Return to Transcripts main page
QUEST MEANS BUSINESS
Uber CEO Ousted by Investors; Economic Chief Becomes Heir to Saudi Throne; U.K. Government Promises New Brexit Bills; Democrats Suffer Expensive Defeat in Special U.S. Election; IATA Chief Sees Good Year Ahead for Airlines. Aired 4-5p ET
Aired June 21, 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] ZAIN ASHER CNN ANCHOR: ING there ringing the closing bell on Wall Street. And by the way, we are going to have ING on the show a little
bit later on. So, make sure you do stay tuned for that.
Let me just show you how the markets did today. It was pretty much down all day. What was dragging the markets down, energy shares, energy shares,
oil prices. Those were the problems both today and yesterday. Oil prices down, in fact, 20 percent so far, this year.
My friends, it is Wednesday, June the 21st. Tonight, a power vacuum at Uber. Travis Kalanick out as CEO. A power shift in Saudi Arabia. The
kingdom has a new Crown Prince. And a palace struggle in the U.K. as the government promises new Brexit bills.
Hello everyone. I am Zain Asher and this is QUEST MEANS BUSINESS.
Tonight, the man who built Uber into the world's most valuable startup has been forced out of the top job. Travis Kalanick has resigned as CEO,
leaving the company he co-founded with little leadership and crisis still unresolved. Kalanick who previously announced he would take a leave of
absence wrote in a statement, let me read for you here, "I have accepted the investors' request to step aside so that Uber can go back to building
rather than be distracted with another fight."
And let me tell you it has certainly been a very difficult year for Uber and for Travis Kalanick, the CEO, in particular. In February a former
engineer, Susan Fowler, wrote this blog post accusing the company of sexual harassment. Uber promised an urgent investigation. Nine days later,
Travis Kalanick was forced to apologize, that's after Bloomberg released in-car surveillance video of him actually arguing with his Uber driver who
challenged him about driver rates, Kalanick admitted he needed to quote- unquote grow up. He hired former U.S. attorney general Eric Holder to review the company's culture. Holder reported to a panel at Uber, chaired
by Arianna Huffington Speaking on this program, Huffington said, Travis Kalanick was willing to change.
(BEGIN VIDEO CLIP)
ARIANNA HUFFINGTON, BOARD MEMBER, UBER: Travis is at the heart and soul of Uber. If he had not be acknowledged mistakes, if he had not been willing
to make changes, it would have been another story. But we cannot judge people by their worst moments, none of us would want --
PAUL NEWMAN, CNN CORRESPONDENT: Many of us are. We're fired all of time for our worst moments.
HUFFINGTON: None of us would want to be judged by our worst moments, provided we learn, we grow, and we evolve. And he has shown very clearly
that he's changing, he's evolving and he's excited to bring about the changes that need to be brought about at Uber.
(END VIDEO CLIP)
ASHER: And that report was released publicly last week. Arianna Huffington there saying, that you cannot judge people by their worst
moments. It's all about growth and change. Kalanick said he would take a leave of absence and work on becoming Travis 2.0. Essentially, he wanted
to reinvent himself. The reports didn't stop headlines though. Two days later a woman raped by a Uber driver in India filed a second lawsuit
against the company. This after claims that Uber mishandled her medical records. Joining me now is Bradley Tusk, who is an early investor and
adviser to Uber. So, Bradley, just explain to us, what do you think Uber needs right now as it looks for its next CEO? Give us your thoughts.
BRADLEY TUSK, EARLY INVESTOR AND ADVISOR TO UBER (via Skype): Yes, thanks. Uber needs a couple of things, the first is they need a strong management
team across the board. The company lacks the COO, a CFO, a general counsel. So, in addition to a new leader at the helm, really a lot of
different pieces are needed on that team.
Second, the Eric Holder report had 47 different recommendations for ways that Uber can improve its culture and they all need to be implemented. I
would like to see Uber every quarter reporting on the status of all 47 recommendations. Do so publicly and demonstrate transparency, demonstrate
accountability. And third, the company needs to keep moving towards profitability. The good news is that core business is stronger than ever.
The revenue keeps losing by leaps and bounds. But the company still loses money. They lost less in Q1 than Q4 the previous year. It looks like that
will be the case in Q2. But in order to take the company public, it has to be headed towards profitability. So those are the things a new CEO needs
to focus on.
ASHER: But oval, its prospects in terms of an IPO are still good, despite the controversies, despite Kalanick being ousted.
[16:05:00] TUSK: Yes, absolutely. The business itself has grown like gangbusters. Consumers seem to really still like the product and use the
product. It's grown by over 20 percent a year. So Yes, the market is still going to welcome an IPO by Uber. But it still wants to see a strong
management team in place. They want to see the culture reformed and repaired. It wants to know that Uber can still attract and retain good
talent. So, there are certainly changes Uber has to make. I don't think they're ready to go public this calendar year. But, yes, the public will
ASHER: What can other tech start-up CEOs learn from this? This is definitely a cautionary tale.
TUSK: It's a terrific question. So, I sent the Holder report to all the companies, in my portfolio about our venture capital fund. It said look,
none of you are in this situation right now. But all of you hope to ultimately have the kind of growth and valuation that Uber has. When
you're going to grow that quickly it means that it's hard to focus on both culture and growth at the same time. And there's a lot in this report that
you can learn from even if it doesn't apply to you today. Around setting up systems in place to insure people are heard. Ensure there are channels
to report misbehavior. Ensure that there's diversity. Ensure that there's independent oversight. All of those things may make more sense at a
company worth $70 billion, like Uber than it is series A or B start-up worth $100 million. But all of those companies hope to be Uber size one
day, and putting some of those measures in place now would really help them avoid a lot of pain in the future.
ASHER: Some people say that some of the characteristics that Kalanick had actually is what helped Uber become so successful to begin with. But may
have ultimately led to his downfall as well. Bradley, we have to leave it there. We appreciate you being with us, sir.
OK. Uber is watching on building driverless cars. Now it's the company, it's the company that has nobody behind the wheel, or in the passenger
seat. Uber's president got out in March after just six months on the job. He cited concerns about the firm's management culture. In May, the vice
president of finance left. That happened the same day the company reported a $708 million loss for the first quarter. The company was already looking
for a chief financial officer, a chief marketing officer and chief operating officer. Those are crucial seats to fill in a company that's
reportedly preparing for an IPO.
Travis Kalanick's right-hand man and senior vice president of business was next to go. This after the investigation into harassment at Uber. That
left Kalanick who had already said he would take a leave of absence, that wasn't enough for Uber's board who pushed Kalanick out of the CEO seat.
Now with Kalanick gone, there's nobody at the wheel. So, Paul La Monica, my good friend, Paul La Monica has been following Uber's movement. So,
given what happened, given the news that we all woke up to this morning about Travis Kalanick being finally ousted. I mean this cannot really come
as a surprise given the headlines you've seen in the past six months.
PAUL LA MONICA, CNNMONEY CORRESPONDENT: It shouldn't be. I think that maybe some people did feel that because of the tragedy in his family, the
death of his mother and that he was taking a leave of absence, that maybe that was the real story. He would take a leave of absence and potentially
come back. But I think the writing was on the wall, given the numerous problems that Uber has been facing. And let's be honest, I think a lot of
people feel that Kalanick was not the right person to send this company down to the next level. Which is probably going to be sending an Uber car
down to broad and wall for an NYSE IPO or maybe NASDAQ. But a lot of companies are choosing NYSE these days.
ASHER: Our last guess actually said on that point that none of the controversy is going to hurt Uber's prospects when it comes to an IPO.
Why, just why wasn't a leave of absence, a temporary leave of absence enough to calm investors.
LA MONICA: I think that when you look ahead, I'm not so sure I would go so far to say that all these current scandals won't hurt Uber's prospects as a
publicly traded company. Because even though the revenue growth is there they are losing money. That eventually has to stop. There are emboldened
competitors, I know firsthand that a lot of people delete Uber as people wine on social media, and they've been adopting Lyft and other --
ASHER: But wasn't that a drop in the ocean in terms of its bottom line--
LA MONICA: The bottom line it's still not profitable. So, this is a company that has to prove -- this isn't 2000 -- even though the NASDAQ is
roaring again, we need more than just user growth. The equivalent of eyeballs from 2000 and nice revenue growth. If they're not going to be
profitable -- look at Snap. Snap has great user trends, but people are worried about its ability to make money, that's why that stock has not done
all that well since its IPO. I think people feel the same way about Uber and some of the other unicorns that are not yet proven by the same metrics
that people use to judge Facebook, Apple, Google, et cetera.
ASHER: What is the solution then? You look at workplace culture. You look at the allegations surrounding Uber when it comes to sexual
harassment, when it comes to discrimination. What is the solution? Yes, Kalanick is out. What happens next?
[16:10:06] They need a CEO that will be respected by employees and not just the employees at Uber headquarters, but also the drivers, and even somebody
that Wall Street will respect. Is that a high-profile Silicon Valley tech executive? You're probably going to probably hear speculation about Sheryl
Sandberg, her name always comes up when there's a job opening. Even though she's got arguably a great gig as the COO of Facebook. Why would you want
to leave that? But maybe an auto executive. Maggie Lake and I spoke on the show CNN, 9:00 a.m. show early this morning, about could Allen
Mullaly, a former Ford CEO, who is also a Wall Street darling be lured out of retirement to lead a company like Uber. And that's where I think things
get interesting. Do they need an auto executive? Or because they have aspirations beyond auto, Uber eats and things like that, maybe they do need
a real tech leader.
ASHER: OK, just quickly before I'm up against the clock. Do they need somebody who is calm or do they need another disruptor?
LA MONICA: That's the problem. They need somebody that can be a disruptor, but personality mainly be charitable. They need a kinder,
gentler -- use a former president's line -- to Travis Kalanick.
ASHER: All right, Paul La Monica live for us. Thank you so much. Appreciate that.
Queen Elizabeth has opened a new session on Parliament in Britain with a Brexit at the top of the agenda. I'll be talking to a minister in Theresa
May's government, next, don't go away.
ASHER: Britain's Queen Elizabeth usually wear as crown and a ceremonial robe to open a new session of Parliament. Today she wore a hat and a
dress. And her choice of headgear shall we say, actually set the internet on fire. With many pointing out the similarity between the Queen's hat and
the EU flag. In fact, Guy Verhofstadt, the European Parliament's chief Brexit negotiator actually tweeted, "Clearly the EU still inspires some in
the U.K." The speech she read at the opening of Parliament focused more on Brexit than any other topic. Eight bills are promised specifically about
leaving the European Union, including the so-called repeal bill, to replace EU laws with British ones, and bills on Trade, import taxes, immigration,
the fishing industry, agriculture, international sanctions and nuclear safety as well. The Queen's speech drawn up by the Prime Minister
emphasized the need for a smooth withdrawal from the EU.
(BEGIN VIDEO CLIP)
QUEEN ELIZABETH, U.K.: My government's priority is to secure the best possible deal as the country leaves the European Union. My ministers are
committed to working with parliament. The devolved administrations, business and others to build the widest possible consensus on the country's
future outside the European Union.
(END VIDEO CLIP)
[16:15:07] ASHER: And Nic Robertson joining us live from Downing Street. So Nic, we got a snippet there for our viewers of the Queen's speech. It's
interesting because obviously, there's focus on the fact that, yes, it was heavily focused on Brexit. But there's been a lot of attention about what
the Queen's speech did not include, the Conservatives omitted key manifesto pledges, basically highlighting the tough road, the cautious road for
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Yes. I mean what we didn't hear there was some of the sort of austerity-type measures, the
cutting of protections on pensions. The cutting of free school lunches for under 11-year-olds. It was quite a list of things in the manifesto. And
because the outcome of the election was so disastrously bad for Theresa May. Absolutely didn't make the cut in the Queen's speech. So, very much
skin it down. I have to say that the thought about the Queen's hat there has been some sort of perhaps the Queen becoming some sort of subtle secret
weapon for Britain in dealing with European Union. That quite has caught everyone's attention.
But the reality for Theresa May is, the Brexit is going to be tough for her. She needs political support. She doesn't have the majority that she
requires. She has a minority government. She's still struggling to get the support of the Democratic Unionist Party from Northern Ireland. We
heard from the leader of the Democratic Unionist Party speaking in the House of Commons late this afternoon, and the indicator that it was the
government's austerity program in the past, that they seem to want to assurances of. That are not going to sort of come back and rebound on his
party in the future. This is what he said.
(BEGIN VIDEO CLIP)
NIGEL DODDS, DEPUTY LEADER, DUP: I have to say I'm very taken with the slogan which the right honorable gentleman adopted for his election,
prosperity not austerity. And glad that the chancellor said over the weekend, that he wasn't deaf to what was being said. And for our part, on
these benches, we again will work with government and the course of the next period in this parliament to ensure that we do deliver a prosperity.
Do deliver a greater standing on health and education. And that we do see an end to the tunnel, the dark tunnel of austerity.
(END VIDEO CLIP)
ROBERTSON: So, was this some kind of sort of political posturing to get a better deal overall and the real issue is something else? We don't know,
but we're beginning to get glimmers of what may be behind the big sticking point for Theresa May right now.
ASHER: Right, Nic Robertson live for us there outside number 10. Appreciate you joining us thank you.
In light of the recent terrorist attacks in both Manchester and London, the U.K. government announced new commission to tackle radical ideology in
society and on the internet as well. Earlier Theresa May said the extremist threat is growing.
(BEGIN VIDEO CLIP)
THERESA MAY, BRITISH PRIME MINISTER: We have seen these terrible terrorist attacks that have taken place over the same time period five other plots
have been foiled by our police and security services. This shows the increasing scale and tempo. And it's in that context that we need to look
at the powers for the future to ensure that our security services and our police have the powers they need. I look forward to the right honorable
gentlemen joining us insuring us and insuring we give those powers to our agencies.
(END VIDEO CLIP)
ASHER: I want to bring in Tobias Elwood. He's a defense minister in Theresa May's government. He joins us now live from London. Tobias thank
you so much for being with us. I want to talk about the Queen's speech. You obviously saw key campaign pledges, key campaign promises, basically
sidelined, basically put aside. You're obviously a Tory MP, but in your honest opinion, in your honest and humble opinion, how much has the Tory
brand been diminished over the past few months, do you think?
TOBIAS ELLWOOD, BRITISH DEFENSE MINISTER: We have to recognize we didn't do as well in the general election as we hoped to. That's why we had to
remove some of the items from our manifesto. That was reflected in the Queen's speech. But I would say we've had a tough three months, three or
four months here. And indeed, go back a year with the uncertainty of Brexit. This week has provided some clarity. We've seen the Brexit talks
finally begin, which is good news. And then we've seen the Queen's speech. We've seen the prime minister come to Parliament and Parliament recommence.
So, the nation and the markets and so forth are getting clarity as to how Britain is got to move forward. What bills will move forward, in order to
compensate for us stepping back from the European Communities Act of 1972. What will be replace them? And how also are we going to make Britain safer
as your clip just showed.
ASHER: In terms of Brexit and moving forward on that, obviously as you mentioned there are certainly challenges ahead. Labour's Kevin Brennan
actually said, how can may negotiate Brexit with the EU if she can't negotiate a deal with ten DUP MPs. What's your response to that?
[16:20:00] ELLWOOD: I think there's a sort of political battling there. It's very clear, and you heard it from Nigel Dodds as well. An absolute
intention for us to be able to work with the DUP. We wouldn't have had a Queen's speech if that wasn't the case. Negotiations are still taking
place. I'm not close to them, but I understand that there's determined effort to make sure that we have a government for the future.
What we are seeing within the Brexit discussions is moving away from the rhetoric, the talk, the discussions, the hearsay, the speculation is what
that means and getting downing to the business as to how we as one of Europe's three largest nations. With the GDP that we have, the fifth
largest economy in the world, can actually set a new relationship, a positive relationship with Europe. There's more that unites us with the EU
than divides us and now we can get down each week of talking about the relationship with the EU citizens and British citizens working in Europe.
The relationship with the --
ASHER: But Tobias --
ELLWOOD: -- with the Irish border for example. The compensation, the cost --
ASHER: But Tobias --
ELLWOOD: -- each of these things one by one will be work through.
ASHER: Tobias, the fact there's no deal yet with the DUP. Obviously, a major stumbling block. Did you anticipate they would play hardball to this
ELLWOOD: You're calling it a major stumbling block, if I may say so. There are details --
ASHER: It's a major problem. The fact that there's no deal yet, Tobias is a major problem, you have to admit that.
ELLWOOD: No, I don't have to admit it because we have the Queen's speech. We have the bills going through. There are of course, details that we need
to strike with the DUP, but there's a determination to make sure that happens. So, it isn't the big problem that you're trying to suggest it is.
ASHER: I want to talk about terrorism. Obviously, you were hailed as a hero given your attempts, your beautiful attempts I should say to try to
save the life of PC Parma who sadly died outside Westminster after that Westminster attack. What do you think the government needs to do to move
forward in terms of implementing succinct and workable counterterrorism measures?
ELLWOOD: Well, we're seeing a consequence of the squeezing of Daesh, ISIL in Syria and Iraq and sadly the message is being passed through internet
companies and so forth, for people to continue these attacks across the Western world. We saw another attack, thankfully thwarted in Brussels last
night. And as you mentioned, we had the attack in Westminster and in Manchester, as well.
We need to work on three levels, government legislation needs to come through so we can make sure that the police and our security agencies have
the powers. We need to make sure that the internet companies are able to work with us to remove the poisonous content as quickly as it's put up.
And then thirdly, it's for community as well. It's for the moms and dads, the grandparents, the teachers, the imams, all these people to recognize
when somebody might be prone to believing this poisonous ideology that we can step in quickly enough before they believe this false promise of what
Islam is about. Thinking they're going to get a fast track to paradise if they conduct and do these terrible activities.
ASHER: Tobias, obviously, a crucial point you mentioned is getting the tech companies, getting the internet companies to work with you. Can you
give us more specifics on how you get them to do that? How you get to cooperate more?
ELLWOOD: We've doing this already with the major companies. We need to make sure we have access to and working with them very fast indeed.
Unfortunately, as fast as they site goes up, they're taken down. More actually come up there as well. It is important that we work
internationally to make sure that happens. Because simply of what the scale of the internet actually is today. And this is exactly why Britain
wants to take the lead on this on making sure that we can work with the internet companies and indeed our allies to actually remove this content as
quickly as possible.
ASHER: All right, Tobias Ellwood, thank you so much for joining us, appreciate that.
In Europe, the major stock markets all closed in the red. The FTSE ended the session down. A third of 1 percent. Shares in a British subprime
lender, Providence dropped more than 17 percent after it issued a profit warning. The Dutch bank ING has just rung the closing bell, as I mentioned
at the top of the show, at the New York Stock Exchange. It recently announced plans to move some trading jobs to London. Despite the Brexit on
Saturday. The bank's CEO Ralph Hammers joins me live now. So, Ralph, thank you so much for being with us. Explain that to us. Because it does
seem on some level a little bit counterintuitive. The fact that you're moving trading jobs to London, despite what's happening with Brexit
uncertainty. Just explain your strategy to us.
[16:25:00] RALPH HAMERS, CEO, ING GROUP: Well actually the action is very specific ING action. Where we are trying to basically move from three
locations to one location. And at this moment in time, with the Brexit coming. But still at this moment in time. The better place to centralize
these jobs, these trading jobs, is in London. That's where the talent is. That's where we're moving them to. We'll see how the Brexit negotiations
go. How it will affect our business going forward. And then we'll see where we move them thereafter, if they have to be moved.
ASHER: So, if London doesn't end up or loses its status as the sort of financial center of Europe, will you end up, are you saying you're going to
end up reconsidering that decision?
HAMERS: It really depends on how it's going to work. We're working in London, as a Dutch company. As a branch of the NP. And so, it really
depends on whether the licensing still works as a continental bank. If not clearly then we'll have to make a different choice. So, we'll see, we'll
really have to wait and see as to how both sides negotiate about how the financial industry needs to be licensed between the U.K. and the continent.
ASHER: So how does the banking world, Ralph, prepare itself for a hard Brexit? What sort of contingency plans are being put in place?
HAMERS: So, what we're doing, what the PRA is asking us, is asking every bank to come up with a couple of scenarios with different assumptions. So,
what if hard Brexit and you lose your license. And what if a soft Brexit and you can continue. What would you do in each of these scenarios? We're
all preparing for these scenarios. We're all writing out these scenarios. We're discussing them with both sides. Because it's not in the interest of
either side that is going to be some kind of a disruption to the financial markets. Because of all of it is. So, everywhere it's in everybody's
interest that the financial markets will continue to function, regardless of a hard or a soft Brexit. And that's basically what we all need to work
ASHER: So, at this point are you fearing a continent-wide recession at all? As a possibility?
HAMERS: Beg your pardon?
ASHER: Are you fearing a continent-wide recession as a result of Brexit? In terms of the knock-on effect, in terms of the EU economy?
HAMERS: Not really. Honestly. I think that currently in the U.K., you see that inflation and growth are at the same level. So, I think the U.K.
is actually seeing the consequences of the decision, of the Brexit decision at this moment in time. On the more euro side of Europe, we actually see
very positive signals. We see house prices going up. Consumer confidence going up. We see a strong euro. We see with a low interest rates, we see
GDP growing. We see unemployment decreasing. So, I actually think that we're in for some more years of growth there. And that Brexit will not
affect it too much. Having said that, it's in the interests of both sides to really work on a good transition to make sure that U.K. will not fall
from a cliff and that the trade will continue as much as possible. The way it is at this moment in time.
ASHER: All right. Ralph Hamers, thank you so much. CEO of ING speaking to us at the New York Stock Exchange. Thank you.
Coming up, King Salman of Saudi Arabia has appointed a new heir to the throne, we'll bring you details after the break. Don't go away.
[16:30:53] ASHER: Hello, I'm Zain Asher, coming up on the next half hour of QUEST MEANS BUSINESS. Democratic donors are licking their wounds after
spending millions of dollars on a losing candidate. And ahead of the IATA chief tells us why airlines are set for a good year. But first the top
headlines we're following at this hour.
ISIS is accused the United States of blowing up the al Nouri mosque in Mosul. The very site where ISIS leader, Abu Bakr al-Baghdadi, announced
the group's caliphate. ISIS cells were responsible for destroying the mosque. The image from the Iraqi military show massive damage with the
mosque's minaret not visible.
A police officer is in stable condition after he was stabbed in the neck and back at a Michigan airport. Authorities say the attacker is in
custody. And no passengers were hurt. And officials say it appears officers were indeed targeted. The FBI's investigated whether the incident
is terror-related. Authorities are continuing their investigation into the failed Brussels train station attack Tuesday evening. Investigators say
that a powerful explosive, TATP was found in the bomb that failed to detonate due to poor preparation. Officials have identified the suspect as
a Moroccan national in his 30s. No one was injured, but there will be increased security in the metro and train stations.
In a world reshuffle, the king of Saudi Arabia has removed his nephew as crown prince and appointed his 31-year-old son, Prince Mohammed Bin Salman
as heir to the throne. The new crown prince has been spearheading the kingdom's efforts to diversify the economy. Here's our John Defterios with
JOHN DEFTERIOS, CNN MONEY EDITOR: A choreographed transfer of power at the heart of Saudi Arabia's monarchy. Outgoing Saudi Crown Prince, Mohammed
bin Neif, pledging allegiance to his cousin, Prince Salman as the kingdom's new heir to the throne. Masking radical change. All triggered by this
royal decree from King Salman, removing the previous crown prince, stripping him of titles and roles in the government. Power now
consolidated in the hands of this man, Mohammed bin Salman. His swift rise began when his father ascended the throne in 2015. Young and ambitious,
he's adopted an activist approach. He spearheaded Saudi Vision 2030, an economic transformation plan meant to wean the kingdom of his addiction to
oil and bring about more social reforms. As defense minister, he was the primary architect of Saudi Arabia's military intervention in Yemen against
Houthi revels and their allies.
Two years on, it has yet to achieve its goals and has been criticized for causing civilian deaths and worsening the conditions in the country. And
as his portfolio responds, so, too, will the challenges he has to grapple with. Chief among them, the stand-off with Qatar. How to counter the
kingdom's arch rival, Iran and deal with low prices depleting his cash pile. But the prince's backers aren't limited to his father's royal court.
U.S. president Donald Trump chose Saudi Arabia as the first stop of his first trip abroad. Signaling his strong support for the kingdom and its
regional policies. Support that will be key in helping the young prince push through bold domestic reforms and pursue a more confrontational
foreign policy. John Defterios, CNN, Abu Dhabi.
[16: 35:00] ASHER: Saudi Arabian stock seems to be reacting well to the news of the new crowns prince. The markets boosted that will consider
including Saudi shares in the emerging market index. The remaining index jumped 5.5 percent, hitting the highest level in two years. John
Sfakianakis is joining us from Riyadh. Let me get your perspective on this news, on this appointment of Mohammed bin Salman as the new crown prince.
What sort of social and economic reforms you see as a result of the moves, especially as Saudi Arabia tries to speed up its diversification away from
oil what are your thoughts?
JOHN SFAKIANAKIS, DIRECTOR, GCC, ASHMORE GROUP: Well, Zain, we're going to see a continuation of what we have been witnessing over the last year and a
half. Which is fabulous change in reform that was very much needed in Saudi Arabia. So, everybody was calling for that and finally, we have been
witnessing over the last year and a half so we're going to see continuation of that. And I think that we're going to see leadership stability and
longevity. And the succession issue has come to an end. The discussion and debate about whether the crown prince, the outgoing crown prince was
against the deputy crown prince and all of that has been put to rest.
The leadership council, that's the senior royals have given a clear majority and support to the crown prince, prince Mohammed bin Salman, 31,
out of 34 senior princes have vouched their support to the young prince. So clearly that is going to be a huge booster. Which also means that we're
not going to see retracting of the reforms, we're not going to see them being pushed back. Saudi Arabia needs to push ahead because it needs to
fight time it needs to diversify quickly.
ASHER: So, you mentioned pushing ahead with the reforms that Mohammed bin Salman has already put in place and you mentioned stability as a result of
that. But given his somewhat aggressive hawkish foreign policy. Will we see a premium at its oil prices, do you think?
SFAKIANAKIS: Well I think that right now we are in a rebalancing act and we're not going to see oil prices going heavily upwards over the next year
to year and a half. But clearly Saudi Arabia's foreign policy is going to be more energetic, more dynamic and clearly, it's going to be taking its
rightful position as a leader, as the leader, the preeminent leader of the middle east and the Arab world. It is the largest economy in the middle
east and Saudi Arabia now needs to lead the rest of the countries in the region. Even if it comes to pushing the envelope with Qatar.
ASHER: Qatar, but also, I guess more significantly, given that Saudi Arabia and Iran are major rivals in the region, what will this move mean in
terms of a tougher stance against Iran?
SFAKIANAKIS, Well, Iran is a difficult country to deal with. And I think his royal highness, prince Mohammed bin Salman was very clear and adamant
about what he plans to do. If Iran wants to continue with its negative and proxy wars, in the region, Saudi Arabia will react and respond. And the
United States will be there to support Saudi Arabia. And that was clearly the visit of president Trump and I think the U.S. is going to do what it
needs to do. To push ahead with supporting Saudi Arabia in its efforts to push away Iran.
ASHER: John Sfakianakis. Thank you so much for sharing your thoughts.
Tumbling oil prices triggered new weakness on Wall Street. The blue chips fell 57 points as crude oil prices plunged 2 percent. Crude fell into bear
market territory on Tuesday. But tech stocks continue to recover. The NASDAQ rose 45 points. Still to come, Democrats and Republicans in the
U.S. have been battling hard in special elections. We'll tell you about, get this, the most expensive race ever for a seat in the house. That
[16:40:00] (COMMERCIAL BREAK)
ASHER: Democrats fought tooth and nail in yesterday's election for Georgia's sixth congressional district but lost in a contest that ended up
being the most expensive house race in history. It left the Democrats 0 for 4 in this year's attempts to grab Republican seats, the vacancies all
came up because the previous holders had joined President Trump's cabinet. Seats in Montana, South Carolina and Kansas also returned Republican.
Returned to the Republican party. I want to bring in Brianna Keilar who joins us from Washington. So, Brianna, looking at the race of John Ossoff
last night, what message does it send to Democrats as they move forward to 2018? What are your thoughts?
BRIANNA KEILAR, CNN SENIOR WASHINGTON CORRESPONDENT: What we're hearing from Democrats is something we've been hearing privately, Zain, that we're
now hearing publicly. They're very frustrated. Specially some of the younger Democrats in congress. They're frustrated by their leadership
which they see as kind of an old guard and frustrated by a message that they think is leaving behind what has been a key part of the Democratic
base, some of the voters that Donald Trump was able to woo over. Working class white voters who seem to be defecting from their party. There's a
lot of frustration, you're now looking at special elections, four losses at this point in time. It's also hard and I found this talking to
Republicans, Zain, can they extrapolate out from this special election loss last night, this means that there's going to be a disaster for Democrats in
the 2018 primaries? Or mid-terms I should say? Even Republicans I talked to said not so fast it's hard to actually draw a lot of conclusions about
these kinds of races.
ASHER: This is interesting. Because Democrats obviously going to be feeling slightly down about the result last night. However, this was a
seat that had been held by Republicans for 40 years. And the fact that there was this much momentum behind Ossoff surely Democrats have to see
that as somewhat of a sign of hope.
KEILAR: They certainly are and they're spinning it like that. But I think there's also this sense, Zain that they're trying to really put a pretty
picture on something that is pretty ugly for them. You have to keep in mind, you're exactly right when you look at the fact that tom price, it was
his seat that he vacated. So, he could be the health and human services secretary. He won his re-election back in November by 23 points and Karen
Handel only won by a little under four points, that's the silver lining that we see Democrats trying to spin. They'll say Yes, but this race
shouldn't have been competitive. There are dozens of other races that are going to be more competitive in 2018. They're really struggling to figure
out exactly what it is that they want to say to voters. Even though, honestly talking to some Democrats, they say this may be the wake-up call
that the party needs, they need to retool. That is so essential, they move towards a message that could appeal to voters in 2018. I think they're
expecting that they're going to do well. The pendulum is going to swing towards them. But they want it to swing really far towards them and that's
where they really need to take some of the lessons learned from this race and some of the other special elections.
ASHER: They can't just be the party that is anti-Trump. Can't just be the party that says everything Trump does is wrong. They have to come up with
something cohesive to give voters hope in them.
[16:45:00] KEILAR: That's exactly right. And to that point, John Ossoff in the Atlanta area, north of Atlanta, at first, he did really channel that
anti-Trump energy from Democrats. But then I'm sure thaw noticed that after he won, or not won the primary, but did well in the primary, getting
over 48 percent of the vote, he stopped harping on Donald Trump so much. He started emphasizing bipartisanship. That he would work with anyone who
could achieve what he wanted to achieve. So that's the other thing the Democrats have to reckon with. Is the way to beat Donald Trump, to
actually not be so liberal and pivot towards the middle and sound like a Republican? These are the questions they're grappling with right now.
ASHER: The fact that he didn't even live in the district, do you think that was the straw that broke the camel's back? What are your thoughts?
KEILAR: I think it was big deal and for your viewers who don't know, he grew up in the district, he lived within a few miles of the district.
That's really, that ended up being a good attack line for his opponent, Karen Handel. Hard to tell if it made the difference, but it sure did not
help him. I think a lot of Democrats felt it hurt him. Appreciate your thoughts, thank you.
ASHER: And a quick programming note. If you missed part of the program or want to take us on the road or you love this show, you love QMB, QUEST
MEANS BUSINESS, can you download our show as a podcast. It's available from all the main procedures and you can listen to us by going to
CNN.com/podcast. Still to come, weak leader or corporate visionary, Travis Kalanick is out at Uber, the debate over his legacy, is only just
beginning. That story, next.
ASHER: Welcome back, everybody, Travis Kalanick helped found Uber back in 2009. Even though he leaves somewhat of a troubled legacy, some hail him
as a corporate visionary, tech investor and an Uber board member tweeted this today, "there will be many pages in the history books devoted to
Travis K, very few entrepreneurs have had such a lasting impact on the world."
And many tech entrepreneurs have become synonymous with the company's, they've created a company here, let me show you a few of them. Mark
Zuckerberg, this young fresh face, synonymous with Facebook. Jack Ma and Alibaba. Right here. And more recently, Evan Spiegel at snap. When Uber
ultimately goes public, Travis Kalanick will not be at the podium to celebrate. I'm joined now by Lance Ulanoff, editor in chief at Mashable.
I've read some of your articles. Talk to you about Travis Kalanick. You describe him as smart, brash, but also disruptive as well. It sort of
seems as though those characteristics probably led him to becoming so successful. But may have dramatically hurt the company as well.
[16:50:00] LANCE ULANOFF, EDITOR IN CHIEF, MASHABLE: I think he always saw the goal. He saw the goal and went for it no matter what. It wasn't
really shy about explaining this. A couple of years ago I saw him talking about Uber cars, driverless cars. And basically, saying that eventually we
won't need drivers. Now meanwhile there are many people, millions of Uber drivers going wait a minute. My job's going to be gone? He didn't even
couch it in any don't worry, we're going to take care of these people.
ASHER: You saw him fighting with an Uber driver as well it did sort of seem as though he had forgotten the driver is much more focused on the
company and much more focused on user growth.
ULANOFF: I think he had a laser-like focus on the business. To sort of the everything else was pushed aside. He wasn't aware I think of some of
the things that were going on and maybe he was supporting them. It was a little hard to tell. The growth culture that existed was more to me about
this tiny executive group that almost became like an echo chamber and kept saying that everything's all right. Everything's fine. Even if people are
saying that there's some sexism here or issues here. The fact that I don't know the details. A couple of years ago to have the medical documents of a
driver handed from one executive to another. And nobody questioning that that might be the exact wrong thing to do. But here's the thing that I see
about Uber that's very interesting. You have the business of Uber, the day-to-day business and then you have the corporate culture. Two very
different tracks, I drove around with a bunch of Uber drivers, one after the other, asking them about who is Travis Kalanick. Are you concerned
about what's happening? Are you concerned about the business? Most of them I spoke to, either didn't know who he was or really didn't care. You
ASHER: So far removed.
ULANOFF: They're so far removed. I also said, does the company reach out and tell you about what's going on. Do they let you know that Travis
stepped aside? No. They get nothing. They have an app that lets them do their job and they continue to do it. And you know what their biggest
complaint was? It was that there are too many drivers on the road. They can't make as much money.
ASHER: But he's going to start allowing tips. He was going to start allowing tips.
ULANOFF: There is a part of the business sort of comes from the corporation that is a strategy that's kind of mapped out where new features
and new expansions sort of rolled out. Like they actually have a map. They have a strategy for the company. But they aren't taking care of their
people. I think that sort of like when you have a really fresh-looking Apple and a rotten core on the inside.
ASHER: So, what is it like to actually work under someone like Travis Kalanick? What is it like to have him as your boss?
ULANOFF: Well, I think it's probably wonderful at times because he's super energized and he really has a vision for what he wants to do. But it's
also like he doesn't hear. So many people in that corporation weren't listening to the employees that were telling them there were issues and if
you look at, I wrote about the fact that I believed he should have resigned back in February. I also talked about the other, everyone who he hired is
probably complicit here in some of the issues. I said maybe they should go, too, most of them are gone. If you look at what's left, at the exec
level, the CEO level, they're all gone. A few people are left. Now is the time to rebuild. And rebuild with diversity and open ears. And probably
I've said many times, I think a woman should lead, but it should not be Arianna.
ASHER: You've said that.
ULANOFF: Look, she's all on board I don't know how -- I think that it can't be her.
ASHER: I have to go, but thank you so much for joining us. Uber is the top story in today's QUEST MEANS BUSINESS newsletter, if you want a daily
digest of the top business stories delivered straight to your inbox? Head to CNNmoney.com and subscribe it features Richard's Profitable Moment and
all the top headlines from the rest of our CNN money team. Just go to cnnmoney.com/quest to subscribe.
Airlines are vulnerable to big shots, according to the head to the International Air Transport Association. Richard spoke with him and asked
him if the airlines would continue to be profitable in these challenging times.
ALEXANDRE DE JUNIAC, DIRECTOR GENERAL, INTERNATIONAL AIR TRANSPORT ASSOCIATION: We are still, we will be still for 2017, similarly
profitable. Even we have increased our forecast. We expect $31 billion profit over $ 746 billion of revenue.
RICHARD QUEST, CNN ANCHOR: So, you're still down in the low digits.
DE JUNIAC: But, but, we are still below last year. But above all. Our beginning of the year forecast. We are making more than, more than our
cost of capital. So, it will be the eighth year in a row that the industry is making money and the third year in a row that the industry is making
more than the cost of capital. So, it's a good year.
[16:55:00] QUEST: Do you believe that the industry has made the structural changes necessary such that if and when oil prices edge up to $60, $70 a
barrel if they do, this industry can remain profitable at those prices? Bearing in mind many airlines have added on wage costs, they've spent a lot
on new fleets and upgraded their passenger offerings.
DE JUNIAC: Yes, but what we say is first of all, we are profitable, but the profitability is not high enough to be able to resist the big shocks.
If there's a big shock, we say the airlines are fragile. Secondly, they have done an enormous job to restructure the activity. To lower their
costs, to invest in good product, in new fleet. For sure, and to contribute heavily to the results. To the results. But you know the
profitability is still not very high.
QUEST: And the yield, the amount that each airline makes flying one passenger, one mile. Is still very, still under pressure. And I wonder
though, the capacity is coming back in. Maybe not like it's use to. I feel that this is a house of cards waiting to tip over once again.
DE JUNIAC: I think you are pessimistic, we have learned from our past. And the airlines have done their job. In terms of restructuring, putting
pressure on costs and negotiating good conditions with the suppliers and renewing their fleet, investing, they have done the job, huh and they have
done it in a difficult environment. And you know, what we can also say that if you look back five years ago. When the oil was above $100. They
were still making money, not as much as now. But they were still making money. The resilience of the airline industry has significantly increased.