It's really just a rounding error. If you give the people a little more tools, this thing could be resolved fairly easily. And also respect your
employees that are doing a great job.
QUEST: On the wider question of overbooking of planes, all airlines do it. JetBlue, we believe doesn't do it. But is overbooking, is this a
legitimate airline strategy, do you believe, in this day and age?
NEELEMAN: Absolutely. I mean, if you have a flight that on average is 8 percent no-show rate, then what you'll do is maybe book it up 5 percent
overbooked so you have a margin. Most of the time, like I said, it's very rare that somebody involuntarily gets off a flight. But it's a revenue
source for airlines. You know, my concern is that if the airlines don't come out with something proactively, some in congress will say, it's pass a
law that says you can't overbook. That would not be good for the industry, wouldn't be good for the passengers or for the hundreds of thousands of
people that are voluntarily bumped and make a lot of money, you know, doing this. People make money doing it. So, you know, it's a very small
problem. And maybe the airlines just need to up the ante a little bit when they involuntarily bump somebody to make sure everybody is voluntary and
cut way back on the involuntary, which is minuscule.
QUEST: You have experience with public relations crises from your previous life at JetBlue. What do you take from these experiences? As a chief
executive of an airline who has faced it in the past, let's face it, you've faced real wrath of large numbers of passengers and congress. Now you're
running an airline in Brazil with all the difficulties of that. What do you take in terms of brand loyalty and brand marketing?
NEELEMAN: It's very important. Especially today, everybody has a phone. How many people were filming that incident on the united flight? What I
told our people is, go above and beyond for the customer, resolve issues. You know, it's not who's right, it's what's right. Let's make sure we do
the right thing, because someone is going to be posting this to a site. You never know when it's going to go viral. Things that would have been
swept under the carpet before are now in the broad open with social media. You have to be careful of your brand and you have to kind of go overboard
to protect your company and your brand.
QUEST: Does it have long-lasting repercussions, do you think, in these situations? People like me, remember, maybe we drag it out of the
archives. But do you think the passengers actually remember these sorts of things?
NEELEMAN: You know, I think, you know, we had the situation at JetBlue, I was very proactive. I created a customer bill of rights. I went live on
all the networks and talked about it, I did 24 live interviews the day after, when we launched the bill of rights. Our numbers bounced right
back. I think it has a lot to do with your reaction to it, how believe you are and how credible you are. And how sincerely you apologize.
QUEST: He joined me from the stock exchange earlier today.
IMAX has completed the largest European deal in its history. We'll discuss the announcement with the company's chief executive. He was here earlier
[16:50:00] (COMMERCIAL BREAK)
QUEST: In Europe moviegoers will be able to enjoy bigger screens after IMAX signed an agreement to bring 25 screens to the U.K., Ireland, Germany,
Spain, and Italy. New sites are to be developed elsewhere across the continent including Scandinavia. The chief executive of IMAX told me why
because IMAX is very large in the U.S. and growing fast in China. But why this European footprint? It's relatively small.
RICHARD GELFOND, CEO, IMAX: Europe has been a very slow growth market for us compared to China and north America. And the reasons are, first of all,
Europe has a much older infrastructure around cinema, they tend to be in cities. They tend to be not as many stadium seats, not as many big
screens. That's one reason it's been difficult to get a big foot print. The second one is, the way Europe evolved is a lot of small regional chains
in each country. You have to go to each country and make your story and prove it out and sell separately. Now that they're being amalgamated by
people like AMC, you could do one continental deal a lot easier.
QUEST: Right. I suppose for a company like yourselves where you have an element of limited resources for expansion, you have to put it where you're
going to get the biggest bang for your buck. I'm guessing the U.S., but I'm guessing it's China.
GELFOND: China is a big bang. We've done phenomenally well, we have 800 screens including our backlog in China. Surprisingly, a place like Germany
has done fairly well, we have high per screen averages, but it's just so fragmented, you can't get in in a bigger way. This deal enables us to get
in in a bigger way, get the support of the studio to build the business. Southern Europe, as you're we're, has been a very risk averse place,
because of the economy. When you get in with a big player like UCI, you can really accelerate your development in those territories.
QUEST: If we look at the product that's coming out, the movies, the Marvels, the deals that you have with Warner and others, what have you got
GELFOND: By the way, it's an auspicious time to be here, because this Friday kicks off really one of the best blockbuster seasons we've seen.
You go into "Guardians of the Galaxy," then in no particular order you've got "Spider-Man," "Transformers," "Dunkirk" which is beautiful and will do
phenomenally everywhere, in the U.K. for the rest of the summer. You have "Star Wars," "Wonder Woman," "Justice League."
QUEST: Will we see any records broken, are any of them of that genre, you may get a billion dollars, but are any of them of the genre that will break
GELFOND: Well, you never know. Who would have thought "avatar" would have done it at the time it opened? Several of these are in -- "Transformers,"
"Spider-Man," "Guardians," they're all in that kind of company, we'll have to see.
[16:55:00] QUEST: There is systemically a change between what you were telling me about, the difference of when a movie is released in the
theaters and then when it is released into other distribution channels such as home or streaming. At the moment, you're saying that it's roundabout 75
days. But the studios want to make that shorter. That will cost you.
GELFOND: Our movies only play two weeks, in the case of a blockbuster, three weeks. For IMAX, it's not relevant. For the rest of the industry,
it's a contentious issue. We have a unique perch because we're in business with the studios on the content side, the exhibiters, and the filmmakers.
Everybody says it's going to happen soon. I don't think so.
QUEST: A fascinating way of looking at things. We'll have a Profitable Moment after the break.
QUEST: Tonight's Profitable Moment. Oscar Munoz summed it up, it's never too late to do the right thing, that's exactly what he did with his full
apology, taking responsibility, describing the attack on a passenger on his plane as being truly horrific, promising to put it right and a full
investigation. And now of course they have to deliver. But the reality of course is, it's not going to be easy to actually deal with the systemic
problems of things like overbooking and the way in which the airline has to handle these situations. So, you have to make a start if you're going to
make a finish. That's what United is doing. Because frankly the last 24 hours have been a calamitous disaster.
That's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in London. Whatever you're up to in the hours ahead, I hope it's profitable. I'll see