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Quest Means Business
Airline Executives Say This Summer Will Be Better Than Last; Pope Francis In Hospital For Respiratory Infection; Sergio Ermotti Returns As UBS CEO To Manage Deal; Avoiding Russian Airspace Proving Costly To Carriers; Call To Earth: Protectors Of The Sea. Aired 3-4p ET
Aired March 29, 2023 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:41]
RICHARD QUEST, CNN INTERNATIONAL HOST: It is nine o'clock in Brussels. There is an hour left to trade on Wall Street. The markets, I wouldn't say
ebullient, but they are certainly enthusiastic -- perhaps is the best word -- 278 points, nearly one percent for the Dow. That green has been solid
all day. We'll talk about that as the hour moves on.
Those are the markets and these are the main events that we are following: Strikes threaten aviation summer. I speak to the Big Three where there is
cautious optimism on how the summer will go.
UBS is bringing back Sergio Ermotti overseeing the challenges of merging with Credit Suisse.
Tonight, the Governor of the National Bank of Belgium here live on the program.
And today, flying around the world often means going the long way or the wrong way. A comfortable way if you're in a certain seat. You'll hear from
the CEO of FinAir tonight.
We are live from Brussels where the Airlines for Europe Summit has been taking place. It's Wednesday. It's March the 29th. I'm Richard Quest, and
yes, in Brussels, I mean business.
Good evening.
We are in Brussels tonight because this is where the Airlines for Europe have been holding one of their meetings. This is when all the major airline
CEOs of the member companies, all the three big groups -- IAG, Lufthansa, Air France-KLM, along with Ryanair, Wizz Air is not a member, but all the
others come here to Brussels and meet with the various regulatory officials.
The Belmont Building behind me that you can see, for some reason, it is not lit up tonight. Maybe it's an energy saving measure.
But what they are most concerned about, of course, the lessons from the summer of hell, 2022 when pent up demand, staff shortages, there were lost
bags, some never came back, delays, cancellations, truly a dreadful business.
The senior executives say this year will be better. To be sure though, whilst they may have staffed up and the infrastructure may be better, they
are facing labor issues, strikes in Germany, France and elsewhere and the CEOs tell us disruption is not over.
(BEGIN VIDEO CLIP)
MICHAEL O'LEARY, CEO, RYANAIR: I think we're going to have a very strong summer, but it's going to be fraught particularly where the French Air
Traffic controllers are rebelling and revolting.
CARSTEN SPOHR, CEO, LUFTHANSA: I think it will be better than last year, but it won't be good, and indeed for partly new reasons and partly the
same.
JOHAN LUNDGREN, CEO, EASYJET: I do think overall the Indra is better prepared for it. The downside is of course that there's more pressure into
the system than it was last year.
(END VIDEO CLIP)
QUEST: Now, there is the message, "better than last, but perhaps not good enough."
Lufthansa's Chief Executive says the year won't be as bad. It's different, though the reasons than from last year. It is not staffing shortages,
instead, the company is hiring up to a thousand new workers to ensure the airline performs properly.
If you talking about other airlines, for example, Ryanair, Europe's biggest carrier, here, the CEO says the Americans are returning in droves and that
will present its own challenges at the same time as China opens up and those visitors return as well.
I spoke to Michael O'Leary, who last year carried 160 million passengers and this year hopes to add another 20 or 30 on top of that.
(BEGIN VIDEOTAPE)
O'LEARY: I think this summer will be significantly better in Europe than last summer was. The airports and most of the other airlines are fully
staffed.
Air traffic control in particular, French Air Traffic Control is going to be a huge challenge and that is because the way they allow the French to
run the system. So when French Air Traffic controllers go on strike, they protect the long haul flights. They can operate to and from, no issues.
They use French Domestic Legislation to protect the French domestic flights, they are fine. So it's all the overflights within Europe that take
all the cancellations, so it's manifestly unfair that the European Commission sits there doing nothing to protect either the single market or
the free movement of people across Europe, when what they should be saying to the French is, if you're having an air traffic control strike, cancel
the French domestic flights, but protect the overflights.
[15:05:19]
QUEST: When I look at the issues that the airline industry is facing in Europe, they're the same ones. Single European sky, there is not enough
sustainable aviation fuel at the right price. These are -- air traffic movements, congestion -- these are issues that you have been dealing with
and I've been questioning about for the last 20 years and very little progress seems to be made.
O'LEARY: I think that would be generous. No progress has been made. But I mean, that's why we're here. We come here twice a year to Brussels to point
out that this Commission led by Ursula von der Leyen, Commissioner Valean has done nothing for the last three years to advance reform of the Airport
Charges Directive, to advance reform of U261, which was promised 10 years ago, or to deliver Air Traffic Control Reform, which was promised 23 years
ago, and nothing has been done.
So we have to, on behalf of our passengers, keep pointing the finger at the Commission. We expect the Commission to take action to improve the life of
Europe citizens, but sadly, we have an ineffective Commission, and I think we've got to embarrass them into action.
QUEST: Can this industry do it?
O'LEARY: Yes.
QUEST: All right, but will it?
O'LEARY: Will it? Yes. The question is when? Like will it be another 12 months? Would it be five years?
I think the French Air Traffic Control strikes are going to be so bad for the next five, six, seven weeks. I think that might spur the Commission
finally into taking action.
The solutions are there. They don't require legislation. They don't require much action. They just require the European Commission to get up off its
lazy, overpaid backside and take some action to protect the single market and the free movement of people across Europe.
QUEST: They must love seeing you when you turn up on their doorstep.
O'LEARY: They love me. I mean, I entertain them. I point out where they've again failed to take any action for the last 12 months. And these fat
overpaid Commissioners deserve a regular kick because you know, they're insulated from the realities of life here in Brussels and we have to
represent our passengers' interests.
QUEST: Okay, I looked at the Ryanair map, as I saw your 160 million. You're going just about everywhere. Where do you grow in terms or is it
done by up gauging aircraft or new destinations. You are pretty much saturated.
O'LEARY: No, I mean, we've barely scratched the surface of what's possible. Firstly, we've just taken delivery of 51 new aircraft this winter from
Boeing. So we can grow -- I think, in the next 12 months will grow from 168 million passengers to about 185 million passengers.
We're seeing huge growth in Italy where Alitalia is reducing its fleet; in Portugal where TAP is reducing its fleet. There's extraordinary growth in
Central Europe, Poland, Romania, Bulgaria, Slovak Republic.
We're also seeing growth issue in the UK where the UK government has reduced domestic APD by 50 percent, and even in Ireland, we are growing
because people just want to get away from the rain and the depressing rain and go to the sunshine beaches of Europe.
QUEST: So you're looking for planes now and you're going back into negotiations with Boeing. You are a single fleet -- you're a single model
fleet airline, therefore, if Boeing won't do a deal, will you consider Airbus?
O'LEARY: I mean, we would always consider Airbus, if the price was right. The problem with Airbus is the price has never been right. We have enough
aircraft to grow out to 2026 or 2027, but we'll need more aircraft deliveries from 2027 onwards. Firstly to maintain growth across Europe and
keep fares down.
And remember, if Ryanair doesn't grow in Europe, Lufthansa and BA and Air France will just keep putting up the prices, so it's important we grow so
we can keep them all honest, and we want to take out some of our older aircrafts because by the time we get to 2027, some of our original aircraft
will be approaching 24 or 25, and it will be time for retirement.
So we need more aircraft. We haven't been able to replace Boeing yet, but we're hopeful that over the next six or 12 months, we might do a deal.
QUEST: How many more years have you got doing this job?
O'LEARY: Well, I am, as you know very young. I am a mere 62-year-old.
QUEST: We are the same age -- well, now, you're a year younger.
O'LEARY: There we go. Four teenage children, so I'm certainly going to keep working until they all get to 20 and disappear. But I signed a contract now
to 2028, very excited.
QUEST: 2028?
O'LEARY: Yes. When I will be a strapping, I think just barely 66 and looking for something else, so looking for something to do.
(END VIDEOTAPE)
QUEST: So there you have, Michael O'Leary, enfant terrible, perhaps of the airline industry in Europe, who is going to be with us for a good few
more years.
The Chief Executive of Lufthansa Group, Carsten Spohr says that the reasons for 2023's potential disruption are different from last year. Lufthansa has
employed a thousand more people to ensure things go smoothly, but there will be disruptions from industrial action.
[15:10:09]
And this has to be kept balanced against very high increased demand to fly.
(BEGIN VIDEOTAPE)
SPOHR: Now, the passenger demand is high, people love to fly, and that is not just pure statistics when I go to my office, it's also when I meet
friends and families. Everybody talks about his next vacation, her next vacation, going somewhere, so I think that's a wonderful, positive spirit
back to aviation.
QUEST: So not only leisure, but even business travel. You had suggested that maybe 30 percent might never come back, but business travel too, is
coming back.
SPOHR: Especially lately, I must say it was lagging behind in recovery. But now the last weeks, we see it coming. On long range very much so.
Opening of China, everybody has pent up demand to go to China on the corporate side. So I think we'll see the catch up now of corporate travel
towards individual private leisure traveler, which we have seen already for a year now.
QUEST: In 2022, the issue was airlines or airports or infrastructure. Let's be neutral, infrastructure wasn't ready for the ramp up and there
were massive delays. This year, it is going to be different. It's going to be strikes, it's going to be ATC overwhelmed, it's going to be the war in
Ukraine, meaning air traffic movements just are congested. It's going to be grim.
SPOHR: I think it will be better than last year, but it won't be good. And indeed for partly new reasons and partly the same. There will be staff
shortages at the airports and especially at service providers at the airports. Air Traffic Control will be an issue to a higher degree, 20
percent of European airspace is blocked by the terrible events in Ukraine. Huge NATO maneuvers happening in June taking up big parts of our airspace.
The level of strikes, apparently, is higher, and the willingness to go on strike is higher than ever before in Europe, which we see in many parts of
our society having an impact on aviation, so I think this will not be the best of all summers, but hopefully, I'm very much convinced so, better than
last year.
QUEST: Are you prepared?
SPOHR: Well, in terms of Lufthansa, we're doing all the homework we can. We are hiring a thousand people per month, which is unheard of, also for
our company, in the cabins, in the cockpits, in ground crews, in the various airlines we have in the group, the various hubs we operate and the
whole --
QUEST: These flights to Asia that now have to go the most. I mean, I came back from Tokyo to London and flew over the top, instead of around and
about. It is very difficult for your long haul fleet.
SPOHR: Well, it's up capacity because you need more airplanes to serve a destination. Obviously it increases flight times and fuel burn. At the same
time, we understand that our passengers don't want to be in Russian air space right now, so I think even competing with those airlines who still go
through Russian air space is not that big a disadvantage as it looks on paper by pure numbers.
QUEST: Eurowings is an important part. At what point do you say to Eurowings, you've got to now make money.
SPOHR: Well now, we are convinced Eurowings will make money this year, but let's never forget the strategic importance. Germany very different
than my competitors in the UK or in France. It doesn't have a Paris. We don't have a London.
The wealth, the purchasing power in Germany is much wider distributed. So I need that presence of the Lufthansa Group in those markets, to be honest,
it's probably the only country in Europe, the Lufthansa Group has defended its non-hub parts against low cost competition.
QUEST: ITA in Italy. Why? I know it's important that you'll have a Southern European base and hub to grow the airline out of Germany in the
south, but is ITA the right vehicle, bearing in mind the baggage that comes with it?
SPOHR: Well, first of all, when we talk about ITA, we talk about Italy. Italy, the third largest economy in the EU. Italy, the third largest
aviation market in Europe after the UK and Spain. Milano the third largest catchment in Europe, after London and Paris.
So these are important strategic targets for us where we have been present obviously for some time, and I think it's obvious with our recipe for
success, which we have proven in Switzerland, in Austria, and Belgium, we can also turn ITA into a success. So the answer is yes, it is the right
vehicle.
QUEST: Finally, I'm looking forward to trying your first class.
SPOHR: You can. You should look into it.
QUEST: Are you surprised that first class --
SPOHR: It is going to be amazing.
QUEST: Are you surprised that first class still exists?
SPOHR: Well, I'm not surprised they exist because we always wanted to keep it in the market as a premium carrier. I am positively surprised about
the huge demand we see for first class.
[15:15:08]
QUEST: Really?
SPOHR: Not just from corporate travelers, but also from leisure travelers. A lot of people are spending more money on watches, on cars, on
handbags, and on first class by Lufthansa and Swiss. And obviously, we try to tap that demand.
The new first class will be amazing, both in Swiss and Lufthansa and we are looking at equipping more airplanes with first class for the upper end of
the market. You should look forward to it for good reasons.
(END VIDEOTAPE)
QUEST: That is the CEO of Lufthansa, and well, I'll be quite honest, I am looking forward perhaps to trying the first class out purely for
research purposes, and purely on your behalf.
Coming up next, Pierre Wunsch, a member of the ECB Governing Council, who is also the head of the Central Bank here in Belgium, balancing inflation,
fighting it and banking turmoil. So is Europe getting it right?
QUEST MEANS BUSINESS tonight live from Brussels.
(COMMERCIAL BREAK)
QUEST: Nine o'clock in the evening in St. Peter's Square in Rome. There's a live picture for you at the moment.
The Vatican has announced Pope Francis is in hospital. He has a respiratory infection, apparently. The Vatican has ruled out COVID, but he is expected
to stay in hospital for several days.
Delia Gallagher is in Rome this evening. I suppose, you know the Pope is 86, but otherwise, I mean he seems to be in good health. So concern, but
not panic.
DELIA GALLAGHER, CNN VATICAN CORRESPONDENT: No, absolutely not panic. In fact, Richard, you know, we saw him this morning, Wednesday morning, he
does his weekly general audience out there in St. Peter's Square. He was speaking fine. He was breathing fine.
But then this afternoon, the Vatican said well, he's gone into the hospital for previously scheduled tests and then just about 45 minutes ago said
he'll be staying in the hospital because they have discovered a respiratory illness.
They did say that the Pope had been complaining in the past few days, Richard, about not being able to breathe properly. So clearly, they've
decided to take him into the hospital and get those tests done. They've cleared his schedule for the next few days. Obviously it's a busy -- this
is the busiest time of the year for the Pope and for the Vatican because we're coming up on Easter week.
So starting Sunday, the Pope would have a whole series of masses leading up to Easter Sunday which is April 9th to take care of.
[15:20:11]
But at the moment, he is in the hospital. We'll be monitoring, obviously, his condition, but it does seem that they are running tests. They've ruled
out COVID, as we say, but he did lose part of his lung. Remember, when he was younger, Richard. You'll remember that story that they had to take out
part of his lung. And so he has had throughout the years, some respiratory issues.
Remember, he was in the hospital in 2021 for 10 days for his intestinal issue, but this is the first time we've seen him in the hospital for a
respiratory issue, Richard, so we'll keep you posted on it.
QUEST: Thank you very much, Delia Gallagher, joining me there.
And so to the banking crisis. Sergio Ermotti returns to UBS to steer the takeover of Credit Suisse.
Now, he was CEO back in 2011 to 2022. So a good long chunk there. He is back to manage the rescue of a rival, a deal that was orchestrated, some
would say, the forced marriage on behalf of the Swiss authorities. The US Senate accuses Credit Suisse still helping wealthy Americans evade taxes.
Credit Suisse, of course, had pleaded guilty to that.
Matt Egan is in New York.
Matt, the situation and bringing back Sergio Ermotti, a sign of panic or a sign of a steady hand at the helm. To organize this merger?
MATT EGAN, CNN REPORTER: Richard, I think it's the latter. I mean, this is a very difficult job facing UBS now. I mean, they have to basically
complete what you described as a forced marriage.
They never wanted to buy Credit Suisse. Credit Suisse was a mess for many years, but regulators basically forced them to do it, and this is going to
create a banking behemoth with something like $1.7 trillion in assets. And obviously, the latest headlines out of Washington suggest that you know
Credit Suisse still has its fair share of problems.
This two-year long Senate investigation led by Senate Finance Chairman Senator Ron Wyden basically accuses Credit Suisse of breaching its 2014
plea agreement with Federal prosecutors. This investigation says that Credit Suisse is "complicit" in ongoing tax evasion by wealthy Americans.
It even alleges that Credit Suisse may be taking part of this potential criminal conspiracy.
Let me read you a key line from Ron Wyden and the Senator here. He said: "At the center of this investigation are greedy Swiss bankers and
catnapping government regulators, and the result appears to be a conspiracy to help ultra-wealthy US citizens evade taxes and rip off their fellow
Americans."
Now we should note that Credit Suisse has said that their new leadership is cooperating with the Senate inquiry, and that their policy is to close
undisclosed accounts and to discipline employees when they don't follow the rules. Credit Suisse, in a statement said: "In its core, the report
describes legacy issues, some from a decade ago, and we have implemented extensive enhancements since then to root out individuals who seek to
conceal assets from tax authorities."
Richard, all of this just underscores the very difficult task UBS has here who are trying to put these two companies together.
QUEST: Matt Egan in New York. Matt, thank you.
The effect of all of this has been seen in the turmoil of bank stocks. If we take a look at how they've traded since the beginning of the year, you
have HSBC and UBS slightly up on the year-to-date. Deutsche Bank is down 15 percent year-to-date in New York.
The ECB's Pierre Wunsch, the Central Bank Governor from Belgium says EU has tougher rules than the United States, and therefore, the EU doesn't expect
a repeat of 2008.
The Governor of the National Bank of Belgium is with me now.
Good to see you, sir.
Governor, so everybody is saying that the message is the same from everybody. It's not 2008 all over again. Could it become 2008?
PIERRE WUNSCH, GOVERNOR, NATIONAL BANK OF BELGIUM: Well, I don't think so. I mean, we basically, over the last few days and week, we have toured
through the data to see you know, what was the situation of our banks, whether we would have some vulnerabilities that would be comparable to SVB
in the US and what we see is actually good numbers, capital ratios are high, and liquidity is high. So of course the system is based on trust, but
when we look at the numbers I mean we are on the safe side.
[15:25:06]
QUEST: Okay, so the resolution by the Swiss National Bank, I know you're not going to suddenly criticize a fellow Central Bank, but was it the right
decision, in your view to get rid of the bonds and keep the equity? Controversial? All Right, let's skate to thick ice. You'll agree it was
controversial.
WUNSCH: It's probably controversial, yes. But I don't know the details of what was in the, you know, in the contracts. And apparently, I mean, they
had a good basis to do it, so they decided to do it.
QUEST: Let's talk monetary policy then. So, rates -- have we reached the peak yet do you believe in Europe? And I ask you this because you're on the
Governing Council and every politician will always say to me, that's up to the Governing Council. They are, you know, we -- monetary policy
independent, but you're on the Governing Council. So where do you stand?
WUNSCH: Well, you know, if we go back to the base case and to the projection we just made two weeks ago, we had more to do. Now, we should
take the time that we have from, you know, today to the next meeting to see if this turmoil in the market, which seem to be abating would have any
implications for monetary policy.
But, you know, again, we have a very strong banking system in Europe and the base case was still on the basis of our projection that we would have
to do more.
QUEST: The difficulty, of course, now is whether or not the banking crisis has, as Jay Powell said, provided sufficient tightening. Now nobody
is now expecting a recession, technical or otherwise, as far as I can tell, there's a pretty much a consensus on that, but the banking crisis may be
doing your work for you.
WUNSCH: It is a possibility. That's what we need to look now. But again, I think in Europe, the risk is may be lower than the US, because it's not
like banks have to increase buffers of capital and liquidity. And so there might be here and there some impacts on the way that you know, credit
conditions may become a bit stricter, but we don't expect that here.
QUEST: I was reading in the "New Statesman," an article by Wolfgang Munchau, who you'll be familiar with his writing and he basically says that
actually Europe is deceiving itself, that there is sort of a pressure cooker building up in the European monetary system that is not as prepared
as it should be if there was another crisis, do you see that?
WUNSCH: No, I don't. I mean, it's always easier to talk about what you see than what you don't see and I cannot exclude here and there that there will
be still, you know, one financial institution that has taken some risks that we have not seen. But what we see again, is good and we have a robust
system.
QUEST: You are a student of crises. You were around the 2008, right at the center, and saw the resolution of major institutions, and you see
monetary policy wax and wane. Are you content at the moment with monetary policy?
WUNSCH: Yes.
QUEST: I suppose everybody would have been shocked if you had said no. What would you like to see next?
WUNSCH: Well, I think now we're in a good place to -- I mean, we've had some catching up to do. We raised rates by 75 basis points, 50, and now I
think we can see where inflation is going. I mean, headline is, it going down. Our core is still persistent.
So we need to look at where it is going, and on the basis of that, again, the base case is probably that we have to do a bit more and we will see.
QUEST: I could spend all evening trying to get out from him what does a bit more need, but I guess not.
Thank you, sir. Very grateful.
WUNSCH: Thank you.
QUEST: Thank you that you came in for us tonight.
Coming up next, as we continue on QUEST MEANS BUSINESS, banking crisis puts pressure on regulators. We'll be talking all about that in just a moment.
QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
[15:30:00]
(MUSIC PLAYING)
QUEST: QUEST MEANS BUSINESS tonight comes to you from Brussels, where Airlines for Europe has been having its annual summit meeting. All the
airlines CEOs, the major CEOs are here and the big topic or one of them is certainly avoiding Russian airspace.
Since the war on Ukraine began, as you can see here, flights before and after the war began. Now these are very costly changes, to four hours for
some flights, thousands of gallons of fuel extra.
Now, just only last weekend, I was in Tokyo. As you know, we were speaking from Tokyo. My flight from Tokyo went the long way around the world, 14.5
hours from Tokyo to London instead of what should have been maybe 11.
Also joining me is Topi Manner, the chief executive of Finnair.
You are no stranger to this issue, of course.
TOPI MANNER, CHIEF EXECUTIVE, FINNAIR: No, of course, not.
QUEST: This is your bread and butter.
MANNER: We are living it.
QUEST: You are living it and, in many ways, it's sort of destroyed what was the plan, Finnair, of the fastest way to Europe, over the Helsinki hub.
So now what do you do?
Because when we spoke last, you were talking about boosting the West to the U.S.
MANNER: Correct, so it has effectively been a double crisis for us, first pandemic and then you know Russian invasion of Ukraine, smack right in the
middle of our strategy of connecting Europe and Asia via the short northern route.
And now we have been changing our strategy. And first steps are encouraging. We are back to profitability and it looks better.
QUEST: So that -- but the changes based on what, more to the U.S., trying to find your way around to you to Asia?
MANNER: The key element is geographically more balanced network. So we're keeping our foothold in Asia in the megacities of Asia, going around the
Russian airspace. And then we are pivoting to the West in terms of the long haul connections and also looking into the Middle East, increasing our
capacity to Middle East.
And by doing so, we have successfully rebalanced our network and also have been able to keep our European short haul network.
QUEST: I suppose the question is, is it sustainable to run it this way?
Can you remain profitable?
Or are you ultimately going to have to marry up to one of the big groups?
Everybody says IAG, of course.
MANNER: But the thing is that it's a level playing field in markets like Japan, Korea, Singapore and so forth. So also, the local carriers are going
around the Russian airspace and therefore the yield levels have been going up.
QUEST: Now I want to talk about your business class seat, your new business class seat?
[15:35:00]
I tried it. Here's what we found out.
(BEGIN VIDEO CLIP)
QUEST: But of course, the revolutionary thing is the seat doesn't recline.
What does that mean?
Yes, it'll go into a bed. Of course I can go that way. But when I'm just sitting here, lounging, watching television, there's no button to go ...
(END VIDEO CLIP)
QUEST: Now once I got over the idea that there was no button to go ... it was actually -- well, it is a conceptual thing, isn't it?
That it doesn't go back. But it's actually a full bed and there's a vast amount of space.
MANNER: Yes, I think that the secret sauce of this seat is the design. You know, the fineties (ph) of the design so that there are no rough edges and
you can find the right -- find the right position, whether you're sitting or whether you are in the lounging position. And the sleeping experience is
second to none.
QUEST: And what's been the reaction because, at some point, the question will be whether other airlines are going to franchise it off?
MANNER: Customers love it, so the feedback has been overwhelmingly positive.
QUEST: Now you've just got to get the routes back so you can fly more of them.
MANNER: Yes, absolutely. So -- and that's what we're doing. So we are deploying more capacity. We're opening new routes in Asia, coming back to
China. Beijing did during this summer, you know, seasonal routes to Chicago, Seattle and so forth.
QUEST: Next time we meet, Topi, we must be in -- we must do it in Helsinki.
MANNER: Fantastic. You're more than welcome.
QUEST: Thank you very much, indeed.
Now -- thank you -- onto Baltic, a very different character, nature of an airline. AirBaltic is much smaller carrier, based in Riga, borders Russia,
as you can see. Whichever way airBaltic goes, it's going to find difficulties, Russia or down to Belarus, all sorts of strange flight routes
to avoid Russia.
I spoke to the airBaltic CEO, Martin Gauss, earlier.
(BEGIN VIDEO CLIP)
MARTIN GAUSS, CEO, AIRBALTIC: We have completely adapted to it by not having any revenues coming from Russia, operation from Ukraine, operation
unfortunately. But it was hard because we just came out of COVID. Then the war came a year ago. We were impacted last year still in the summer because
people saw the Baltics as a war zone.
Yet the media was reporting about it. But last quarter last year we have offset it completely, mainly by giving 14 of our aircraft to fly for
others. Lufthansa Group SAS and that has offset what we couldn't place in the eastern countries this year. Things are changing. We're going back
apart from Ukraine and Russia.
But we're going back to the former routes we fly still to Georgia, Baku (ph), Yerevan (ph) we opened and we fly Dubai. So we are circumnavigating
the area and we'll have to. But we have recovered.
QUEST: Where are your challenges?
GAUSS: The challenges is everything which goes east and some of the challenges going south because, between Kaliningrad, which is Russia, and
Belarusian border, it's only 80 kilometers. And that's a corridor which we can use.
But that corridor, of course, is very busy. So going south and going to the west in Europe, we also sometimes need to go first to Sweden and then come
down to Europe because of that bottleneck. If you look on the map between Kaliningrad and Belarus, there is a lot of traffic.
Then you get a slot there and then you would go via Sweden and then go down.
QUEST: But you can't go east.
GAUSS: We can't go east anywhere there. So to go east, we have to first go south and then stay all the time around the first Russian-Belarusian and
then the Ukraine airspace.
QUEST: How many routes or are there destinations that are simply no longer economically viable and you just dropped, besides those countries where you
can't fly to?
GAUSS: That was the case last summer; they were not viable initially, because we just didn't make it with the needs (ph) we had on these routes.
But now things have changed. We now reopen some of these destinations, which are longer.
We fly longer but they make sense again. And I think it's similar for Finnair. They're also flying now, even flying longer. It makes commercial
sense again.
QUEST: If we look at the airline overall, how are you?
How are you positioning in now?
Because after pandemic and with the war, with fierce competition, where are you?
How are you positioning it?
GAUSS: As we did it always. It's a hybrid airline with 150 seater, very efficient aircraft flying short and long range, flying a network, which is
a connectivity network, mainly from the Baltics plus Finland.
And in addition, we went without (ph) the aircraft, which is very high demanded.
QUEST: And your preferred connecting partner is ... ?
GAUSS: We have 24 culture participate so basically all larger airline groups in Dubai, it's Emirates; in Munich, it's Lufthansa; in London,
Gatwick; It's British Airways, Paris and it's Air France. So it's basically -- you can name them all.
[15:40:00]
We are doing the culture. We connect the Baltics we fly in and have coaches from them to fly to their hubs.
QUEST: I am friends of all?
GAUSS: Yes, friends of all and not in an alliance, like I'm always asked, wouldn't it be better to be an alliance?
And I say no, because then we would be partnering with one and would lose the others.
QUEST: The issue of sustainability: the airlines continue to take a blame, arguably greater than their actual effect.
Why is the industry so bad at getting its message across?
GAUSS: We had that discussion.
Why can we not be as beloved as the people who come on board and like to fly on us?
And I think, it is the political landscape which can, of course, say that we are polluting because of the emissions we produce. And that will not
change. But as the detachment from the passengers who love to fly on us and who need to fly, if they want to connect, we, as airlines, have not
managed.
We, as airlines have not managed but I think we would need help because, if official public says it's not good to fly but then everybody wants to fly,
how do you get that sorted out?
We try everything. And we have happy passengers, very happy. I do not see people getting on board and being miserable. But still, if you look into
the media, then we are polluters, which we are actually not, because we do a lot to reduce emissions by buying new aircraft.
And in our case, AirBaltic has one of the youngest fleet in the world and will go further because we put sustainable aviation fuels and we do all the
things. We can't build an aircraft which doesn't burn fuel anymore but we can do all the steps.
Passengers are coming. Passenger like to fly. But we still are seen as something bad. While we're not, airlines are very good.
(END VIDEOTAPE)
QUEST: And that's the CEO of AirBaltic.
Still to come on the program is the CEO of easyJet. This one night of the year, when the A40 summit is strong, we want to bring you all the names, so
you get a good idea of what to expect this summer.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: This is something that is particularly problematic on the point of view that we, as airlines, can't really resolve that. Yet we
bear the primarily cost and the burden of the blame why this is happening.
(END VIDEO CLIP)
(MUSIC PLAYING)
(COMMERCIAL BREAK)
(MUSIC PLAYING)
QUEST: All this week on "Call to Earth," we are focusing on the work being done by conservationists, particularly protecting Mexico's marine
ecosystem.
[15:45:00]
Our guest editors this week are heavily involved in this. It's the award winning conservation photographers, Paul Nicklen and Cristina Mittermeier,
part of Rolex's Perpetual Planet Initiative.
The significance, of course, they have brought to our attention in the most graphic and stunning way, important images.
(BEGIN VIDEOTAPE)
PAUL NICKLEN, PHOTOGRAPHER: I would say right now it is my favorite photograph, just because it's my most popular photograph. When you take a
photograph that's sharp and in focus, you know, for many people, their job is done.
For me, it's when that image now goes to work. Now it takes on a life of its own. Now it communicates with the world.
The work I do is at that intersection of art, science and conservation. It has to be beautiful and engaging and it has to invite you in. It has to be
based on fact and science and it has to have a conservation message.
It was the opening spread in "National Geographic's" climate change issue. It's used by Al Gore. It's used in other talks and then it was put on the
album cover of Pearl Jam, called "Gigaton," which is the measurement of ice disappearing from the ice caps in both the Arctic and Antarctica.
UNIDENTIFIED FEMALE (voice-over): Paul Nicklen grew up on Baffin Island in the Canadian arctic territory of Nunavut, where he said the lack of a
television, computer or phone led to spending all of his time outside in the snow and ice.
Nicklen: I was learning to be tough. I was learning survival skills but it's also learning about storytelling. The Inuit are beautiful
storytellers.
CRISTINA MITTERMEIER, PHOTOGRAPHER: Here they come, the mother lode.
Hi.
UNIDENTIFIED FEMALE (voice-over): Cristina Mittermeier, on the other hand, was raised in the mountains south of Mexico City, where she says adventure
books and television shows introduced her young mind to the wonders of the sea.
MITTERMEIER: I was as far away from the ocean as you can get. But I became a marine biologist because I thought that that was my passport to get close
to nature and close to wildlife.
UNIDENTIFIED FEMALE (voice-over): Paul, too, started off as a biologist.
NICKLEN: I was working on polar bears, caribou, moose, lynx, wolves.
UNIDENTIFIED FEMALE (voice-over): Both quickly discovered they were more motivated by the impact of capturing scientific moments in picture rather
than on paper.
MITTERMEIER: I realized that when people are shown photographs, they feel so much more comfortable asking questions about what they're looking at.
Simple questions, human questions, where was this ?
Were you afraid?
Was it cold?
Were you hungry?
Where did you sleep?
Those kinds of questions. And that's the first step in enabling a dialogue.
NICKLEN: The role that I have to play is that the science is important. But I need to bridge the gap between the scientists and the rest of the
world by using the power of visual storytelling.
Here he comes, just rolling now.
MITTERMEIER: Woohoo! A blue whale!
(LAUGHTER)
MITTERMEIER: So you guys have never seen that blue whale before.
WHO!
NICKLEN: They were 15 degrees off the wind.
UNIDENTIFIED FEMALE (voice-over): They are also co founders of Sea Legacy, an organization working to bring larger audiences into the conversation on
the importance of protecting our oceans.
And they've recently added an impressive resource to their creative storytelling toolkit.
NICKLEN: Sea Legacy One is an autonomous hub of content creation that's out there on the front lines of the biggest issues facing our oceans, where
we have the latest technology and equipment to capture those stories and share those stories with the rest of the world.
MITTERMEIER: Sea Legacy One for me is a beacon of hope. You know, we want a lot of people to come and be entertained by our videos, by the adventure
but also to start understanding why they need care.
(END VIDEOTAPE)
QUEST: And make sure please that you watch our special program, "Call to Earth: Protectors of the Sea." It is here on CNN this Saturday and Sunday.
(MUSIC PLAYING)
(COMMERCIAL BREAK)
[15:50:00]
(MUSIC PLAYING)
QUEST: The protests in France have been targeting and disrupting air travel quite extensively, as you'll see from these pictures. Smoke bombs in
Biarritz at the airport on Tuesday, with many flights canceled. France is a major air travel corridor.
Overflight is what it's called; other countries also facing strikes. EasyJet's chief executive, Johan Lundgren, says the protests are now out of
control. The failure of being able to fly over those protesting countries means delays; the airlines or getting the blame.
(BEGIN VIDEOTAPE)
JOHAN LUNDGREN, CEO, EASYJET: The cost of living crisis and coming out of the pandemic, you have seen strikes happening really across, you know,
every part of the society. But it's very clear that this is something that is particularly problematic on the point of view that we, as airlines, you
know, can't really resolve that.
Yet we bear the primarily cost and the burden of the blame.
Why is this happening?
I mean, how do you explain to a customer who's flying to A to B and not even touching C that there's a strike in point C?
That means that his or her flights are canceled or even delayed. And also don't forget, the ripple effect that comes from delays and cancelations. So
it is a very, very tricky one.
QUEST: Are you preparing for it?
Are you preparing for basically the destruction of the route network at some point during the summer?
LUNDGREN: I mean, we are always looking to how we can mitigate these types of challenges that we see. And also remember, you know, in 2018, I think
we've probably spoken about it.
That was also a difficult year in terms of the disruption that we're seeing there, was party related to the internet traffic control as well. So it's
not unusual. I think it is the scale that we've now been seeing.
QUEST: So talking about easyJet yourself and where you're going to grow and how you're going to grow. I was looking at the numbers again. And you
know, I see Ryanair sort of marching across Europe, almost unstoppable in many ways.
And I'm wondering where are you going?
LUNDGREN: Well first of all, I think we grew in the last quarter. We updated the market more than any other airline who was there. There was
more than 50 percent growth than we had last year because remember that we had more restrictions than any other airline.
If you think of the size that we have in the U.K. and you can have the toughest restrictions in there, so we've had a quicker ramp-up in order to
get to the place where we are today.
Look, we are focusing on delivering returns for our shareholders and a great customer experience for the people who fly with ourselves. We are
focused on the primary airport. Some of our competitors are focused on the secondary, the tertiary airport.
So nobody's actually marching over us because they come.
QUEST: Would you grow into larger aircraft?
Or are you going to stick around the 320 family?
Are there certain routes where you could judiciously put in a bigger plane?
[15:55:00]
LUNDGREN: Absolutely, we can. Look we have over hundreds of 319s, the 156- seaters. And they will be all be leaving the fleet now within the next four
or five years. And that will take us to the 186-seaters and also the under 235-seaters, so we will absolutely grow naturally by just changing the
fleet.
QUEST: But a different model of 330, a different model into the fleet?
LUNDGREN: I think we're quite happy with the A320 fleet that we have. Now we have an order book that has firm orders now that will take us up to
2028. And we're quite pleased and we're now just hoping for the -- for the manufacturer delivering them on time.
QUEST: I want to talk about, sustainability is the issue of the day in a sense. But the industry has done a really poor job, my view, that in
getting the message over what it's doing. The industry could do more.
LUNDGREN: I think you're right to the point that our narrative certainly hasn't been effective. I think that there's something, if you talk about
airspace reform as an example, which is basically the fact that we are having a, you know corridor --
(CROSSTALK)
QUEST: You and I will have retired.
LUNDGREN: Oh, I'm not so sure.
(CROSSTALK)
LUNDGREN: -- retire, Richard?
QUEST: Well, are you talking single European skies?
LUNDGREN: I am.
QUEST: We'll have retired.
LUNDGREN: But no, no, no. Hang on here. The narrative has to be that whatever we can do right now to start decarbonizing the industry, this is
the cheapest way and the most effective way to do that. That narrative wasn't there five years ago.
QUEST: Do you get frustrated?
LUNDGREN: Yes, of course, I am. Of course I am. Look, we're signing up for a roadmap to net zero in here. And when I sit with politicians and decision
makers, you know, in a small room, we talked about there is no disagreement on this.
QUEST: But what happens?
LUNDGREN: So what happens?
I think that there are mostly local domestic politics involved in it. I think it's about protecting jobs. I think it's about the fact that, you
know, nobody wants to give up some things that has to do not so much about the sovereignty or the military's right to take airspace, as we would have
seen with the situation right now.
The military will take airspace when they want to.
Does that -- that's not really an excuse.
(END VIDEOTAPE)
QUEST: That's the CEO of easyJet.
We've given you lots of aviation and airlines tonight. Tomorrow night in Brussels, we turn our attention to politics, European politics. I'll be
joined by the European Parliament president, Roberta Metsola, and Ukraine's ambassador to the E.U.. The program from Brussels. It's 3 pm In New York, 9
o'clock in Brussels.
We will have a "Profitable Moment" after the break. Stay with us.
(MUSIC PLAYING)
(COMMERCIAL BREAK)
(MUSIC PLAYING)
QUEST: Tonight's "Profitable Moment." Not surprisingly, it's about aviation. Martin Gauss of airBaltic summed it up.
How can people, who -- passengers; you, me -- who love to fly have such a dislike, if you will, of airlines and aviation and believe the damage that
it does?
How do you square that circle?
Everybody's got a great story of where they've been but then somehow wants to beat up on the industry that took them there and gave them that
experience.
Carson Spohr of Lufthansa is right when he says the industry's job now is one most important thing: get that message out, that actually aviation is
the force for good, he believes. And that's the message that needs to be put around.
And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest. Whatever you're up to in the hours ahead, I hope it's profitable.
END
