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Russia Troops on Ukraine Border; Tracking Planes in Real Time; GM Recall Wipes out Profits; Ferry's Owner Probed; Accused Crew Members Publically Shamed

Aired April 24, 2014 - 09:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

JIM SCIUTTO, CNN CHIEF NATIONAL SECURITY CORRESPONDENT: This puts the Ukrainian government in a very precarious situation, because if they don't act to retake these half a dozen eastern cities from pro-Russian militants, they're, in effect, seeding control of the eastern part of their country to Russia.

If they do act, which is what they're doing now and more aggressively in the last 24 hours than we've seen - than we've really seen since the beginning of this crisis, they're in effect giving Russia what it wants, which is justification for further action in eastern Ukraine. It's a very precarious situation and everybody watching, including U.S. officials, if Russia is going to make even more aggressive moves inside Ukraine.

CAROL COSTELLO, CNN ANCHOR: OK. So what if it does? What if Russia sends in some troops to rescue the Russian citizens that are now in danger in eastern Ukraine? What happens then?

SCIUTTO: Well, one thing we know is that the U.S. is not going to react and the west is not going to react militarily to actions inside the Ukraine. The president reiterated again today there's not a military solution do this problem. They want a diplomatic solution. So the consequence are going to be, as the president's referenced today, you know, more economic sanctions against Russia.

What does it mean for Ukraine? You know, it means you have the makings of a civil war. And that's the real danger here. And we already saw some violence today. Ukrainian forces moved into one eastern city. There were reports of five people killed as those Ukrainian forces challenged the pro-Russian militants. You know, that can be a simmering civil war where you have clashes like that. It could escalate if Russia sends in more significant forces. And, remember, we talked about this a lot, there are - there are 40,000 to 50,000 Russian troops right now poised just on the eastern border of Ukraine.

COSTELLO: Jim Sciutto, thanks for your insight this morning. I appreciate it.

SCIUTTO: Great to talk.

COSTELLO: We'll be right back.

(COMMERCIAL BREAK) COSTELLO: The Bluefin-21 almost done with its mission, 90 percent done, if you want me to be specific. And still, after six weeks, no sign of Flight 370. Of course that has a lot of people asking, isn't there a better way to track a plane the size of a Boeing 777? Visual scans, ping detectors and underwater robots haven't exactly been the answer so far. So, what about a real time flat - so what about real time flight data tracking? Brian Todd joins me now from Washington to tell us more about this.

Good morning, Brian.

BRIAN TODD, CNN CORRESPONDENT: Good morning, Carol.

You know, we can stream movies on our laptops. We can stream music instantly on our phones. But the live streaming of data is only used on a few commercial airliners. And some key players in this case might have just injected new momentum in the push to change all of that.

(BEGIN VIDEOTAPE)

TODD (voice-over): The black boxes from Flight 370 are as elusive as its wreckage. Inside them, the cockpit voice and flight data recorders that could unlock this mystery. Now, there's new momentum for the idea to avoid having to recover black boxes. CNN has earned Malaysian authorities have recommended to international regulators that commercial aircraft should be tracked in real time.

TODD (on camera): Is it time for that? Are these obsolete?

MICHAEL GOLDFARB, FORMER EU CHIEF OF STAFF: I feel there's few people in the world today, Brian, after the Malaysian air crash, who wouldn't say yes. I mean clearly this is old technology.

TODD (voice-over): Now, the NTSB is reviewing new technology for airliners to live stream flight data back to the ground as they fly. One challenge the NTSB sees, too many planes transmitting too much information.

JOE KOLLY, NTSB DIR., RESEARCH & ENGINEERING: You only can have so much bandwidth, you know, so much ability to receive data, transmit data. So you're looking for what is the most important information?

TODD: But two Canadian companies have already developed real time streaming that bounces off satellites. The hardware looks like this when it's installed in a plane. As the jet is flying on the right, the airline's operators on the ground can see information on the left, like airspeed, altitude and location, in real time. But it doesn't transmit all the time.

RICHARD HAYDEN, DIRECTOR, FLYHT AEROSPACE SOLUTIONS : It's only activated when a specific set of circumstances occur that are pre- defined.

TODD: Pre-defined by the airline, circumstances like the plane deviating from its flight path, a sudden pitch or roll. These systems don't send back the cockpit voice recordings. GOLDFARB: We have a cultural problem with the airlines and the airline unions for the pilots. They do not want big brother in the cockpit.

TODD: The FAA doesn't require American carriers to outfit their jets with live streaming. And the Canadian companies tell us only a few U.S.-based airlines carry them. They won't say which ones. Why aren't more major airlines using live streaming?

GOLDFARB: It's always cost. The airlines don't want to put anything else in the aircraft that they can't make use of, and they don't want to carry anything that adds weight and hence costs more fuel.

(END VIDEOTAPE)

TODD: Now, these live streaming systems are certainly not cheap. They cost about $100,000 per plane. But analysts say if the Malaysia Airlines missing plane had had live streaming data, we would have at least had some more answers right now. Michael Goldfarb, the former FAA chief of staff we interviewed, says this case could be a game- changer in this whole debate, Carol.

COSTELLO: We'll see. Brian Todd reporting live from Washington. Thank you.

For more of this let's bring in CNN safety analyst and author of "Why Planes Crash," David Soucie, and Peter Goelz, a CNN aviation analyst and former NTSB managing director.

Welcome, gentlemen.

PETER GOELZ, CNN AVIATION ANALYST: Good morning.

DAVID SOUCIE, CNN SAFETY ANALYST: Hello, Carol.

COSTELLO: Good morning.

So, Peter, live streaming sounds great. But as you heard, it's expensive. So how likely is it that streaming will become a reality in all flights?

GOELZ: Well, I think Michael Goldfarb's correct, that this accident is going to be a game changer. But it's going to take pressure to get the international aviation community to act promptly. ICAO, which is the group in Montreal that oversees international aviation, is notable only for its inability to act quickly. We need to push this and push hard. And getting real time streaming, all of the objections can be answered and answered easily.

COSTELLO: But, David, I just want to back up a little bit. Flight 370 went missing because of a series of mishaps. Human error enters into this, too, right?

GOELZ: It certainly does.

SOUCIE: Yes. Yes.

Oh, I'm sorry.

GOELZ: Go ahead, David.

COSTELLO: No, go ahead - go ahead David.

SOUCIE: Dave Soucie.

COSTELLO: Yes, David Soucie. I'm sorry.

SOUCIE: Yes, it definitely does. And, you know, something to point out, too, is that this aircraft did have communication. We did have the way to track it. What happened was that the transponder was turned off. If the transponder had stayed on, we'd still have tracking information on the aircraft but it was either turned off or it had failed. There was something that took it out. So, you know, I think that there's something being overlooked here.

Yes, I believe that streaming data needs to happen. Constant surveillance needs to happen. But that's also part of the next gen program that's coming up with the FAA in that the ADSB (ph) in and out would provide information to all the aircraft around a certain area that would be tracking each other. And that would be a benefit as well.

So the idea of spending $100,000 per aircraft, I think that's pushed the airlines back on that idea. But we need to look at utilizing what's in place now and what's already funded through the federal government at this point and expanding that into the ICAO regulations.

COSTELLO: And, Peter, I know you wanted to expound on this. If everyone was doing his or her job, if someone had looked for Flight 370 when the transponder was turned off or the plane disappeared from radar, maybe this plane wouldn't be missing. Is that fair?

GOELZ: Well, I think it probably is. But as I say, there are ways that you can minimize the cost on this real time streaming. I mean this is the second time in five years or three years that we've lost an aircraft in deep ocean and haven't been able to find it. And there are -- for instance, you only need real time streaming on aircraft that are going over open ocean, what they call ETOPS (ph) flights. Planes flying over land mass, we find them easily without any problems.

COSTELLO: And, David, one last question for you. If the batteries on those black boxes had lasted longer, that would be much cheaper -- that would be a much cheaper fix, right? So why not do those things first before you move to something so costly like streaming?

SOUCIE: Well, and they actually are. And as Dave (ph) had mentioned before, we have already - ICAO has already addressed this. They've already said, yes, that we need to go to 90-day boxes. However, the misnomer, the problem with that is that they haven't said, let's go back and put it on the 20,000 aircraft that are flying right now. They're just simply saying, from here forward, from 2015 forward. And the FAA has done the same thing as well. But that's not good enough because then we've still got these aircraft out there that are not required to be changed in retrospect - or in history, the ones that are out flying now. It's only for new aircraft.

COSTELLO: Gotcha. David Soucie, Peter Goelz, thank you so much.

Still to come in the NEWSROOM, General Motors says its massive recall has nearly wiped out all of its profits. New details about just how much it cost the automaker, next.

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COSTELLO: General Motors' first quarter profits were nearly wiped out by the cost of its massive recall. The automaker is spending more than $1 billion to fix problems on roughly seven million vehicles. Alison Kosik joins us from the New York Stock Exchange with more.

Good morning.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Good morning, Carol.

So the price tag so far for repairs is going to cost GM $1.3 billion. Keep in mind, though, this is not just for the recalls that we've been hearing so much about, meaning the ignition switch problems that have led to 13 deaths. This is for all of its recalls so far this year.

Well, now GM is fixing the cars, but the fix is really whacking GM's bottom line. GM made just over $100 million in January, February and March of this year. But how bad of a hit is it for a company like GM? So I want to show it to you in this chart because all the bars that you're about to see over the past two years, they represent some really big profits for GM.

Look at what they made in the first quarter of last year, more than $1 billion. So this $100 million from this year is really a teeny, tiny amount. So it's a profit that's not so big because of the recall. I'd say it's definitely a huge hit for a part that originally cost 57 cents. GM put a 57 cent part that it knew didn't meet its specifications into these cars and now GM is paying for it.

But, funny enough, Wall Street has a different view of this. We are seeing GM shares up about 1.5 percent at this point because -

COSTELLO: What?

KOSIK: Well, yes, because - here's why. Because Wall Street knew this charge was coming. Also, sales were good for the first quarter. Its cars are still selling well here. They're also selling well in China. And, actually, investors expected GM to lose money, Carol, this past quarter. That didn't happen and that's why you're seeing the positive response on Wall Street. Though, you know, keep in mind, you've got that lingering question, what about all those lawsuits. We still don't know if GM is going to be accepting liability, so that really still continues to be the wildcard.

Carol.

COSTELLO: All right, Alison Kosik reporting live for us this morning. Thank you. [A portion of this transcript has been removed.]

COSTELLO: The arrested crew members Kyung mentioned now total 14 of the 20 who survived the ferry wreck. One thing that stuck to us, the way these people, these accused, are being treated. What looks like a familiar perp walk quickly turns into what could be called a morbid class photo. The accused lined up for photographers, publicly shamed for their alleged crimes.

Let's talk about this with Dr. Stephen Noerper. He is the senior vice president of The Korea Society and a former State Department analyst.

Welcome, Stephen.

STEPHEN NOERPER, SENIOR VICE PRESIDENT, THE KOREA SOCIETY: Thank you, Carol.

COSTELLO: Is this normal treatment for those accused of crimes in South Korea?

NOERPER: Well, it's not unusual for those who are arrested, but certainly we're all playing attention given the dramatic loss of life involved with 302 (ph) souls, perhaps. And so it's not unusual to see them put out front in a lesson of public shame.

This actually goes back several hundred years to Joseon dynasty times. It's part of the Confucian ethic of accountability and certainly in this case a demand for some justice.

COSTELLO: So they were purposely put out here for photographers. And, of course, that was probably broadcast on local television all over South Korea, right?

NOERPER: That's absolutely right. And that's something that officials are OK to have happen because they certainly don't want that public discontent turning toward them. There have already been expressions by the families in that regard.

But there is a demand for answers. There's a tremendous amount of anger. But let's remember, there's a tremendous, tremendous amount of grief. It's really created a national state of mourning. President Obama arriving tomorrow. No doubt he will offer a tremendous level of sympathy, especially as the father of two teenage girls himself.

COSTELLO: Yes, it's just hard to imagine what these poor families are going through.

NOERPER: Tragic.

COSTELLO: The vice principal of the school where most of these kids went to school, he committed suicide. He was not charged with any crime, but he did survive that ferry accident. Did this result as a result of a culture of shame there?

NOERPER: Well, I think it resulted because of his sentiment at least in the suicide note that was left that he expressed shame for having not been there and able to save those children. He felt a tremendous amount of duty. And it is a duty-bound culture that, again, part of the Confucian ethic. So there is an expectation that those, like students, or those like citizens, are loyal upward and also that those like teachers or officials are responsible for those beneath them. But a tragedy on tragedy is very sad indeed. And the stories that are coming out are just heartbreaking. We can do nothing but just offer tremendous condolences to the South Korean people.

COSTELLO: The millionaire owner that Kyung Lah, you know, she just did a story on this millionaire owner -

NOERPER: Right.

COSTELLO: He hasn't said a word. He has a very murky past. Is that unusual? I mean he hides away and doesn't go out in public very much, yet he owns this ferry company. He has millions of dollars. Normal?

NOERPER: Yes. I mean, not normal. I mean, in the sense that this is somebody who certainly has a shadowy past and there will be a very thorough investigation. I'm sure the prosecutor's office is already very actively investigating him. Really, he's only known for his photography. He recently had an exhibition outside The Louvre of nature photography, but he's not a figure who's important in civic life in South Korea. He's not viewed as a business leader. Very much an unknown, but certainly somebody whose company appeared to cut corners and leave a crew that was unqualified and certainly questions that will come out about the appropriateness or lack thereof in terms of their actions, especially by way of the evacuation orders and leaving the ship with so many children on board.

COSTELLO: Stephen Noerper, thank you for your insight. We appreciate it.

NOERPER: Thank you. Our hearts go out.

COSTELLO: They do.

Still to come on the NEWSROOM, as the first underwater search for that missing Flight 370 nears completion, the focus remains on the Indian Ocean. We'll show you just how much garbage might be getting in the way of finding Flight 370. The next hour of NEWSROOM after a break.

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