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Quest Means Business

Uneven Recovery, Lagarde Inquiry; Italian Presidential Vote

Aired April 18, 2013 - 14:15   ET

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

NINA DOS SANTOS, HOST: Let's just break away from our sister network, there, CNN USA, to bring you more. We'll of course continue to watch the events in Texas and in Boston and bring you any breaking news updates as we get them, of course.

But now, let's bring you an update on the business news later on after the break, because QUEST MEANS BUSINESS will continue shortly after this.

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DOS SANTOS: Welcome back. The world needs to become a full-speed economy, according to the head of the International Monetary Fund. Christine Lagarde was speaking at the IMF's spring meeting in Washington, and she said that while the economic world order no longer looks as dangerous as it did before, what really matters, sustained growth in jobs, is still proving to be rather elusive these days.

Maggie Law -- Maggie Lake is in New York and has been listening in to what she's had to say so far. First of all, Maggie, there's some mixed messages coming out of the IMF, aren't there? On the one hand, they're involved in the Troika, preaching austerity to people, but they're also saying, well, things -- growth is proving to be difficult for the average person on the street.

MAGGIE LAKE, CNN INTERNATIONAL BUSINESS CORRESPONDENT: Yes, and I think it's very maddening to some people, Nina, who've been watching this, because it does seem like they're trying to have it both ways, or perhaps not being as sort of forthcoming, maybe, about what should be a change in policy.

But they are trying to sort of walk the line and be a diplomat, I guess, between the many interests out there. And you're right, to say that the sort of -- it hasn't trickled down to the economy and helped the job situation is, you can say, an understatement, given some of the unemployment rates we're seeing in places like Spain and Greece and the dire situation in places like Greece.

But Lagarde today, sort of spreading it out and this lackluster recovery is pretty much everywhere when you look at developed countries. There wasn't any place that she didn't critique and say listen, we've got to do better.

She did praise Japan for some of the efforts they're taking in terms of the Bank of Japan, but said that deeper reform is needed, but urged the US and the UK to back off the austerity, the short-term austerity, that they are pursuing.

But they're sort of careful to say yes, we still need long-term austerity, but short-term -- but interestingly, when it came to Europe, and this is where that paradox really is, she said that of all the central banks, the ECB has the greatest room to ease more.

Of course, they are also part of that Troika that's been pushing this austerity. So, I think that they would probably say the difference is the short-term austerity seems to be taking too much of a toll, and that they still need to stay on the path for long-term austerity.

But you can imagine some of the people sitting in some of these locations having to swallow that in Southern Europe are very confused by the messages coming out from Christine Lagarde today. And no doubt, the ministers representing them at these meetings will be making that loud and clear to her as they continue tomorrow and into the weekend.

DOS SANTOS: Yes, I'm sure they will, Maggie. Christine Lagarde's also in focus, as well, because of the specter of an investigation in France based on her settling an affair with a French businessman, a financial litigation that they had with a French bank. Tell us about how that is, to a certain extent, undermining her tenure.

LAKE: Absolutely. Well, for one thing, it is certainly dominating the headlines, today, Nina, if you look and you're reading about what's going at the IMF, you would expect to see all sorts of headlines about what she has to say about growth and about the different policies. Instead, everything that you're seeing is exactly this, that she may be summoned to court, or she is going to be summoned to court.

Lagarde taking it in stride. It did come up at the press conference today, she was asked about it very directly, and she said she's looking forward to clearing her name. Have a listen to exactly what she said.

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CHRISTINE LAGARDE, MANAGING DIRECTOR, INTERNATIONAL MONETARY FUND: There is nothing new under the sun, and ever since 2011, I had known very well that I would be heard by the investigative -- investigating commission of the Cour de Justice.

So, a date has been set, it will be at the end of May, and I'll be very happy to travel for a couple of days to Paris, but it's not going to change my focus, my attention, and my enthusiasm for doing the work that I do. And I -- my lawyer has issued a statement, so for any further and additional information, I would really refer you to that. But I look forward to it.

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LAKE: So, there you go. That's the official statement. I think until something more comes of it, It is -- if nothing more comes after the fact that she appears in court and there's no further investigation into her, then that will probably be the end of it.

And I don't think it's going to damage her credibility at IMF, which a lot of people pointed out, seems to be strengthened under her and what's been going on in their central role in the affairs in Europe.

However, if it does turn into something more, that along with some of the frustration about these mixed messages, Nina, is going to really set an interesting stage. Her job is to come in there and help sort of reestablish the IMF after the difficulties of the past. So, if we're going back down that road, that's not good news to these multi-nationals.

DOS SANTOS: Yes, absolutely. L'affaire Tapie, they call it, don't they? The issue involving Bernard Tapie over there in Paris. Thank you very much for that, Maggie Lake joining us from New York with more.

As you may have noticed, Richard of course, is away tonight. As such, I'm sitting in the hot seat. He's actually traveling to India on -- which of course is one of the emerging economies that's at the top rung of Christine Lagarde's so-called three-speed world.

Tomorrow, he'll be presenting QUEST MEANS BUSINESS live from New Delhi and will be bringing, of course, in-depth looks at the progress this dynamic developing economy is making these days, so you'll want to tune in for that. QUEST MEANS BUSINESS, live from New Delhi, India, this time tomorrow.

Well, after the break, we'll have more on the political gridlock in Italy. We'll be live in Rome for you. Stay with us.

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DOS SANTOS: Italian politicians have failed to choose a new president in two rounds of voting. The center-left candidate, Franco Marini, fell well short of the two-thirds majority that he needed to win, despite having the support of Italy's two largest political parties.

A third vote is now expected to take place tomorrow morning. Ben Wedeman joins us now, live from Rome with more on what this means. Ben, the president's role in Italy is largely ceremonial, isn't it? It's not as important as, say, a prime minister. But it is crucial to have one during times of political vacuum like this?

BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Certainly. Let's keep in mind, Nina, that general elections took place almost two months ago, and Italy still does not have a proper government, merely a caretaker government.

Now, the president's job beyond ceremonial activities, is to appoint somebody to form a government, a prime minister, and also to call for early elections. So, at this point in this political vacuum, that position is critical.

Now, there were two votes today for the president, but they were inconclusive. The one in the afternoon saw more than 400 members of the lower and upper houses of the Italian parliament submitting blank ballots, and several of the members of parliament basically making a joke out of the whole affair.

One of them voted for a famous male porno star, one voted for Benito Mussolini, and another voted for Sophia Loren, so we'll see if the fun and games continue into tomorrow with some sort of a result.

DOS SANTOS: OK, Ben Wedeman joining us live from Rome, thanks ever so much for bringing us the latest there.

We're going to be heading to Wall Street next where stocks are in the red and Apple seems to be fading fast.

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DOS SANTOS: Hello and welcome back. I'm Nina Dos Santos, this is CNN, let's bring you a quick check of the world news headlines.

In Texas, rescue teams are sifting through the wreckage of a town left devastated by a massive explosion at a fertilizer plant. Police say that between 5 and 15 people may have died as a result, and over 160 people have been injured in the town of West near Waco, Texas.

The state governor has declared McLennan County a disaster area at present. At first -- at the moment, there's no sign yet on what has exactly caused the blast.

The US president is visiting those injured in Monday's bombings in Boston Massachusetts General Hospital. Earlier at a memorial service that took place today, Barack Obama praised the city's people, saying that they showed the world, quote, "In the face of evil, Americans will lift up what's good." Monday's attacks killed three people and injured more than 180 others. Investigators are still searching for suspects at present.

A spokesman for Pervez Musharraf says that he's been placed under house arrest. A Pakistani court earlier denied the former president's request for bail extension. That's related to a case involving the detention of judges back in 2007. Musharraf's lawyers say that they will appeal that decision.

And finally, Greek police are hunting three people -- three farm foremen after 29 migrant workers were shot and injured during a protest. At least one supervisor is alleged to have opened fire on a crowd of around about 200 strawberry pickers. They were demanding wages that they say hadn't been paid in about six months.

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DOS SANTOS: Welcome back. You're watching QUEST MEANS BUSINESS. Now Twitter is getting tuneful these days. Today, obviously the social media company launched a new music app and website that taps into your own social network. The service looks at which musicians you follow and also recommends other bands or singers that you might like to listen to.

It can also tell you what your friends are listening to and which artists are trending these days. Dangerous stuff.

Now Nokia shares lost more than 8 percent in Helsinki in today's session, just another technology company in focus today. You can see here the moment that investors started selling the stock pretty heavily as you can see around about 10:30 to 11:00 am local time. This is the point where Nokia actually released its first quarter earnings statement.

And in it, it said this, it made a net loss of some $355 million in the last quarter, despite increasing sales as its Lumia smartphone (inaudible) product many people have been hoping to rival some of Apple's own smartphones.

So let's have a look at Apple shares and how they're doing. They're falling for a second straight session, as you can see. They're down around about 23/4 of 1 percent at the moment. They're actually trading at their lowest level since all the way back in December 2011.

Yesterday this stock actually split to around about $400 apiece, as you can see. It's now below that by around about 9 cents, allowing ExxonMobil to reclaim its coveted title as the world's most valuable company on market capitalization or by market value.

Now let's find out what the rest of Wall Street is doing these days in this Thursday session. We seem to have gotten over the hump of the week, some might say. Alison Kosik joins us now live from the New York Stock Exchange.

And, Alison, it seems though we've had a bit of a shift in momentum.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: There really has been. I mean, you look at how the week has progressed so far, Nina. It's really been choppy with these triple-digit moves for the Dow the first three trading days of the week, these wild swings. It does feel like there's a change in momentum taking place.

Today, investors are digging into a handful of corporate earnings reports, including from Morgan Stanley. It's the last of the big banks to post results. Earnings (inaudible) estimates, rather, but investors are worried about a drop in sales from traditional trading products, like bonds and commodities. It rounds out a pretty lackluster quarter for the big banks, though.

Most of the earnings were mixed at best with the exception of Citigroup. Morgan Stanley shares right now are down about 41/2 percent. Other big banks stayed lower as well.

On (inaudible) side of things, Verizon shares, they're up more than 3 percent, even though it also missed the mark on sales. But it beat on profit, reporting a 15 percent increase from a year ago. It also added 650,000 customers and lost only 1 percent of its existing customers.

Also one more sector we are watching, now that the Senate here in the U.S. defeated a bill to require universal background checks before buying a gun, that's causing a bit of a selloff in that space. They're watching Smith & Wesson shares. Actually, they've turned higher, about 11/2 percent higher. (Inaudible) Ruger shares are lower, about a half a percent.

Cabela's is really getting hit hard. It's one of the big gun retailers. It's falling more than 4 percent.

And the reason, Nina, it's selling off so much is because these universal background checks would have actually been a big positive for Cabela's because it would have kind of leveled the playing field about these background checks. But now that issue is on hold. Investors are at least selling that stock in a big way, Nina.

DOS SANTOS: Thanks ever so much for that, Alison Kosik there with a full roundup of the day's action on Wall Street.

Well, speaking of gun control, there was some pretty strong words there from the U.S. President Barack Obama earlier today. And gun law reform advocates after the Senate, as Alison was just mentioning, rejected that measure to expand background checks for gun sales.

White House correspondent Brianna Keilar has more now on the vote, the reaction and why the measure actually failed.

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BRIANNA KEILAR, CNN CORRESPONDENT (voice-over): President Obama angrily called out Congress for failing to expand background checks on gun purchases.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: All in all, this was a pretty shameful day for Washington.

KEILAR (voice-over): It was an emotional speech, delivered with families whose loved ones were killed in the Newtown massacre and shooting victim Gabby Giffords looking on.

OBAMA: It came down to politics -- the worry that that vocal minority of gun owners would come after them in future elections. And so they caved to the pressure. And they started looking for an excuse, any excuse, to vote no.

KEILAR (voice-over): The normally staid Senate chamber erupted as Republicans blocked the key amendment to the gun bill.

UNIDENTIFIED FEMALE: (Inaudible).

JOE BIDEN, VICE PRESIDENT OF THE UNITED STATES: Be order in the Senate. The gallery will refrain from any demonstration or comments.

KEILAR (voice-over): Despite broad public support for expanded gun background checks and personal pleasure by Sandy Hook families, the bipartisan compromise failed. One conservative senator criticized the White House for having the families of the victims lobby for the legislation.

SEN. RAND PAUL (R), KY: In some cases, the president has used them as props and that disappoints me.

OBAMA: Are they serious? Do we really think that thousands of families whose lives have been shattered by gun violence don't have a right to weigh in on this issue? Do we think their emotions, their loss is not relevant to this debate?

MARK BARDEN, SANDY HOOK PARENT: Our hearts are broken. Our spirit is not.

KEILAR (voice-over): The president and Sandy Hook families vowed the fight is not over -- Brianna Keilar, CNN, Washington.

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DOS SANTOS: U.S. major indices were mostly flat in today's session. It was actually the fifth straight session of losses for the FTSE 100 over there, as you can see. But only down a tenth of 1 percent, also the Xetra DAX fell losing by quite a bit more. And it was the fifth straight session for that one, too.

Most banking shares fared particularly badly. RBS and Societe Generale each losing more than 1 percent, but as I was saying, the CAC 40 completely flat, the FTSE 100 down just only around about a tenth of 1 percent, despite the fact that we also had the major insurance company, Aviva PLC listed in the London market, saying that it's going to have to cut about 6 percent of its total staff.

Well, lawmakers in Germany have voted overwhelmingly in favor of a bailout package for Cyprus. This comprehensive package is worth about $13 billion. To receive the rescue loans from the E.U. and the IMF, Cyprus will have to raise an additional $17 billion from its own resources over the next three years to come.

Now that's actually more than was initially expected. A portion of those funds will be coming from bank restructuring. But it's still unclear now how Cyprus will raise the full amount.

Up next, the book -- from the book to the e-reader and now (inaudible) HD reader, it seems to get better by the day, doesn't it, we'll show you the latest gadget that's going head-to-head with Amazon's Kindle.

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DOS SANTOS: Hello and welcome back. Well, the e-reader has peaked, according to the research company I Supply and the list think that sales of e-readers actually fell by more than a third last year to around about 15 million units, and that's because people are increasingly instead using their tablets or phones to read ebooks. Still the e-reading story, it seems, isn't completely over yet.

Let me tell you why. Next week, this company, Kobo, will be releasing what it says is its first HD e-reader. This offering is actually going to be giving, it says, customers the closest experience to print on paper -- interesting stuff.

Well, the Kobo Aura HD has 1.5 million pixels -- that's about twice as many as in Amazon's top range Kindle. So there you have it, something to wait for, obviously if it's your birthday out there.

Well, Kobo CEO Mike Serbinis told our very own Jim Boulden that the Aura HD is designed with the most ardent readers in mind.

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MIKE SERBINIS, CEO, KOBO: We've created the Kobo Aura HD for the most voracious readers, the most passionate readers, those people that have hundreds of books in their library and read daily, read several books a week. Not everybody's one of those readers, as much as I wish that were to be true.

So we're building this in limited production.

JIM BOULDEN, CNN CORRESPONDENT: So a bit more expensive than what we used to see from Kobo. But you'll still be doing these for the cheaper side of the market, the less expensive side of the market as well?

SERBINIS: Yes, we've got a couple of family of a number of products, the Kobo Glow, the Kobo Mini, which is a great entry-level device and, of course, we also have our tablet.

BOULDEN: We talk about things being lighter and longer battery life as well. Is that what we're going to see with the Aura as well?

SERBINIS: So this device basically has more of everything. It's got a higher resolution screen . It's the first HD screen for an e-reader, so it's got the closest thing to reading real print on paper. It's got more battery life -- two months on a single charge. It's got more storage, double the storage. You can store thousands of books.

BOULDEN: Obviously the market leader here, we're talking about, is Amazon with Kindle. How do you go against that? Is it about the luxury end of this? Is it about what people can get on offer, not just books, from your app store, as it were?

SERBINIS: So Kobo started three years ago as a bunch of book lovers. We came out of a bookstore in Canada and we built this business for people like us, people that love to read. And one of our key advantages is how we go to market.

BOULDEN: In the U.K., it's a company called W.H. Smith (ph), which is obviously the biggest bookseller. So is that the kind of thing you do in other markets as well? Is it some of the -- of an equal stature?

SERBINIS: Exactly. We aim to work with the leading booksellers in every market. But we also work with booksellers big and small.

BOULDEN: Of course, Amazon isn't just about books. So you -- are you going to survive just selling books to people digitally?

SERBINIS: Well, one of the things that we're really excited about that we just announced at the London Book Fair is expanding our offering for our book loving customers with magazines, with kids' content, kids' ebooks, apps and games and kids' comics and the comics and graphic novels for young adults. So broadening the content offering is pretty key for us.

BOULDEN: I know how tablets are soaring. But what about for e- readers?

SERBINIS: So Kobo tripled year-over-year last December. So we saw substantial growth. And it came from existing markets as well as emerging markets. But overall, we think of that as a -- as a 25-year transformation that's going on. And you know, pick your country; we're really still in the early innings of that transformation.

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DOS SANTOS: Jim Boulden there to file those reading glasses forever if he manages to get his hands on one of those Kindle -- excuse me -- Kobo HDs, which could rival the Amazon Kindle.

Let's turn our attention towards the weather and the big picture across Europe. Jenny Harrison is standing at the CNN Weather Center.

You promising me any sunshine, Jenny?

JENNY HARRISON, CNN METEOROLOGIST: Oh, I'd better not make any promises about that, Nina, a bit rash, I think, at this stage of the game. It's cooled off, hasn't it, for you in London because we've seen a bit of a front come through, very windy conditions, too, for you although the winds actually have eased just a little bit in the last hour.

You're seeing, of course, these April showers. They're all taking aim at the U.K. But we've also seen one or two showers across areas such as Germany in the last few hours. But look at the temperatures this Thursday. They are staggering, it has to be said.

Look at this, Prague, 26 degrees Celsius. The average for April is 13 degrees. So 13 degrees above average, double the average. And in fact, that 26 is 3 degrees above the average for summer. So it really is very warm indeed. I mean, it's just gone from one extreme to the other. We were talking about how cold it has been and all of a sudden, it is just way above the average.

So we've got this really warm flow coming in from the south and the southwest. At the same time, they've got all that rain still coming in across much of the northwest, which is the U.K., as you can see, particularly heavy rain across parts of Scotland again in the last few hours. The winds are still blustery, but as I say, they've come down noticeably in just the last hour.

We've got some strong winds in Dublin and Plymouth right now. But they will ease off as that system continues to work its way through. But once it does, already the temperatures have dropped slightly in Paris and London. And in fact eventually that cooler air, it will spread across much of central Europe as well.

This little low here, that'll produce more rain and maybe even some snow across the mountain, as you can see, but still clinging along to some of that early sort of summer heat across southern regions of Spain and Portugal, the central Med and also across the southeast.

But you can see that cold air as we go into the start of the weekend. It really will spread across many of those areas. But there's that rain, that snow, again, across the mountains. And there are your temperatures for the end of the week, 17 in Vienna, very nice 23 in Rome, Nina.

DOS SANTOS: Thanks ever so much, Jenny Harrison there from the CNN Weather Center.

And that's it for this edition of QUEST MEANS BUSINESS. Thanks for joining me. I'm Nina dos Santos. I'll be back in just a moment for time with MARKETPLACE EUROPE from Lisbon, Portugal. That's next here on CNN.

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DOS SANTOS: Hello and welcome to MARKETPLACE EUROPE from Lisbon, the capital of Portugal. I'm Nina dos Santos. Well, last year, this very parliament building was surrounded by protesters, voicing their displeasure at the government's austerity measures. Harsh tax hikes and swinging spending cuts may have followed.

But regardless of all of this, the Portuguese economy is expected to plunge deeper into recession this year. In this week's program, we look at what businesses are doing to turn the tide.

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DOS SANTOS (voice-over): Coming up, how the textile industry is weaving its way out of the crisis.

And the CEO of Portugal's national airline, TAP, calls for a single European sky.

FERNANDO PINTO, CEO, TAP: We've not been able to make really Europe a single Europe in terms of skies. It's being on the ground because as you go up, underneath the sky, Europe, it's not any more a single Europe.

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DOS SANTOS: For years, lace like this represented the very fabric of this country's economy. But acute competition from China coupled with weak domestic demand has left this industry in something of a tailspin. After a hefty and painful restructuring, Portugal's textile industry might just be turning a corner. As Isa Soares found out when she traveled to Guimaraes in the north of the country.

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ISA SOARES, CNN CORRESPONDENT (voice-over): Broken windows, closed gates, flaking paint -- the writing's all over the wall. The remnants of a day of protest telling the tale of the economic demise of the many textile factories in Guimaraes. Just down the road, family-owned factory Lameirinho is still standing. As workers sew duvets and bedsheets, I asked its president how the crisis has affected his business.

ALBANO COELHO LIMA, PRESIDENT, LAMEIRINHO (through translator): With sacrifices. But we've tried to overcome it. Thankfully, we have a good financial director. That's helped us. And we've been able to counterbalance currency exchanges which has helped us a lot. But yes, it's been difficult. I mean, when Europe created the euro, we never thought we'd have to fight to survive.

SOARES (voice-over): It has survived. But the economic bruises are still deeply imprinted here.

SOARES: This company was once buzzing with people. Now it's mostly an automated process. The economic crisis here in Portugal has meant the company has had to do some severe restructuring. In the last 10 years, it has shed 700 jobs. That's half of its workforce.

SOARES (voice-over): In the last year alone, 100 jobs have been cut as credit died up and domestic demand fell. That hardship has bred endurance and perseverance. I asked Albano Coelho Lima what he's been doing to survive.

LIMA (through translator): High-quality cloth, very fine threads. When I talk about a thread size 10 or size 8, that's a thick thread. When I talk about a thread size 120, that's finer than one strand of hair.

SOARES (voice-over): Innovation from machinery to material such as iron-free cloth and mosquito repellent sheets have made Lameirinho more attractive abroad. Today he says 90 percent of output is exported to clients such as (inaudible), Ralph Lauren and Agatha Ruiz de la Prada.

PAULO VAZ, GENERAL DIRECTOR, PORTUGUESE TEXTILE AND CLOTHING ASSOCIATION: A lot of the international customers that used to work with Portugal 20 years ago are getting back.

SOARES: Why is that?

VAZ: The textile business changed a lot in the past five years. The -- China is not the El Dorado that it was in the past.

SOARES (voice-over): Beating China has meant listening and responding quicker to the clients' needs.

LIMA (through translator): The oldest place today at 5 o'clock it will be in Madrid by midday and in Barcelona in 48 hours.

SOARES (voice-over): It's this integrated production chain that has helped Portugal's textile industry weave its way out of the crisis. In the last three years, exports have jumped 18 percent. Turnover has increased by 13 percent. But employment has fallen some 15 percent.

VAZ: We can -- we can say that since the bailout probably we lose around 15,000 employees in the -- in our -- in our (inaudible).

SOARES (voice-over): Having worked here since he was 11, Albano Coelho Lima is proud of what he's achieved and promises never to turn his back on this crisis -- fighting words from a president who has made this the fabric of his business.

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DOS SANTOS: Isa Soares there with the nimble fingers weaving some magic back into the textile industry.

Well, coming up, I found out what (inaudible) horizon for the national airline as I speak with the CEO of TAP. That's after the break.

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DOS SANTOS: Hello and welcome back to MARKETPLACE EUROPE from Lisbon. The crisis in Portugal has forced its leaders to sell off some of the country's crown jewels as part of its 78 billion euro bailout.

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DOS SANTOS (voice-over): The privatization process for the country's national carrier TAP (inaudible) last year but it's expected to resume in 2013. Finding a buyer may continue to prove challenging. TAP's core business is made profits in the last two years helped in part by increasing passenger numbers. The airline carried over 10 million passengers last year to 75 destinations in 35 countries.

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PINTO: We are not bigger. So in order to survive you have to have a niche. And that's what we found, our niche is this: we have (inaudible) we serve a very important market, a gross market where I would say two gross markets, the Latin America and the African market. So in order to survive in these days you have to be very carefully costs.

And we are number one in costs. You have to have fewer area of operation well defined. And you have to be within an alliance. And that's what we do.

DOS SANTOS: Brussels has made itself very unpopular with the airline industry of late with all sorts of carbon taxes, et cetera. Your thoughts on that regulation?

PINTO: Yes. What we feel as an European airline is that we've been overregulated. OK? We're used to regulation because all the safety regulations of course we follow by the rule. It has to be like this and that's the way that most of the world is and Europeans like that.

But Europe went to other sides in terms of regulation and in the areas where we would like Europe to be very active, which is, let's say, the single European sky, that's been very slow. We've -- we are not -- we've not been able to make really Europe a single Europe in terms of skies. It's been on the ground because as you go up, underneath the sky, you're (inaudible).

It's not any more a single Europe. We fly in Europe. We have a difficult environment now. And we have difficult regulations to compete against the world. And that's why we're talking about a field that is equal to everybody, OK. It's important.

DOS SANTOS: And obviously these regulations have come in just at a time when obviously the airline industry, especially in Europe, is suffering.

PINTO: Yes. We are really, let's say, the economy is the most important regulation for us. If it goes up, we go up; if it goes down, we go down. So that's where we are attracted to. And I would say if we talk about the economy indicators of countries, we will be saying that maybe we grow twice as much as the economy grows.

But we also lose and decrease twice as much as the economy. So we are very sensitive to that. So in that situation, like this, I would say also the regulators have to be very careful not to take too much from the airlines.

DOS SANTOS: How worried are you about the business sentiment here?

PINTO: We are very (inaudible) in terms of Europe. The -- what we need more and more is that people invest in (inaudible) in Europe. And things like what happened in the Cyprus really, really concerns us because as we are running an airline, we want people to trust an airline.

The same we would want to trust in the air where we operate and Europe is very important. We would like more and more investors to be making this area grow up. So in a situation like this, yes, it's a big concern.

DOS SANTOS: Would you say that we're not seeing the policy response in leadership from the European political leaders that we would need to raise sentiment, particularly in recipient bailout countries like Portugal?

PINTO: Yes. Our biggest concern here is unemployment, that is what we really, really concerned. We're very important to Portugal. We are the biggest exporter in Portugal. It's not normal for an airline to be that. But we are the biggest exporter. We are one of the biggest employers.

But, of course, as I said, we depend on the economy here. We are very concerned when we see so many people coming down now, coming out of jobs here. So what we see that we will be (inaudible) very soon is a policy for development. It is improving. The efficiency (ph) of the country, no doubt about it, but now we need to start growing.

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DOS SANTOS: Fernando Pinto there, the CEO of TAP Portugal who, just like these explorers hundreds of years ago, is looking beyond familiar shores for new growth markets.

Well, that's it for this edition of MARKETPLACE EUROPE. Join us again next week. But in the meantime, from Lisbon, it's goodbye and thanks for watching.

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