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Quest Means Business

Plane Crashes in Pakistan; US Stocks Higher After Positive Earnings Reports; More Countries Pledge to Build Up Global Firewall; Economist Doubts Recovery Will Repeat 2010, 2011 Backsliding

Aired April 20, 2012 - 14:00   ET

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

RICHARD QUEST, HOST: Earnings are up, the market is up, so why are there worries over the US economy?

They are patching up the holes in Europe's umbrella. The IMF builds up its fund for a rainy day.

And unions united. The employees who want American Airlines and US Airways to merge.

I'm Richard Quest, tonight in New York, where I mean business.

Good evening. Tonight, the program comes from New York, where there are concerns that the economic recovery may falter as the spring gets underway. We'll get to that in a moment. We will, of course, update you now, though, with the devastating plane crash that's taken place in Pakistan. And Reza Sayah joins me in a moment.

Pakistan's Civil Aviation Authority says there are no survivors from a plane crash near Islamabad. More than 120 people were onboard the Bhoja Air flight from Karachi, which crashed five aeronautical miles short of its destination.

Local pictures on television, as you're seeing now, showed rescue workers and -- picking through the wreckage at the crash site near Rawalpindi. At least 50 bodies have been recovered, as well as the flight data recorders.

It was the airline's first commercial flight from Karachi to Pakistan's capital. Civil Aviation Authority officials say bad weather may have been a major cause in the crash. Reza joins me now from Islamabad.

Now, let's -- tell us, Reza, what we know, and then we can start talking about, perhaps, what the causes may or may not have been.

REZA SAYAH, CNN INTERNATIONAL CORRESPONDENT Well, it's much too early, Richard, to reach a conclusion about the cause of this plane crash. It happened roughly four hours ago.

Within the past hour, a Pakistani television station aired live pictures of what seemed to be the data recorder box, the all-important black box. So you can be sure aviation officials are going to want to get their hands on that.

According to officials, more than 120 people onboard, all of them feared dead. What's underway right now is a grim recovery effort. Pakistani TV stations showing the aftermath of the plane crash, debris on the ground, mangled and twisted pieces of the plane. They're also showing pictures of personal belongings -- cell phones, blankets, luggage -- the bleak remnants of this plane crash.

Another tragic twist is what this flight, Bhoja Airlines, which went out of business in 2001. It restarted operation recently, and its website, Richard, says that its inaugural maiden flight from Karachi to Islamabad would be April 20th. Of course, today is April 20th.

This could have been the first or one of the first flights of Bhoja Airline from Karachi to Islamabad. I can't imagine a worse way to start back operations again, Richard.

QUEST: All right. Now, the -- looking at those pictures, one thing that is surprising is, of course, the way in which people are swarming over what this crash site is. The plane is obviously sort of a dangerous area, obviously with fuel and other things.

But in terms of the weather that we know, there was a thunderstorm, there was bad weather, as the plane was coming in to land. I understand fully, of course, that an investigation will -- and it'll take a long time -- sort out what it -- what the cause was. But what are people saying there at the moment, anything?

SAYAH: Well, lots of speculation. There were severe thunderstorms going through this region, and this time of the year in Islamabad, when thunderstorm hits, they hit hard. Around 6:00 PM, an hour before this plane crash happened, there were heavy, powerful gusts of wind followed by thunderstorms. There is speculation that maybe that severe weather was a factor in this plane crash.

There's also lots of speculation about the condition of this aircraft. We have reports from some websites -- we haven't independently confirmed them -- that this was an airplane that was nearly 30 years old, so some people are speculating about the condition of the airplane. Again, all of these details are going to be hashed out when this investigation starts.

And you mentioned, people walking through the debris. Unfortunately, this is something that's not unusual in accident scenes in Pakistan. Police officials for various reasons do not, seemingly, do a good job in cordoning off the area, so you have people going through the debris, as you're seeing, and certainly the potential of compromising the accident scene and the investigation.

QUEST: Reza Sayah, who is in Islamabad for us tonight. And while we look at those pictures, I'll just do one or more other facts that we now know or we believe we know.

The plane, as Reza was suggesting, was at least 30 years old. It's believed originally a British Airways aircraft, that's what the -- what people are saying at the moment. So, an aged aircraft, Boeing 737 200 series, that in itself shouldn't make any difference. Planes can fly infinitely longer and older than that.

The weather, as such, I'll just give you a bit of background. Lightning usually, certainly does not bring down aircraft, but with lightning and thunderstorms comes wind sheer, there can be all sorts of atmospheric conditions which can make it considerably more challenging for flight crew to navigate and to bring an aircraft in.

But even so, the flight data recorder and the cockpit voice recorder, if they are retrieved and in workable order, will give good information, and one doubts -- one doesn't doubt for one moment, this is one crash they will get to the bottom of.

In a moment, countries are contributing to the global firewall fund. At the IMF spring meeting, cash in, cash out, who's yet to commit and why this firewall could be the next filling the hole of the umbrella. QUEST MEANS BUSINESS, we're in New York tonight.

(COMMERCIAL BREAK)

QUEST: "We are achieving industrial growth." That's a declaration from General Electric's chief, Jeffrey Immelt. GE's making a strong showing on Wall Street after its earnings did come in at the top end of the estimate.

Alison Kosik is downtown. We're in midtown, Alison's downtown at the New York Stock Exchange. Good evening.

ALISON KOSIK, CNN CORRESPONDENT: And good evening to you, Richard. You know, it's not just earnings that are sort of keeping the market moving forward today. Also, that read on German business confidence, that came in stronger than expected. That really gave a good boost to stocks today.

You mentioned GE, but let me get to McDonald's, first. McDonald's is interesting. It met profit forecasts, its earnings coming in line with estimates. Sales up 7.3 percent worldwide.

But these sales were led by the US, Richard, which saw an almost 9 percent sales gain, and this is what's unusual compared to recent quarters. It's usually the international sales that outpace domestic, but Europe's struggles have sort of changed things around.

All right. General Electric's earnings, as you said, beating forecasts. They had a really strong quarter with strong sales of big industrial products, like jet engines and electric turbines, actually profits from the industrial side of the biz for GE is up 10 percent from the same time a year ago. Richard?

QUEST: And if we take a look at the mood and, if you like, the sentiment, Alison, a very strong run up, a pull back on the market. But as we bounce around 13,000, there is that level of indecision that seems to be all pervasive at the moment.

KOSIK: That's so true. Even you look at the volume, and the volume continues to be light because you don't have that buying with conviction. And you don't have that buying with conviction because there's a lot of skepticism as to how the economic recovery is going.

We're seeing how the jobs recovery is sort of losing momentum. The recovery, if any, in the housing market is definitely losing momentum if it had any in the first place. So, you're seeing these inconsistent economic signs in the US economy that it's not necessarily charging ahead.

One bright spot, though, is earnings. Earnings are really the reason why you're seeing stocks continue to move forward at least for today, although it's been quite the bumpy week this week.

You look at earnings overall so far for the first quarter. So far, they've been pretty upbeat. Of the 105 S&P 500 companies that have reported, more than 80 percent had beat expectations. Ah, but of course, I know what you're going to say: we've still got about 400 companies to go. Richard?

QUEST: We have 400 companies to go, and that is why next week, you will be taking part with me in the Q 25 as we start to analyze those --

KOSIK: Ooh!

QUEST: -- the greens and the --

KOSIK: I can't wait!

QUEST: -- the reds. Oh, yes. Get yourself ready. Oh, well, you really must get out more --

KOSIK: I can't wait.

QUEST: -- if that gets you that excited.

(LAUGHTER)

QUEST: Alison Kosik at the New York Stock Exchange. Have a good weekend, Alison.

KOSIK: You, too.

QUEST: Pledges to the global firewall fund are pouring in. The finance chief of Brazil and Japan say the IMF could achieve its sum target of $400 billion. Britain, Australia, Singapore, South Korea, together have added another $41 billion. Talk about passing around the tin can or the tin pot.

The chief at the IMF, Christine Lagarde, says the additional crisis commitments have pushed the current total to at least $357 billion. The IMF wants to have enough money to shore up the eurozone's most vulnerable economies. She says it's the -- eurozone is the epicenter of risk to the global economy. The IMF's watching the BRICs economies to see whether they'll contribute and by how much.

And it's worth pointing out that the money that is being contributed is not loans. They are guarantees or they are commitments. So nobody's actually writing checks. They're probably just writing IOUs.

The chief economist for the Americas at Natixis is Evariste Lefeuvre. He joins me in New York. Evariste, we look at the numbers this week that we got from the IMF, and we look at the firewall. Let's start with the firewall --

EVARISTE LEFEUVRE, CHIEF ECONOMIST FOR THE AMERICAS, NATIXIS NORTH AMERICA: Yes.

QUEST: -- if we may. As currently constituted, $500 billion, the IMF's got its $300, $400 billion. Are you satisfied that's enough?

LEFEUVRE: First, I would like to remind you that when the IMF is lending money, it's just drawing some money from the Central Bank. So, of course it's the pledge. So, it's true you don't have to put more than a commitment to help the IMF if things are going bad.

After that, to answer precisely to your question, I think that if the purpose of this firewall is to bail out Spain or Italy, I think it's not enough. If, on the contrary, and what I do expect, this money can be added to the European stability mechanism to provide some cash to the banking system in Europe, that will be well enough.

I think that all now will depend on the ability of countries to ask cash not for themselves but for their banking system. This is where the crisis we are now.

QUEST: We have spent so much time this week talking about he eurozone crisis, which is the epicenter, according to Lagarde, and which is the tail risk, according to the World Economic Outlook.

But talk me through emerging markets and how the spillover of what's happening in Europe now becomes such a worry not only in the United States, where growth will be 2.5 percent or so this year, but in more -- more emerging economies.

LEFEUVRE: I think in emerging economies, we've seen some very interesting moves last week, actually. The Reserve Bank of India cut interest rates. Brazil, also, which is facing a very strong deceleration is also cutting rates and is also promising to cut more if need be. And I think that this is helping the sentiment of investors.

We are definitely in a period of slowdown. It can be eased, of course, by Germany getting better, and it can be eased also by the fact that we should never compare it with last year, because last year was a huge shock on the global trade because of Japan.

QUEST: Right.

LEFEUVRE: And it's different. It's cyclical here.

QUEST: OK. Well, you say that. You say -- you say that it's cyclical --

LEFEUVRE: Of course.

QUEST: -- but what we could be seeing and what the "New York Times" says this morning on its front page is that 2012 could repeat 2010 and 2011, where you have a very promising Q1 that filters down into Q2, and by Q3 and Q4, we're all underwater.

LEFEUVRE: I totally agree with that, but I think it's wrong for several reasons. First of all, the reason I just mentioned before, we don't have an earthquake and a strong shock on global trade.

Second, probably most important, last year, when you have a strong deceleration, especially in the US, you had before that a very sharp increase in oil prices. Remember, from $42.90, $100. Now, it's totally different. Prices are easing down.

And the third point, which is also very important is, we've seen some decline in the economic momentum in the US, that's true, but the economy is much stronger. Even if we had some weak job creation last month, it's still -- we still have a strong economy.

And I will add to the fact that the reason why the recovery is so bumpy is in the US because not of the fact that it's -- the reason it's so bumpy is because it's not a demand-led recovery. It's not credit, it's not bubble, but it's supply. It's the revolution in oil, it's the rebirth of manufacturing. That's why it's going to be bumpy. But it's a healthy economy for sure.

QUEST: If we are not seeing good growth now with this -- to use the phrase, very or highly accommodative monetary policy, basically rock-bottom interest rates, LTROs, quantitative easing, and we are still bouncing about the bottom, how can you say this is cyclical?

LEFEUVRE: The problem of the LTRO, that is the ECB in Europe providing cash to banks, is to deal with liquidity. It's totally different from what the Fed is doing. The Fed is trying to support the economy using some quantitative easing.

And now, the nature of quantitative easing has changed, and I think that the Fed is willing, really, to go further. But the only thing they are going to do is increase the balance sheets, but just focus, focus on the long end of the curve, trying to put weights on the downside.

Personally, I think that this will be used less because now the problem with the housing sector -- this week, we've seen that the housing sector is still weak in the US. It's not to match the possibility of households to re- -- change, to re-assess and refinance their mortgage.

It's more about writing off the debt of people with negative liquidity in their home. But they will probably do it, but I think QE3 or whatever you call it will be a bad idea in the US.

QUEST: Evariste, have a good weekend and --

LEFEUVRE: You, too.

QUEST: -- thank you for putting such spirited views on the economy. Always good to talk to you on the program, QUEST MEANS BUSINESS, live from New York.

Now, the UK's Royal Mint is defending its move to remove copper from 5 and 10 pence coins. Good grief, whatever next? Are they not real?

These new nickel-plated steel coins will save $13 million a year, though there's controversy about their safety. Two dermatologists have written to the "British Medical Journal," the BMJ, warning that the coins are more likely to cause allergic reactions. Give me enough of them, we'll try it out.

They point out that nickel-plated coins were withdrawn in Sweden for an acceptable risks to health. The Mint tells us the new coins have no additional risks and are already in use in New Zealand and Canada.

Now, while we're on the subject of loose change, today's Currency Conundrum. According to the Canadian Budget Office, how much in Canadian cents does a Canadian penny cost to produce? Is it 0.4 cents, 0.8 cents, or 1.6 cents? In other words, one penny costs how much to make? Those are -- that's the Conundrum.

Now, the rates to the break. A quick look at the foreign exchange. Sterling has jumped to a near six-month high against the dollar, 1.61. The euro is also making gains. There's little change with Japan's currency. A dollar buys 81.5 yen. The rates, now the break.

(COMMERCIAL BREAK)

QUEST: In France, voters are getting ready to go to the polls on Sunday as part of the first round of presidential elections. They could turn their backs on President Nicolas Sarkozy in favor of the socialist challenger, Francois Hollande.

Sarkozy's rivals have heaped scorn on his jobs record. Now, on the final day of campaigning, the top candidates must convince voters they will be the one that will turn around the economy. CNN's Dan Rivers revisits some riot-scarred areas of France to see if there's been improvement.

(BEGIN VIDEOTAPE)

DAN RIVERS, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): It's been seven years since France's suburbs, or banilieues, erupted with sustained riots fanned by years of social exclusion and deprivation.

Since then, President Sarkozy's government has earmarked almost $800 million for urban regeneration in areas like this. These are new apartment blocks, a vast improvement on those they replaced. And then, there's this fortress-like police station. Difficult to see if it's designed to project strength or simply protect the officers inside.

Among the changes here, this community center set up by locals called Assez le Feu, or Stop the Fire, which has produced glossy TV ads urging local people to vote.

UNIDENTIFIED MALE (through translator): For the moment, it's only been flapdash. They just have little campaigns, little policies. They think it's going to fix the problem. They still say we're going to create jobs, but often the jobs created aren't full time. They are short-term contract, precarious jobs, so the young today can't have a better future.

RIVERS: I'm curious to see if he's right and venture into the heart of Clichy-Sous-Bois, where we're warned to be careful. The simmering anger hasn't dissipated. But what we find are the same grim apartment blocks I saw in 2005. Despite the glossy new buildings, these seem to have been forgotten.

RIVERS (on camera): Most of the people in Clichy-Sous-Bois live in apartment blocks like this, which are terribly rundown. This one hasn't got working elevators, there's no heating. The people here say they are as unhappy and angry as they were in 2005. In this area, youth unemployment of people who've left school with diplomas has increased by 119 percent.

RIVERS (voice-over): I'm shown around by 24-year-old Diaretu Diavera (ph), who's one of those intelligent young people who can't find a job. Her modest ambition is to be a bus driver. A pretty damning indictment on social mobility here. I ask her about the millions spent in Clichy-Sous- Bois.

UNIDENTIFIED FEMALE (through translator): We haven't seen any of it. We just get poorer and poorer.

RIVERS: Others nearby agree.

UNIDENTIFIED MALE (through translator): Yes, there are no jobs. They have forgotten the area, you can say. They take care of the rich with their promises -- I'm talking about Sarkozy. Everything he promised the rich, they did it. But everything for the poor? Nothing at all.

RIVERS: President Sarkozy cemented his tough reputation as interior minister during the 2005 riots. Now, the same social exclusion combined with more austerity is threatening to derail his presidency nationally. And here in Clichy-Sous-Bois, few will be sorry.

Dan Rivers, CNN, in Clichy-Sous-Bois, France.

(END VIDEOTAPE)

QUEST: And a reminder, the voting takes place on Sunday. We'll obviously be bringing you the results and the runoff when it happens in May.

They'll be making merry on Wall Street tonight at the end of a good week of solid corporate results. Head a bit further south, and you discover that America's recovery is more uneven, especially in rural areas, where people are learning they need to diversify in order to survive.

Poppy Harlow has been to Dalton, Georgia. It's the carpet capital of the world, and Poppy Harlow joins me now. The carpet capital? Did you pick up a piece of carpet while you were there?

(LAUGHTER)

POPPY HARLOW, CNN MONEY: I picked up a few, Richard. I brought them home from my apartment. A lot less expensive down there than here in New York City. But in all seriousness, we talk so much about America's recovery, and when you look at the South, it is doing relatively well because so much manufacturing, so many industries are going there, largely because you have non-union facilities.

However, we really found this tale of two recoveries. Let's talk first about Walker County, Georgia, right next to Dalton. They were struggling in the recession, 11 percent unemployment and higher. In less than two years, their unemployment has fallen to the mid 7 percents because of diversification.

They have a GE plant there, now. They have a rope plant. They have some carpet plants down there. They have brought in new industries. Many, many auto parts manufacturers are going there.

But then, take a look at this county. We're going to roll some video for you. This is Walker County, Georgia, and it is where Dalton is, the carpet capital of the world. They were doing very, very well for many, many decades. And then the housing crisis hit.

They have not recovered whatsoever. They have 12.3 percent unemployment right now, and the reason is -- and this is what we're learning about the recovery in America -- if you are not diversified, you will not recover. They are fully reliant on the carpet industry.

You're taking a look at visuals of Shaw Carpet, which of course is owned by Warren Buffet's Berkshire Hathaway. We had a chance to go there yesterday, Richard. We sat down with the CEO, Vance Bell, to talk about what happens in an area that is so reliant on a struggling housing sector that is not fully recovering. Take a look.

(BEGIN VIDEOTAPE)

HARLOW: This area, this county, and Dalton itself, has been hit very hard because --

VANCE BELL, CEO, SHAW INDUSTRIES: Right.

HARLOW: -- so many of the biggest employers here are carpet manufacturers.

BELL: Right.

HARLOW: Your company among them. What's your outlook for the employment situation here?

BELL: I think over time, it's going to be positive. Now, it's not going to be immediate, just like the housing market and the industry's not going to be immediate. But as housing comes back, as I mentioned, and it will, and it'll take some time, but it will, there will be a lot of growth and employment in the industry and in the community.

HARLOW: Is this going to remain the carpet capital of America? Maybe the carpet capital of the world?

BELL: No question.

HARLOW: No question?

BELL: No question.

HARLOW: Why?

BELL: It's not going to move. Labor costs is a fairly small component of the overall manufacturing cost. All of our logistics, all of our distribution is set up here. It makes sense to have manufacturing here. It will be the main hub of carpet production going forward. It's really not going to go anywhere else.

(END VIDEOTAPE)

HARLOW: So, what's interesting, Richard, this company struggled a lot, is struggling, has laid off thousands. But even during the recession, invested a billion dollars back into the business to be ready for that recovery.

And you heard him say labor costs in the United States are going down, and when you make big items like carpets, like refrigerators, like water heaters, as we saw at General Electric a few weeks ago, those are being made more and more here in America because they are just so expensive to ship, now, with those high oil prices, Richard.

So, really a tale of two recoveries. Very uneven here, especially in the South.

QUEST: All right. Now, quickly, before we go, a tale, Poppy, of two Poppy Harlows. As you as of tonight and tomorrow, you change your -- you change your duties and will be attending to other responsibilities.

But I hope as you leave CNNmoney.com and move elsewhere in our empire, I hope you won't forget us on QUEST MEANS BUSINESS and will continue to bring us those business stories that very much keep our agenda moving on what's happening in the US economy.

HARLOW: I absolutely will. It'd be my absolute pleasure. I will be literally one floor below here with CNN the network reporting on the economy on Main Street, on business, on breaking news. So, I need to get some hurricane gear and tornado gear this weekend, Richard, because I have a feeling that might be part of my new job.

Richard, it's always been a pleasure working with you, and there'll be many more times ahead. Thank you.

QUEST: Oh! I'll sell pictures. Poppy Harlow in her hurricane gear. That should be worth a bauble or two on eBay. Poppy Harlow joining us from CNNmoney.com.

In a moment, an airline merger is on the horizon. It might not be a friendly one. US Airways, American, QUEST MEANS BUSINESS after the break.

(COMMERCIAL BREAK)

QUEST: Hello, I'm Richard Quest, more QUEST MEANS BUSINESS in a moment. This is CNN, and on this network, the news always comes first. And more than 120 people are now believed to have been killed in a plane crash in Pakistan.

The Bhoja Airlines flight from Karachi to Islamabad crashed just short of its destination. Bad weather is thought to have been responsible. The flight data recorder has been recovered from the wreckage.

Anticipation and anger both are building in Bahrain. Thousands of anti-government demonstrators are protesting, and activists say they -- some are clashing with the police. The unrest is out of Sunday's controversial Formula 1 Grand Prix.

Shelling and gunfire resumed in some Syrian neighborhoods on Friday. Forty-three civilians are reported to have died. The opposition says the Syrian government is using force to prevent protests despite a promise of a cease-fire. Meanwhile, the Syrian government says an unusually large car bomb has killed 10 soldiers.

A Florida judge has set a $150,000 bail bond for George Zimmerman, the neighborhood watch volunteer who's now charged with second degree murder in the shooting of the black teenager. Zimmerman addressed Trayvon Martin's family at the hearing and apologized for their loss, and said he did not know if their son was armed during the February incident.

South Sudan says it's pulling troops out of a disputed oil region, where it has been fighting against Sudanese forces. Both sides claim the area around the town of Heglig. The South now says it wants to negotiate. Media says Sudan's claiming it had liberated the region.

(MUSIC PLAYING)

QUEST: It's a takeover, and it may be hostile, and US Airways is inching closer to what looks like a hostile bid for a takeover of American Airlines. The potential merger has received the backing of three of American's unions representing 55,000 AA employees.

In a statement for US Airways, the chief exec emphasized no deal had yet been done, but they were working on making the merger a reality. American's been struggling since it filed for bankruptcy protection last November.

It's emphasized it wants to remain a stand-alone carrier. Operating costs have pushed the airline beyond its limits, and it's looking to cut labor costs by one point 21/2 billion -- one two billion (ph).

He head of the union representing the airline attendants says unreasonable demands by American Airlines has forced them to make the decision.

(BEGIN VIDEO CLIP)

LAURA GLADING, APFA PRESIDENT: As you know, American Airlines management has made several excessive demands of our contract since filing for bankruptcy protection last November. Not only were their demands unreasonable, but their business plan was uninspired and not viable. My fellow union leaders and I had no choice but to evaluate alternatives.

(END VIDEO CLIP)

QUEST: American Airlines could use help. It was yesterday the company reported a net loss of $1 billion plus.

Joining me now from New York, Ray Neidl, the senior analyst from the Maxim Group.

Ray, as we look at this, first of all, is it your gut -- is it your gut feeling this deal goes ahead?

RAY NEIDL, SENIOR AIRLINE ANALYST, MAXIM GROUP: Well, the thing is American has a big job right now in restructuring. And I figure that once that was done, we probably would have a merger to bring up the nacket nest (ph) to match the two industry giants, United and Delta.

This is a more complicating factor into the equation. I'm still not sure if anything will be done in the next couple of months regarding this.

QUEST: So it's not -- it's not going to be a shotgun marriage that'll happen within a week, and you and I'll wake up in three weeks and find it's all been a done deal?

NEIDL: I tend to doubt it. The unions only had three votes on a nine-member credit committee panel. They're going to have to persuade some of the other creditors to go along with them, that the US Air plan is -- should be implemented right away. And it's going to be up to that and the bankruptcy judge if he wants to give the American plan time to be presented and implemented.

QUEST: (Inaudible). OK. Now humor me and play along if you will. Let assume that US Airways does go ahead with this, and it does win the day. The US Airways of today is really the old America West as merged, and you'll agree that that merger was a dog's breakfast -- union strife, poor labor relations.

So what on Earth makes them think they can now be biting an even bigger bite of the cherry with American?

NEIDL: Well, you're right. This wouldn't be a smooth merger like we had with Delta and Northwest, where everybody was on board ahead of time.

But the thing is the industry is consolidated. There's probably one airline too many among the hub and spoke carriers and American does need the market mass to compete with United. The idea of doing it is good. The implementation of it will be difficult.

QUEST: OK. Then it turns the question `round back to American Airlines. Does American need a deal? If it goes ahead with its plan as putting forward to the bankruptcy judge and does eventually get these contracts ripped up and rewritten, can't it survive? Because by then it will have lowered its cost base. Or is it simply now too small to compete?

NEIDL: No, it can compete in the short term. The danger is if American successfully restructures and gets economical costs, they'll try and grow rapidly, which would hurt the whole industry. It would be much better off that American restructure, get their cost structure down and then seek a merger with a viable partner like US Airways.

QUEST: Ray Neidl joining me from New York. We will watch this story very closely indeed. We thank you for that and joining us this evening, American and US Airways. We'll be back in a moment. I will have the answer to our currency conundrum on the Canadian penny and how much it costs to make. QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

QUEST: Time for the currency conundrum answer. We asked you how much the Canadian Budget Office says it costs to produce a penny. The answer is 1.6 Canadian cents. The (inaudible) more than the face value of the coin, which is why it's being phased out.

Retailers will round up to the nearest five cents at the cost of $11 million or say a year (ph). Now Jenny Harrison's at the World Weather Center this evening.

1.6 cents to make one penny? That's what you call really spending a penny, Jenny.

JENNY HARRISON, CNN METEOROLOGIST: Isn't it just? All for spending a penny.

Yes, I'm just moving straight on from that. I'm going to tell you about weather conditions when you get back to Europe. I'm showing when you're heading back to Europe. Nice day today, New York, the clouds and rain showers pushing in for the weekend, but I have to tell you, not much change across western Europe.

We'll talk about the weather for the French election on Sunday in a moment, but I also wanted to point your attention to this (inaudible) cloud pushing up towards Scandinavia. That is a system which wreaked havoc across to Turkey middle of this week. That is now bringing snow up to the north. But look out across the west. It has looked like this for about the last three days.

There's an area of low pressure. It actually moved slightly to the north, but it basically just circulating these showers, these thunderstorms across pretty much all of western Europe. Some of these showers, as I say, were a little heavier in the form of thunderstorms, and that is what will stay in place, really, as we go through the weekend.

So what we have to hope -- and we should see some sign of this -- is that it begins to just sort of rain itself out almost, because it's not showing any signs of particularly moving. It will just drift up to the north. So it'll continue to pick up all this moisture from the North Sea, and then as I say, just sort of scatter across much of western Europe.

It's still pretty cold across there, the mountaintops, so again, we'll see some snow throughout the Alps. This is what it'll look like for the next couple of days. And we'll also see more in the way of rain, but also some snow across into Scandinavia. But the first snow that's happening in the next 24 hours, that will push off to the north, and then it should be followed by some rain.

But just a reminder again, last few hours, so have a look at pretty much all of France. It's just going to be this far south, maybe Marseilles, for example, where you could get away with a dry dale (ph) Sunday, but pretty much every other major town and city, we are going to have scattered showers, maybe some brighter spells in between.

It won't be cold, a little bit below the average, but that is about it. Travel-wise on Saturday, just a little bit of low cloud around, not long delays expected. And then we might just pick up some long delays as we get to Geneva overnight Saturday into Sunday. So your weekend temperatures, very nice across central Europe, 17 in Vienna and Berlin and then 13 in London, Richard.

QUEST: Jenny Harrison, have a lovely weekend. We thank you for that at the World Weather Center. A second ago I was talking about the cost of a penny. Now Christine Lagarde has just said she welcomes measures (ph) by IMF members to increase resources by over $430 billion. That's what you call spending a penny.

And that is QUEST MEANS BUSINESS for tonight. I'm Richard Quest in New York. whatever you're up to in the hours ahead, I do hope it's profitable. "MARKETPLACE AFRICA" next.

(COMMERCIAL BREAK)

ROBYN CURNOW, CNN HOST: You're watching MARKETPLACE AFRICA. I'm Robyn Curnow. Now they're called repats, expatriates who've left the continent and are now returning home. Some African countries are experiencing double-digit growth.

There's a perception that there are more opportunities here in Africa than elsewhere. So Western educated Africans are turning their backs on cash-strapped European countries to bring their expertise, their experiences and their degrees back home. Nkepile Mabuse now reports from Nigeria.

NKEPILE MABUSE, CNN CORRESPONDENT: It's a far cry from the fancy offices of the big financial firms that employed him in Britain, but 33- year-old Joshua Egba's business degrees are proving more useful at home. He left Nigeria 10 years ago to further his studies in London.

JOSHUA EGBA, BUSINESS CONSULTANT: Things weren't really happening in Nigeria in about 2002. People were going to the U.K. for better opportunities.

MABUSE: Six years later, that picture changed completely when the global financial crisis, fear set in.

EGBA: Businesses are laying staff off. The government is laying staff off. So you're not safe. That's when I thought, well, I think, really, it's time for me to go home, because I'm hearing all these stories, all these success stories coming from Nigeria, coming from Africa.

MABUSE: Here, 2008 was a turnaround year. Government reforms boosted an economy that has continued to grow. In the past three years, the oil- rich West African nation has seen growth of more than 7 percent while Europe continues to shrink under the weight of austerity.

But many Nigerians lacked the skills needed to make their enterprises profitable.

EGBA: Like now, for instance, like for this one --

MABUSE: With his economics and international business degrees, Egba is helping entrepreneurs invest wisely and run their companies efficiently.

EGBA: In Nigeria, if you wanted to get into a business, it was just a question of what is the vogue business, what is reigning right now? What are people doing? Like for instance, somebody say well, right now, taxis, cab services are doing well.

I know you'd see somebody going off to buy two cabs and then putting them on the road without doing a proper business analysis. You don't have -- you don't know where your return on investment is. You don't know how long it's going to take you to pay back. So all of a sudden, I was giving advice on these types of things.

So people were receptive, and I've been pleasantly surprised, matter of fact, that people want to change the way that they do business.

Hello, good morning.

UNIDENTIFIED MALE: Morning.

EGBA: Yes, how are you doing now?

Yes, we just --

MABUSE: That change has faulted through to government. Nigeria's Central Bank has also called for assistance.

EGBA: I worked one of their departments to give them the training session on international financial (inaudible) standards, because one of the key criticisms that I know of in the Nigerian government is accountability.

Somebody's given money and he's not, at the end of the day, asked to account for exactly how that money was spent. We have a budget, but at the end of the day we don't have a budget reappraisal, so to speak.

MABUSE: Microbiologist Tunde Ogunrinde is another Nigerian trying to lift standards.

TUNDE OGUNRINDE, COO , CHICKEN REPUBLIC: Hey, how are you. You all right? How's it going?

MABUSE: He spent nearly 20 years in Europe, most of it working for Burger King, training and managing staff. Here, he says, it's all about changing mindset.

OGUNRINDE: I think a lot of it is just what is best practice, what does good look like. If you don't know what good looks like then, you know, you accept anything else.

MABUSE: Ogunrinde was recruited by an employment agency trying to entice the estimated 2 million Nigerians living in Europe to come back to Africa.

OGUNRINDE: Having worked in an industry which was already established in Europe, there was very little -- there was less career activity. I mean, you see what we're sitting in.

This is the effort of, you know, sitting with my M.D., who's very visionary, sitting with, say, architects, challenging each other and looking at the plans and looking at the designs and saying what works well in this environment, what materials are hardware in. That is -- that is exciting, when you're creating.

MABUSE: That competition at home is getting stiffer as established international brands expand aggressively into Africa. They, too, drawn by growing opportunities.

OGUNRINDE: There are lots of examples where foreign brands have gone in and they haven't been able to shift the local brand. And because there's an opportunity, there's a taste (inaudible), which, you know, we've established, but most importantly, really, you know, the battle is really around within the hearts and minds of customers.

MABUSE: Amidst this brain-gain boon, there are still millions more professionals in the Diaspora put off by the daily inconveniences of living here. Traffic, power cuts, corruption and a general struggle to get things done quickly.

OGUNRINDE: That is all set up OK.

MABUSE: Ogunrinde says he was lucky to return to a well-established and organization industry, but that more needs to be done to make it more appealing for doctors, nurses and lecturers that are so badly needed in the country to come back.

OGUNRINDE: The government is really put in more of an enabling environment for those industries to lure back, not just people like yourself in the retail, hospitality industry, but also in those industries.

MABUSE: In Nigeria, they call them repats.

EGBA: There's about 15.

MABUSE: They speak a little differently, but their passion for their country is unquestionable, even after decades away, to them there's still nothing like home.

OGUNRINDE: Absolutely. I'm good to rice and beans, you know, the yellow rice and some of the meals we do, absolutely. Nothing like home.

(END VIDEO CLIP)

CURNOW: As African returnees flee the European financial crisis, we speak to the CEO of a recruitment agency working between London and Nigeria, and ask him, what's changed in the jobs market?

(COMMERCIAL BREAK)

CURNOW: It is a bit difficult to try and lure Europe's top graduates to come and work here in Africa, but that all changed as the CEO of the recruitment agency, Find a Job in Africa, after the collapse of Lehman Brothers and the European financial crisis. (Inaudible) "Face Time" with (inaudible) Funto Akinkugbe, and he tells us what his agency is capitalizing on Africa's increasingly attractive jobs market.

(BEGIN VIDEO CLIP)

JIM BOULDEN, CNN CORRESPONDENT: I think for me the most interesting part to start with is how this all came about, the recruiting of people here to go to Africa. What was the spark?

FUNTO AKINKUGBE, MANAGING DIRECTOR., FINDAJOBINAFRICA.COM: The spark, I wanted to go back. My colleague wanted to go back. That's (inaudible) we started this together. That started way (inaudible) 2000, the 2000 to 2001, 2002, wanted to go back to Africa.

And we said, we looked around at all the platforms out there to actually showcase these opportunities in African countries. So we said, you know what, let's create something that would serve this, the African markets. So we came up with Find a Job in Africa.

BOULDEN: But you couldn't have done this if there hadn't been a stability returning to the region. I mean, you could have the best ideas in the world, but if people don't want to go, so what changed in sub- Saharan Africa to allow you to do?

AKINKUGBE: What the political landscape started changing. (Inaudible) Nigeria, whereby for the first time in a long time you had a democratically elected government in power. And essentially in addition to that as well, know how to stretch whereby telecoms (ph) was actually becoming a major play in African countries. (Inaudible) to build was (inaudible) issue.

Then you have enough people locally who can actually want to provide the skill set. So through the creation of a portal, we were able to assist for a lot of the telecommunications organization to be able to attract skills to opportunities that they have in African countries (inaudible).

(CROSSTALK)

BOULDEN: Was it easy to explain that to people here in Europe to recruit, to go to Africa? Or was that as big of a selling job as it was to the African companies?

AKINKUGBE: It actually -- well, it was actually easier for the African companies, because the African companies already had a global mentality. They wanted to recruit. They wanted to compete. But attracting the skill sets was (inaudible) issue, because saying to someone, hey, guess what, jump on the next plane to Africa wasn't exactly exciting.

But saying that, at the end of the day, most of these organizations were able to wave carrots in front of the potential recruit candidates. It was -- the packages that we're putting together to attract good candidates was very attractive.

BOULDEN: How soon do you think it'll be in years when people that are working in Africa will then go the opposite direction? In other words, there will be so much skill set there that they'll be wanted elsewhere?

AKINKUGBE: It's already happening. You already have that, because if a skill set (inaudible) sought after, which is the case right now, the skill's already moving around, you have a situation whereby I do have friends who were initially working in an African country, say for example, they work in Uganda, Sierra Leone, they're now working in Iran.

And some of them actually working in England. That just shows you the trend in terms of what is now happening.

BOULDEN: And where's the trend going now, do you think? I mean, should we just stop looking at it and saying Africa this or Africa that or Europe this, it's all global and it should be that people are moving around very quickly?

AKINKUGBE: I would say yes and no to a certain extent. I think because of the current situation that you have in terms of you know how the level playing field as the moment across all (inaudible) globally, Africa still need a couple of handicaps set off with to allow it to be able to catch up to a certain extent.

Obviously in terms of being able to catch up, rests on the shoulders of the government providing more -- what I would say is a competitive environment, good governance, for example, infrastructure, and all the things that government is (inaudible) put in place for any kind of growth that would happen.

BOULDEN: It's fascinating to see that you're able to feel that things are stable enough in that region to be able to recruit people and bring people, and you yourself wanting to go back. That can change (inaudible). Or is it not going to change?

AKINKUGBE: Anything can change anywhere. Right now you have a situation globally that, economically speaking, it's precarious. To a certain extent, with good governance, Africa would do well. It all hinges on the governance. The leaders themselves actually, we need to create an enabling environment whereby business can actually thrive.

(END VIDEO CLIP)

CURNOW: Well, that's it for this week's show. I'm Robyn Curnow. You can find us online at CNN.com/MarketplaceAfrica. Till next week, goodbye.

END