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Quest Means Business
Greek Officials Reveal Debt Plan; Greeks Rally to Support Government; Germany Reacts to Greek Plan; Greece Holds Debt Talks With EU Leaders; European Stocks Fall; US Stocks React to Greek Debt Talks; High- Stakes Ukraine Peace Talks; Greek PM Says Sanctions Counterproductive; Greece and Russia Reinforce Ties; Spain Looks to Next Election
Aired February 11, 2015 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(NEW YORK STOCK EXCHANGE CLOSING BELL)
RICHARD QUEST, HOST: Opening bell is ringing. A mall loss of about 10 points for the Dow. It's just about time to hit the gavel. Three hits
of the gavel to bring trading to a close on Wednesday, it's the 11th of February.
Tonight, the plan is on the table. Greece is presenting its funding proposals to Brussels. The question is, are the eurogroup listening?
Also, crucial peace talks for Ukraine. They're underway this hour. We'll be in Minsk, where the negotiations are at the very highest levels.
And the mayor of London is with us tonight. He tells me there's no good outcome for Europe's economic crisis.
I'm Richard Quest. I mean business.
Good evening. There are key meetings taking place around the world that will have major importance and developments for financial, economic,
and security, if you look at where they are taking place.
In Brussels, the eurogroup is meeting as Greece presents its economic plan to the eurozone for the first time. In Minsk at this hour, leaders of
the so-called Normandy format are trying to thrash out a cease-fire in Ukraine. And in Washington, President Barack Obama is calling on Congress
to authorize the use of military force in Iraq and Syria.
In their individual ways, the meetings in Brussels, in Minsk, in Washington, will have a major impact on how the economies, the military,
how the whole situation -- the geopolitical situation in the United States, Europe, and in Russia is likely to proceed in the weeks and months ahead.
We begin our coverage tonight in Brussels, where the Greek finance minister is revealing the specifics of his debt proposals for the first
time. The country is two weeks away from a possible bankruptcy.
The Greek prime minister has dug in, insisting there's no way back. There's the finance minister and others arriving. The core of it is the
renegotiation of the debt terms, and that's a little support from amongst the country's creditors.
(BEGIN VIDEO CLIP)
JEROEN DIJSSELBLOEM, PRESIDENT, EUROGROUP: As you know, we formally still have a program, so the first question is, how to move on with that
program. And I'm open to listen.
WOLFGANG SCHAEUBLE, GERMAN FINANCE MINISTER (through translator): It's not about drawing a red line. We have a program, which we will extend
as Greece has still to fulfill a part of it.
PIERRE MOSCOVICI, EUROPEAN COMMISSIONER FOR ECONOMIC AFFAIRS: It's about technique tonight. Tonight is about politics. The noble sense of
the art of politics is to understand each other and to enter into a work in process.
(END VIDEO CLIP)
QUEST: "The noble art of politics," is how Pierre Moscovici puts it there. Well, the Greek government is calling for major changes to the
terms of the bailout agreement with the Troika, which of course is the ECB, the European Commission, and the IMF.
One of the conditions that the Greeks are looking for, scrap 30 percent of the conditions and replace them with ten new reforms. The
Greeks are saying they will no longer work with this Troika of ECB, Euro Commission, and the IMF. Instead, they want to negotiate directly with the
creditor countries.
Just how much is involved? Well, Greece owes 323 billion euros in total. Three quarters of that amount of money goes to the ECB, the IMF,
and the eurozone creditors.
There's already been -- remember, there's already been a major renegotiation which involved huge losses for the private sector under the
private sector initiative that was negotiated in -- or renegotiated in 2012.
What is Greece also offering on the other side? It wants a bridge agreement to renegotiate the debt to last until September the 1st, because
after all, the current agreement expires on February the 28th.
How does Greece survive economically from the 28th of February until September? Elinda Labropoulou is in Athens, where thousands of people have
gathered for a rally in support of this stance. Jim Boulden is in Berlin. You have two direct opposite points of view, here.
Let's start with you, Elinda. The support for the Greek government as it puts forward its proposals and faces down the eurozone, is it still
strong?
ELINDA LABROPOULOU, JOURNALIST: Well, the support is still very strong. There was a big rally in Athens, about 15,000 people gathered
right behind me, right outside the parliament building. Most of them have gone home by now. But they were here for hours in support of their
government. They knew that the government had its own battle in Brussels while they were here.
And their message was one of European solidarity about basically a bailout that hasn't worked, where the conditions made people's lives
considerably worse than they were five years ago, where they were saying, well, we need a change, we need some breathing space, we need something
different. We voted for change. And this is something that we expect the Europeans to understand.
QUEST: Jim in Berlin. This is something that they expect them to understand, but Schaeuble's view is absolutely this is it, take it or leave
it. Is it your impression in Berlin that they are ready for the showdown?
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: Oh, I think they're ready for the showdown indeed. You get the sense here in Germany that the
program is in place, Greece can get the money if they stick to the program. It seems very simple, very straightforward to the people here.
And we've heard that again, as you've said, that there has to be an extension to the program, as far as the Germans are concerned. They don't
see any other way for Greece to do this. They keep asking, what is the plan? How are you going to do this? A bridge loan? Well, what does that
do? That just puts off the inevitable. You've got to do more than that. Richard?
QUEST: Elinda, the protesters in Athens, they see what the Germans are saying, but they're determined anyway. What are they telling you?
LABROPOULOU: Well, we've been talking to a lot of protesters. They're simply saying that extending the bailout would not make any sense
because the bailout hasn't worked. So, there's no point in doing more of the same because all it would do, it would add to Greece's debt.
I spoke to a lot of people, a lot of young people at the rally as well. That's the generation that has been the hardest hit by the crisis,
with unemployment reaching, in many cases, even 50 percent for that generation. And all of them seem to be backing the government. Well,
let's take a listen at what some of them said.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: I'm here for -- with these people to reclaim our lost dignity and self-evident rights.
UNIDENTIFIED MALE: If in Europe there's no room for the people to choose their way, then there is a problem for Europe, not for Greece.
(END VIDEO CLIP)
QUEST: Jim, how far does Berlin feel it is not only taking a stand on the moral hazard argument where Greece is concerned, but also is well aware
if ground is given, other countries will say what did we go through all this for? In other words, Syriza has to fail on this point.
BOULDEN: What they say constantly, not just here in Germany -- you hear it other European capitals as well, there's two things. Number one,
Greece already got a break, a huge break in 2012, as you pointed out.
Number two, the Greek economy was starting to show some growth. And they want to point out that just at the time that maybe it hit rock bottom,
that maybe we were seeing, of course we know, a primary surplus, that that was not the time to stop, that that was the time to continue on. There's a
lot of pain, but we did begin to see some of the gain.
QUEST: Jim's in Berlin, Elinda's in Athens, and these are the key dates. Today's talks involved the finance ministers, just the first in a
round of long negotiations. You've got the Greek and European leaders will meet for more talks over the next 24 hours. The eurogroup finance
officials will meet again on Monday.
Two days later, you have the ECB meeting together in Frankfurt. So, you've got the leaders' summit, the eurogroup, the ECB meeting, and of
course, the ECB also has to look at what help will be given by the National Bank of Greece.
Let's put this into some perspective. Joining me now is Morten Ostergaard, the Danish economy minister and the deputy prime minister. He
joins me from Copenhagen. Minister, thank you for joining us this evening.
The -- you heard our discussion there with Berlin and with Athens. The raw fact is, minister like you can't give too much ground to Syriza and
Greece, because then everybody else says what about us? Why did we take the pain?
MORTEN OSTERGAARD, DEPUTY PRIME MINISTER OF DENMARK: Well, Richard, it's even more profound than that. I think there is some weird sentiment
of reverse Stockholm syndrome here, where the people who actually extended the Greek people a hand when they were in dire straits are now receiving
all the criticism.
And I think we can see from many countries in Europe that the combination of strong fiscal responsibility, structural reforms, and also
investments out of that has actually worked. So, the Baltic countries, like Latvia, has turned a really sever recession into a plus and a growth.
And in Denmark, we have 5 percent unemployment, which is half of the EU average.
QUEST: Right.
OSTERGAARD: And we've done structural reforms of pension and tax systems. So, we need to make sure that we stay on this road that has
worked in many places and, as you said, we're just beginning to show some effect in Greece.
QUEST: So, Denmark, you're not eurozone, but you do, of course, peg to the euro, and therefore you have a more than vested interest in this.
Are you more -- and let's put this in blunt terms -- are you more in the Schaeuble camp or more in the Tsipras camp?
OSTERGAARD: We're definitely in the Schaeuble camp, if you want to put it that way. Because we not only think that it's fair, we also think
it's the right course for Europe, and we follow the same steps and even though our recession hasn't been as deep. And we're seeing the results in
the moment.
And therefore, I think it's important that we make sure that this doesn't go into a one-dimensional discussion where either you spend a lot
of money or you save a lot of money. This has to do with making reforms that make your country's economies viable and sustainable and have growth
that will last for many years.
And the problems that are really haunting the Greek society were not created by the eurozone, but were there in the first place, and then the
eurozone stepped in --
QUEST: Right.
OSTERGAARD: -- with some lending that helped them along the way.
QUEST: If you're right, and if everything we hear -- I mean, I know it's a negotiation and they are always difficult to begin with until, as
Boris Johnson, the mayor of London, who you may know, he says he'll tell us later in the program, it'll end up in one big euro fudge. It will all end
up with one big mess. If this is right, surely now is the moment to deal with it. And if that means Greece going, so be it.
OSTERGAARD: Well, I don't see it in anyone's interest that it would end like that. And of course, this is a discussion for the eurozone
countries, and we're not one of them. But my sense of it is that everybody has an interest in the European family staying together and also the
eurozone.
But on the other hand, of course, even though there's a new government in Greece, this doesn't mean that they don't have the same problems and the
same obligations that the old government did.
And therefore, I think there some work has to be done, but in the end, the obligations are the same, and the problems that the Greek government --
the new Greek government has to tackle are the same, essentially.
QUEST: Minister, thank you for joining us this evening from Copenhagen. I appreciate your time, sir, thank you.
Across Europe, stocks fell sharply. Investors were worried about the debt showdown. Greek stocks were down 4 percent in the market.
In the US, it was a showdown in Brussels, and there was also a fall and then a partial recovery. If you take a look at the market, we have
that little bit of a gain towards the late afternoon. But the losses, when all was said and done, was off just some 6 and change.
Apple pushed the NASDAQ higher. The company's value topped $700 billion for the first time. First time any country -- any country, it's
almost the GDP of many countries -- many companies has reached that.
The stakes couldn't be higher. We're going to be in Minsk after the break, where four world leaders could decide Ukraine's fate in a matter of
hours.
(COMMERCIAL BREAK)
QUEST: Talks taking place in Belarus right now could make the difference between peace and war in Ukraine and have a huge bearing on the
economies of Ukraine and Russia.
In Minsk, whilst we're talking, the French president Francois Hollande, Germany's chancellor Angela Merkel, and Ukraine's president Petro
Poroshenko are meeting, and they are all meeting, of course, with Vladimir Putin, trying to find a common ground. The stakes are frighteningly high.
The violence in eastern Ukraine is costing lives every day and putting the stability of the region at risk.
Before heading to the talks, President Poroshenko said it was the most important summit of his presidency so far.
(BEGIN VIDEO CLIP)
PETRO POROSHENKO, PRESIDENT OF UKRAINE (through translator): We are for peace, but if we need to hit a tee, we will hit a tee. If we need to
defend our land, we will do it to the end. And I think that, unfortunately, we need to be ready for both options.
(END VIDEO CLIP)
QUEST: Nic Robertson is with us from Minsk. We have much to go through, Nic, so let's go through the basics to begin with. Are the talks
still underway, and do we know if the framework of the agreement has been reached?
NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: The talks are underway. There were about two hours where the leaders were alone. They
came out for a photograph. There wasn't very much of a smile on Petro Poroshenko's face when he shook hands with Vladimir Putin. It appeared in
the photographs to be at the urging of Angela Merkel.
And then they went back in for meetings, broader meetings that involved their foreign ministers as well. Those talks are still underway,
we understand. But there is, we're hearing, they are getting closer to a deal. But until they have it, until the signatures are down, it's still
anyone's guess. But it does seem to be edging that direction, Richard.
QUEST: What would -- what does this deal look like, from your understanding? Bearing in mind that we had the Minsk agreement, which was
quite detailed in its requirement for pullback of troops, heavy artillery, a sort of a cease-fire. That failed, so what does the new deal contain?
ROBERTSON: From what we understand, the new deal would have some of the similar characteristics. That is fundamentally a cease-fire.
Fundamentally a pullback of heavy weapons. Fundamentally a buffer zone between the two military forces, the separatists and the government. A
wider buffer zone, we're led to believe.
But of course, the lines have moved significantly since the deal last year, so that would look different when you put it on a map. But the real
details of what failed to stick last time, because it clearly didn't happen in good faith last time, and we're not sure that it will, whatever happens
now, happen in good faith, we just don't know that.
But it's the -- type of autonomy that the separatists would get, how much autonomy, and how much autonomy that Petro Poroshenko and the
Ukrainian government can live with them having, and how much that heads toward a more united Ukraine in the future.
The border with Russia for the separatist region is also an issue. The Ukrainian government wants the OSCE, the European monitoring group, to
be controlling that border with Russia. It doesn't want separatists and Russia having open access across a border.
QUEST: Fundamentally, though, Angela Merkel said she couldn't live with herself if she hadn't done this last-ditch deal, as did Francois
Hollande. But fundamentally, this all relies on Vladimir Putin being willing to give up his own territorial ambitions in eastern Ukraine.
ROBERTSON: That and there may be more, too. There are plenty of analysts who will look at what's happening right now and say that if
Vladimir Putin is trying to drive a wedge between the United States and the Europeans, sort of redrawing the geopolitic of the world, if you will, as
you can say that's happening in the Middle East as well, part of it with his hand involved, then he's doing a good job.
Because the Europeans by and large don't want to arm the Ukrainian government if the talks go sour, but the United States does. There --
you'll find analysts as well that will tell you that Vladimir Putin is quite happy to sort of maybe stop right now and get a deal at the table now
but then shake the foundations of the deal in the future, put more troops, more weapons, more money into supporting the separatists.
Which he is doing at the moment, by all accounts. So there he would be sort of destabilizing Ukraine to his advantage. So, there are bigger
issues way beyond the deal that could be worked out here right now.
QUEST: Nic Robertson in Minsk. Come back to us, Nic, the moment there is more to report.
The wedge that may be being driven between the United States and Europe over Ukraine of course might also be driven within the European
Union and the eurozone. As the Greek government negotiates with its EU leaders, Russia, perhaps, has one of the keys to Greece's economic future.
(COMMERCIAL BREAK)
QUEST: Greece's foreign minister says EU sanctions on Russia are "counterproductive." The foreign minister was speaking after meeting the
Russian foreign minister, Sergey Lavrov, in Moscow earlier. That was pretty much what the Kremlin wanted to hear, especially from a European and
a eurozone country.
Lavrov praised Greece for its opposition to new sanctions and said Moscow would consider helping Greece financially if it asked for
assistance. Nothing like throwing another spanner in the works of the eurozone discussions and debate.
The new government in Greece has taken a different line on Russia to its predecessors, and if you look at why, you might start to understand, if
you look at some of the issues of interest to both countries.
First of all, you have the question of the sanctions on Greece, where, of course, Greece agreed to an EU plan. Greece agreed, along with
everybody else, to extend the current sanctions by six months.
But Greece now seems to be against any new sanctions, and the European Union has delayed decisions until Monday to give the Ukraine talks, which
are taking place, a chance for success.
On the question of financial aid, the Russian finance minister said that in January he would consider a request from Greece to help the
country. But Greece hasn't made any such request.
And then on the question of energy, Greece imports 90 percent of its natural gas from Russia. The new Russia-Turkish stream pipeline initiative
would go up to Greek borders and beyond. It would go south and beyond.
Finally, to the cultural ties. The cultural ties, of course, are deep, they are religious, and of course, the root of them is the Orthodox
Church. Nina Dos Santos with more.
(BEGIN VIDEOTAPE)
NINA DOS SANTOS, CNN BUSINESS CORRESPONDENT (voice-over): As Europe's leaders grapple with solving the unrest in Ukraine, a crisis within the
bloc's own borders could make Russia more relevant than ever as Greece threatens to turn to Moscow for money if Brussels won't yield.
PANOS KAMMENOS, GREEK DEFENSE MINISTER (through translator): What we want is a deal, but if there is no deal, and if we see that Germany remains
rigid and wants to blow apart Europe, then we have the obligation to go to Plan B. Plan B is to get funding from another source. It could be the
United States at best. It could be Russia, it could be China, or other countries.
DOS SANTOS: An austerity-weary country with a radical government looking east, not west, to refinance its 240 billion euros' worth of debt.
But how likely could a deal really be?
Russia is one of Greece's biggest trading partners, according to the IMF. With over $370 billion worth of foreign reserves, it also has plenty
to offer. But with a collapse in the ruble and a fall in oil price, the Kremlin may already have enough financial woes of its own.
ANDREW LILICO, EXECUTIVE DIRECTOR AND PRINCIPAL OF EUROPE ECONOMICS: The Russians made similar friendly noises towards the Icelanders at the
time of their crisis a few years ago and to the Cypriots a couple of years ago. But it didn't really come to anything. So -- although Greece is a
larger prize, I think that the Russians have enough troubles of their own just to deal with.
DOS SANTOS: One thing's for certain, Russia is keen to cultivate an ally at the heart of Europe at a time when the EU is mulling more sanctions
for the country's elite. When Greek prime minister Alexis Tsipras won the election, Vladimir Putin was quick to say that he was confident the two
countries could work together, a point echoed by both nations' foreign ministers.
SERGEY LAVROV, RUSSIAN FOREIGN MINISTER (through translator): If there are any requests from the Greek government, these requests will be
definitely looked into, as our finance minister has said.
DOS SANTOS: In a further boost to relations between Moscow and Athens, 2016 is set to become the Year of Greece in Russia, and the Year of
Russia in Greece. Still, if EU leaders don't soften their stance soon, that could turn out to be true in more ways than one.
Nina Dos Santos, CNN, London.
(END VIDEOTAPE)
QUEST: Just as in Greece, the economic crisis is having a big impact on the politics in Spain, where elections this year could very well
redefine Spain's place in the European Union. CNN's Al Goodman in Madrid has been finding out what people in the capital think.
(BEGIN VIDEOTAPE)
AL GOODMAN, CNN MADRID BUREAU CHIEF (voice-over): Oscar Juncker (ph) was laid off last year in Spain's economic crisis from this Coca-Cola
bottling plant near Madrid, which has stopped production. He is expecting a second child next month and is also expecting big changes this year in
elections in Spain, long ruled by two big parties, center-right and center- left.
"People are tired of the two big parties," he says. "Their policies are practically the same." Like in Greece, the economic crisis is pushing
politics in Spain. Polls show the new anti-austerity party, Podemos, or "We Can," could beat the incumbent conservatives and the opposition
socialists in national elections.
Juncker helps colleagues trying to prevent the Coke plant from being dismantled. He says he usually votes for a smaller Communist-led party,
but he's listening to Podemos.
"It's true they're saying what people want to hear," he says, "but the policies they'd implement, no one really knows." Closer still to Podemos
is Miguel Luna. His college history degree has led only to occasional jobs in catering or private tutoring. Many young Spaniards like him have moved
abroad to find work. He says Podemos could bring big changes.
"Besides breaking down the two-party dominance," he says, "Podemos could be a real alternative to build a different country and break with
this economic caste."
GOODMAN (on camera): There are signs Spain is pulling out of its economic crisis. Job creation and growth predictions this year around 2
percent. But more than 5 million people are still jobless, 23 percent, and the dominance of the two big parties is threatened even on the right.
GOODMAN (voice-over): But it's especially true on the left from Podemos. It's leader, Pablo Iglesias, a political science professor, is
drawing large crowds. Back at the Coke plant, the dispute is tied up in the courts. Juncker hopes for a ruling that would give him back his job.
"Many people are outraged and want change in this country and might tilt towards Podemos," he says. "The country won't be worse off under new
leadership," he adds. "There's nothing to lose," he says.
Al Goodman, CNN, Madrid.
(END VIDEOTAPE)
QUEST: Boris Johnson, the mayor of London, says Greece is likely to strike a deal and stay in the eurozone. And Mayor Johnson says that would
be the wrong solution. He'll explain why on QUEST MEANS BUSINESS next.
(RINGS BELL)
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There's more "Quest Means Business" in a moment. When the mayor of London Boris Johnson tells me Europe is
heading for a gluttonous tide of fudge over Greece. And we go from ultra- low costs to business class only. I'll be speaking with two airline chief execs who have their eyes on very different markets. Before all of that,
this is CNN and on this network the news always comes first.
The captain of the Italian cruise ship the Costa Concordia has been found guilty of manslaughter and sentenced to 16 years in prison.
Francesco Schettino was in charge of the ship when it hit rocks and sank off the Italian coast three years ago. Thirty-two people lost their lives
in the calamity.
At least 300 migrants are believed to have drowned after their boat sank in the Mediterranean. United Nations says the group left Libya on
Saturday and were at sea for days without food or water when a major storm hit. The Italian coast guard rescued more than 100 people. The search
continues for a fourth boat. More than 40,000 migrants have died trying to find better lives in Europe and the United States since 2000.
The leaders of Russia, Ukraine, Germany and France are holding meetings at the moment in Minsk as they try to find a peaceful end to
months of fighting in Ukraine. The violence has been escalating between the Ukrainian military and the pro-Russian separatists. Discussions are
likely to go well into the night.
Greece is revealing the specifics of the country's debt proposals at a meeting of the E.U. finance ministers in Brussels. The Greek government
wants to tear up the existing bailout deal. It's asking for six months of financing to allow time for new negotiations. So far, the plan has
received little support from Eurozone governments.
The mayor of London says there are no good options when it comes to Greece and the Eurozone. Boris Johnson believes that a deal will be struck
and Greece will stay in the Eurozone. But he calls that the wrong solution to the problem. The mayor is in the United States where he is promoting
trade links between the U.S. and the U.K. He's already met Hillary Clinton earlier today where they talked about ISIS and the threat of terrorism.
I spoke to Mayor Johnson and asked if the critics who say a Greek exit or the Grexit is inevitable, the Eurozone - like Alan Greenspan said last
week that the Eurozone's going to break up.
(BEGIN VIDEOCLIP)
BORIS JOHNSON, MAYOR OF LONDON: I think if Greece does leave, then there will be a much bigger unraveling of the Eurozone, and that's why
people are so desperate to try making it work and try and do a deal with Tsipra and Syriza.
The problem is of course that the more kind of slack they cut the Greeks, the more outraged - not just the Germans but in particular those
other Southern European countries - the Spanish and Portuguese and others - who have spent so many years telling their own populations that such
generosity from Brussels, from Berlin is impossible.
QUEST: So, with Schauble saying this is it, take it or leave it and the other side thinking `how far can we push it?' - it doesn't look good.
JOHNSON: I - more and more -
QUEST: You think it's going to be a fudge, don't you?
JOHNSON: I think - I think the way these things end up is with great sort of - a huge amount of - bloodshed or, you know, a huge amount of - a
huge amount of rhetoric and a huge amount of outgrow (ph) and then the whole place submerged in a gluttonous tide of fudge. And they'll do a
deal.
QUEST: Isn't that the worst option if they do a deal amongst the fudge of Europe?
JOHNSON: The - there's no good option here. There's no good option. This is a - yes, of course what is likely to happen. My view is that
Greece will stay in, but that will not be in my view a long-term healthy situation because the Greek population, the Greek economy is not
competitive in the Eurozone. They're being kept on a procrustean rack that is deeply unfair, humiliating, difficult. It's the wrong solution for
them, but I think that is where probably they will end up.
On the other hand, if they were to leave, then you'd have a big convulsion, a lot of uncertainty about the European economy and a lot of
knock-on effect (ph).
QUEST: The U.K. goes to the polls in a matter of months - less than 100 days -
JOHNSON: Eighty-five days.
QUEST: -- eighty-five -
JOHNSON: Eighty-four days.
QUEST: -- eighty-four days. And you're standing for Parliament.
JOHNSON: I am.
QUEST: The key issue though, besides the economy, is going to be whether or not the U.K. has a referendum -
JOHNSON: Yes.
QUEST: -- on staying in Europe.
JOHNSON: Yes. And Richard, we are going to have a referendum - it'll be profoundly -
QUEST: No, you'll only have a referendum if your party wins.
JOHNSON: Well again as I say we're going to win. Or I think we're going to win. My belief is that although the polls are very evenly matched
at the moment, the weight of money is now moving on to the conservatives for the betting market. People basically think that David Cameron will
emerge as the prime minister and the conservatives as the largest party if not actually with a majority. In those circumstances, it is the right
thing to do to go for reform of the European Union, to go in there and - in the interest of the whole community that we're not doing this -
QUEST: But are you in favor of staying in?
JOHNSON: I'm in favor of staying in on the right terms.
QUEST: But not the existing terms?
JOHNSON: And that means getting reform. And this is - I just want to stress - this is something so good for everybody. You know, it's not just
us - the Brits - who are calling for this. There are people around the table in Brussels who know that Europe is uncompetitive, we can see - look
at America, look at other parts of the world - Europe is really the back marker at the moment. It needs to come out because it needs supply side
reform. Britain can lead that. This can be positive both for Europe and for investors in America.
QUEST: Talking of Europe and New York and London, we - in your honor -
JOHNSON: I liked it, yes -
(CROSS TALK)
QUEST: -- in your honor. Yes, in your honor we decided -
JOHNSON: Quite a recent photograph too.
QUEST: Well, but what would you expect?
JOHNSON: Yes, very good.
QUEST: The relationship between New York and London and the financial communities between the two and the crossover links between the two.
JOHNSON: It's incredible, and it's so important for I think the health of both our countries and just being here today - the last couple of
days - talking to people about the huge, throbbing, unbelike sort of (inaudible) pipeline of investment, of talent going both ways.
(CROSS TALK)
JOHNSON: -- obviously - I've just been, oh you know - how many bright young British journalists I just met and he escorted me to meet you.
Everywhere I go, I meet -
(CROSS TALK)
JOHNSON: -- and in London you will find more young Americans than any other city in the world -
QUEST: So what's your biggest challenge? It's all very nice, what's your biggest challenge between these transatlantic losses (ph)?
JOHNSON: My - our challenge is very simple - that the success that you're seeing there - many of those buildings weren't in exist when I was
mayor - before I was mayor.
QUEST: Not that one, it shouldn't have been.
JOHNSON: That didn't exist, that didn't exist, that one didn't exist. Those have come up in my - in my time - as mayor, and the - you're seeing
huge investment in London, huge success of the London economy. But that is very tough for people who need to buy homes and to own homes. So my
biggest challenge is to build hundreds of thousands of new homes for Londoners. That's what we're doing.
(END VIDEOCLIP)
QUEST: Now, the mayor of London, Boris Johnson, is also promoting tourism to London in a campaign called "The Guest of Honor." Now, a
primary school teacher from California is currently being treated to a two- week vacation exploring all that London has to offer.
So for example, she's meeting Professor Stephen Hawkings at the Science Museum, which of course is a once-in-a-lifetime experience. She's
also have afternoon tea at Lord's Cricket Ground with Carson, the actor Jim Carter, from Downton Abbey. Yes, Mr. Carson.
She'll visit the houses of Parliament, Westminster and the Speaker of the House John Bercow will show her around. And if you come in closely
there, you'll see she gets to raise Tower Bridge. Let's see her do it again --. Well it went up the first time - how many more times do you want
to see Tower Bridge go up and down.
When we come back, if you're flying from London to New York, there is a new airline that will take you there. This is the chief executive. It's
an all-business class product, but can he make money at it? We'll talk after the break.
PETER LUETHI, CO-FOUNDER, DEPUTY CEO, LA COMPAGNIE: Thank you.
(COMMERCIAL)
QUEST: Time for today's "Business Traveller" update, and we have two very different views of the world of aviation, from two very different
chief executives flying totally different models. First of all, New York to London -- the skies are about to get more crowded and, arguably,
cheaper.
The French airline La Compagnie said it is to begin offering business class - all-business class travel between New York and London, London and
New York for a return fair of roughly $2,200. Slightly more on a flexible ticket. Now, La Compagnie has outfitted its Boeing 757 with a lie-flatted,
angled bed and a host of amenities. It's half the cost of what it would be on one of the larger carriers.
The problem for La Compagnie of course is many have tried this before and not succeeded. First of all, there was Eos and MAXjet - they came into
the market. And then Silverjet joined the fray - all out of either London Stansted or London Luton, but none succeeded. They collapsed with the all-
business class transatlantic service at lower costs.
Peter Luethi is the cofounder and deputy chief exec of La Compagnie. He's in the C-Suite for us now.
LUETHI: Richard.
QUEST: Sir. There is only one question - you're currently running Paris to New York. Why will you succeed London to New York where so many
others have failed?
LUETHI: Because we started Paris/New York successfully, it's a successful startup, and we have a model that decides that we will fly where
the traffic is. So we will do the London which has a three times higher potential than what you have between Paris and New York, and there is one
issue which I would like to bring in. L'Avion is the fourth carrier that actually succeeded.
QUEST: Until it was taken over.
LUETHI: Until it was taken over but we have the same CEO, Frantz Yvelin, who is our -
QUEST: He was bought by BA's OpenSkies.
LUETHI: That's a perfect timing when they bought it because it was to Europe too and they needed something new. But this was not because the
business didn't work.
QUEST: I'm not suggesting that you won't have a great product and that it won't be a fine alternative on the route. That is not in doubt -
at a better - at a cheaper price. But you have to compete against the BA joint venture with American, the United - the new Delta Virgin - which is a
formidable operation. They have more daily flights than you have in a week.
LUETHI: I think that's absolutely true and we are not really competing for their customers, we are competing for the independent
entrepreneur - the ones that don't have the big corporation deals. The ones that also like comfort but at reasonable prices, and there are
thousands of them, whether they are doctors, lawyers, whether they are fashion people, music people. They are all in for getting a better
experience at reasonable price. And that is why we will succeed.
QUEST: OK, now one of the things I've experienced as having come at this for "Business Traveller" is - one of the issues is always reliability,
punctuality - all the things that's very difficult when you only have one piece of equipment. I mean, if your flight goes tech, then the passenger
gets stranded.
LUETHI: This is not true. We do the same thing like any other airline. If we have a technical, we protect the customers on another
airline within the rules and regulations and we get them there. Has happened already at the beginning of our operations, but I have to say we
have operated now 230 flights between Paris and New York with over 10,000 passengers. Reliability of the operation is close to 99 percent.
QUEST: So, I wish you luck, sir. I mean, -- whatever natural skepticism I have comes from the experience of the past, but it is always
phenomenally good to see somebody else coming into the market.
LUETHI: Thank you very much (inaudible).
QUEST: And we look forward to trying it out on "CNN Business Traveller," and we will pay for our tickets before anybody thinks we look
for a freebie.
LUETHI: (LAUGHTER).
QUEST: No freebies here.
LUETHI: Thank you very much.
QUEST: Thank you, sir.
LUETHI: (Inaudible).
QUEST: Now, let's go from the all-business class fare and the all- business class airline to one of the absolute opposite end of the spectrum. If it can be done cheaper, he'll do it. If he can make more money in
ancillaries, he'll charge it.
Well the shares of Spirit Airlines slipped 1 percent on Wednesday after they had a good rally after the fourth quarter earnings were well
received. Profits rose a lead (ph) 30 percent which was better than expected. Spirit flies primarily in North and Central America.
The CEO Ben Baldanza joins me now live from Fort Lauderdale in Florida. It's interesting, Ben, we do have both opposite ends of the
spectrum. We have Peter who we've just been talking to with his all- business class fare, and there's you - if you could get it cheaper, you would, right?
BEN BALDANZA, CEO, SPIRIT AIRLINES: That's exactly right and it's great to be with you, Richard. It's an interesting comparison you have
with your last guest. I wish him luck.
QUEST: Well and supposedly - now look, tell me, Ben - the model in the U.S. is getting tighter. The margins have been improved because of oil
- the lower oil prices. But even that is now starting to slip away, isn't it?
BALDANZA: Yes, it's starting to slip away a little, but oil, you know, which is the largest input cost for us and almost every other
airline, is still at, you know, several year lows right now. So what it does is it's giving every airline the ability to maybe price down a little
bit - excuse me - price down a little bit in weaker times.
QUEST: Are you planning to be - I'll let you put your earpiece in so you can hear me clearly.
BALDANZA: Yes, thank you. I'm sorry.
QUEST: Not at all, not at all. Are you planning to become warm, cuddly, friendly or more friendly, for example, doing a Michael O'Leary and
deciding it's time to go for that business class market and become nice and fuzzy?
BALDANZA: Well, I - we certainly want to be friendly and we certainly want to be on time and we want to have clean airplanes, but we're not
aiming to carry business travelers. Our target market, Richard, is customers who pay for tickets themselves. And when customers pay for
tickets themselves, they tend to be much more realistic about the tradeoffs they're willing to make in order to have a lower fare.
You know, when you ask customers what they want out of their airline, most of them say that they just want a cheap price - to get from A to B,
and that's what Spirit is great at doing.
QUEST: Would you ever - finally, sir, -- would you ever go for a larger equipment and go transatlantic?
BALDANZA: Well that would very much complicate the business model.
QUEST: (LAUGHTER).
BALDANZA: That would require that we train pilots for different airplanes, that we have parts for different airplanes, mechanics who can
fix different airplanes. That's a very complicating thing which would raise our costs. So since we have so much natural growth in North, Central
and South America, it would be a long time if ever I think before Spirit thought to serve the transatlantic market. We'll leave that to people like
your very capable last guest.
QUEST: And finally, you have got a plan in your desk, in your office to start service to Cuba the moment you can. I'm putting money on it, Ben.
BALDANZA: (LAUGHTER). Well, Cuba's a huge market - or I should say will become a huge market once it's open. The reality is it's still very
limited and there are a lot of restrictions to be able to fly there and for customers to travel there.
Once it becomes open, then we will serve probably multiple cities within Cuba. But we also expect that that will change travel patterns in
the total Caribbean somewhat.
For some period of time customers may want to say, hey, let's check out Cuba instead of maybe going to the Dominican Republic or to Puerto Rico
or something.
So being a player in the whole Caribbean, we're very interested in Cuba not only as an absolute play, but how the - how the whole market may
change once it opens up. It's a fascinating proposition.
QUEST: And we'll be onboard one of your flights to try it out for you. Thank you, Ben. Thanks - good to see you as always.
BALDANZA: Thank you very much, Richard.
QUEST: Now Uber says it's made a refinement, a major one to its ridesharing in India to overcome passenger safety fears. A panic button -
in a moment.
(COMMERCIAL)
QUEST: In India, Uber passengers can now connect with the local police just with the tap of their finger. It's one of the new safety
measures the company's rolling out as part of the response to allegations that an Uber passenger in new Delhi was raped by one of the company's
drivers. Sumnima Udas reports from New Delhi.
(BEGIN VIDEOCLIP)
SUMNIMA UDAS, CNN CORRESPONDENT: After a spate of high-profile rape cases in the capital, we've been looking at what's it like to be a woman in
Delhi. We've been on public busses. Ask the majority of women here and they'll tell you, harassment is a daily issue. We've been on three-wheeler
taxis. It seems quite safe. What can really happen in an auto rickshaw?
Female: Just in case you don't know where you're going - you're going to some place you haven't been before. The auto rickshaw guy who could
take you anywhere.
UDAS: Commuting in Delhi's simply not easy, especially for women. So when the app-based GPS monitored car service, Uber, arrived in Delhi a
little over a year ago, Smartphone-wielding young women embraced it.
Female: Instantly liked Uber - you can always step out after 8 o'clock. These apps are really useful.
UDAS: Early December though a 26-year-old woman was allegedly raped by an Uber driver. The victim sued the company, saying it's not doing
enough to keep passengers safe. The service was then banned in Delhi.
Male, TRANSLATED by UDAS: "Because of that one driver, we all had to suffer," he says.
UDAS: But just a few weeks ago, this message - "We are back with two new safety features introduced on Wednesday." The first in-app feature is
this SOS or panic button on the top right so if there's an emergency, you tap it, and it automatically dials 100 which is the police hotline here -
the equivalent of 911 in the U.S.
The second feature which passengers perhaps may use more often is the send status to contact button which, with one tap, enables the passenger to
send details of the car, the driver, the driver's photo, the license number to five pre-selected family and friends.
And this is really important because it allows family and friends to track you in real time all the time. Several other Indian cab companies
boast similar features.
Authorities say app-based car services are still officially banned in New Delhi. But with India as the second largest market in the world for
Uber after the United States, the company says it will do whatever it can to assure a smoother ride in India. Sumnima Udas, CNN New Delhi.
(END VIDEOCLIP)
QUEST: Just before we take a short break, there is some confusion tonight over what may or may not have been agreed at the Eurozone talks in
Brussels. According to some sources, no deal has yet been reached. But there may be an agreement to explore extending the bailout program. And
other sources say that an agreement has been reached. It's a typical Euro fudge, and needless to say, it will be some time before we get some
clarity. "Profitable Moment" next.
(COMMERCIAL)
QUEST: Tonight's "Profitable Moment." On the show you heard the chief exec of La Compagnie. That's the all-business class airfare - or
airline - between Paris and New York and now between London and New York. Can all-business class succeed where others have failed so often? I hope
it does in many ways. There's nothing more exciting than a new airline starting.
But the truth is the odds are very much against it. Whether it's because of the major airlines, the alliances, the corporate discounts, the
loyalty programs, the high cost of oil, the cost of new planes - whichever way you put it, La Compagnie has some turbulent air ahead.
That should not mean that I don't wish it well. And that's "Quest Means Business" for tonight. I'm Richard Quest in New York. Whatever
you're up to in the hours ahead, (RINGS BELL) I hope it's profitable. Let's get together tomorrow.
END
