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Quest Means Business
U.S. Employers Cut 20 Million Jobs In April; Uber Slashes 3,700 Jobs As Demand Sinks; Germany Eases More Of Its Lockdown Measures. Aired 3-4p ET
Aired May 06, 2020 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MARC BENIOFF, CEO, SALESFORCE: ... to do their part. That's really my message, Walter, which is that everybody has to do something, one thing,
and especially at a time of crisis like this, you have to ask yourself a question, what am I going to do philanthropically? What am I going to do
commercially?
You have to do something for others, and everybody needs to make that choice. That's what's going to make things better now.
WALTER ISAACSON, AUTHOR AND JOURNALIST: Marc Benioff, thank you so much for joining us.
BENIOFF: Thank you, Walter. Great to see you.
CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL ANCHOR: And so important that Marc Benioff is reminding us that everything does actually have to connect
and fit in order to work at every level.
So, and finally tonight, at a time when escaped, and perhaps even magic are needed more than ever, "Harry Potter" comes to the rescue in the shape of
his alter ego, the actor Daniel Radcliffe, who has recorded himself reading the first chapter from JK Rowling's "Harry Potter and The Sorcerer's
Stone." That is the first of her seven books. Take a listen.
(BEGIN VIDEO CLIP)
DANIEL RADCLIFFE, ACTOR: He was wearing long robes, a purple cloak which swept the ground and high heeled buckled boots.
His blue eyes were light, bright and sparkling by my half-moon spectacles, and his nose was very long and crooked as though it had been broken at
least twice. This man's name was Albus Dumbledore.
(END VIDEO CLIP)
AMANPOUR: And in Fantasyland, Dumbledore, of course, is the headmaster of the wizarding school, Hogwarts.
So, each week each chapter will be read by a roster of different actors, including Stephen Fry, Dakota Fanning and Eddie Redmayne.
The initiative is part of JK Rowling's "Harry Potter At Home Campaign" to bring joy during these hard times. And the much love stories are a powerful
reminder that in the words of Dumbledore himself, happiness can be found even in the darkest of times, if only one remembers to turn on the light.
And that is it for now. Thanks for watching and goodbye from London.
(COMMERCIAL BREAK)
RICHARD QUEST, CNN BUSINESS ANCHOR, QUEST MEANS BUSINESS: There's only an hour of trading left on Wall Street, and as you'll see in the market, it is
a quiet day. It is one of those days where direction is being sought, up and down, up and down, and the numbers involved are minor, which is even
more interesting when you consider the reasons why.
The U.S. has shed 20 million jobs. The market seems to be shrugging that off. I'll speak to the President of the Philadelphia Fed in a moment or two
about the larger economic importance.
Germany is moving ahead to opening up the economy, doing it slowly, carefully and with caution.
It's a historic recession that Europe is bracing for, as we've heard from the latest numbers.
And Beijing is saying tariffs are not the answer. The Trump administration is blaming the virus on China.
Now, we're live from New York. It is Wednesday. It's May the 6th. I'm Richard Quest. And, yes, I mean business.
Good evening. We start tonight with grim numbers on the U.S. economy. Even expecting bad jobless numbers couldn't prepare us really for just how awful
they were.
Twenty million jobs were lost in April according to the private ADP Payroll Survey, eighty percent of them in the service sector, hospitality,
airlines, transport, hotels and the like.
Now, this accounts for the first full month of lockdown, but not really because the survey was done at the beginning of the month on the week of
April of the. So, it really doesn't catch the back end of the month and all its extremities. It is the worst loss in the history of the ADP report.
On Friday, we get the jobless numbers from the U.S. government, and to put into context, this graph shows the number of people who are employed a
decade.
So, we got up to 128 million, 129 million. Now, that's back down to 109 million, which is just where you are literally 10 years ago.
Mark Zandi is with me. The job growth may pick up later this month, Moody's Analytics chief economist, so the thing that strikes me about these
numbers, Mark, as I say is we knew it was bad. There are some people who are saying it wasn't as bad as it could have been. But it does suggest on
Friday an employment rate north of 16 percent.
MARK ZANDI, CHIEF ECONOMIST, MOODY'S ANALYTICS: Yes, yes, right. Right, Richard, I think it means the unemployment is going to be somewhere between
15 and 20 percent. Now, it's difficult to nail it down, because there's a lot of measurement issues, you know, the Bureau of Labor Statistics, when
they count an unemployed person, that person can't be working, and that person also has to be actively searching for a job.
But of course, given the shelter in place rules, lots of people can't actively search. So, they may not actually be counted as unemployed. They
will be, you know, obviously under a lot of financial stress. They'll be under employed, but not in the official unemployment rate statistics.
But even abstracting from all of that stuff, I think the unemployment rate will be somewhere between 15 and 20 percent. You have to go all the way
back to the 1930s depression to find an unemployment rate that high.
[15:10:06]
QUEST: And when we talk about those who have been furloughed, so that they are going on to unemployment. But obviously, they're not really looking for
a job, because they have an expectation that the company will take them back when it reopens.
ZANDI: Yes, great point. Just another problem in the statistics and the measurement issues.
In fact, Richard, I think, if you counted up all the folks that are officially unemployed, those that are not working, but not counted as
unemployed because they can't actively search. Count up all the folks that got reduced hours, would like to work more hours, we're probably closer to
25 percent of the workforce.
And the old time record high for unemployment in the United States was back in 1933 at 25 percent, and then of course, that doesn't account for all the
other stress. You've got millions of other -- tens of millions of other workers who have a job, you know, they have hours, but they're getting
their pay cut.
So, the stress is very broad and very deep.
QUEST: We, of course, know that the many will be reemployed, what's your best forecast for how many jobs will actually be lost? So what number are
we looking at? Let's just -- for the point of our discussion here -- take October, November, December.
ZANDI: Yes, so what's going to happen is we're starting to reopen. So, by Memorial Day, the job losses will turn into some job gains because why are
businesses restarting. The job gains will intensify in June, July and August.
But by August-September, we'll probably only get about half the jobs that we lost back.
So, we'll lose 20 to 25 million, we might get, you know, 12, 13, 14 million back so that means the unemployment rate will go from somewhere between 15
and 20 percent too high single digit by Election Day.
So eight, nine, ten percent unemployment, and then there's going to be a slog until we get some solution to the virus.
QUEST: Finally, briefly, Mark, is it possible that the unemployment rate can go down? It will not go down to three and a half, I'll grant you that.
But it is possible that the unemployment rate can go down to say five, six, seven percent over the next year if social distancing has to remain?
ZANDI: No, I don't see how that happens. That means the virus is still a problem, it is still an issue. People are still nervous.
We can't reopen completely. There will be a lot of activities that involve lots of people that just can't happen, and more importantly than that, it
means, we're all very cautious and business people are going to be cautious about hiring, investing, expanding.
Global trade will not make its way back because this is a global problem. So, you know, as long as the virus is hanging around, I don't see the
economy getting back to anything close to where we were.
QUEST: Mark, thank you. I know we'll talk more on these awful numbers. But thank you, sir, for joining us.
Now, the St. Louis Fed is warning that the shutdown can't continue, obviously, indefinitely or forever.
James Bullard has written, " ... if it does, deep into the second half that I think you risk getting into financial crisis or even a depression
scenario. And if you get into that, I think even worse, even health outcomes will be way worse."
Pat Harker is with me, President of the Federal Reserve Bank of Philadelphia. Good to have you on. Thank you, Mr. President for this.
And so from the Philadelphia -- from the Philly Feds point of view, obviously, you've heard just the discussion then, with your manufacturers
survey from April which was pretty grim news. You really can't see manufacturing and economic activity, picking up in any meaningful sense, as
long as we have to have this mass social distancing?
PATRICK HARKER, PRESIDENT, FEDERAL RESERVE BANK OF PHILADELPHIA: Thank you, Richard, for having me on. The manufacturing business outlook survey
we recently released, obviously, the current activity index was very bad.
But the future activity index was not that bad, and it's best exemplified by one of our contacts who has told us that, yes, he's not producing right
now, but people aren't canceling orders. They're just delaying the shipment. That's a good sign.
Probably manufacturing of all the sectors of the economy is the one that will bounce back the quickest, because it's probably the easiest relative
to service sector jobs to socially distance.
QUEST: As the recovery begins, where do you see the balance of responsibility for stimulus or for further accommodation to the economy?
Is the balance with the Fed to do more or with the administration for fiscal?
[15:15:12]
HARKER: So, we acted very quickly, and we acted very decisively at the Fed. We put in place the tools we need to create the liquidity that we need
to keep the economy running. I wouldn't call that a stimulus.
This is an attempt to just try to mitigate the problems from this terrible health crisis that we're all facing.
As we come out of that, we've committed at the FOMC to keep rates low for long, and to gradually raise them once we start to see the economy
recovering, and not until then.
So yes, we could expand certain facilities, but we'll also be pulling back on certain facilities over time when they're no longer needed.
QUEST: Of the facilities that were put in place, the corporate facility that allowed you to buy corporate debt, the municipal facility, all of
which lubricated the financial markets. Which do you think has proven to be the most useful?
HARKER: Of course, there are some that are coming like the Main Street Program that we'll be launching and I want to come back to that.
But I think they've all had an impact. We're seeing market functioning starting to come back and the most recent one with respect to municipal
bonds is clearly necessary because states and municipalities are struggling.
QUEST: The Main Street Plan which is coming on stream is very much the Fed's response of course, to if you like PPP and the way in which the whole
thing joined up if you like, joined up recovery. What to you seems to be the important parts of the Main Street Plan?
HARKER: So, there are really two parts in my mind. One is what we're launching right now, which is the Corporate Main Street Program to try to
help midsize companies really filling in the gap between where the PPP help and then large corporate. That's critical. Those companies are critical to
our economy.
The next wave that we're starting to think about is one that's near and dear to my heart as a former university president, Eds and Meds and
nonprofits are also struggling through this. We see that colleges and universities all across the country, we see this with rural health
communities and health systems. So, that's one that we're starting to talk to those communities about what would be helpful to them.
QUEST: Just a couple more, the U.S. is -- the Treasury is going to be looking for $3 trillion worth of basically borrowings at the moment. Are
you at the stage where you are in any way concerned at the appetite for both domestic and international investors to eat that much debt?
HARKER: No, I'm not at this point. However, going forward, as we get out of this crisis, and get back to some sense of what the new future looks
like, we are going to have to put in place fiscal discipline across our economy. No question about that.
QUEST: And finally, the Philly Fed also, of course, looks after the Treasury checkbook. In a sense, you run the Treasury checkbook. How -- what
would it be like? I mean, millions, hundreds of millions of checks have been going out.
You've seen a Treasury accounting that has been something extraordinary in terms of numbers of transactions across the swathes of the economy, how
difficult has it been to manage it?
HARKER: I give great, great credit to our staff all across the Federal Reserve System. They've really risen to the occasion. And I see this every
day in our committee work and I see it out in my neighborhood right now where I am sitting at my home right now.
Neighbors come up and just thank us. One of my neighbors across the street, thanked me the other day because he was able to access for his small
business, the supporting needs to keep his employees employed.
I mean, that's a good feeling for all of us at the Fed to help and do what we can.
QUEST: Mr. President, thank you for joining us. Please, let's talk again, as this crisis goes into different phases. I appreciate it, sir. Thank you
very much.
Now, we heard about the total number of job losses in the private sector. Well, let's bring it down to the basics. Uber announced 3,700 jobs and
acknowledged it was a brutal day. Fourteen percent of the corporate workforce will go, more jobs cuts are expected.
Clare Sebastian is our business correspondent who has been looking at this. I mean, ergo, cause and effect, people aren't taking as many Ubers. There's
not the necessity for the same corporate infrastructure. It's not making the same money. But I mean, these are long term cuts.
[15:20:13]
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, Richard, these are not furloughs, these are cuts, as you say about 14 percent of the workforce and
not at all unexpected. Their rival, Lyft has cut 17 percent of its workforce and furloughed others.
And I think, you know, clearly, as you say, it is cause and effect. Ride sharing is down significantly and they've implemented a hiring freeze and
that's why the cuts are coming in their customer support and recruitment teams, mainly, Richard.
And now this comes ahead of the company reporting earnings tomorrow. I think what a lot of people will be looking at is obviously Uber is more
than just ride hailing. It's got its Eats business as well. Will that -- which is now of course, very popular - everyone is ordering food for
delivery, will that in any way offset the drop in demand for rides?
So far in the past quarter, rides accounted for 81 percent of revenue and Eats was just 11 percent, so it's still a much smaller part of the
business. But will this crisis, will this pandemic have grown that part of the business at all? And will that help Uber going forward.
Richard, the company has maintained that while they expect worst case scenario of an 80 percent drop in rides for the year, they say that they
will be in a strong cash position even if that happens.
QUEST: Okay, but yesterday we saw Airbnb with its 24 percent cut. In fact, you were reporting to us about it. Now, we see Uber.
These are companies that 10 years ago we'd barely heard of, and have become cornerstones of digital economies, and they are being hit just as much as
everybody else.
SEBASTIAN: And sometimes, Richard, I think they're even more vulnerable and in particular, because their workforce is not just the corporate
employees, it's the sort of the gig workers that they rely on, the drivers and delivery people when it comes to Uber; the hosts when it comes to
Airbnb.
This has put these companies in a bit of a quandary. You'll remember that Uber was lobbying for gig workers to be included in the CARES Act. They did
eventually achieve that.
There is some government assistance for these freelance workers and the company is itself providing assistance, but I think what we're going to see
coming out of this is questions around these business models. Do they do enough to protect these gig workers?
The companies themselves though will argue coming out of this that people are going to want freelance, flexible work more than ever.
QUEST: Clare Sebastian. Clare, thank you.
Germany's numbers in terms of the pandemic, the number of cases and the number of deaths was much less than other countries in Europe. And now the
country is planning a very gentle considered reopening.
Fred Pleitgen will be in Berlin for us after the break. This is QUEST MEANS BUSINESS, and you are most welcome.
(COMMERCIAL BREAK)
[15:25:23]
QUEST: Germany is taking the first and ever so tentative steps to reopen the economy, the European nation amongst the lowest number of cases and
deaths of any large country. Chancellor Merkel says the first phase of the pandemic is over.
More shops will open. The Bundesliga can resume play and social distancing still applies. Fred Pleitgen is in Berlin.
Fred, let's start with the Bundesliga. I'm assuming that they'll be playing behind closed doors.
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: They will indeed be playing behind closed doors, Richard. It's not just that. They
have to have a very, very strict testing regimen.
The interesting thing about it is that the Bundesliga actually came up with their own hygiene concept, and then presented that to the German government
and also to the state governments. You know, we have very strong federalism here.
And that was then signed off on and they can start with this from May 15th. It just been decided a couple of minutes ago, I was just actually looking
at the alert that came out.
So the Bundesliga is going to start on May 15th. But really, those very strict hygiene measures and certainly no fans in the stand -- Richard.
QUEST: Right. Right, now, Fred, I just want to go back to -- I saw -- we had yesterday your fascinating report about Lufthansa and forgive me if I
go back to that. I mean, what was it like? You know, look, let's face it, you're an Av geek, almost as much as myself in that sense. And, you know,
to be at the airport and see so many of those magnificent machines, just sitting there with their engine cowls covered, it must have been quite
remarkable.
PLEITGEN: It is extremely remarkable. And I think that it was really symbolic for the way that much of the European economy is going on right
now, certainly the aviation sector.
But if you look at what's been going on here in this country with a virtual standstill of the economy, and of course, the aviation sector is one that
is the highest hit. But you can really see that on that airfield there, and on many of the airfields here in Germany with those planes just standing
idle, which doesn't only mean that it's aircraft that standing idle, that means business is standing idle, that means there's no business execs.
There's no people who are traveling to go to meetings.
That also means that very little -- although that's coming back -- cargo is being transported as well. And that was also one of the reasons I think
today, Richard, that Angela Merkel opened the country, maybe a little more than she actually wanted to.
One of the interesting things that we've been seeing over the past couple of days is that German business leaders, and some of the state governors
have been saying, if you do not open the economy more, then there could be irreparable damage to Germany's industry and to everything that makes this
economy so strong.
They believe that the very mechanisms of this economy could be in danger if the lockdown were to continue the way that it did. And so what they're
doing now with opening some of these stores, also with the bars and the restaurants is that at least, they're trying to get some of that public
life back, and then hoping that over time, the economy will recover.
But there are many in Germany, who have been pressuring Angela Merkel much more so than they had in the past. If you recall, whenever we were talking
on the show, it was always Angela Merkel and she had the state governors behind her that was beginning to crumble -- Richard.
QUEST: Fred Pleitgen. Fred, thank you, sir. Good to have you with us tonight. I appreciate it.
Now, in just a moment, you'll remember that before the crisis, the U.S. and China had pretty much reached a truce. At least, they had agreed not to
continue the trade war making it any worse.
Now, there's a war of words between the two sides of the pandemic. And that threatens, of course, once again to go into the realms of trade.
It's QUEST MEANS BUSINESS. It is middle of the week and we will have more after the break.
(COMMERCIAL BREAK)
RICHARD QUEST, CNN INTERNATIONAL HOST: Hello, I'm Richard Quest. There's a lot more QUEST MEANS BUSINESS in just a moment. Airline chiefs were on
Capitol Hill giving an update to politicians about exactly what's been going on in their sector and what more help they might need. And China is
warning the United States against using trade as a weapon during all of this. We'll talk to a former head of the WTO, that's the World Trade
Organization, Pascal Lamy will be with in a moment. Before we any further - - we're getting further, this is CNN, and on this network, the facts and the news always come first.
President Trump has backtracked on disbanding the White House Coronavirus Task Force. He said he didn't realize how popular it was. And said it's
been a great success and tweeted its focus will now be on safety and opening up the country again. Several European nations are getting ready to
ease lockdown measures. Starting next week, the U.K., Germany, and the Netherlands will even loosened restrictions or present plans to
(INAUDIBLE). It is an (INAUDIBLE) countries are warning the public must continue to exercise caution.
The Venezuelan President Nicolas Maduro says two American citizens set to be detained in Caracas will be tried in a civilian court. He didn't say
what charges they're facing. Venezuela says the two men were arrested on Monday during what the Maduro government calls a mercenary invasion.
Tyson Foods plans to reopen its largest pork plant in the U.S. on Thursday. They'll be new sanitation and safety measures in place. The plant is in
Waterloo in Iowa. It shut down last month after being linked to 182 Coronavirus cases in the area. One of several meat processing plants that
have closed because of the virus spreading amongst workers. It's also then triggered fears of (INAUDIBLE).
The U.S. Secretary of State Mike Pompeo is doubling down on the accusations that China was deliberately behind the Coronavirus. It was created in a
Chinese lab. Now, the U.S. is threatening to use trade restrictions as a countermeasure because of this. Over the handling of the outbreak, China
says trade measures shouldn't be used as a political weapon.
(BEGIN VIDEO CLIP)
HUA CHUNYING, SPOKESWOMAN, CHINESE FOREIGN MINISTRY (through translator): Facts have proved that terrorists should not be used as a weapon. In
general, it hurts all parties involved. And it is in no one's interest to fight a trade war. So, under the current situation, I think the idea of
using tariffs as a weapon to coerce other countries should be abandoned.
(END VIDEO CLIP)
[15:35:15]
QUEST: Pascal Lamy is with me, the former head of the WTO. He joins me from Paris. Good to see you as always, sir. And if --
PASCAL LAMY, FORMER DIRECTOR-GENERAL, WORLD TRADE ORGANIZATION: Hi, Richard.
QUEST: -- China if -- good. If there are legitimate reasons to believe that China was behind this, or it was created in a Chinese lab, is trade, our
trade sanctions and trade weapons appropriate in your view?
LAMY: Well, we've learned that President Trump loves tariffs and tries to use them for whatever international battle he engages in. I think this is
very dangerous. Not that we haven't had trade spats between China and U.S. for some time. But this time, it comes on top of a trade scene, which
worldwide is heavily disrupted by the current crisis, export restrictions on medicines, on food. So I think it's time to calm down on trade, not to
antagonize anymore.
QUEST: Right, but you're in an article once CGTN says, globalization -- or you're quoted is saying, globalization will look different after COVID-19.
It's going to be -- and yet at the same time, during COVID, we did learn the significance of global supply chains, whether it'd be for respirators
for masks and other equipment. How will it look different post-virus?
LAMY: It will look different, Richard, because many countries have realized during this crisis, that sourcing, essential medicines, all elements of --
that you need for healthcare is a thing, which they could not do. So, they've -- they concluded that their supply chains were too fragile. Were
too prone to logistical disruptions, and as a consequence of that, they will reorganize the supply chain in some critical elements. This is either
through higher inventories, diversification of sourcing, or even reshoring. And this will impact the pattern of international trade post-COVID.
QUEST: But that, to some extent, I mean, let's take the United States where Donald Trump has said domestic capacity to produce these key pieces of
inventory needs to be done at home. There needs to be a rebuild of domestic production of respirators, masks, PPE, and all of those things. Now, we can
extrapolate that to a million and one other products. But you'd agree more countries need to have their own capacity and not rely on international
supply chains.
LAMY: I agree with that for some critical production, while recognizing that it will have a cost. If these supply chains have multi-localized
production systems, it's because it was more efficient. Hence, less costly. So, you're absolutely right, there will be some reshoring where for
political reasons, countries accept to pay the cost of this reshoring, which probably can be quite large.
QUEST: Pascal, finally and briefly, how concerned are you that, let's say, a vaccine is discovered in the next eight months to a year, the wealthy
countries will get it first, the developing world and the emerging markets will lag behind. And they will be the ones to suffer most in terms of an
inability to go back to global trade. Is that a concern of yours?
LAMY: It is indeed, Richard. And vaccine or not, and we all hope there will be a vaccine, the name victims of this COVID crises have already been poor,
developing countries who have to suffer the consequences of the virus, plus the economic consequences of lockdowns, which is much more costly for them.
So, you're right there is a risk, which is why you have two camps in the international conversation for the moment.
[15:40:12]
Some will say, we have to compete for the vaccine, and the one that gets it gets the big prize. And others who say, like Europe, like the WHO, let's
have a global approach to this issue, once a vaccine will be found somewhere, it has to be available for 7 billion people. Of course, of
course, this entails a huge collective investment. The problem being that, as you know, the level of international conversation for the moment is
pretty low.
QUEST: Thank you, sir. It is good to have you. We'll talk more. I appreciate it. After the break, we're going to show you what United
Airlines 14 from Newark to London tonight. Looks like in terms of number of passengers, and then you'll understand why airline chiefs run Capitol Hill,
in a moment.
(COMMERCIAL BREAK)
QUEST: Airline industry executives have been on Capitol Hill telling the lawmakers just how bad the situation is for airlines for America has been
explaining. The average 23 passengers on domestic flights, 23, and an average of 35 passengers on international flights. Currently, there are
3,000 ground -- aircraft on the ground, AOG, and it's burning $10 billion in cash every month.
Let me show you United Airlines Flight 14, of which I'm very familiar, going backwards and forwards between New York and London. So, this is what
it looks like for tonight. And it's Newark to Heathrow, it departs at 7:50. And you can see it's a Dreamliner, which in itself is different. Normally
they would have it would be a 767, an old 767 because gas guzzling. Seven to take it in business class, 14 in Premium Economy, and 26 passengers are
taking in economy itself. My guess is as it doesn't, that's search gives you an idea of just how bad that 14 is also including Premium Plus.
Pete Muntean is with me, our aviation correspondent. What's the point of them going to Capitol Hill? They've already had the money. The lawmakers
know how bad is the situation. I don't know what more there is to say other than, let's get on with it.
[15:45:18]
PETE MUNTEAN, CNN AVIATION CORRESPONDENT: Well, the testimony really centers, Richard, around laying out those numbers that you just mentioned.
You know, domestic flights here in the United States, on average, 23 people on board those flights. That's up slightly from only a week ago when the
average was 17. Up even more from back in April when it reached the low point of about 10. You know, the airline industry is really just trying to
paint a picture of just how dire and how grim the state of the industry is right now.
The Transportation Security Administration here in the United States, saying that more folks are passing through security checkpoints up a little
bit, but still hardly what it was just a year ago. The change only now right now, the number is about nine percent of the norm. So, a really
sobering picture that has been painted on Capitol Hill today.
QUEST: All right. So, to those who think that it's a good opportunity to get a cheap ticket, and when the airlines reopened, for those who've got,
you know, decided they will travel, and this could be a good chance, get a cheap ticket later in the year, are they right?
MUNTEAN: Well, you -- I can tell you, at least from my experience, I was on board a flight just last week. I went from Reagan National to Atlanta and
back primarily just to see what the passenger experience is like, you know, it's hard to find somebody not already wearing a mask. The airlines have
instituted these mask policies, making large announcements early this week. Pretty much every major airline here in the United States will have a mask
policy in place by either the end of this week or early next week.
They are -- they are trying to sort of win passengers back, in a way, to reassure them that it is safe to fly, although, what I've been telling
folks is that it's unlikely to be safe, at least for the time being. And we've seen some of those studies which show how a cough can spread through
a flight. So, you know, it's really just a little too soon to tell, although airlines are trying to reassure passengers.
QUEST: Pete, good to have you, sir. Thank you. Now, think of Australia and you're thinking of those golden beaches, perhaps and those times when we
could travel to the crashing beaches, and the spectacular area. Well, the beaches are empty, but at the moment, there are those who think that this
could be a good way of creating new sources of forms of energy. John Defterios now with our Global Energy Challenge.
(BEGIN VIDEOTAPE)
JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: The water is alluring at any of Australia's 12,000 beaches, and the oceans power is obvious. But what if
its energy could be harnessed to reduce Australia's dependence on fossil fuels?
JENNY HAYWARD, RESEARCH SCIENTIST, CSIRO: Majority of the power in the national energy market is from coal, so mainly black coal. We also have
wind and solar P.V.s.
DEFTERIOS: While solar and wind power are getting cheaper and more widely adopted, we can never be certain that the sun will shine or the wind will
blow to create dispatchable electricity. Local green energy entrepreneur, Douglas Hunt, believes his company has an underwater turbine that can
capture the power of Australia's coast as the sea moves in fully predictable tidal currents.
DOUGLAS HUNT, MANAGING DIRECTOR, MAKO ENERGY: As the tide flows in this direction, it turns the blades which drives a generator inside the turbine.
So, one turbine in a constantly flowing environment will be enough for up to 20 households.
DEFTERIOS: MAKO Energy wants their turbine to work for energy consumers big and small, from a coal-fired power plant in Australia, looking to add green
energy into its operation, to off-grid coastal communities around the world.
HUNT: We want to contribute to an energy mix that's less reliant on fossil fuels by empowering local communities and businesses, generating their own
power from a predictable and abundant resource that's hiding in plain sight, often flowing directly past businesses and communities, untapped and
underutilized.
DEFTERIOS: Tidal turbines have been successfully scaled up around the world. But that has come with construction costs ranging into the hundreds
of millions of dollars.
HUNT: Tidal energy is a relatively new entry into the energy mix in Australia and around the world. Tidal turbines have been around. The
challenge has been, of course, to build them cost effectively.
DEFTERIOS: Underwater farms could one day plug into Australia's national electricity market, according to experts in energy economics, if innovators
like Maiko keep bringing costs down. Right now, the MAKO turbine produces electricity at around $0.03 per kilowatt hour in constantly flowing water.
That's less than the cost of energy from large solar farms in the United States.
[15:50:07]
The opportunity in Australia now is for small scale tidal power to play into a mix. Or help coastal homes and business go green by going off-grid.
A big task but one we can draw closer to achieving with each passing time. John Defterios, CNN.
(END VIDEOTAPE)
(COMMERCIAL BREAK)
QUEST: For today's "VOICE OF THE CRISIS" we go to Brazil, and to a yoga studio that's giving virtual classes. One of the frustrating parts about
"VOICE OF THE CRISIS" is we're seeing how so -- how everybody is just being so ingenious in terms of keeping your businesses going. Well, YogaFlow shut
down in March, of course, for the obvious reasons. And after a student tested positive, now it's offering fewer classes, and it's lost obviously
its massage revenue, but it's refused to lay off 29 or 20 employees.
The staff are working hard. It's got various online platforms, Zoom for instance, a booking engine and all of those sort of things. With me is
Charlie Barnett who used to work on Wall Street, then went to Brazil. Charlie, reading the notes, it's fascinating. You were determined not to
lay off any staff. But the issue was how to create anything approaching the same sort of revenue from your yoga classes.
CHARLIE BARNETT, OWNER & DIRECTOR, YOGAFLOW: That's right. And we really made a big effort to transfer as much of our business onto the internet as
possible. Obviously, there are certain things like massages that you can't do on the internet, but we're able to put up in just about five or six days
more than 80 classes a week of yoga and also our weekend training courses onto the internet via streaming.
QUEST: So, how much of revenue percentage wise do you think you're getting back compared to what it was before?
BARNETT: I'd say around 40 percent. That's about as far as I think we can go. And that's enough to keep our business going, to pay our -- meet our
payroll to keep our teachers working and getting paid. Pay our rents, we've been able to renegotiate our leases down somewhat. It certainly will keep
us in a holding pattern until we can eventually get back to normal.
QUEST: This is -- this is phenomenal to hear, Charlie, this is really heartwarming that, you know, you've reached a level albeit not nice, but a
sustainable level that will put you in a good position to open, and crucially for your employees, keep them -- keep them going.
BARNETT: That's right. And interestingly enough, it seems that our students really like being able to do yoga in their homes, looking at a screen. I
personally would rather much rather do it in person, but in fact, they've actually required -- or not required but requested that once we reopen the
studios, we continue to offer streaming classes in the future.
[15:55:13]
QUEST: Sure. And also, interestingly, the way in which you've managed to have to put all different technologies together, how much of your previous
background in finance on Wall Street, which you may well have left behind for more spiritual and wholesome life in yoga, but how much of that
background came back to serve you well in a crisis of resource?
BARNETT: Well, I think it's been serving me well for a number of years now, but certainly in learning how to move quickly and to motivate my staff and
get them to get out pieces together has certainly been a good thing to have.
QUEST: I tell you what, here comes the promise, I'm not -- I don't know anything about yoga, but how about I sign up for a class and pay for it?
I'll pay for it full whack, go on any discount, and you set me up with one of your instructors. And we can do a working from home yoga class. Can we
do that?
BARNETT: Sure. It sounds like a good idea. You can work on your Portuguese while you're at it.
QUEST: It will be a very short class if it's in Portuguese. Good to see you. Thank you very much. I think I'll be able to work out but you twist
yourself like that. Thank you, sir. We'll sort that out -- we'll film it and you can see. We will have a "PROFITABLE MOMENT" after the break. It's
QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
QUEST: Finally, tonight's "PROFITABLE MOMENT." And we continue to look, of course, at the "VOICE OF THE CRISIS." And one of the reasons I do love the
"VOICE OF THE CRISIS" is because it's getting to the heart of how you and me and everybody's actually surviving during it and the ingenuity that is
now being put forward. And we're going to keep up with it. And although I've made 1,000,001 promises, some of which will be almost difficult to
keep, we are going to follow through throughout the course of the year to see those businesses, the yogas, ther hair salons, the cake shops, their
wedding dress makers, the restaurants, to see how they have performed. And we'll be following them as we continue this.
Otherwise that's QUEST MEANS BUSINESS for tonight, I'm Richard Quest in New York. Whatever you're up to in the hours ahead, I hope it is profitable.
END
