Return to Transcripts main page

Quest Means Business

Twitter Takes on Musk Bid with Poison Pill Plan; I.M.F., W.T.O. Slash Forecasts over Ukraine, Prices, and COVID, Russia Hits Military Factory on Outskirts of Kyiv; Palestinians: More Than 150 Injured In Jerusalem Clashes; More Rain Forecast In Flood-Ravaged South Africa. Aired 3-4p ET

Aired April 15, 2022 - 15:00   ET

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

[15:00:23]

RICHARD QUEST, CNN HOST: It is the end of the week and stock markets on both sides of the Atlantic closed for Good Friday. It gives us a chance,

you and me, to chew over if you like what is happening and there is plenty to discuss this evening.

Twitter attempts to thwart Elon Musk's hostile takeover bid, adopting the strategy known as the "poison pill."

Shanghai residents breathing fresh air as authorities ease weeks of harsh lockdowns.

And there are assets seized and contract terminated. The Russian racecar driver Nikita Mazepin joins me to discuss his life under E.U. sanctions.

We live in New York, Friday, April 15th. I'm Richard Quest, I mean business.

Good evening, tonight, the fight for Twitter heats up as the Board moves to scupper a hostile takeover bid by Elon Musk, the board of Twitter has

adopted a so-called "poison pill."

Now, this is a policy that kicks in if Musk or any other shareholder acquires more than 15 percent of the company, and without the Board's

approval. If that happens, investors could then increase their stakes with newly issued shares. Basically, the company floods the market with shares

at a discount, it makes it much harder for any hostile acquirer to succeed, makes it prohibitively expensive.

Clare Sebastian is with me. How and why?

CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Well, so Richard, this is a fairly typical thing that companies do if they are trying to avoid a

hostile takeover and this makes it very clear that Twitter does not want Elon Musk to take it over under these terms and at this time.

So the how is that if he reaches that 15 percent threshold, as you say, they then issue new shares, and they offer them to all existing

shareholders at a discount, of course, except for Elon Musk, who owns just over nine percent of the company, he would not get the discount, which

means that any new shares he wants to buy on the open market would be at a higher price.

But look, this gets criticized a lot by corporate governance experts for being perhaps bad for shareholders because they are automatically diluted

unless they buy the new shares, and of course, it takes so -- if it does work as a deterrent and prevent Elon Musk from taking over the company,

then they lose the opportunity to get the premium that they would have got on the takeover.

Why? Of course, very clearly, they didn't want his offer. Several shareholders have come out including Prince Al Waleed, of Saudi Arabia and

said that the price just wasn't high enough.

QUEST: But basically, Musk has said tonight, really, investors should decide this, not the Twitter Board and there are implications or

understandings that there may be other bidders out there.

SEBASTIAN: So it's possible, Richard, that this has sort of opened that process. Now, the Twitter Board might decide to sort of launch a formal

process and put it up for sale.

But I think the question will be what Elon Musk does next, because of course, he hasn't reached that 15 percent threshold. So this poison pill

isn't going to get triggered. Yet, on the flip side of it, he could decide to follow through on a threat that he made when he, you know, made that

S.E.C. filing, saying that he wanted to buy the company that if he doesn't have his offer accepted, he's going to sell all his shares, because he

doesn't think the company is being managed properly that then could be equally bad for shareholders.

Because if you look at the stock, the company is up some 15 percent since he announced that he had bought into it. That could then plummet down

again. So, I think the shareholders are in for a bumpy ride over the next few weeks.

QUEST: Where does this go? Because Musk has now started a formal process. Now, sure, he can fold his tent and leave. But there are all sorts of

deadlines now. There are all sorts of restrictions on what he can do and can't do, can say, and can't say.

And yet the market, bearing in mind that the price is $54.00 he has offered. There is no sign of another bidder that is going to beat it, and

the price in the market hasn't got to the strike price.

SEBASTIAN: So like, there are those who think that he might challenge this in Court, to challenge the poison pill and eventually get his way that way.

The other thing to note is that the poison pill itself, Richard, has an expiry date, it's only in place for a year, so potentially Elon Musk might

decide that he has time to wait for it to expire.

But look, if he does throw the baby out with the bathwater, sell his stake, send the stock coming down, that could then bring in new bidders because of

course it will be at an even bigger discount. They could then decide to make an even lower offer.

[15:05:14]

SEBASTIAN: So this again, it creates this very turbulent time for Twitter. And they were already having issues, Richard, I think you know, they've

been under a lot of pressure since the new CEO took over since Jack Dorsey left, and this really amps that up.

QUEST: Clare Sebastian, Clare, thank you.

Now, investors haven't had a chance to react to the latest Twitter drama, the markets are closed for Good Friday. It has been a tumultuous week and

several months of this.

We had slower growth forecasts from the I.M.F. and the W.T.O. They've weighed in as well. Economists are blaming soaring inflation, as well as

the economic fallout from the war.

Bill Dudley, my next guest, says recession is now inevitable. He joins me now, former President of the Federal Reserve Bank of New York.

Bill, it is good to see you, sir. Look, this inevitability of recession, is this because the rate of interest rate increase is that you're expecting

from the Fed over the rest of this year, basically half a point here, half a point there is going to slow down to such an extent.

BILL DUDLEY, FORMER PRESIDENT OF THE FEDERAL RESERVE BANK OF NEW YORK: The problem is that when the Fed is to take monetary policy sufficiently to

push the unemployment rate up, in other words, the labor market is too tight today, when they ever went -- in the past, whenever they had to push

the unemployment rate up, they have not been able to achieve a soft landing.

Chair Powell has decided three episodes where the Fed is tightened, and the economy did not go into recession. You know, all three of those

circumstances, the unemployment rate kept falling during the tightening cycle. That can't allow the unemployment rate to keep falling.

The labor market is already too tight. So the Fed has to cause the labor market to loosen. Now, this is going to happen very soon, right? Because

monetary policy is still very, very accommodative. So we're not talking about a recession in the very near term, we're talking about a recession

when the Fed makes monetary policy tight.

QUEST: Right. But that means we've got a year or so. I mean, the first forecast came out of from Deutsche, which was threatening or forecasting a

recession back end of '23. That means, a year to 18 months of this anomie of this no man's land, as monetary policy gets tighter and we don't sort of

see the ship turn yet.

DUDLEY: Yes, the Fed is going to go for a soft landing, obviously, they're going to try to tighten it enough to slow the economy down and keep

inflation in check. The problem is historically, they almost always overdo it, and I think that's probably what will happen this time.

How quickly they turn to make monetary policy tight though, is still uncertain. If you look at their forecasts, their own projections, they have

monetary policy to slightly north of neutral, you know, by the middle of 2023. So a lot of this also depends on the Fed's appetite to make monetary

policy tight, and that probably depends on how fast inflation comes down over the next six to 12 months.

QUEST: And if we look at your other, if you like, quote, "de jour" which is doing the rounds, the one about the markets, you know, Bill Dudley market

says Fed might need to force stocks to fall. This is the same idea, isn't it? Rates go up so high that corporate profitability falls and therefore PE

is going to be justified.

DUDLEY: This is not just my idea. This is Chair Powell's idea. He has made it very clear that monetary policy works through financial conditions, the

Fed needs to make financial conditions tighter, one aspect of tighter financial conditions is weaker stock prices.

QUEST: Is this -- even absent Ukraine -- is this a massive failure of Fed management of the policy rate when they should have been raising last year,

they should have realized -- you know, when we were hearing all about this temporary inflation, this, that, and the other, and people were warning,

no, you're wrong. It's not temporary, it is sticking?

DUDLEY: I think there is no question that the Federal Reserve is late, and this is really due to a couple of decisions that they made. The first

decision was to say that we're not going to even begin to tighten monetary policy until we reach two percent inflation, and we're confident that the

economy is at full employment. They could have started to tighten before the economy reached full employment, they waited.

The second thing that they did was they made some pretty bad forecasts, as you allude to. Inflation turned out to be higher for much -- much higher

for much longer than they anticipated, and one of the consequences of that is it wasn't just the transitory price pressures. Those transitory price

pressures have gone on long enough now that they're getting into wages.

So wage gains of five and a half to six percent are not consistent with two percent inflation, so the Fed has a problem. The economy has gone, you

know, it's almost too much of a good thing.

[15:10:10]

DUDLEY: The labor market is too tight. And now, the Federal Reserve has to respond to make the U.S. labor market less tight, and that is very

difficult to pull off.

QUEST: At what point does the Fed have to accommodate or at least to be aware of asset prices? I mean, the traditional view is, I see no evil, hear

no evil, we only -- our mandate, et cetera et cetera.

But if the market falls further faster, then surely that in itself has a wealth effect, a dampening wealth effect.

DUDLEY: That's what they want. They want tighter financial conditions. So as long as the decline in, you know, the tightening of financial conditions

is, you know, modest and not abrupt, they're actually going to be happy, they actually want to see the stock market a little bit lower, bond yields

a little bit higher.

Now, obviously, if the stock market were to collapse, you know, we're talking about a 30, 40, 50 percent decline in the stock market, that would

cause them to rethink, you know, are we happy with how things are unfolding?

But, you know, the so-called "Fed put" for the stock market is way lower than the current level of the equity market.

QUEST: This doesn't bode well.

DUDLEY: It doesn't bode well, I mean, for the markets. But we've had had an extraordinary decade of very high financial asset returns. I think we're --

you know, we're about to enter a decade where the financial returns are significantly lower.

QUEST: Good to see you, Mr. President. Bill Dudley, Mr. President, we will talk more about this as we -- as things progress, but I'm very grateful to

have you on the program tonight, Bill. Nice to have you. Thank you, sir. Have a good weekend. Have a good Easter. Thank you.

Now in a moment, a CNN exclusive, a dire warning from Ukraine's leader as battle rages in the east. President Zelenskyy says the world should be

prepared.

(COMMERCIAL BREAK)

QUEST: Moscow is threatening more attacks on Kyiv after the loss of its flagship cruiser on the Black Sea. Russia fired missiles earlier today on

the outskirts of the city. It says the target was a military plant making anti-ship missiles and other weapons.

The Pentagon now backs Ukraine's claim to have struck the Moskva with missiles, and Moscow claims the ship caught on fire and sank while being

towed to port.

Ben Wedeman is in Kramatorsk where that deadly train station attack took place a week ago.

Ben, hopefully you can hear me.

[15:15:10]

QUEST: Ben, this is now -- you've got Russia, basically now angry, more angry on having lost its flagship cruiser, and we don't really know how

that's going to manifest itself in terms of further aggression against Kyiv and elsewhere?

BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: No, we don't. What we do know is that the Russians are preparing for a massive offensive in this

part of the country, and regardless of whether they've lost their flagship for the Black Sea Fleet or not, they are going ahead with these plans and

the expectations is that this will be perhaps even more of a ruthless military campaign than what we've seen already.

There is video circulating on social media that would indicate they are sending in a massive amount of troops and armor and artillery, and rocket

launchers and whatnot.

We were yesterday, in a town, where just to the north of it, we heard that they were sending in more reinforcements, more artillery, and this is a

town that frequently was coming under bombardment, and the anticipation is that perhaps the frustration that the Russian High Command has felt as a

result of essentially, their defeat in the Kyiv area and North Central Ukraine will play itself out on the ground here in ways that perhaps we

haven't seen in terms of brutality until this point -- Richard.

QUEST: Ben, listen to what President Zelenskyy told Jake Tapper, and you and I will talk about it afterwards.

(BEGIN VIDEO CLIP)

VOLODYMYR ZELENSKYY, UKRAINIAN PRESIDENT: And not only me, I think, all over the world, all the countries have to be worried. Because, you know,

that it can be not real information, but it can be the truth because when they began to speak about one or another battles or it involves enemies, or

nuclear weapons or chemical -- some chemical, you know, issues -- chemical weapons, they should do. They could do.

I mean, they can. For them, life of the people nothing. That's why we should think, not be afraid. I mean, don't be afraid, be ready. But that is

not the question to Ukraine, and not only for the Ukraine for all the world, I think so.

(END VIDEO CLIP)

QUEST: Ben, Dmitry Peskov, the Press Secretary said that nuclear weapons would only ever be used in the event of an existential crisis concerning

Russia. Do you think that's changed?

WEDEMAN: I hope not, Richard. I hope it has not changed yes, I heard more than once Zelenskyy -- President Zelenskyy's comments on the use of nuclear

weapons. And in terms of how it has been seen here, the fact of the matter is, the use of nuclear weapons, tactical nuclear weapons or whatever you

want to call it, it is a hypothetical.

At the moment, this part of Ukraine and other parts of Ukraine as well are dealing with something real, which is daily bombardment, the siege in

Mariupol, this impending offensive, and this war has already sent more than a quarter of the population sent them -- fleeing from their homes.

And so I think people's minds are more focused on reality than a hypothetical possibility at the moment, but obviously, if people here had

the time to consider it, they might be concerned, but their concerns, I'm afraid, Richard, are a little more immediate.

QUEST: Ben, thank you. We needed to hear from the position on the ground. Thank you, Ben Wedeman, who is in Ukraine and you could see more of the

interview with President Zelenskyy in "The Lead" in the next hour. The full exclusive interview will be on Sunday in a Special Edition of "State of the

Union." That's at 2:00 PM London Time, 3:00 PM in Europe.

The E.U. and the U.S. are ramping up their efforts to seize and freeze sanctioned assets. Germany has impounded a $600 million super-yacht in

Hamburg. It is linked to the Russian billionaire, Alisher Usmanov, and is said to be named after his mother.

[15:20:10]

QUEST: Usmanov was a major shareholder in the English Premier League team Arsenal. He had an estimated worth of more than $12 billion, now subject to

Western sanctions.

In Italy, police have seized property in Sardinia owned by the former Formula One driver, Nikita Mazepin. Now he is under E.U. sanctions over his

father's close ties to Russia's President Putin.

The E.U. says that the senior, the father, is a member of Putin's inner circle. And as for Nikita himself, he used to drive for the Haas Formula

One team that was until the sponsorship was removed. His father's fertilizer company sponsored the team. The team has terminated his contract

-- Nikita's contract in the weight of the invasion of Ukraine.

We are pleased to have Nikita Mazepin who joins me now. Sir, thank you for joining. And so your assets have been seized? Or will be, if they come into

the purview of Western authorities. How is that affecting you?

NIKITA MAZEPIN, FORMER FORMULA ONE DRIVER, HAAS F1 TEAM: Hey, Richard, you know, thank you for having me.

In respect to the question that you've asked me, I'll be honest. You know, I'm not going to be crying tears, you know, over this. In the bigger

picture, it's not important. And, of course, at some point, we'll be looking at the options that we can be taking, in terms of sanctions and in

terms of deals, but, you know, that's just -- there's just time down the road.

QUEST: I sort of feel that if we can talk sanctions and how sort of you feel about the fact that your contract was terminated and the sponsorship

and all of those sort of things. But I think, sir, we do need to ask where you stand on this war? What is your view on this war?

MAZEPIN: My view is that, you know, whatever is going on right now, and I can only see a very small bit from where I am in Moscow, you know, it's

very painful, and I definitely feel it.

You know, I've been living for 23 years, and I was living in a very calm world. But, you know, as to my official position, I've said many times that

it's very important to be neutral for me, because I'm an athlete. And I feel that it's important to be able to be to be neutral.

You know, and even for that, I have created a foundation that will help athletes stay neutral in principle.

QUEST: Can you understand how people hear that and say: How can you be neutral when half the world is saying that there is a genocide underway at

the hands of the Russian government?

MAZEPIN: I understand and as I said, I feel that is hugely painful. But I feel that you know, for who I am, and I feel myself as an athlete

competing, you know, used to be competing in Formula One, I am not a politician to speak out on this. And I don't have enough knowledge to be

making these decisions.

So public neutrality is important, and I would say, people should have a right to speak, and they also should have a right not to speak if they wish

to do so.

QUEST: I'm familiar with the old proverb don't visit the sins of the parents on the children. Of course, it's a wise saying, and but everybody

says your father is part of President Putin's inner circle. Now, I don't know whether he is or not. So I'm asking you, is he?

MAZEPIN: Well, look, I would like to make two points here. First, everyone is now a member of Putin's inner circle and that has become a trope. You

know, it's like everyone, as a business person, or as an athlete, or an artist, you know, as hanging out in Kremlin every day, which is, you know,

obviously not the case. And perhaps, you know, if thinking people analyze the number of people currently described as members of Putin's inner

circle, they will ask themselves the question of, you know, how inner is that circle?

QUEST: In terms of your own career, as an athlete, how do you get back? Now, the U.S. Secretary of State says, for example, that this war could

last until the end of the year and beyond and certainly the sanctions are not going away, anytime soon. So what's your idea for how you can get

behind the wheel of a car again?

[15:25:05]

MAZEPIN: It's difficult to say, you know, at this moment in time, because I'm very wary that my issue is that I've lost a job that, you know, I was

trying to get to Formula One for 17 years and, and then I eventually got there. But it's a very minor issue, if you compare it to the big things

that is going on in the world right now.

So, of course, you know, I would love to get back to the sport. I feel that I've got a lot of unfinished business there. But, you know, it just needs -

- I need to wait until things cool down, and I don't even know who I can get back to. Because, you know, Haas has obviously done what they did with

the game, not the cleanest game, in my opinion, but it is different for me.

QUEST: But perhaps the most difficult question I'll ask you tonight, is your studied neutrality going to be the problem, the issue that will

prevent you from driving again? People will say he took a position of neutrality, and that will be held against you for the foreseeable future,

possibly for the rest of your career?

MAZEPIN: Well, it's a question that I feel is quite easy to answer. I think as I said, everybody has a right to speak or not to speak and FIA, the

highest governing body has enabled me to compete as long as I'm neutral. But I would say the biggest issue here is, you know, coming back to the

sport, where teams are allowed to be, you know, keeping sponsorship money without fulfilling the contract. And, you know, even asking for more, even

though they say they don't want money from Russia, so I'm not sure but the sport values need to be evaluated for me after this.

QUEST: Nikita, we will talk more and we'll talk to you again, I hope. I'm grateful you've spoken tonight to QUEST MEANS BUSINESS. Thank you.

As we continue, air travel. Now, we've talked about it numerous times. It's one of the busiest days of the week, so far, and the French carrier French

Bee is expanding low cost routes across the Atlantic, we need to look over, in a moment.

(COMMERCIAL BREAK)

[15:30:28]

QUEST: I'm Richard Quest. A lot more QUEST MEANS BUSINESS this Good Friday. We're talking about travel. Many carriers have tried and failed to make low

cost long haul flights work. The Chief Exec of French Bee says his airline can succeed where others have failed. And from New York to London to

Sydney, renters in major cities around the world, feeling the squeeze soaring prices.

It's after we've had the headlines. Well, of course it is. Because this is CNN and on this network, the news always comes first.

Palestinians have clashed with Israeli forces at Jerusalem's Al-Aqsa Mosque on Friday morning. More than 150 Palestinians have been reported injured.

The fighting came on a major holiday weekend. Passover, Ramadan and Easter. All fall on the same weekend this year.

The death toll has risen to almost 400 in South Africa from a week of terrible flooding. 6000 homes have been damaged or destroyed and it's hard

to find clean drinking water in the KwaZulu-Natal region. Things are likely to get even worse as the weather forecast calls for more rain this weekend.

North Korea has marked the birth anniversary of its late founder Kim Il- sung with a colorful celebration in Pyongyang, as it is means squarely knit up with fireworks, singing and dancing and a light show that will run until

Sunday. This is after monitor speculated the country also hold a military parade or a missile launch. There's no sign of either.

China's central bank is when relaxing the rules for Chinese lenders. The idea stimulate the world's second largest economy. A clear sign of the

growing anxiety now in Beijing over the damage being caused by the strict COVID lockdowns. In an unexpected move though, the People's Bank of China

held off from cutting interest rates which are -- which perhaps would have been the blunt instrument to use.

Across China more than 40 cities remain under full or partial lockdown. Shanghai, the country's financial center accounts for 95 percent of new

COVID infections. Now if you think we had perhaps you, I don't know, had a really difficult lockdown. Well, when you see what's going on in China, it

makes you -- gives you cause and pause for thought. David Culver, our correspondent, the only American television correspondent in Shanghai at

the moment gives us a look at life under lockdown.

(BEGIN VIDEOTAPE)

DAVID CULVER, CNN INTERNATIONAL CORRESPONDENT (voice over): A few steps of freedom granted to some Shanghai residents, strolling their own

neighborhoods as if taking in some strange new world.

UNIDENTIFIED MALE: But where are you going to go? There's nowhere to go.

CULVER: Shops still closed, and public transportation halted, still this woman can't hold back her joy, recording as she and neighbors roam the

empty streets.

After forcing 25-plus-million people into weeks of harsh lockdown, government officials facing mounted pressure lifted some restrictions, for

communities like mine without a positive case in the last seven days, that meant we could actually step outside our apartments. My neighbors enjoying

the taste of relative freedom, and so too, our pets, eager to stretch their legs, still keeping within the confines of our compound.

The extent of my freedom is all the way to here, the compound gate still double locked, it's been like that about a month. In recent weeks,

community permission to leave our homes, mostly for COVID tests of which there were many. We could also step outside to pick up the occasional

government distribution.

CULVER (on camera): Today's delivery, a bag of rice.

CULVER (voice over): But even with heavy restrictions still in place, we had it good, for now at least.

The majority of this city remains in hard lock down, kept to their homes, some hungry and suffering. This woman heard begging in the middle of the

night, begging for fever medicine for her child, and this man, recording his dwindling food supply.

Then there were those who've tested positive, tens of thousands being sent to cramped government quarantine centers whose residents described a host

of problems, facilities quickly and apparently poorly constructed. Outside of shanghai, panic spreading quicker than the virus. The horror stories

from China's financial hub have residents in other Chinese cities stocking up, from Suzhou to Guangzhou.

[15:35:05]

CULVER: Online, sales for prepackaged foods surging. This as China's national health commission warns of more cases and publicly calls out

Shanghai for not effectively containing the virus, shifting blame to local officials for allowing it to spread to other places.

China's strict zero COVID approach, forcing dozens of cities into weeks- long full or partial lockdowns. Residents in Jilin banging on pots to protest. Most of the 24 millions in the Chinese province confined to their

homes for more than a month now.

Back in Shanghai, the joys of freedom for some might last only a few hours, as it only takes just one new case nearby to send them back inside,

resetting the clock for their community. Another 14-day sentence in lock down, a seemingly endless cycle.

David Culver, CNN, Shanghai.

(END VIDEOTAPE)

QUEST: U.S. airports had their busiest day of the year on Thursday, the TSA screened more than 2,300,000 people probably traveling for this weekend

holiday with all of the major religions having its celebrations taking place on the same weekend. Thursdays figures out pace the same day and it

fell short of the 2019 pre-pandemic numbers. The surge in demand is good news for the low cost carrier French Bee.

It's expanding its roster of fruits to and from Paris or the airport. The airlines beginning service from Los Angeles in April. It runs flights to

San Francisco to Newark, it has an onward flight to Tahiti and Reunion which French Bee's France first long haul budget airline, competitive

transatlantic fares. With me now is Marc Rochet, chief executive. Well, you're doing well, sir. You've got it up and running and it is flying and

you did it in a pandemic.

And you're managing to do it but now it gets difficult because now you have to sort of grow to keep the thing moving, don't you?

MARC ROCHET, CHIEF EXECUTIVE OFFICER, FRENCH BEE: Yes. But I have to say that we have a booming demand mainly for the summer because people --

including people from France has been so frustrated not to travel for almost two years. They made also -- I have to say some savings, so they

want now to vacation time, they want to travel and UAC is so easy destination that there is a very strong demand.

We will probably in the summer 2022 do bigger and more passenger when we have done in 2019 which was with last good year before the pandemia.

QUEST: So. what are you going to do with those brand new nice 350s that you've got in the winter? Because as we all know, the -- filling the plane

in the summer is not that difficult at the right price. But filling it in the midst of winter particularly if there's an economic slowdown. So,

what's your plan?

ROCHET: This is a really good question indeed. And in fact, you have to say that we have chosen to fly to the U.S. as we said before and summertime is

going to be very good. In the winter time we have sunny destination which is mainly built around the Indian Ocean and Reunion Island as you said

before. We are also flying to Tahiti. Tahiti it is a winter destination because it's always sunny. Very good landscape and very welcome people

(INAUDIBLE)

So, we are mixing in the summer mainly focused on the United State market. And as you said we are flying now San Francisco, L.A. at the end of April

and New York and we will add another destination in the wintertime. So, I can tell you we will be on the sunny destination in winter because the

demand is strong from what we call VFR, visit friends and relative. And from tourists people, we are not at all a business airline, we are not a

legacy.

We have no business class. But most people, VFR tourists people, they want to travel somewhere but they want also to go to sunny destination in

winter.

QUEST: How do you avoid the problem that has bedeviled all low cost long haul airlines? And it's this, al it requires is the other carriers to

increase the number of cheap seats, yield management themselves and it siphons off across the whole network just enough to make you profitable or

to prevent you from becoming profitable. I looked for example at New York, I, you know, I matrix your flight all the way to New York and yet you are

the cheapest.

[15:40:08]

QUEST: But of all the others, the Deltas, the Americans, Air France, as all the others, if they just reduce their prices a bit they can siphon off

enough passenger traffic to make it very difficult for you.

ROCHET: Yes. But both legacy carriers as you said, we have very high production costs. We have lower production costs. So, it will be quite

difficult for them to low where we are pricing, we can do it obviously, and then can -- they can put the pressure on the market, but the cost per seat

-- cost per seat mile will be always lower in our organization. We are flying brand new airplanes, we are flying a very fuel efficient airplane.

Probably more efficient than the average fleet we are flying. And we have a cost advantage where we can fight. Of course, it's not easy. But we have

also -- I have to say more seats in our planes. S we can fight with them. And I think at the end of the day, the customer will choose the best way

for them and for their family. They are not riveting alone our customers, they are not riveting my two, three or four people. Let's make a big

difference.

QUEST: Marc, I'll be in Paris next month. Let's meet up and we're talk more about it about the way in which the French Bee. It's an interesting

development. It's always good to see a new airline in the market.

ROCHET: Yes. And we are more than welcome in Paris and more than welcome on French Bee.

QUEST: Look, thank you, sir. Marc Rochet joining me. Now, living in New York has always been expensive. Record rents and now making it even more

unaffordable. It's a challenge facing the city's rebound as we continue tonight, record rents in New York.

(COMMERCIAL BREAK)

QUEST: The price of housing in New York City hit a record high. On one site, a studio apartment now is around $3,000 a month. Now what does it get

you? Well, this is what we found. It is the studio. It doesn't look terribly impressive, but it isn't a very popular, desirable Chelsea

neighborhood. And all this can be yours for, ready? $3,250 a month. And remember, it's a studio, it's not even a one bedroom. It was going for half

that amount last year.

[15:45:05]

QUEST: Similar story on the other side of the Atlantic in the U.K. prices are sharply high. London is 14 percent up. And in northern England,

Manchester is 19 percent up. Richard Barkham is the chief global economist at CBRE. One of the world's largest commercial real estate companies. He

joins me from New York. All right, sir. I know your commercial real estate. But, you know, the two go hand in hand at one level because if you're going

to have offices, you need places for people to live. So, is this very frothy residential market? Is this good? Is this -- which side is washing

which?

RICHARD BARKHAM, CHIEF GLOBAL ECONOMIST, CBRE: Well, I think the surge in rents indicates a good thing in a sense, it indicates the recovery from the

pandemic, it indicates a surge in job market that we have seen. And it indicates as well that people have confidence in our great cities. Of

course, the fact that people have flooded back into the cities and we first noticed this in late 2021 has exacerbated.

I think preexisting problems with our great cities, which is lack of supply of residential apartments. And, you know, that's what's showing up. Just a

surge in demand, butting up against limited supply.

QUEST: Did you secretly always know, you know, at the height of the pandemic, whilst people were waffling on pontificating that cities would

add, we'd all be working from home in our pajamas. Did you secretly tell your bosses now this is just not going to happen? Give it three years and

everything will be back?

BARKHAM: Well, we did more than secretly tell our bosses I think we told everybody who was willing to listen that, you know, we had faith in the

economic power and the social power and just -- the create -- the cities as creative hubs and business centers as well. So yes, I think we've always

had that kind of level of confidence that fundamentally cities represent where businesses want to locate that people want to live and work.

QUEST: On this program earlier, we had Bill Dudley, the former president of the New York Fed. He basically says stock markets are going to fall or have

to fall, unemployment has to rise if the Fed is going to get things under control. Do you -- I mean, mean pretty much now there's -- I won't say

unanimity. But there's consensus on a recession coming down the road. Are you worried?

BARKHAM: I don't think there is consensus on a recession. I think that the majority of the economics community would see, I think that we're going to

have a slowdown, and we need a slowdown. There are too many jobs and not enough people to do those jobs. But I think that we're probably at peak

inflation now and inflation is likely to fall over the course of the year. So, I don't think a recession is inevitable.

Although you have to say financial conditions are going to -- going to continue to tighten and growth will slow. But I think there are other

factors in the world economy right now, such as a slowdown in China that are going to provide some relief on the inflation front, that maybe it

might not come through until the end of the year. But I think is probably in the system already.

QUEST: Sir, good to have you. I appreciate it. Thank you. Now --

BARKHAM: Bye.

QUEST: In a moment, I -- you're just going to have to watch it (INAUDIBLE) after the break. You're going to have to watch it. You're going to have to

understand it and you're going to have to appreciate just how horrific world events are in a moment.

(COMMERCIAL BREAK)

[15:51:39]

QUEST: And the moment there's pictures from the Vatican Pope Francis is leading Good Friday services at the traditional way of the Cross service

that's taking place in Rome's Coliseum at the moment. That's taking place.

And across the world celebrations this evening for Passover, Ramadan and of course Easter as you see. The three festivals taking place at the same

time. And it happens about once every 33 years. So, as everybody is celebrating, I want you to watch Clarissa Ward's excellent reporting.

Particularly, the old lady at the end of the report. No one should live their final days like this.

(BEGIN VIDEOTAPE)

CLARISSA WARD, CNN CHIEF INTERNATIONAL CORRESPONDENT (voice over): The town of Avdiivka is no stranger to war. For eight years, this has been the front

line of Ukraine's battle with Russian-backed separatists. People here are used to shelling. They have never experienced anything like this. A missile

can be heard overhead. This emotional man approaches us. They smash the old part of town, he says.

As we talk, the artillery intensifies.

WARD (on camera): I told him it's better to go home now because there's a lot of shelling and he said there's more shelling where he lives.

WARD (voice over): As Russia prepares a major offensive in the east, frontline towns like a Avdiivka are getting pummeled.

WARD (on camera): So, you can hear constant bombardment This is the bomb shelter down here but you can see this building has already been hit.

WARD (voice over): More than 40 people are now living in what used to be a clothing store. Lita (ph) and her two sons had been here for three weeks.

She wants to leave but says her boys are too scared to go outside.

We're afraid to stay and afraid to go, she tells us. But it's fate. Whether you run or don't run. On an apartment block, an icon of the Virgin Mary has

been painted. A plea for protection. But there is no respite in the bombardment.

WARD (on camera): If we look over here, you can see the remnants of some fresh strikes.

WARD (voice over): 37-year-old government worker Rati Slab (ph) looks at what remains of his family home. He takes us inside to see the full scale

of the destruction.

WARD (on camera): It's completely destroyed.

[15:55:05]

WARD (voice over): Mercifully, no one was at home at the time of the strike.

UNIDENTIFIED MALE: It was photo albums. My children's photograph.

WARD: His family has already left but he says he plans to stay.

I'm afraid like anybody else. Only the dead aren't afraid he tells us. But a lot of people are still here on Avdiivka living in bomb shelters and we

need to support them. Authority say roughly 2000 people remain in this town. There is no water, no heat. Electricity is spotty. The local school

has become a hub to gather aid and distributed to the community.

Volunteer Igor Golotov (ph) spends his days visiting the elderly and disabled. Today he is checking in on 86-year-old Lydia (ph), petrified and

alone, he has yet to find an organization willing to come and evacuate her.

When there's no electricity and it's so dark and there's shelling, she says, you can't imagine how scary it is. She tells us she recites prayers

to get through the night. I never imagined that my end would be like this, she says. You can't even die here because there's no one to provide a

burial ceremony. For Igor, it is agony not to be able to do more.

I promise you, Igor says, I will help you to be evacuated.

As we leave, Lydia is reluctant to say goodbye. It is terrifying to live through this time to do it alone is torture. It's so nice to see real

people, she says. Probably it's going to get worse. A prediction all but certain to come true a second Russian offensive draws near.

(END VIDEOTAPE)

QUEST: You can't even die here because there's no one to bury you.

(COMMERCIAL BREAK)

QUEST: The three festivals that are being celebrated, Ramadan, Easter and Passover have at their heart of course, suffering. Today, of course now

there are more celebrations of the family getting together. And so as you do tonight, and over the weekend, get together with family and friends to

celebrate as you should, as we all should. And as they remember the old lady that we've just seen, who can't even die because there's no one to

bury her.

And let's remember that the suffering that's taking place at the moment. And so in that spirit, I do wish you a happy festival. I wish you Chag

Sameach, Ramadan Mubarak and of course, very happy Easter. And we'll do it all again next week on QUEST MEANS BUSINESS.

[16:00:01]

QUEST: Have a good weekend.

END