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QUEST MEANS BUSINESS
Trump Uses Memorial Day Tweet to Tout Economy; Colombian Presidential Election Set for June Runoff; Malian Hero Who Rescued Child Gets French Citizenship; Former IMF Official Nominated as Italy's Interim PM; Cottarelli to Seek Italian Parliament's Support; Padoan: EU and Eurozone Need Deep Restructuring; Millions in Southeastern U.S. Brace for Storm; Hawaiian Airlines CEO: Low Impact of Volcano Eruption; Hawaiian Airlines Adds Airbus A321 Neo to Fleet; Paris Start-Up to Beat Traffic with Water Taxis. Aired 4-5p ET
Aired May 28, 2018 - 16:00 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 somber day in the United States, Memorial Day as the United States remembers those who have fallen
in service of the country. Markets were closed, of course, in commemoration for Memorial Day. No closing bell tonight.
We have plenty to talk about. It is Monday, it is the 28th of May.
Particularly, Italy hanging in a limbo as an economist technocrat is given the job of running the country, and that could open the door to a wider
crisis. A breakthrough in Brazil after a trucker strike grinds the country to a halt. And from roads to the river, they are floating new ways to get
around the city of lights.
I am Richard Quest live in London, where of course, I mean business.
Good evening, we begin tonight, Italy's stop gap Prime Minister says he will do his best as the country and the markets brace for further and fresh
crisis. If you look at the way the markets have reacted, investors sold out of stocks and Italian government debt. The yield on the Italian 10-
year bond is at its highest level since 2014. It is now more than 230 basis points, that's 2.3% above the equivalent benchmark, which is the
German bund. The Euro lost ground against the dollar.
This is the reason why -- a political crisis at the heart of Italy. Carlo Cottarelli faces the difficult task of soothing investors, getting his
Cabinet in place and staying in office through the rest of the year, after President Mattarella rejected the Populist Party's choice for Finance
The President said that appointing this man would endanger Italy's place in the Euro. So, now the Populists have taken a different view saying the
President betrayed the will of the people, and it's those same Populist leaders who must now decide the Prime Minister's political fate.
(START VIDEO CLIP)
CARLO COTTARELLI, ITALY'S NEW PRIME MINISTER: (Through an interpreter). I did agree to form a government as the President of the Republic asked me to
do. Naturally, I will do my best. I will go to the Parliament with the program that if it wins the confidence vote, will include the budget law
for 2019. After that, the Parliament will be dissolved and new elections will be called for the beginning of 2019.
As a founding country of the European Union, our role in the Union is essential, and our participation in the Euro is also essential.
(END VIDEO CLIP)
QUEST: Now, the reposed Finance Minister that the President rejected is Paolo Savona and he would have replaced Pier Carlo Padoan. Mr. Padoan
spoke exclusively to me earlier on the "Quest Express."
(START VIDEO TAPE)
QUEST: It might have been constitutionally okay for the President to reject the proposed Finance Minister, but was it the right thing to do,
bearing in mind, he was suggested by the Coalition which had pretty much won the election.
PIER CARLO PADOAN, ITALIAN ECONOMIST: Well, what the President of the Republic did is fully consistent with the Constitution, which says that the
Ministers are appointed by the President of the Republic after having received a list -- a proposed list by the Prime Minister appointed.
So, all the ministers presented by the Coalition were approved by the President of the Republic, with the exception of one member of that to be
Cabinet, which was -- has a reputation of being clearly against the Euro, being a Euro skeptic.
QUEST: What is so wrong with the Euro skeptic being Finance Minister. I mean, the President took sides here. I will read you what he said, you'll
be familiar with it, he wanted a person that is not seen as a -- he said, the person that was selected is not seen as a supporter of a line, and
expressed on multiple occasions that could cause Italy's exit from the Euro.
What's so wrong with somebody who has that view?
PADOAN: What is wrong is not the person himself who is a distinguished internationally renowned economist. What is wrong with this situation is
that the combination of a clearly and inconsistent program proposed by the coalition in terms of sustainability and public finances, and the fact that
one option in the back of the mind of an influential member of the government could generate an explosive outcome.
QUEST: So, now you are in a situation where Cottarelli becomes -- you have an interim Prime Minister who will get a budget through Parliament somehow
and there will be elections in January or early next year. Do you fear that those elections will turn into a referendum or a vote on either the EU
or the Euro?
PADOAN: This is a risk, but I am confident that the Italian electorate is wise enough to understand what is at stake and what's good for them. We
have gone through difficult days including -- and in the stock exchange which has generated loss of personal savings, which are now showing
immediately what the loss of confidence would do to a country.
So, I am confident that the combination of the Italian electorate wisdom and the good fundamentals that the economy is now enjoying will avoid
negative outcomes even from the elections.
QUEST: But you can see some people in the electorate, you can see someone say, "Hang on a second, we had a vote, we got the result, it was two
Populist Party's that the elites and the establishment don't like, and all that the establishment has done is scupper them?
PADOAN: Now, this has to be very -- made very clear that there was no objection to the formation of a government supported by the two major Euro
skeptic parties or movements, one of them a movement, it's not a party.
The point is not that. The point is that, as I said, with the exception of Mr. Savona, all other ministers presented by the Coalition were accepted by
the President of the Republic, so we are not -- the President of the Republic is not questioning the fact that there would be a Euro skeptic
government or as it was called in these days, a green-yellow government.
QUEST: In which case, I am not sure I fully understand what he was objecting to, because as you said at the beginning, that Mr. Savona has
been in government before, is an extremely respected world renowned economist, maybe on the elderly side, but that has never stopped anybody in
government before, and so I can't necessarily see -- the President has created for himself an institutional crisis.
PADOAN: The President is not creating any institutional crisis for himself, the President has been applying the Constitution even in the past,
although with much less excitement, I would say.
The President did not accept individual ministers proposed by the incoming coalition, and this is exactly the case, and as far as what Mr. Savona has
been saying, he has been of course, a very well known economist for a long time. He is not a young fellow by the way, only that over the recent past,
say about a decade or so, he has been explicitly talking about the possibility and sometimes, the need that the country like Italy leave the
And as I said, the combination of this option open to the Minister of Finance and that the fact that the programs set forward by the coalition
members, which is clearly unsustainable from a public finance point of view, generates the possibility of a negative and disruptive outcome both
for Italy and I would say for the whole of Europe.
(END VIDEO TAPE)
QUEST: The outgoing Italian Finance Minister Padoan joining me earlier. To Rome, Barbie Nadeau is with me live. It's a ripe mess, isn't it? I
mean, at the end of the day, you've got a caretaker President, so a caretaker Prime Minister, the possibility of elections early next year and
the reality that this might turn into some sort of de facto referendum.
BARBIE NADEAU, CORRESPONDENT, CNN: Well, it is worrying, and I think the Italians are very frustrated. Those who voted for this Populist Party feel
that they were getting the short end of the stick on this, that they had taken the risk, voted for the Populist. They had put a government
together, they had presented a list, and what happens? The technocrats and those that think they know better for the good of the country have taken
that away. That's how they see it.
On the other side of the coin though and I think you see this reflected across Europe, there is a sense of relief, at least for the moment until of
course we start electoral campaign again, and I think everybody is concerned that this is going to lead to not an official referendum on the
Euro, but certainly one that will be reflected by the campaign promises when people go to the ballot box.
QUEST: If that happens, what is the general consensus if there is one on how Italians view both the Euro and the EU at the moment?
NADEAU: Well, I think most Italians view the Euro as a necessary evil and not something that actually helps them in their daily lives. They don't
see it as a way to save money, as a way to prosper and as a way to grow. A lot of people, and we talked to many people out on the streets today who
wanted to stay within the Euro zone, but who didn't particularly like the way the Euro had affected their lives, their finances, their savings --
what they have built for their children.
So, there is a lot of frustration, kind of like, this isn't exactly what we signed up for when we joined the Euro, and I think that that's going to be
reflected as it was to some extent in the ballot in March in the next election, and I think that's probably going to be something the rest of
Europe is very, very concerned about, Richard.
QUEST: Barbie Nadeau in Rome this evening for us. Thank you. Staying in Europe now, Serge Dassault, has died. The French businessman legend was 92
years old. One of the leading industrialists of his time, his family owned "Le Figaro" newspaper and he became a global leader in aviation with the
Dassault Group. He was a complicated figure in his own country; most recently, he was barred from public office after conviction for tax fraud.
Melissa Bell joins us from Paris with so much -- I mean, a kind of full character to be sure, and -- but what is also interesting is the way in
which not only at the Elysee Palace, President Macron and former President Sarkozy have both put out statements tonight obviously with condolence, but
pointing out the contributions he made to the French economy.
MELISSA BELL, CORRESPONDENT, CNN: I think that's right, Richard. That is the interesting thing. This was a man who after all, having helped his
father's group become really one of the world leaders, we are talking about the group responsible for the Mirages, for the Falcon private jets, for the
Rafale that France has done so well at selling over the course of the last few decades.
He was also a man who dipped into politics very close to Jacques Chirac. He was a local councilor, he was a mayor, he was a senator -- always for
the right. One of his big ambitions was to see France liberalized, its economy liberalized.
So, I think it was interesting that he got such widespread praise today in many parts of the press, but also from so many of those politicians,
including from his good friend, Nikolas Sarkozy, a real figure, a real captain of industry, and a man who was not all of it positive.
Of course his reputation, this is a man as you say had a conviction for tax fraud who only escaped jail, Richard, because of his great age. Also,
there were allegations over the last few years of having paid off voters for political support in the constituency in which he was a mayor for so
many years, but still a real figure, and I think it is telling, Richard, that he died today at age 93, just a few meters from here in his office.
This was a man who works and was a figure until the very end, an office overlooking a circle a-round-about named for his father, Marcel Dassault.
QUEST: I often wonder when I think of it, and I hear about this. I mean, similar say to Rupert Murdoch, these great entrepreneurs, businessmen who
mix effortlessly between politics and great commerce. They don't make them like that anymore?
BELL: No, they don't. And we are in a different -- he represents in a sense a different era. A captain of industry at a time of
industrialization when the world is very different from what it has become and it is also one of the interesting facts of this man that he was able to
be both a man who was an heir, he inherited in a sense; even though he had to fight for it within his father's group, the name the company, but he was
also a man who re-drove it forward and succeeded in his own right, Richard.
QUEST: Melissa, thank you and you're very kindly staying with us to join us later in the program with another story and so, go ahead and have a
little something while we continue on our business agenda tonight. And I just realized, I don't have the bell on the table. There we go. I thought
there was something missing tonight.
Italian stocks weren't sharp enough, the Midtown was down 2% and it was happy in as much as it was up to 2%, but Italian stocks took the banks.
They took the biggest losses. In Frankfurt, Daimler was nearly 2% down, 1.7%. This is because German transport officials met with the Chief
Executive, Dieter Zetsche, a regulator found potentially illegal software installed in Mercedes diesel vans that violate clean air standards.
Also, we will be live in Brazil tonight, which has been crippled by a trucker strike. How unions have responded to concessions by the President.
Thank you very much, this is "Quest Means Business." We are live here in London.
QUEST: Diesel prices in Brazil will be cut after President Michel Temer caved into demands from the truckers' drivers. They had been on a week-
long strike. It has crippled the country. Journalist Shasta Darlington is with us from -- via Skype from Sao Paolo and the unions we have been
hearing are not necessarily all in agreement on the rejection of the original plan?
SHASTA DARLINGTON, CORRESPONDENT, CNN: Well, that's right, Richard. Basically, this has become a bit of a political hot potato and this all
started because truck drivers wanted to cut down the price of diesel, which has soared with the international price of oil going up, and also the real,
the currency here getting weaker. It was really hitting them hard.
So, they blocked highways across the country. This meant that we've run out of gas here in Sao Paolo, airplanes are grounded. You can't get a lot
of food at the supermarkets. Schools are closed. It's been pretty insane.
But then, even starting last week, President Michel Temer came out saying, "Oh, no, we've got an agreement. We are going to lower the price of
diesel. Everything is good." And the truck drivers just didn't go home.
And so, what we are hearing now, you could have one union say, "Yes, that looks good," but they don't necessarily represent all of the truck drivers,
and in the meantime, you've had other sectors coming out actually in favor of the drivers because frankly, President Michel Temer is the least popular
president Brazil has had in recent history.
So, being on the side of the side of the truck drivers is good if you're a politician and this is an electoral year, so we have had left wing and
right wing politicians coming out in favor of truck drivers and criticizing the way the government has handled this, which has made it very hard for
them to get any backing anywhere for the proposals they are making, Richard.
QUEST: What is it they want? Fundamentally, what do the truckers want from the government?
DARLINGTON: It really did start with the price of diesel. The government agreed to that, they are going to cut the price of diesel roughly 12%,
basically by eliminating some taxes. This whole thing will be subsidized by the government which will pay the money to the Petrobras oil company so
they won't lose out.
But then, they realized, you know, there are a few more things they want. They want to pay lower tolls. They want -- the autonomous truck drivers
want to make sure they also get a chunk of business from the government. There are issues having to do with payroll taxes. They want to make sure
that they aren't paying payroll taxes.
So, you know, the list just keeps getting longer and longer, and as soon as the government agrees, they come up with more things that they want and
they want it all in writing and approved right now in these official decrees to make sure nobody can go back, Richard. So, while in theory, it
looks like they -- all of their demands have been met, we're still seeing roadblocks across the country.
QUEST: Shasta Darlington in Sao Paolo, thank you to Alberto Ramos, the co- head of the Latin American Economic Research at Goldman Sachs, who joins me from New York.
QUEST: Alberto, which is the greater cost to the Brazilian economy? The concessions that the government is making or sticking it out and facing
down the strike?
ALBERTO RAMOS, CO-HEAD, LATIN AMERICAN ECONOMIC RESEARCH, GOLDMAN SACHS: There is a debt that we have a very, very significant fiscal cost, there
will be an economic cost for the loss of activity. There will be a short- term impact on inflation, but I think this sets a very dangerous precedent, a very small well-organized group is extracting concessions from the
government worth about 0.4% of GDP, about 14 billion reals, it could be higher if the real continues to depreciate, it could be higher if
international oil prices continue to go up.
This is a country with a huge fiscal deficit of more than seven percentage points of GDP, where they have a very tight budget constraint and it just -
- in a number of days, they were able to squeeze out of the government 14 billion reals. Keep in mind that the end-users of diesel are refusing to
pay for higher cost and the reason why fuel prices are going up at the pump is because as Shasta mentioned in the previous segment, international oil
prices went up and the real is depreciated.
So, the government has to reallocate scarce funds in the budget in order that the end users will not pay for it, therefore, you know, other segments
of society will end up paying for that for low provision of public goods. It could be security, education, healthcare, you just name it.
I think it sets a very dangerous precedent for other organized groups eventually to mobilize and extract for the concessions from the government.
QUEST: But the government couldn't just sit by while a strike paralyzed large parts of the economy with the prospect of that getting much worse. I
mean, Brazil is barely growing to start with and a trucker strike could have tipped the country well and truly back into deep recession.
RAMOS: Absolutely. I mean, this is very, very disruptive to daily life. It is very, very disruptive to activity, but does that mean that the
rationale behind the truckers' drivers movement is the right one. This will lead to a misallocation of resources.
Again, you know, oil prices are going up. You're not raising prices at the pump, you're providing the wrong signal in terms of the allocation of
resources. You should be using less of it, not more, and we are extracting money that could have been allocated to other areas with a bigger economic
and perhaps also social impact in the economy.
QUEST: You're obviously an economist, if you factor in the political question, an election year, Michel Temer, one of the most unpopular
presidents ever in Brazil, you can start to see here perhaps, dare I suggest politics trumped economics.
RAMOS: Absolutely. There is no doubt about it. I mean, this is a government with a very limited political capital. This is a government
with a very, very high rejection rate, so it's vulnerable to that type of organized pressure on the budget.
With an election approaching, you know, the former political standpoint is very difficult to resist that type of movement.
QUEST: Alberto Ramos, thank you, sir for putting that into perspective at the wider picture. Thank you. We are going to stay in Latin America,
Venezuela is facing new sanctions from the European Union in response to the recent Presidential elections that the EU described us neither free nor
fair. Our Paula Newton of course was in Caracas for the elections and (inaudible) for us. She joins us now from New York, and the new sanctions
were expected and I am guessing, President Maduro won't care a fig one way or the other?
PAULA NEWTON, CORRESPONDENT, CNN: No, he's kind of been isolated by his Latin American neighbors, the United States, Canada, Europe -- you name it.
What he waiting for now is the other shoe to drop and he is trying to make sure that he can mitigate that happening quite frankly, Richard, and that's
sanctions against his oil industry.
I think many Venezuelans will tell you, they are disappointed by the reaction by Europe and the Latin American neighbors because they have not
been able to get any concessions out of the Maduro regime whatsoever.
I could tell you, Richard, having been there to the elections last week, Maduro has done an outstanding job of consolidating his power in the last
10 months in terms of when it comes to political dissent on the streets, many expect that that will just continue in the weeks and months to come.
So, many are wondering what pressure he will feel, which corner it will come from to give him any incentive to change things for people in
Venezuela at all.
QUEST: Ah, but Paula, who then does have sufficient clout either with the Venezuelans, the government or with Maduro personally, if it is not
obviously the US and it's not the EU obviously with its sanctions. Does China, does Russia -- do these other actors have the potential to force
change in the country?
NEWTON: They do, but do they have the will to make that happen? Not likely, and the US, its most recent sanctions has been not only putting on
more sanctions against the regime itself, but behind...
NEWTON: ... closed doors, Richard, which is as much leverage as they have, keeping in mind all of the geopolitical issues on the table. They have
been trying to convince Russia and China to step away from the Maduro regime so that some of the pressure is brought to bear.
Whether or not Russia and China will get involved anymore especially China, who has been absolutely reticent to get involved in any of these
politically, they congratulated Maduro after his victory last week, so unlikely.
Richard, I still think that what many people are looking for is when you clear the midterm elections in the United States is whether or not the
Trump administration will have the stomach to go through with at least some of those sanctions on the oil industry, and I will leave another caveat in
there for you, Richard.
The Maduro regime has been reaching out a little bit more to try and reach out to the opposition, to other countries, of course, they want investment
in that all important oil industry, and perhaps you will see more conciliation from the in the weeks to come, if only to try and get that
foreign investment in that all important oil sector.
QUEST: Paula, thank you. You'll watch that for us. We appreciate, Paula Newton who is New York. Now as the EU criticizes Venezuela, the EU faces a
political crisis within its own border. The Italian President has called in the man known as "Mr. Scissors" for his cutting ability. Now, they want
to try and calm the markets. You will hear more. We will discuss it after the break.
Hello, I am Richard Quest. There is more "Quest Means Business" in just a moment. When the mandate called Mr. Scissors to get the task of cutting
through the quagmire of Italian politics and whether Europe now faces a very real crisis.
Florida is readying itself for the first named storm of the hurricane season, Alberto is bearing down on the coast. As we wait for those
stories, this is CNN and on this network, the facts always come first.
A high level team of US envoys is in North Korea with a second team in Singapore. They are meeting North Korean negotiators about the possible
summit between the two countries leaders -- a summit that seems to be getting more likely by the day. However, there is still uncertainty. The
summit was originally planned for June the 12th, which is two weeks away.
Critics are calling a new tweet by President Trump very inappropriate. The President marked Memorial Day a somber holiday dedicated to honoring
America's war dead by wishing everyone a "Happy" Memorial Day and talking up the economy.
He wrote, "Those who died for our great country will be very happy and proud of how well our country is doing today."
Columbia's presidential election is headed for a -- great country will be very happy and proud of how well a country is doing today. Colombia's
presidential election is headed for a runoff between the conservative candidate and the leftist after no candidate won 50 percent of the vote on
Some observers see the election as a referendum of the country's peace deal with Marxist rebels. Runoff will be held next month. Immigrant from Mali
who rescued this child dangling from a balcony in Paris has been rewarded with French citizenship and a job offer.
Mamoudou Gassama scaled four floors until he reached the child and pulled him to safety. The Paris Fire Department has offered Gassama the job. So
we return to Italy where the populist parties who won the election have failed to form a government.
It follows the country's president refusing to endorse a Eurosceptic finance minister. Now, the president has asked Carlo Cottarelli; a former
IMF official to be the interim Prime Minister until fresh elections next year. Cnn's Robyn Curnow in Rome.
ROBYN CURNOW, CNN (voice-over): The latest last resort for Italy's political crisis is a man they call Mr. Scissors, no, not this one, this
one. Carlo Cottarelli; a former director of the International Monetary Fund who earned his name Mr. Scissors for his severe cut to public spending
has been given the mandate to form a caretaker government that will guide this entry towards a new election.
CARLO COTTARELLI, INTERIM PRIME MINISTER, ITALY (through translator): He knows global markets are worried, but he says the economy is growing,
adding that he will guide a moderate government where it leads role and the European Union remains essential.
Cottarelli came to power after populist parties that won March elections on Eurosceptic campaign promises failed to form a government. Steve Bannon;
President Trump's former adviser has been especially interested in the rise of populism in Italy which he's here to support.
STEVE BANNON, FORMER WHITE HOUSE CHIEF STRATEGIST: This populist movement is a global movement. It's to show the world that every day, men and women
can take control of their lives, take control of their countries.
CURNOW: It is clear that this country is in political chaos, staying in the Eurozone, which is what EU countries that use the euro as their
currency call themselves is no longer something people take for granted here.
I asked Italians in Rome whether they want to stay in or get out of the Eurozone. Dentro(ph) or forti as they say it here.
UNIDENTIFIED MALE: Dentro(ph) --
UNIDENTIFIED MALE: Forti --
UNIDENTIFIED MALE: Dentro(ph).
CURNOW: Italians are clearly divided when it comes to the euro.
QUEST: And that's the question of the deeper credentials of the new prime minister if when he gets confirmed in a vote of confidence. He's a very
established one, definition figure. He's a former director of the IMF and he is European, pro European personified as you heard him talk about
However, the controversial part, the austerity role that he played, not only in Italian politics in the terms of after the great recession, but
also at the IMF. The nickname Mr. Scissors was given to him because of the history of cost-cutting and always looking for an austerity solution.
Which of course is particularly galling and grueling in Italy which has suffered so badly. Now, the populist party is calling Mr. Nobody and says
he has no chance of winning confidence, that is the confidence that takes place in the Italian parliament, that he has to win before he becomes Prime
Remember, if he were to lose that confidence vote and there's no alternative, then Italians will be going back to the collections
considerably quicker, and as the president finds another eccentric or technocrat candidate.
The skepticism about this man and his ability to get a budget through which we know at the end of the year and see the country into new elections
reflects a deep skepticism about the European Union.
Many believe in Italy that the union has caused unnecessary hardship of the country, the outgoing finance minister spoke exclusively on "QUEST
EXPRESS", and Pier Carlo Padoan told me that yes, there are challenges, but change is possible from within.
(BEGIN VIDEO CLIP)
[16:35:00] PIER CARLO PADOAN, MINISTER OF ECONOMY & FINANCE, ITALY: There's no doubt that the EU and the Eurozone need deep restructuring and
readjustment in their architecture, so that there's more growth, more inclusion and more stability.
This can be done -- this is done on a daily basis at the European level, and this is by the way what I've been doing in my Monday, which is now
approaching its end for 51 months. So I know that progress is possible, sometimes a single country may not be satisfied, but there's no doubt that
Europe needs to be deeply transformed.
But one thing is to transform from inside, respecting rules and cooperative approaches, the other thing is leaving, that leaving the game and slamming
QUEST: What needs to happen now for the rest of the year since clearly, there will have to be elections at some point early in 2019? The incoming
Prime Minister has designate -- has recognized that.
If you have a technocratic government that is merely looking after the box, that means nobody is advancing the pro-European argument which makes it all
the more dangerous when that election comes around with the Five Star and the League movement.
PADOAN: Well, this is a fact, it's to say -- it saddle(ph) things, how they extend. Of course, by definition, if the government with Mr. Savona
as finance minister, we're in power, we would have not just any advance in the European construction, but a step backward.
At least one step backward or maybe several steps backward.
(END VIDEO CLIP)
QUEST: Out of the outgoing finance minister of Italy, (INAUDIBLE) doesn't officially start for another week or so. There's subtropical storm Alberto
that's battling its way towards Florida -- after the break.
QUEST: Part of the unofficial start if you like of the holiday season, Summer season, and yes, millions of people in the southeastern of the
United States are bracing for the first named storm of the year.
Even though the hurricane season doesn't officially begin for another three days. Now, it is called Alberto and it's threatening flash floods,
tornadoes and 100-kilometer per hour winds during one of the busiest times of the year.
Nick Valencia is with us from Panama City Beach in Florida where I mean, the storm -- has it -- it's with you, have you felt the full force yet?
NICK VALENCIA, CNN: Hey there, Richard, yes, we've been out here since very early this morning and landfall for subtropical storm Alberto has come
and gone. So the worst of this storm here for Panama City Beach is over, and what's left here is just blue sky.
And you see a lot of people out here, you ask locals, they've certainly seen a lot rougher storms pass through here, but it was as you mentioned
the first significant storm of 2018 and coming about a week before storm season officially starts in the United States.
[16:40:00] To have a lot of emergency management officials very concerned here especially along this beach where we watched it all day long, and at
the height, it probably got towards the top of that walkway here which is pretty significant for this time of year.
But we'll keep an eye on the winds as well especially on those bridges to make sure that no cars were toppled over, the good thing in all of this,
there were no mandatory evacuations, there were no significant reports of damage and no injuries.
They did have a voluntary shelter open, but there was no evacuations. So far though, things are looking pretty good here in Panama City Beach,
officials here though, a little uncomfortable that this storm came a lot earlier than expected in 2018, Richard.
QUEST: Never a good time to have a tropical storm or a hurricane or anything -- bad weather, but Memorial Day weekend which is of course the
unofficial start of the Summer were one would have expected this -- where you are, to have been full of holiday makers and tourists.
VALENCIA: Yes, there was certainly their fair share of tourists, we saw a lot of people here down from neighboring Alabama, Tennessee, certainly a
lot of people here on the beach to look at those waves and they got so dramatic throughout the day.
But now things have really calmed down, you have more people out of their apartment complexes, coming out of their Airbnbs to check out the situation
here down here. This storm certainly did ruin a few afternoon barbecues, but as I mentioned, the worst of it has come and gone and people are now
enjoying the scenery. Richard?
QUEST: You know, one always wonders when -- and it's useful of this early part of the season. The preparation necessary for the unknown, and yet,
everybody does know that there will be two or three hurricanes or major storms of some impact over the course of the Summer.
So as they look at this, the residents you've been talking to, would -- how would you describe their mood? You know, are they fearful? Do they think,
oh, here we go again or is this just an occupational hazard of living on the coast?
VALENCIA: I think you put the nail on the head there, it is an occupational hazard of living on the coast. I did talk to somebody who
says they spent a majority part of their year here, they've been here for the last seven years, they said they've seen a lot of storms come and go,
they felt the effects of Hurricane Irma.
You remember last year when Hurricane Irma --
QUEST: Well, I do --
VALENCIA: Barely last year --
QUEST: Oh, yes, I do --
VALENCIA: Florida coastline, that caused a lot of damage and there are still people in South Florida drawing out. Here we are along the Gulf of
Mexico, the panhandle, you know, people here, they think that this might be an early sign for just how busy --
QUEST: Right --
VALENCIA: And active of a hurricane season it will be. We're still a few months away from the height of it in August when we saw all of those storms
hit the United States last year, here we are, not even June yet, Richard, and we're already dealing with tropical or subtropical storms -- Richard.
QUEST: Nick, I assume you have your red Cnn windcheater, your -- it's probably never far from your -- the back of your car -- right, let's move
on. As Florida prepares for the full impact of the storm, Hawaii is still in the midst of volcanic eruptions.
First moving, obviously cutting off more escape routes. The pictures are hypnotic and we brought them to you as much as we can. Now, the chief
executive of Hawaii Airlines told me last week, there's been little impact on the business, this is despite caused mountain for the state of Hawaii.
PETER INGRAM, CHIEF EXECUTIVE OFFICER, HAWAIIAN AIRLINES: So far it has been largely a non-evident operationally. And you know, the volcano
Kilauea, the volcano on the Big Island, first of all, it's away from our main days of operations in Honolulu and it hasn't affected even the two
airports on the Big Island in Hilo and Kona.
So you know, we've been operating as normal, of course, taking all the precautions we can. I would point out it's a little bit different from the
volcano in Iceland. The volcano in Iceland is a bit of a -- not all volcanoes are the same, and that one spews an awful lot of ash.
This one has been flowing continuously for about 35 years, and it actually emits more vapor than ash. So we still try and avoid the emissions,
obviously, but they are not quite the same as what was experienced with the big eruption in Iceland.
QUEST: The competition is now coming at you from all sides. Specifically, of course -- everybody asked you about Southwest which is increasing its
flying -- or start in flying from the West Coast to Hawaii, and interisland.
Now, I suspect you are somewhat amused that everybody thinks you should be running scared at this because you faced competition before when people
think it's easy to make money on the Hawaiian routes.
INGRAM: Well, we've been flying, you know, routes in Hawaii, almost 90 years and we're no stranger to competition from all manner and forms of
airlines. The biggest airlines in the world, both nationally here in the U.S. and internationally have been our competitors and certainly Southwest
has been gathering a lot of attention.
[16:45:00] But you know, we built a business around being the Hawaii specialist. Really catering to the needs of people traveling to and from
our islands and people traveling within the state. I think we've got a pretty good formula, we've got terrific employees and you know, this is
what we focus on.
And so, we're able to compete with the largest airlines in the world, they have a lot of advantages, but we're competing you know, just to and from
and within Hawaii and we get to play our home games and we stand up pretty well to that competition.
QUEST: The battle of the 321 neo or the 320 neos or any of the neos, does the fuel efficiency gain dramatically outweigh the extra cost of the new
aircraft. Because what I hear from a lot of CEOs now is particularly on the 78 -- as with 13 neos and those, look, it's great to have a new
But they are very expensive and you better be sure that you get the cost- savings to offset against the extra aircraft cost itself.
INGRAM: Sure, and that's a very good point, and of course it depends a little bit over, you know, what fuel costs we're talking --
QUEST: Right --
INGRAM: About and we end up, you know, committing to aircraft orders for 25 years with you know, no idea what the fuel price is going to be by the
end of the day. But for us, one of the -- one of the things that makes the new more fuel efficient aircraft very compelling is that we're flying
longer distances and on longer-range flights, there's a greater amount of fuel sensitivities.
So we really fly that A321 neo in the sweet spot of its mission a little more --
QUEST: That's right --
INGRAM: Than 2,500 miles, fuel is a big part of the equation, and the math does absolutely pencil out for us in terms of having more fuel efficient
QUEST: Are you feeling hot into the collar as jet -- as fuel goes over $80 a barrel. I mean, most people asked me to say look at these prices, we
are, quote, "OK", but it's starting to get a little warm. Do you hedge, do you not, are you comfortable?
INGRAM: Well, I think first of all, I'd say the airline industry is particularly in the U.S. is a lot more resilient than it was. So a decade
ago when we hit $80 and $100 a barrel, that was catastrophic. I think we're much better equipped today and we built stronger balance sheets and
we're in a good position.
I'd obviously like fuel prices to be lower, in that way, our fears can be that much more affordable. We do hedge, we hedge primarily with call
options and those options for the current period are in the money. But you know, really, even when you do hedge, that protects you for a little while
over the long term.
We've got to make sure we've got the operations of the business lined up so that we can manage our cost structure in a range that meets demand. We
think we're well equipped to do that --
QUEST: Right --
INGRAM: And so I'd love fuel prices to be lower, but we'll manage through this current period.
(END VIDEO CLIP)
QUEST: The CEO of Hawaii -- now, when we return, in the film "Moonraker" in 1979, James Bond revolutionize Italian transport. Now hilarious, we
laugh it off, I always loved that part of the movie. Now, they're trying something futuristic in Paris, it's not a far long way from what you're
looking at, Melissa Bell is with us after the break.
[16:50:00] (COMMERCIAL BREAK)
QUEST: It's a public holiday in New York and London, in Paris, it was business as usual and that of course means gridlock across the city. As
the ancient Parisian boulevard turned into a chaotic mess of cars, bikes and buses. The congestion cost France billions of dollars every year.
A French start-up now says it can solve the problem by creating the Uber of water taxis. Cnn's Melissa Bell went on the river to discover.
MELISSA BELL, CNN: Is it a bird? Is it a plane? No, it's a sea bubble and it's just landed in Paris. Its design will be the taxi of the future, not
only in its French homeland, but in as many as 250 cities worldwide that might choose to use their water ways as a new eco-friendly urban pathway.
ANDERS BRINGDAL, CHIEF EXECUTIVE OFFICER, SEA BUBBLE: Well, it's a boat, but it's eco-friendly transport system that we have designed. It's to try
to help a little bit of the situation that everybody is in traffic jam, the city is in a polluted city and trying to get rid of it, and well, that, you
leave no ways, there's no sound and there's no pollution.
BELL: They call it a flying water car and the idea is only two and a half years old, it was dreamt up by the team behind the Catamaran that has been
breaking sailing records, thanks to its elevation out of the water.
BRINGDAL: We're coming from dream into reality. We're a start-up company, so when you start a start-up company, then hey, I had a great idea, like
this is how it's going to work and everybody goes, cool. How? And then once you actually show it to them, then this is the next step right now, we
have to take this into how can we now deliver thousands of these boats around the world.
BELL (on camera): As you can see, the Sea Bubble gives a fairly smooth ride. Now, there's still so many obstacles for the people trying to get
these out onto the rivers of the world, things like regulations that exists on the main water ways inside big cities.
Things like fighting off ranges to make them available commercially to a vast number of people. But they do believe that it can be done, and that
this will soon provide you with a smooth ride from the Eiffel Tower that we just left, taking you east down the (INAUDIBLE) that's avoiding gridlock of
Paris' streets, in favor of the fluidity of its river.
QUEST: Melissa joins me now. A workable realistic option. Could you imagine hundreds if not thousands of them if it became popular?
BELL: Well, it's easy to imagine in one way because it seems such an obvious solution, Richard, but you're right. Will we really take the
trouble to go to a river to jump in a water equivalent of an Uber-riding, that is something that operators have yet to test on the market.
And yet, this provided the most extraordinary ride elevated as you were out of the water. And I can tell you that all of the people along that said we
watched this past couldn't believe what they were looking. It's simply not what we're used to.
Now, the developers believe they can be done, and once people have tested these, they're going to love them and that they're going to be able to
bring them particularly around the world including Richard, New York, you may soon be using Sea Bubbles if they get their way to porter around on the
QUEST: Good grief, that's a thought. And Melissa, Paris has a traffic problem, would you say it's much worse and say London or New York, and I
mean, they're small streets, yes, in the geography and the winding roads.
But it also has a very efficient transport system.
BELL: It does have an efficient transport system, and yes, the gridlock that has only got worse over the course of the last few years as Paris has
tried to make the banks of this end more pleasant. It's closed off a number of roads, the gridlock has gotten worse and people believe that the
mayor of Paris is really trying to push far out altogether.
It doesn't have London's congestion system at all, and so you do have a great loss of gridlock in Paris' street, something that Parisians will
complain about most days of the year, Richard.
[16:55:00] QUEST: And over your left shoulder, of course, over your left shoulder, we can elegantly see --
BELL: The world --
QUEST: The Shanzay Lezay which of course -- actually, it doesn't look too bad tonight. Good to see you, thank you for staying late for us tonight --
BELL: At this --
QUEST: Really appreciate it -- go ahead.
BELL: I think it's pouring with rain, Richard, which is why there's no gridlock on Shanzay Lezay tonight, and any other night, there probably
would be. You're doing extra duty and it's raining, what more can we ask? Melissa Bell in Paris for us tonight. We'll have a profitable moment after
QUEST: Tonight's profitable moment, though, Italy faces a really nasty political crisis which could grow to something even more existential for
Italy, the euro, the European Union, apparently, I don't think it's going to because as we heard on our program tonight, Italians believe or look at
the euro as a necessary evil that allows the country to do business within Europe.
And there isn't the same anti-European feeling as they will say for example in the United Kingdom. But that should not mistake or mask the fact that
there's a potential for a really nasty accident when the elections happen next year.
This election is going to become a de facto referendum on EU, Eurozone, austerity, all the issues that people in Italy have against the European
structures. It's going to get nasty, but ultimately, the result is likely to show that Italians once again are going to determine to stay in Europe
if they come.
And that's QUEST MEANS BUSINESS for tonight, I am Richard Quest in London, whatever you're up to in the hours ahead, I hope it's profitable.