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Quest Means Business
Thousands Of Flight Cancellations; Rate Hikes Expected As EU Inflation Soars To Record Highs; China Declares An End To Chaos In Hong Kong; Ukraine: Russian Strikes Kill At Least 20 People Near Odessa; Brittney Griner Appears In Court For Drug Smuggling Trial; W.H.O. Says Monkeypox Cases In Europe Tripled In Two Years. Aired 3-4p ET
Aired July 01, 2022 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:34]
RICHARD QUEST, CNN BUSINESS ANCHOR: It is an hour to the closing bell on Wall Street and the Dow, if you look at the way the market is trading,
we've been down most of the day, and now we're up quite strongly towards the close. So I imagine it's going to be a positive end to the session. But
of course, there are some serious losses as we end the first half of the year.
The markets and the events of the day. A really tough start to the summer travel season, a combination of strikes and staff shortages, mass
cancellations on both sides of the Atlantic.
President Xi was in Hong Kong amid questions about its future role in the global economy.
And I get to see firsthand the damage to the Qatar Airways A-350s that is now in a massive court case between Qatar Airways and Airbus. You'll see
the pictures of the damage right here.
Live from London. It's Friday, it's July the first. I'm Richard Quest. I mean business.
Good evening.
The first of July and tonight the summer holidays have arrived and with it, air travel misery and mayhem just as travelers are heading to the weekend,
they're now facing strikes, cancellations and delays and that's both in Europe and the Americas.
So in Europe, let's begin. Charles-de-Gaulle is the latest airport to be affected by striking workers. Well, it's the summer, of course, they're on
strike. Ground crews are demanding higher pay, so you strike when people are traveling, about 10 percent of Friday's flights were canceled due to
the disruption.
In the US, the airports and airlines are short staffed, but it is the start of America's Fourth of July Independence weekend. They're expected to
handle passenger numbers, at least if not more than pre pandemic.
Delta's Chief Executive has already apologized to frequent flyers, calling it "an environment unlike anything that we've ever faced."
Anna Stewart joins me now.
I'm not sure which I find more disconcerting -- the strikes. I mean, talk about hitting people when they're just going on a holiday after a couple of
torrid years, or the fact that airports, airlines, and regulators can't get their act together.
ANNA STEWART, CNN REPORTER: I mean, it is a giant mess, isn't it? We look around the world, particularly in Europe at all the different strikes,
labor shortages, and generally for people looking ahead for a summer holiday at last after two years.
You're looking at long queues, airport delays, airport cancellations, you're looking at your bags, maybe being lost. I certainly had that
experience myself of late, but this is pockets of disruption. That's the good news. This isn't for everyone, and I do feel like unfortunately, when
you experience travel chaos, people are quite quick to go to social media because it's truly awful.
Most of the strikes have been obviously mentioned weeks in advance, there is some spillover effect. And of course, it's hoped that things will be
worked out before the strikes happen. But so far, that hasn't been the case.
Big strike today at Charles-de-Gaulle and Orly. We've had big strikes from Ryanair this week, really across the board in Europe. EasyJet striking as
well in Spain this weekend -- Richard.
QUEST: Is there any hope that things will get easier? I've got a friend who flew into Amsterdam, and bag either lost, mislaid or otherwise and is
unlikely to see the bag for some time to come.
Is there any help? Is there any likelihood of things getting better? I know, the British government said they expect and hope it will.
STEWART: Yes, I'm interested in in the solutions that you could get to particularly for this summer, which, of course is now already here in terms
of people's travel expectations. Probably not hugely better.
Some of the pay rises that are being demanded are simply beyond what airlines and airports can possibly afford, and I think really, the biggest
problem perhaps is actually just the fact that there are labor shortages, which is doing nothing to help people who aren't being paid enough because
they're being overworked.
And where do you get more staff? The problem of the pandemic is, we've had this huge shift of people going to different types of jobs, people wanting
to do something else, people have traveled away.
There is certainly some agency staff, I believe, coming from Turkey to help out some European airports, but that is a temporary fix and probably won't
go anywhere near to fixing the problem at hand -- Richard.
QUEST: Anna Stewart who is in London. Thank you
[15:05:10]
The US is facing chaos in many cases, as people get ready to travel for July the Fourth. CNN's Pete Muntean on the conditions in the United States.
(BEGIN VIDEOTAPE)
PETE MUNTEAN, CNN AVIATION CORRESPONDENT (voice over): At its round the clock Command Center in Virginia, the Federal Aviation Administration is
preparing for what could be the biggest air travel weekend in years. The goal here: Reroute flights around bad weather, overcrowded airspace, even
space launches in hopes of avoiding flight cancellations that are plaguing airlines.
The latest Federal data shows airlines have canceled three and a half percent of all flights so far this year, a 42 percent increase over 2019
before the pandemic.
UNIDENTIFIED FEMALE: They rebooked us for flight for tomorrow, and now, we're just trying to figure out if we want to go out for a hotel or just
stay here at the airport.
UNIDENTIFIED FEMALE: I was really panicking.
UNIDENTIFIED FEMALE: You have patience. Bring snacks.
UNIDENTIFIED FEMALE: Yes. Book another -- yes.
MUNTEAN (voice over): Transportation Secretary, Pete Buttigieg is warning airlines that they must perform.
Last weekend alone, airlines canceled 2,200 flights nationwide. The weekend before there were 3,200 cancellations.
MUNTEAN (on camera): Secretary Buttigieg, what can be done to end these massive flight cancellations that keep happening?
PETE BUTTIGIEG, U.S. TRANSPORTATION SECRETARY: Well, I was especially concerned after what we saw with the Memorial Day travel weekend. Look, we
are counting on airlines to deliver for passengers and to be able to service the tickets that they sell.
LAKISHA PRICE. US FEDERAL AVIATION ADMINISTRATION: We have a good representation of the airline industry here, right here at the Command
Center on the floor with us.
MUNTEAN (voice over): Here, FAA workers manage the flow of flights alongside representatives from airlines and industry groups. Airlines say
they are only partly to blame for cancellations and have called on the FAA to staff up on air traffic controllers.
The agency insists it is shifting controllers to delay and cancellation hotspots.
PRICE: We do not work in a vacuum. So, we collaboratively make decisions and strategies together to help mitigate those impacts that are in the
system.
MUNTEAN (voice over): Airline after airline has announced it is preemptively canceling summer flights. Delta Air Lines is letting all
customers change their flights free of charge, saying operational challenges are expected this holiday weekend.
This week, Delta pilots picketed at major hubs saying they are overworked.
MUNTEAN (on camera): So who is really to blame when it comes to these massive cancellations?
BUTTIGIEG: Well, let's be very clear. The majority of delays and the majority of cancellations have not been caused by air traffic control
staffing issues.
Bottom line here is that the airlines that are selling these tickets need to have the crews and the staff to back up those sales.
MUNTEAN (voice over): After passengers set a new pandemic era record, the TSA thinks this weekend will be big. The question for travelers is,
will it be smooth?
MUNTEAN (on camera): Is staffing an issue for TSA as well?
DAVID PEKOSKE, TSA ADMINISTRATOR: Well, staffing is still a challenge for, I think, for everybody. But for us, it's not an issue that's going to
impact wait times for travelers.
MUNTEAN (voice over): Pete Muntean, CNN, Warrenton, Virginia.
(END VIDEOTAPE)
QUEST: To economic events now, and interest rates in the European Union could soon face an aggressive increase. The latest numbers on rising food
and energy costs have pushed inflation to an all-time high.
Consumer prices saw it by 8.6 percent in the year to June, well above the ECB's target of two percent. And the bank, the ECB is expected to begin its
first rate rise in more than a decade. It's already telegraphed that for later this month.
With me is the former Vice Chair of the US Federal Reserve, Donald Kohn, who now serves as Senior Fellow at the Economic Studies Program at
Brookings, good to see you, sir. Glad to have you.
Now, on both sides of the Atlantic, the current inflation number is three times what it should be. How -- we've got the beginning of the monetary
tightening, but how far and how deep and how aggressive do you believe it's going to have to be?
DONALD KOHN, FORMER VICE CHAIR, US FEDERAL RESERVE: Well, I think it's -- you're right. We're at the beginning of monetary tightening. I think a lot
of the inflation, especially in Europe, but in the US as well has arisen from the shocks that came from the Russian invasion of Ukraine, the rising
food and energy prices, but especially in the US, it came also from excess demand from very expansionary fiscal policy, very expansionary monetary
policy for a long time.
So, the Fed needs to raise interest rates, the ECB needs to raise interest rates. I do think the situation on both sides, on either side of the
Atlantic is a little different. It's a much more difficult problem really for the ECB because they're very much on the frontline of the effects of
the Russian invasion. We're feeling some of it, but they're really -- and that's depressing demand as well as increasing inflation.
[15:10:11]
QUEST: If we take the US for a second, how much inflation do -- vis-a- vis inflation vis-a-vis recession, as the tightening takes place, how much inflation do you think the Powell Fed will tolerate before it says, hang
on, we've got to start -- we've got to start priming the pump again.
KOHN: Inflation or recession, so you said how much inflation will they tolerate?
QUEST: Well, basically, so to clarify, as things slow down, but they've managed to get inflation down to say four or five percent, will they stop
there? Or will they continue to push it down to two or three percent even though the economy could be at a standstill?
KOHN: So, I think they've made it very clear that their highest priority is getting inflation down into that two percent area, and they
need to see clear signs that it is going that it's on -- it is headed on its way there. So right now, their priority is getting inflation down.
Now, when they get further down the line and the economy softens, it's already begun to soften a little bit, but if it softens more, the
unemployment rate rises and they can see looking forward that inflation has not only dropped to four percent as you said, but is on its way to two,
then they can let up on the brakes. But they need -- they they've been very clear they need to see a path, too.
QUEST: In your view, how much is Central Bank credibility on the line on both sides of the Atlantic, in the sense that everybody sort of got it
wrong. I mean, it's not just the ECB or the BoE or -- everybody miscalculated as Powell admitted what the effects would be, but it does
mean that credibility is now in question to get it right.
KOHN: So I think they need to do what they said they're going to do. They need to take the actions necessary to get inflation down, and to get
back to two percent.
So yes, everybody miscalculated. A lot of economists miscalculated as well, but they're in the -- I think, the Fed is to be congratulated for admitting
that they miscalculated, pivoting towards tighter policy, taking the steps necessary to correct the situation.
QUEST: Chair Powell said at the ECB forum yesterday, he said, we have learned more about inflation and understand more about it now than we did.
What do you think he meant?
KOHN: I think he meant they were -- they learned and actually, were reminded thinking about coming out of the 1970s of supply shocks and supply
factors feeding into this.
So the excess demand coming from easing monetary and fiscal policy, but also the constrictions of supply coming from the invasion of Ukraine and
the lingering effects of COVID. So, it's a complex -- a complex equation here.
We're always learning something. Remember, COVID was a completely unexpected or an unprecedented event, so very hard to analyze.
QUEST: Donald, I know the answer is that they can get a soft landing and they can avoid a recession, but do you think they will?
KOHN: Maybe this is -- I'm answering for hope. I certainly -- I think they can and I hope they will, but I think it's going to take a lot of
skill and some luck, too.
On the luck side, I think it's about not -- no more of these supply shocks. So the Chinese economy opening up, people going back to work as COVID dies
down and no worse facts from the Russian invasion of Ukraine. On the skill part, I think it's going to be keeping the brakes on long enough to slow
the economy, raise the unemployment rate a little, get growth dance so that the demand for labor -- the key here is the labor market in the US.
So that demand for labor back down some more in keeping with the supply that can be sustained, and it is possible. It'll be hard and as I say,
requires luck as well as skill about when to press on the brakes and when take your foot off.
QUEST: Sir, I'm grateful to you. Have a good weekend. Enjoy July the Fourth, sir, if you can. Thank you.
KOHN: I will. Thank you.
QUEST: As we continue, China assumed control over Hong Kong 25 years ago -- one country two systems. The Chinese leader, Xi Jinping says it's
initiated in his words, "true democracy." His critics say otherwise.
(COMMERCIAL BREAK)
[15:17:49]
QUEST: China's leader Xi Jinping says true democracy began in Hong Kong when China took control. President Xi made the comments in a rare visit to
Hong Kong. It commemorates the 25th Anniversary since the former British colony was handed over and became a Special Administrative Region.
Hong Kong was promised a high degree of autonomy that critics are now saying how autonomous the city is when its opposition is being crushed by
Beijing's crackdowns.
Ivan Watson with the full story with Xi Jinping's trip from Mainland China.
(BEGIN VIDEOTAPE)
IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice over): Flag- waving children greet China's President on his first trip outside Mainland China since the start of the pandemic.
Xi Jinping arriving by train to celebrate the 25th Anniversary of Hong Kong's handover from British to Chinese rule.
XI JINPING, CHINESE President (through translator): Over the past few years, Hong Kong has withstood one severe test after another and overcome
one risk and challenge after another.
After weathering the storms Hong Kong has emerged from the ashes with vigorous vitality.
WATSON (voiceover): Xi's stormy metaphor matched by the typhoon roiling Hong Kong's Victoria Harbor. The Chinese authorities are declaring a new
era for this former British colony and an end to what they describe as the chaos of the past.
This city has certainly changed since the last time the Chinese leader visiting.
Five years ago, tens of thousands of pro-democracy demonstrators marched peacefully through the streets.
(on camera): You can't see anything like this in any other city in China. You have a diversity of opinion.
For instance, people dressed up as zombies here protesting about long working hours.
(voiceover): But this year, there was no annual pro-democracy march. In fact, Hong Kong's once ubiquitous street demonstrations have been banned
for two years, part of a crackdown on dissent that's left most of the city's political opposition leaders in jail or in exile with independent
news outlets targeted by police and closed.
[15:20:04]
Western governments accused Beijing of breaking its promise to ensure 50 years of freedoms in Hong Kong.
BORIS JOHNSON, BRITISH PRIME MINISTER: On the 25th anniversary of the handover, we simply cannot avoid the fact that for some time now, Beijing
has been failing to comply with its obligations.
It's a state of affairs that threatens both the rights and freedoms of Hong Kongers and the continued progress and prosperity of their home.
WATSON (voice over): But in the Chinese President's view, order has been restored. Xi congratulated John Lee, the former police officer who is now
being inaugurated as Beijing's handpicked leader here. But no handshakes between these socially distancing officials.
The Chinese President firmly committed to his Zero COVID Policy. Beijing may have crushed Hong Kong's independent spirit, but authorities are having
less luck stopping a fresh COVID outbreak. Maybe that's why on his first visit in five years, the Chinese President didn't spend the night in Hong
Kong, and instead commuted back and forth from Mainland China.
Ivan Watson, CNN, Hong Kong.
(END VIDEOTAPE)
QUEST: Hong Kong's new leader, John Lee is vowing to strengthen the city status as a global business hub with recent surveys, well, no means as
optimistic about the future.
The American Chamber of Commerce says 44 percent of expats are thinking of leaving.
Kurt Tong is the former US Consul in Hong Kong and Macau. He is now a managing partner at the Asia Group, he joins me. Look, I read Lee's
inaugural speech. I don't -- I mean, I could be proven wrong, but I don't think the word "democracy" appears in it once.
He talked about how everything is, you know, the importance of business, the importance of stability, blah, blah, blah. But I think he fails to
realize the crucial point, which is that which made Hong Kong.
KURT TONG, FORMER US CONSUL IN HONG KONG AND MACAU: Yes, I think the new Chief Executive is definitely taking his cues from President Xi, and
President Xi's priorities are first and foremost, political stability from the Chinese perspective in Hong Kong.
And second, but also importantly, economic growth and development and how that contributes to the Mainland. I do think that the Mainland government
and President Xi have a view that the cause of political instability in Hong Kong was economic or had to do with people feeling like their
livelihood was not good. And in fact, the view from the West is that it was because people wanted to have democratic rights.
QUEST: Is it your view -- do you share the view of some that actually, China -- Mainland China doesn't really care and actually, will be quite
happy to watch Hong Kong go down the toilet? It's got Shanghai, it's got its own larger economy itself.
This idea of Hong Kong being the window for financial window for China simply is irrelevant these days, and if Hong Kong withers, so be it.
TONG: You know, Richard, I don't agree with that. I think that China needs Hong Kong for at least another decade to provide the access to
foreign capital and the flow of information and ideas and finance that will really help develop the Chinese economy.
Shenzhen and Shanghai are just not able to substitute what Hong Kong does, because they can't operate in a hard currency the way Hong Kong does, and
they don't have the same human talent and the same flow of information that is really necessary for a global financial center.
QUEST: So Hong Kong cannot thrive if China maintains to keep -- never mind the democracy issues, let's just talk straight business. It cannot
thrive if China keeps its foot on the neck on its zero COVID policy.
Look, you're going about your normal daily life, wherever you are, I am as well. You know, everything is normal in the rest of the world. It's far
from normal there, and until they get rid of that or move back to normality, it can't survive.
TONG: Yes, certainly, for the last couple of years, the single biggest issue for the foreign business community and the Hong Kong business
community has been the inability to move and do business in person with the rest of the world, which has really been a major drag on activity. Once
that goes away, and I've got to assume that at some point, in one form or another, COVID will be less important, there are going to be other issues
as well.
Particularly, if the rule of law still upheld in Hong Kong in commercial law, and can people still get the information they need to make
investments? So far, that might be okay, but those need to be watched closely by foreign investors.
[15:25:00]
QUEST: As we look towards a US election in a few years' time and we look at the poor relations between China and the US, which of course is
worsened, in a sense because China is supporting -- well, it is supporting President Putin, but not quite going all the way, but at the same time,
highly critical of the US.
Ukraine is a very awkward situation for China.
TONG: Yes, they kind of stepped in it by having President Putin come to Beijing for the Olympics.
QUEST: Right.
TONG: And then two weeks later, launched an unprovoked war. I think, personally, I think China was caught a bit by surprise. They might have
thought that Russia would be aggressive but not isolate Russia and to a certain extent, China by association, because of that action. It's been
really detrimental for China's standing globally.
QUEST: Kurt, if I have to ask you to come off the fence one way or the other on business and economics, are you optimistic about the future of
Hong Kong?
TONG: I am -- I think it's going to do fine for a while. So, I don't know if that's off the fence or not and I don't think it's going to be the
raging success story that it was in previous decades. There is more competition in Asia as you pointed out and the restrictions that China has
imposed on lifestyle there are having an impact. But I don't think it's going to be irrelevant.
So I guess maybe I am still fence-sitting. I think people need to watch this closely to make wise decisions.
QUEST: It's July the Fourth. You're allowed to fence it on the Independence weekend. Good to see you, sir. I'm grateful. Thank you.
It is QUEST MEANS BUSINESS.
A nasty, bitter dispute over safety and expensive planes between Airbus and Qatar Airways is well and truly enmeshed in the British Courts. It's the
A350s.
After the break, we'll show you the damage to the planes and you'll hear what Qatar Airways says and how Airbus responds.
(COMMERCIAL BREAK)
[15:30:00]
QUEST: Hello, I'm Richard Quest. Together we'll have a lot more QUEST MEANS BUSINESS. Two giant and aviation in the midst of a bitter -- just -- we'll
have that, I go as far as the unique dispute. Qatar Airways and Airbus, I got a firsthand look at the planes in Doha and staying with aviation Virgin
Australia's CEO on how the company's culture helped them overcome pandemic and even bankruptcy.
We'll get to all of it only after the news headlines because this is CNN and here are the facts always comes first.
Ukraine says Russian missile strikes near Odessa have killed at least 20 people and that includes a child. The attacks hit residential areas
overnight. Leveling parts of an apartment building and damaging a community center nearby. 38 people have been wounded and eight people (INAUDIBLE)
The trial for the U.S. basketball star Brittney Griner began in Moscow. She was arrested in February at a Moscow airport and is accused of smuggling
less than a gram of cannabis oil in her luggage. If convicted, she faces 10 years in prison. U.S. is fighting for her release saying she's being
wrongfully detained.
The World Health Organization says the number of new monkeypox cases has tripled in Europe in the last two weeks. Officials are urging regional
leaders to ramp up containment measures to reverse the growing spread. Now they say Europe has reported almost 90 percent of all global cases since
the middle of May.
Airlines and aircraft manufacturers like to stay friendly. They need each other. The manufacturers need the airlines to buy the planes and well vice
versa needs a good price. So when two of aviation's most powerful companies are pitted against each other, it is unprecedented and it's a legal battle
that has the entire aviation industry agog. Qatar Airways is suing Airbus in a dispute over the very popular and expensive a 350-wide body jet.
Last week, when I was in Doha, I got to see firsthand the A380s damage and all that sparked the dispute.
(BEGIN VIDEOTAPE)
QUEST (voice over): The CEOs of Qatar Airways and Airbus in happier times when Qatar flew the first commercial flight of the A350 in 2015. They were
the launch customer for this brand new, big, wide-bodied plane.
AKBAR AL BAKER, CHIEF EXECUTIVE OFFICER, QATAR AIRWAYS: I'm very pleased, you can see that everything is perfect.
QUEST: No one on that inaugural flight imagined it would come to this. Grounded planes in Doha and Airbus in Qatar locked in a bitter court
dispute worth billions of dollars.
The lawsuits centered around this peeling paintwork and the degradation on the surface of the planes. Qatar invited me to see the damage firsthand.
(on camera): The damage on the tail plane looks pretty serious, but it's hard for a non-expert to really understand the significance. That's what
the trial will be all about. Is this a design fault that has safety implications?
(voice over): Qatar's Civil Aviation Authority says yes. They ordered the grounding of 23 of Qatar's A350s and won't certify any more. Qatar Airways
says the degradation extends beyond the paint, potentially exposing the lightning protection layer or impacting the underlying fuselage.
Airbus disagrees, saying there is no impact on the air worthiness of the aircraft. And so far, the E.U. safety regulator concurs. This case goes
beyond just these planes. Qatar is refusing to accept any more A350s. And now Airbus is refusing to deliver to Qatar, the A321 narrow bodies that
it's ordered. Billions of dollars worth of aircraft are caught in the middle. Other airlines have noticed paint problems with the A350s but they
continue to accept and fly the plane. Several CEOs telling CNN this is a cosmetic issue.
[15:35:03]
For Qatar Airways' chief executive Akbar Al Baker, this lawsuit is not only about the A350.
AL BAKER: You know, when you have an aircraft manufacturer that today has the market power that it's using to get this way and trying to send a
message to the others in the industry, that either you will comply with what we tell you or we will do something else. And this is a very dangerous
precedent that is now happening.
QUEST: The Airbus chief executive Guillaume Faury still sees the possibility of an amicable resolution with one of his largest customers.
GUILLAUME FAURY, CHIEF EXECUTIVE OFFICER, AIRBUS: We see the planes, having the painting defects not flying where they could be flying. We see the
demand now being back. So, I think the conditions for coming to an amicable settlement are there and we are working in that
direction.
QUEST: In the meantime, the court has ruled Airbus can look for other buyers for the A321s once earmarked for Qatar. The fate of yet undelivered
350s is unclear.
(on camera): Some of these a 350s have been grounded for more than a year. And whilst Airbus accepts that there is a problem with the paint, the
manufacturer fiercely denies that this is a safety issue. So, unless the two sides can reach an agreement, which at the moment seems unlikely, the
case is headed for trial, and will be decided in London next June by a judge. He will have the final decision on whether there's a design defect
that creates a safety issue.
(END VIDEOTAPE)
QUEST: Let's go to South African now where the inflation rate has doubled in the last year and a half and it's threatened the country's post pandemic
recovery. The economy is actually growing about two percent or so in Q1. But an inflation rate of six percent highest in five years and interest
rates have already gone up. Consumer confidence at its lowest level.
Leila Fourie is the CEO of the Johannesburg Stock Exchange. When I look at the economics at the moment and look, you know, everybody's got inflation.
Everybody's got rising interest rates. You had several increases in interest rates including a half a percentage point. And there's more on the
way. It's not good news.
LEILA FOURIE, CHIEF EXECUTIVE OFFICER, JOHANNESBURG STOCK EXCHANGE: Richard, in fact, on a relative basis, as well, South Africa's inflation
rate came in at 6-1/2 percent, slightly above our range. For the first time in over a couple of decades, South Africa's interest rate has been lower
than the U.S. We're also not dependent on gas the way Europe is. And so, the long-term inflation outlook is slightly less severe. We are also a net
food exporter.
And we have an internal support of coal, which is a very important part of our energy transmission.
QUEST: I'm glad you mentioned energy because you've got the worst number of power cuts, deliberate pockets because of energy transmission issues. And
look, I realize you're not here to sort of to answer all the ills of South Africa. But how can you as a stock exchange portray a modern thriving
economy for inward investment, when frankly, the energy company can't even keep the lights on?
FOURIE: Richard, there are short term and there are long-term structural issues. We've got a short-term shock in the economy right now. And that's
largely a wage dispute. The wage dispute has almost been finalized. And if wage negotiations are resolved quickly, it won't be a permanent event.
There have been a profound change on the structural side of managing electricity. The transmission organization is set to be unbundled into a
separate legal entity.
There have been a number of independent power producers which are allowed to produce more than 100 Watts, megawatts of electricity. And we've also
seen Eskom signing 18 leases of spare land to independent power producers. So, we have seen decisive action. And it's a long range vision and it will
take time and we are beset by a short term crisis.
QUEST: What's interesting is that as other parts of the world are also in trouble. There is, you know, the beauty of South Africa is despite all
these problems, it remains an attractive investment opportunity. And we're seeing that in terms of the number that the funds and flows into South
Africa, are we?
FOURIE: Absolutely. We've seen a rebalancing of the index with Russia exiting.
[15:40:02]
And with that we've seen a fundamental flows effects. Traders are starting to look at tactical underweight and overweight positions. And they're
choosing South Africa over our BRICS countries because we're geographically remote from Russia, because we have a high commodity pipeline. And because
we have an improved fiscal position, South Africa is the only emerging market with a better fiscal position now than during the pandemic.
QUEST: Ah, the BRICS. The BRICS, they're still around. Good to see you. Have a lovely weekend. Thank you.
FOURIE: Thank you.
QUEST: It is QUEST MEANS BUSINESS. Conservationists are building a new kind of highway where no vehicles are allowed. Now we've talked about this all
week. Is the animal crossings at the Banff National Park preventing 80 percent of collisions between wildlife and cars. Oh, yes (INAUDIBLE) to
watch.
(COMMERCIAL BREAK)
QUEST: Crossing the road is hazardous for us all. Even more so if your natural history and wildlife in the Canadian Rockies. Now they're getting a
help to cross one of the world's longest roads. On Call to Earth all week. Fascinating. We've been looking at the animal migration corridors. Well,
here's what can happen when one of nature's highways runs into a major manmade highway.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE (voice over): This is Canada's oldest national park, visited by more than four million people every year for its amazing
mountains and breathtaking natural beauty. But there is a scar running through it. Trans Canada Highway.
JODY HILTY, PRESIDENT AND CHIEF SCIENTIST, YELLOWSTONE TO YUKON (voice over): It's the biggest highway in Canada and it goes from coast to coast.
And here in this valley, it happens to cut a national park in half.
UNIDENTIFIED MALE: This and other roads in the region make it almost impossible for animals trying to move through their territory. But despite
the risks, they will keep trying.
HILTY: It represents a real barrier for all sorts of different wildlife. From big wildlife like grizzly bears and wolves to smaller wildlife. That
really over the long term need to be connected across this valley in order to sustain their genetics, find the resources they need and maintain
healthy populations.
UNIDENTIFIED MALE: Jody Hilty is president and chief scientist of Y2Y. A conservation initiative out to expand habitat from Yellowstone to the
Yukon.
HILTY: The vision is about connecting and protecting this region from Wyoming, all the way up to the Arctic Circle in the Yukon so that both
people and nature can thrive.
UNIDENTIFIED MALE: Preventing road collisions is a number one priority maintaining wildlife connectivity.
HILTY (on camera): The Trans Canada Highway today has about 22,000 cars per day.
(voice over): And so, for wildlife that are looking to get across this highway, they either approach and turn around because it's just too scary
with all those cars, or they approach and often get hit on that highway. So -- and for humans, it can be a disaster. Who wants to have an elk land in
your lap when you're going 110 kilometers an hour.
UNIDENTIFIED MALE: But disaster can be averted in the form of wildlife crossing, bridges like this. And underpasses too, can offer a lifeline.
HILTY: Today there are 117 crossing structures. This new overpass outside of Canmore will be the 118th structure.
UNIDENTIFIED MALE: Fencing along the side of the road follows animals towards the crossing.
HILTY: It's not something that we put it up tomorrow and the next day wildlife are using them. But it's something that takes a little bit of
time. You actually see, you know, for some animals like grizzly bears, they're teaching their young where these structures are.
UNIDENTIFIED MALE: A few miles away a wildlife ecologist from Parks Canada is making sure animals are finding their way to the safety of the
crossings. Jesse Whittington is checking footage from a camera trap.
JESSE WHITTINGTON, WILDLIFE ECOLOGIST, BANFF NATIONAL PARK: There's never know what you're going to find. Wolf that we just detected on his camera
can easily be at our nearest underpass in 20 minutes. And I'd be curious to see if this animal shows up there.
We've been monitoring wildlife use of these wildlife crossing structures since 1996. So in that time, we've documented over 187,000 wildlife
crossings. That's a sign that these crossing structures work.
It has reduced wildlife mortality by 96 percent for elk and deer and over 80 percent for carnivores like wolves and grizzly bears. So, not only do
these animals live, the increased conductivity throughout the landscape.
HILTY: We need to get to a point where when roads become busier, it becomes part of normal societal practice that we create safe passage for wildlife
across roads.
(END VIDEOTAPE)
QUEST: Gosh. That's absolutely fascinating. Wow. Well, you're going to catch it again. We have a half hour program on protecting nature's
highways. It's this weekend. And those stories of the animal crossings in Canada and all the other great things we've brought you this week. Amazing.
Now look, #CalltoEarth. That's where you and I continue to talk about what we are doing to help protect that which we've got.
(COMMERCIAL BREAK)
[15:51:11]
QUEST: During the pandemic, Virgin Australia went beyond survival. The airline completely changed the foundations. They went bankrupt to be sure
but they rethought their business. Now it's the second largest airline in Australia. And it says it's paying off. I asked the chief executive Jayne
Hrdlicka about Virgin Australia's transformation.
(BEGIN VIDEOTAPE)
JAYNE HRDLICKA, CHIEF EXECUTIVE OFFICER, VIRGIN AUTRALIA: Well, degree difficulty very high. But it was also just a very unique opportunity, this
extraordinary brand. They've been around for two decades, which had a great sense of pride embedded in its culture. Richard Branson and Brett Godfrey
built business in a beautiful way. It was all about people. And they built a special culture.
And that survived a really tough period where the airline lost nearly $2 billion over its last eight years. And that core of passion and love for
the brand and the business was still alive and well. And so, taking that a great brands of people and a great brand and then fixing the basics of the
business model. That was just a really unique opportunity to do it in the middle of COVID when you can take apart the cost structure and put it back
together again at the lowest of the lows for the industry. It's just a brilliant opportunity.
QUEST: So what did you do? Did you literally go back to the drawing board and do basics?
HRDLICKA: Two thousand four hundred contracts we ripped up and renegotiated and went back to the basics. We got rid of our long-haul operation which
was structurally uncompetitive, we got rid of original business that was also structurally uncompetitive. We focus back on our core, which was 737
operations serving Australians traveling domestically and in short-haul destinations outside of the country.
QUEST: Did you -- being a private company held, once you became, you know, it's a bit like -- I constantly talk to people who are just family
companies. And they say during the pandemic, it absolutely, it enabled us to make decisions. It's enabled a quick turnaround. You didn't have
multiple decision makers.
HRDLICKA: It was a gift for us to be a private company as we restructured the business and going through COVID. We're so grateful for Bain Capital,
because honestly the day we came out of administration, we were investing in our future, we're investing in new aircraft, we're investing in
technology that had been under invested in for decades. We're investing in people, infrastructure, before we ever had revenue to offset that cash
burn.
So, it was an investment from the very beginning for big a bright future.
QUEST: And I know -- I've seen your comments about a flotation or an IPO. This is my phrase, not yours. It's not a question of if it's when.
HRDLICKA: it's most likely that we will IPO at some point in the future. And then when it's just a question of timing and making sure that the
markets are right, and we're in the right position.
QUEST: How far does the oil price at these levels set you back?
HRDLICKA: Well, the fact of aviation is that there are a few things that are outside your control. And there are a number of things that are inside
your control. And the name of the game is be exceptional at the things that are in your control and be good at managing the things that are outside
your control when they move around. And that's the case with fuel. Fuel and currency movements are the two, you know, tricky aspects of planning
forward and what your financial plans look like.
And with rising fuel prices go rising prices because we've got to be able to recover the increased cost of fuel.
QUEST: What did you learn about yourself during the pandemic?
HRDLICKA: Two things. One is that you're never done learning. And every day you have to come into the next set of challenges, open minded to what the
solution might look like. And to leverage the great wisdom of everybody in the organization to find a way through whatever the problem might be. And
the problems were never ending and particularly in Australia where the border is up and down all the time every day brought some new crazy
challenge.
[15:55:04]
And so, it really teaches you the importance of humility and every day is a learning day and opportunity to get better.
(END VIDEOTAPE)
QUEST: Jayne Hrdlicka. I'll talk about that in my profitable moment. Every day is a learning day. We'll have some thoughts on that in a -- in a moment
of charts I've shown you what's happening on Wall Street. The Dow is set to close just off the sessions high, it is now up. You've got Boeing,
McDonnell Douglas, Coca-Cola all leading into a good strong July the 4th weekend. Up over 300 points. And we'll take a profitable moment after the
break.
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment. Last year, I celebrated 20 years working here at CNN. Now over the time, I've met some extraordinary people,
of course, and I looked considerably younger, back in those days. Very -- oh my goodness, look at the hair and the teeth. Now one of the perks of
being 20 years is a one-month sabbatical that you get. It has to be taken as four weeks, it can't be split off in little bits.
Initially, I thought I'm not going to take a month off. I'm too busy. Too many other things to be doing. I can't take a month off. But then COVID
happened and all the changes that take place. It made me think, well, if not now, when? This isn't carpe diem, seize the day make the most of time
while we have on this planet. No, no. This -- my decision to take the sabbatical is more about teaching myself to do things differently.
A lesson that I've learned from the pandemic, be open to new ideas, do things differently. Don't be stuck in the right. So, tomorrow I go to
France where I spend a week or two learning French and then it's to the beach to improve my swimming and my coffee making, I think many of you know
my pandemic project was to learn to be a proper barista. My colleagues think I won't last that our cave that I'll be calling in. I won't. None of
this is revolutionary stuff.
It won't change the world. But as I turned 60 this year, it might jolt this old-age pensioner into realizing you can teach an old dog new tricks. And
that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in London.
[16:00:05]
END
