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Quest Means Business
Boeing, Strikes And Climate Change Dominate A4E Summit; Fed Holds Rates Steady, Signals Three Cuts This Year; Report: Hospital Staffer Tried To View Princess Kate's Records; Interview With Lufthansa CEO Carsten Spohr; Interview With Air France-KLM's CEO Ben Smith; Irish Prime Minister Leo Varadkar Announces Surprise Resignation; Interview With AirBaltic CEO Martin Gauss. Aired 4-5p ET
Aired March 20, 2024 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:21]
RICHARD QUEST, CNN INTERNATIONAL HOST: Closing bell ringing on both Wall Street, gavel to gavel, markets at a record as you can see. The S&P is what
-- you could see, how strong a session it has been on Wall Street. It's record high.
The Fed has been speaking and tonight we have a special show from the Airlines for Europe Conference. Those are the markets. The main stories of
the day: Ryanair's chief executive tonight tells us expect prices to go up five to 10 percent because of delays from Boeing and Airbus; however, he
has full confidence in the Boeing chief executive.
The fed still forecasting three interest rate cuts a year. The chair says higher for longer were very much the message of the day.
And Lufthansa's chief executive, Carsten Spohr, he is confident, but that worst of the strikes are over he says, but look on the staff, the strikes
hurt the business.
We are live tonight in Brussels. It is March 20th. I'm Richard Quest and in Brussels, of course, I mean business.
A very good evening to you from brussels tonight. Why am I here? Well, it is the A4E, the Airlines for Europe. It is their annual meeting and it is a
chance for us all to really get to grips and talk to the top airline CEOs about what's happening in the industry.
Boeing and the problems on the woes of Boeing are very much on the minds, not only as a question of safety, but Boeing's commercial plane unit has
seen its Q1 performance amongst the worse that it has been two years. Slower 737 production and compensation made to airlines for the grounding,
whichever way you look at it, Boeing has been having difficulties either from safety or because of delays in delivering aircraft.
And for the airlines who use Boeing as part of their fleet. Here at the Airlines for Europe, they are very clear about one thing, they are unhappy
about it, and it is putting pressure on the system.
(BEGIN VIDEO CLIP)
GEIR KARLSEN, CEO, NORWEGIAN AIR SHUTTLE: It is no doubt that they have to -- they have to sort out their issues and their issues is massively public
and we have concerns on the delivery going forward.
We know the production rate and how it has been in the last few months and it is way too low.
LUIS GALLEGO, CEO, INTERNATIONAL AIRLINES GROUP: I think Boeing is an extraordinary company and I am sure that they know that they need to
improve their situation and they have a quality issue now. But they have a plan in place and I am sure they're going to come back.
And I think also in aviation, we need Airbus and we need Boeing. So I am sure that is going to be like that in the future.
JONAH LUNDGREN, CEO, EASYJET: On one hand, unfortunate for those who suffers from that, I wouldn't rule out that there will be pressures along
the system in the next coming years as well. They might have an effect also on ourselves.
(END VIDEO CLIP)
QUEST: Jonah Lundgren of easyJet, lets delve further into the issues.
The best airline to do that with is Ryanair.
Ryanair's Michael O'Leary he has more than 400 Max jets on order. There is high travel demand, and he can't get the aircraft that he needs because of
constrained supply.
He sees fairs going up in Europe by five to 10 percent as everybody ratchets up fares on supply and demand. As for Boeing's delays. Well, he
basically has flagged to Boeing these issues. Instead, whilst on safety, he trusts their planes and he says they will get it right. He is making no
bones about it.
Michael O'Leary of Ryanair is not happy.
(BEGIN VIDEOTAPE)
MICHAEL O'LEARY, CEO, RYANAIR: I have confidence in the planes, I am confident they will all be delivered. We are supposed to get 57 for summer
of 2024. I think the number now looks like its somewhere between 35 and 40.
We are in daily dialogue with Dave Calhoun, Brian West, the CFO. I have confidence in those guys. I think they're getting their arms around it. I
think the situation in Boeing is improving, but there is no doubt this summer, we are facing delivery delays, which will constrain Ryanair's
growth this year.
Instead of carrying 205 million passengers, I think we are heading for somewhere between 198 million to 200 million.
[16:05:10]
QUEST: Right. You also said that there will be an increase in fairs as a result. Why?
O'LEARY: Well, 20 percent of the Airbus fleet, something is going to be grounded. Boeing are suffering delivery delays.
So Europe will not return to its 2019 pre-COVID capacity, and if you know - - whereas demand has returned, demand is strong. So, if you have constrained supply, strong demand, I think it is inevitable that you're
going to see airfares bump up again this summer, I think between five and 10 percent.
QUEST: And you're telling us earlier about sometimes when you do get a new plane, what you find at the --
O'LEARY: I mean, we now -- we have about 24 engineers in Seattle monitoring the production, but when we take delivery of an aircraft into Dublin, we
spend 48 hours going in through the plane, checking it for errors, omissions, or anything else.
And you know, last year in 2022 and 2023, we were finding little things like expanders on the floorboards, in some cases seat handles missing.
Things like that.
That shows I think a lack of attention to detail, quality issues in Boeing. Nothing big, nothing major. But that is part of our surveillance of the
Boeing system and we not willing to put an aircraft into service in Ryanair, unless we are fully satisfied that everything is there and as it
should be.
QUEST: Then you've made your views clear.
O'LEARY: Yes, yes. I've been to Boeing at the most senior levels, we've been seeing for 18 months, both publicly and privately to Boeing. Quality
control post-COVID, since they got back making aircraft has not been acceptable and it needs to be improved.
Boeing now accepts that that's the case. The FAA now accept that that's the case and I think that's good overall for customers and for consumers even
if it means some aircraft delivery delays this year.
QUEST: So, you're getting fewer planes. There will be higher fares and there will be also the usual ATC disruption over the summer. It is not a
very cheerful look.
O'LEARY: I am more optimistic. I mean, one, I think there will be less ATC disruption this summer. The French had 57 days of ATC strikes last summer.
I don't think they would be as bad this summer.
The Olympics in Paris will distract them for a couple of months during the summer. We then have the Euros in Germany in the autumn.
The capacity constraints, there will be less pressure on European ATC and we will be flying even with the growth we do get, we will flying 35 to 40
new Boeing aircrafts. We are carrying four percent more passengers, but burn 16 percent less fuel.
QUEST: You're taking over as head, as chair of A4E. It is sometimes quite depressing coming here because it is the same issues and arguably on some
of them, no progress, and even gone in reverse.
O'LEARY: I think there is an element of truth to that, but you know, we meet every year. This year, as a group of airlines, we are carrying
probably six, eight percent more passengers than we did this time last year.
So we are complaining about things that haven't been addressed. ATC reform hasn't been addressed. Protection of overflights hasn't been addressed. We
still have this ludicrous environmental taxation in Europe that only applies to European short haul flights. We exempt long-haul flight and we
exempt transfer flights, which account for the vast majority of Europe aviation CO2 emissions.
I mean, I think it is absurd.
You have airlines calling for a level playing field, but don't even pay the environmental taxes on their long haul and transfer flights, so there are
issues that need to be fixed. I think we have a new European Parliament, new Commission getting elected later on this year, but while we are making
those points, we are still delivering growth.
(END VIDEOTAPE)
QUEST: Michael O'Leary of Ryanair, which incidentally carries the most number of passengers in Europe, 200 million. They expect this year, delays,
notwithstanding.
We will talk more to the CEOs in just a moment.
Now to the Fed, the US Federal Reserve, which left interest rates where they are, held rate steady. The Fed Funds Rate, you can see that five-and-a
quarter to 5.5 percent.
The dot-plot, all right, geeks of the world #FedGeekUnite, the dot-plot is far more interesting. The 2024 forecast most sea three cuts in interest
rates this year, similar to December, but some even see two or less.
Afterwards, the chair of the Fed spoke. He said the timing of the cut is unclear, although the economy is strong.
(BEGIN VIDEO CLIP)
JEROME POWELL, US FEDERAL RESERVE CHAIRMAN: We believe that our policy rate is likely at its peak for this tightening cycle and that if the economy
evolves broadly as expected it will likely be appropriate to begin dialing back policy restraint at some point this year.
The economic outlook is uncertain, however, and we remain highly attentive to inflation risks. We are prepared to maintain the current target range
for the Federal Funds Rate for longer, if appropriate.
(END VIDEO CLIP)
[16:10:05]
QUEST: Julia is with me. Julia Chatterley.
I didn't have the advantage of hearing the chair, but he saw -- he is doing his dance again. You know, we will cut, but not just yet.
JULIA CHATTERLEY, CNN INTERNATIONAL ANCHOR: Two things you want to avoid as a Central Bank governor is overreacting to inflation, hiking too much, or
under reacting to inflation, reducing rates, which of course is under a lot of pressure now to do, but then have to hike them again and perhaps even go
higher than where you even were when you said you were at peak.
Richard, I think he is doing a good job of finding that balance.
It was great news today and I think that's why stock markets reacted so positively. What we heard from the Fed was that they are raising their
growth forecasts for this year and next year. They are lowering slightly, admittedly, their unemployment rate forecast for this year.
Yes, if you look at core inflation, which is that inflation number when you strip out food and energy, they raised that slightly for this year, but the
bonuses, despite some concerns going into this meeting, they still say they plan to cut three times this year and there were those that felt that they
may have to say, hey, you know, the inflation pressures that we've seen recently mean we may only cut twice this year and they didn't say that.
So kind of the best of most worlds here.
QUEST: Yes, now, we are in an election year and I know that the Fed always says they don't take account of it, but there have been other occasions
where in the past, rates have risen in an election year to the disadvantage of the incumbent.
This is going to be really interesting if there are multiple cuts before November.
CHATTERLEY: Yes, so this is a great question because it would be very uncomfortable for any sitting president to have rates increasing in an
election year. The problem of course, Richard is we know that President Biden has come into fierce pressure for the high prices, for the level of
inflation and particularly for the poorest quintiles of the American population. They are still facing higher prices than they were
significantly higher than two years ago.
Mortgage rates, credit cards are far higher and they are feeling the pinch and continue to feel the pinch. So yes, for those people, and of course for
this White House, they'd love to see these cuts come sooner rather than later, but not at the cost of prices increasing again, Richard, and that is
the danger, and that's where the sensitivity point is. Less so on the interest rate hikes and more on the pricing pressures.
QUEST: I don't think you and I are going to agree on the timing of this.
CHATTERLEY: Ever.
QUEST: I think I might be a bit more -- I think I am a bit more dovish to your hawkishness.
CHATTERLEY: June? Do you think they cut in June?
QUEST: I think -- yes, I think the start -- the cut starts -- oh, I don't know. Now, you've put me on the spot. I have my head in aviation all day,
not interest rate.
CHATTERLEY: I thought. Youve been doing sterling work. We will end on a plane analogy. We are in the no landing phase. No hard landing, no soft
landing, no landing phase. There we go -- Richard.
QUEST: That's not a good thing for an airline or a plane to be in.
CHATTERLEY: But you've got the fuel.
QUEST: Julia, it is good to see you as always. Julia Chatterley joining me.
Well, oh, here we go. No, we are not going to -- we are going to stop there. We are going to stop there.
Coming up, the potential of a Royal privacy breach. Now, apparently, somebody was trying to improperly access the medical records of the
Princess of Wales. It was at the hospital.
We will have the hospital's response after the break.
QUEST MEANS BUSINESS.
She always puts me on the spot, Chatterley.
(COMMERCIAL BREAK)
[16:16:07]
QUEST: Welcome back. QUEST MEANS BUSINESS in Brussels.
So now add another bit to the maelstrom mayhem concerning the Princess of Wales, Catherine's trials and tribulations, someone currently tried to
access her medical records improperly whilst she was in hospital. Somebody at the hospital apparently.
Max Foster now reports are the hospital's response.
(BEGIN VIDEOTAPE)
MAX FOSTER, CNN ROYAL CORRESPONDENT (voice over): Another day, another princess headline, this one alleging medical staff tried to illegally
access her records while she was there to undergo surgery at this private London clinic.
The country's data watchdog now says it is assessing a breach of confidentiality reported in "The Daily Mirror." The British tabloid
reported that at least one hospital staffer allegedly tried to illegally access Kate's private medical records while she spent 13 nights at the
London Clinic Hospital in January after planned abdominal surgery.
"The Mirror" says the hospital informed the Palace and launched a probe into the allegations and did a statement to CNN. The UK's Information
Commissioner's Office said: "We can confirm that we've received a breach report and are assessing the information provided."
On Wednesday, the UK's Health Minister, Maria Caulfield warned that hospital staff could face prosecution.
MARIA CAULFIELD, BRITISH MINISTER FOR MENTAL HEALTH AND WOMEN'S HEALTH STRATEGY: You're only allowed to access the patient notes you're caring for
and with their permission and there is really strict rules, information commissioner would take enforcement action against trusts or primary care
practices, but also as individuals practitioners, your regulatory body.
So for me, it would be the NMC that would take action as well. So it is pretty severe.
FOSTER (voice over): It is another blow for the princess and the palace that has been protecting her privacy fiercely during her recovery.
They've released minimal information which has sparked wild speculation about her true condition and whereabouts.
UNIDENTIFIED FEMALE: Wherever she is, I hope she is fine and well. I think that there are a lot more pressing things that people should be putting
their attention towards.
UNIDENTIFIED MALE: I think it is just shocking, and I think they should leave her alone and the Royal family alone.
FOSTER (voice over): On Tuesday, another UK newspaper, "The Sun," published a video taken by a member of the public showing a smiling Kate walking from
a farm shop alongside her husband, Prince William. Kensington Palace has referred all questions over the hospital breach to the London clinic.
In a statement, the CEO of the hospital, Al Russell said: "In the case of any breach, all appropriate investigatory, regulatory, and disciplinary
steps will be taken. There is no place at our hospital for those who intentionally breach the trust of any of our patients or colleagues."
Max Foster, CNN, London.
(BEGIN VIDEOTAPE)
QUEST: Max Foster reporting.
So, to the US southern border and the immigration battles that are continuing there. The controversial Texas law known as SB 4 remains on hold
with appeals courts, judges, signaling they may allow parts to take effect.
The law lets officers detain suspected undocumented migrants and state judges can order deportations. And at the same time, of course, it has been
to the Supreme Court, which it then said that it was back to the states.
Ed Lavandera is with me.
Ed, the level of confusion that now exists over the exact status of this law, parts of this law, the implementation and execution of this law must
be tremendous for those who actually have to do it on the ground.
ED LAVANDERA, CNN SENIOR NATIONAL CORRESPONDENT: Right, and there is a great deal of skepticism on top of all of that that we are hearing from the
local law enforcement agencies all across the state from El Paso, which is in far west Texas, down into the southern communities of Texas as well.
[16:20:11]
And essentially and we've reached out to a number of sheriff's departments and police departments across the state, and the theme that we keep hearing
over and over again is that there doesn't appear to be an appetite or an interest in sending out officers and deputies just to arrest people for
this immigration violation that they say that if they are investigating other crimes, violent crimes, or burglary, that type of thing and they come
across people who are involved in that and they have immigration issues, then then they would apply the law in those circumstances.
So now whether or not that is the way lawmakers had intended these departments to act, is not clear, but that is the reality as these
departments are very weary of getting into a realm of what they describe as the possibility of racial profiling and the concern with all of that.
And that is why you're seeing so much skepticism and hesitation on the part of many law enforcement departments across the state of Texas right now.
QUEST: So, this is the current situation. How does it move forward? I mean, what actually is likely to be the next step here? Because I mean, whichever
way it goes, at the end of the day will break down to a dispute between the federal and the state governments over who has supremacy to deal with
immigration.
LAVANDERA: Right. Well, you know, critics of the lawsuit say that for, you know, a hundred years, immigration enforcement has been the sole duty of
federal law enforcement, Border Patrol and Customs and Border Protection. But right now, this law is just completely mired in the legal process.
There have been a number of groups and the Biden administration's Department of Justice that have brought a lawsuit against the state of
Texas and this law.
So right now, that legal process is playing out in the courts. There was a hearing today to determine temporary kind of immediate effect about whether
or not the law could go into effect while the legal process plays out, and there is some skepticism there among some of the judges in kind of tapping
into this confusion.
But some of the judges also kind of alluded to the possibility of allowing parts of the law to go into effect, while other parts of the law are more
deeply scrutinized. So that could be one possibility.
So right now, we were just in a wait and see mode waiting to hear from this appellate court that will determine the immediate fate of this this bill
and this law and whether or not it will go into effect while the legal process continues to play out.
QUEST: Ed Lavandera who is on the border. Grateful for you this evening. Thank you, sir.
QUEST MEANS BUSINESS tonight from brussels. We are at the Airlines for Europe Conference.
After the break, we will hear from Carsten Spohr, the head of Lufthansa Group.
Lufthansa has had a series of strikes and its own question over delayed planes and problems with Boeing.
(BEGIN VIDEO CLIP)
CARSTEN SPOHR, CEO, LUFTHANSA: Every incident where nobody gets hurt helps us to become an even safer industry.
(COMMERCIAL BREAK)
[16:26:55]
QUEST: Welcome back.
QUEST MEANS BUSINESS tonight live from Brussels in Belgium.
Still to come on the program, you're going hear from the chief executives of the major groups, chief executives of Lufthansa and Air France-KLM, we
will hear from strikes, Olympics, and sustainability.
Also, the Irish Prime Minister, the Taoiseach has resigned for reasons personal and professional. It was a surprised. We will hear more about why.
All of that comes after the news headlines, because this is CNN, and on this network, the news always comes first.
The Israeli Supreme Court has blocked for now the transfer of Palestinian hospital patients from Jerusalem to Gaza. The temporary injunction follows
an appeal from Physicians for Human Rights Israel and others. Around two dozen patients was set to be bused back to Gaza on Thursday.
US House Speaker Mike Johnson says he is considering inviting Israeli Prime Minister Benjamin Netanyahu to address a joint session of Congress. It
would require a sign-off from the Senate Majority Leader Chuck Schumer, who only last week sharply criticized Israeli Prime Minister and called for new
elections in the country.
The Dominican presidency says it has helped get nearly 300 people out of neighboring Haiti. It includes members of international organization.
The US has flew out more than 15 Americans from Port-au-Prince a short while ago.
The Lufthansa chief executive, Carsten Spohr is one of the very big players in the aviation industry here in Europe. His airlines have got a variety of
problems.
Not least the delays in delivery of aircraft from Boeing and also problems with getting aircraft from Airbus, and if that wasn't enough, Carsten Spohr
also has a series of strikes to contend with, with his largest carrier, Lufthansa. The strikes have been on the ground. There have been pilots,
there have been all sorts of workers at Lufthansa.
According to Bloomberg, those strikes have costs Lufthansa more than $370 million since the beginning of the year.
So why are these strikes happening?
Lufthansa's CEO, Carsten Spohr sat down and said to me, he thinks that the end is in sight.
(BEGIN VIDEOTAPE)
SPOHR: We have the unique situation of high inflation of the last years and full employment and that combination, I think, Germany has not seen a long,
long time. That's why we indeed see a frequency of strikes in Germany we have not seen in a long, long time.
But when it comes to the Lufthansa negotiations, I am quite optimistic that we have seen the worst and we are now coming to an end of this.
QUEST: Why? What gives you optimism? I mean, the unions sort of say that the offers still aren't good enough.
[16:30:04]
SPOHR: Well, Lufthansa being a group, we introduced a few years ago that every internal strike is allocated as cost to the labor group, which goes
on strike. So that has discipline element attached to it, which in my view makes people understand that these internal strikes eventually come to
their own disadvantage. So that's why we have not seen long strikes in Lufthansa since many years.
QUEST: If we go back to the cause of the strikes, one of them, of course, is that, you're right, the higher inflation, et cetera. But there's a
feeling of the company is making good money and that they're not sharing in it, that Lufthansa is having record profits in certain areas, but where's
my bit of that?
SPOHR: Well, I'm not denying the world records in Lufthansa, but not only record profits. We also have seen record participation of staff in this
profits. We paid out more than half a billion euro for '23 alone to our unionized staff. I'm not talking management, which is a biggest share of
our profits, and even our dividend. So I think their argument, which are rightly subscribed that staff should participate in profits in the case for
Lufthansa Group, at least with half a billion, I can clearly say we've done so and we have done rightly so because I very much believe in this.
QUEST: So we are clear. You're confident that there can be resolution before the summer?
SPOHR: Absolutely. I think our staff knows that strikes also are ruining their business model as individuals. And it's different than in the car
factory where you have a strike and then in one more night shift the cars are, you know, made up for. In our industry, customers become unhappy,
customer choose other hubs.
QUEST: You can't guarantee, but do you hope this summer is better than last, and the one -- and clearly better than the one before that?
SPOHR: We will see the challenging summer based on the high demand. And let's not forget the record summer of 2019 was very challenging in terms of
operations in Europe and not just Europe, but it will be better than '23. I'm quite sure.
QUEST: Do you still have confidence in Boeing?
SPOHR: We absolutely do. Yes. We have ordered actually more Boeing airplanes over the last years and in the decades before. And we should
never -- let me put this in the right words. None of us wants incidents in aviation. We surely all do everything to avoid accidents. Also, we don't
like incidents. But every incidents where nobody gets hurt helps us to becoming even safer industry.
So what happened in Alaska surely, again, we all would have loved to live without, but this particular incident will also now allow, not just Boeing,
but other planes around the world to be more safer. So I have not given up that strong belief that all of us in the industry think exactly in that
direction.
QUEST: And the delays on new aircraft, in the 777s or whatever it is, is that starting to affect your growth profile?
SPOHR: Yes. While we speak we have more than 30 A320neos on the ground because of engine issues.
QUEST: Aren't you furious about that?
SPOHR: I am, I am. But on the same time, safety is everything. I rather, you know, don't push the system to the limits. And then endangering any
kind of a shortcut. But yes, this industry individually suffers from this lack of airplanes, but it's also, be honest, is a global industry in
general. We also of course see the upside that there is no overcapacities currently which we have seen so many years. So I think there's really two
views.
(END VIDEOTAPE)
QUEST: That's Carsten Spohr on the woes of Airbus and Boeing.
And so to Air France-KLM. You'll remember of course earlier this week on Monday, we were in Paris. QUEST MEANS BUSINESS came from the rooftops of
Paris and we were talking about the Olympics. Well, Air France is the sponsor airline of the Olympics and Air France is getting ready for the
games later this year. But as Ben Smith, the CEO of the group Air France- KLM, told me there are so many difficulties when it comes to sustainability, for instance. The one he wants globally for airlines is a
level playing field.
(BEGIN VIDEOTAPE)
BEN SMITH, CEO, AIR FRANCE-KLM: In the U.S. there are big subsidies for SAP. So we have the mandates. We don't have the SAP. In the Middle East
there are no mandates and in Asia it's a little bit of a mixed bag, but nobody is subject to the same amount of restrictions or tactics and charges
versus us.
QUEST: But you would agree you don't want to descend to the lowest level.
SMITH: No.
QUEST: Because that's really, you know, if you remove these things to compete against these other carriers, you're just a race to the bottom.
[16:35:05]
SMITH: Yes. Could, but I just said, our objective is level playing field. We are --
QUEST: Right. But that means bringing them up or you down.
SMITH: We want -- we are totally aligned with decarbonizing as quickly as possible. And number one is to get new equipment in. I don't think there's
any argument around that. We need to be able to do it. We need the money to be able to do it. But in terms of going to the lowest common denominator,
no, that's not our objective. But any policies or any charges or mandates, as long as they help us get to where we'd like to go, we're not looking to
lower mandates or slow things down.
QUEST: The court in the Netherlands has just ruled against you or against KLM, that basically on your "Fly Responsibly" campaign saying that there
needed to be more concrete and responsible measures, not just slogans basically.
SMITH: Yes, it's frustrating. I mean, concrete examples to make the largest order in the history of our group, largest order of new aircraft is as
concrete as you can get. It's the biggest expenditure we've made. It's the biggest expenditure we'll make over the next few years. We will replete the
entire European fleet and we will replete our long-haul aircraft fleets. So it's a huge commitment, it's a huge risk.
QUEST: And so we can say you're with KLM-Air France with SAS in the not- too-distant future. Is that size enough or do you need more?
SMITH: To be seen. To be seen. We have a lot of transformation to do. And one big example you just mentioned is Transavia. We are --
QUEST: Doesn't punch its weight.
SMITH: We had some restrictions with our French pilot unions at Air France, which put a lot of restrictions around Transavia. We've negotiated that
out. So all the airport, which was a big money-loser for Air France for decades, we now have the right tool with a low-cost competitor with the
right cost structure, which will turn Orly into a profitable airport for us. That's a big change. And there's a new metro line from Paris, from
central Paris into Orly, I think it's under 20 minutes, which will be on time. It'll be open before the Olympics.
QUEST: The Olympics. What's your biggest challenge?
SMITH: CGD. Paris Charles de Gaulle Airport, which is our main base for Air France. You know, we run about 50 percent of our customers are connecting
through the airport. For -- during the Olympics, that'll significantly decrease. So we'll be carrying the same number of passengers. A lot of them
will be originating or, you know, their destination will be Paris. So can the facility handle all these new, you know, arrivals, baggage, all of that
where people be getting off? The roadways to and from the airport, can our staff get to work? You know, this is a big concern.
QUEST: I noticed all the major European carry the legacies of (INAUDIBLE). You're all investing in product. BA did their big announcement recently.
You've announced first and then -- the 777s. This is a fighting ground now.
SMITH: Well, because there's the long haul premium leisure customer. This is segment is growing significantly, and I think because we are based in a
city which has a disproportionately large segment of that market is really a plus for us, so we are investing in first-class, La Premiere we call it
at Air France, and the business class, and the investments are proving to be worthwhile.
QUEST: Boeing.
SMITH: Boeing.
QUEST: What can one say? I mean, you can give me this sort of the standard answer which is that you still have confidence in them to build safe
aircraft. And that they will sort out their production problems. But the delays are causing new capacity issues. You must be pissed off with Boeing.
SMITH: Well, first of all, it's, as an aviation enthusiast and as somebody who basically spent their entire life on this industry, Boeing has been
part of my -- in my head, part of my space, you know, since I was very, very young. And this carrier has an amazing legacy, it's built some amazing
airplanes, my favorite airplanes, and it's extremely sad and disappointing to see the situation they're in today.
So as an enthusiast, it's very, very sad. I think they have a lot of legacy. They've got a lot of decent people there who, you know, they've got
a lot -- they've got a big long job to do. But I think they'll get out of it.
QUEST: Right. So that's the hashtag avgeek answer.
SMITH: Yes.
QUEST: Now what's the CEO of Air France-KLM answer?
SMITH: Well, today we don't have the kind of exposure to Boeing that many of our competitors have. You know, we had a couple of 787 left to be
delivered, but the rest of our fleet, they are all Airbus airplanes that are coming in.
(END VIDEOTAPE)
QUEST: That's Ben Smith, the Air France-KLM CEO.
[16:40:03]
QUEST MEANS BUSINESS tonight from Brussels.
So the Irish prime minister, the taoiseach, resigned today. In fact, he resigned immediately. He says it's for personal and political reasons and
when asked or when questioned, he said there's nothing else behind it. I know you all think there is. But there isn't. Well, we do and we will ask
more questions.
QUEST MEANS BUSINESS after the break.
(COMMERCIAL BREAK)
QUEST: So they say leaders cling on to power. Well, not today. The Irish prime minister known as the Taoiseach Leo Varadkar announced he is quitting
politics. He resigned today and will leave office as soon as a replacement is announced. He said it's for personal and political reasons. He's a
former doctor-turned-politician. He was the -- he first began taoiseach in '17. Then he was deputy and then he shared power. The country's youngest
leader and the first openly gay Irish prime minister.
Here's what he said.
(BEGIN VIDEO CLIP)
LEO VARADKAR, IRISH PRIME MINISTER: I know this will come as a surprise to many people and a disappointment to some, and I hope at least you'll
understand my decision. I know that others will, how shall I put this, cope with the news just fine. That is the great thing about living in a
democracy.
(END VIDEO CLIP)
QUEST: Suzanne Lynch with me from "Politico."
You've met him and you've worked with him, or you know him as much as any journalists ever does. Why is he gone?
SUZANNE LYNCH, GLOBAL PLAYBOOK AUTHOR, POLITICO: Well, this is the big question and I can tell you everybody in Dublin is asking themselves and a
lot of people here in Brussels are asking themselves that. As you say, most politicians at the moment, we know a lot of them I could name, who don't
want to go, you know, thinks now is not the moment. And yes, he did take people by surprise.
There are a couple of reasons that could be. The polls have suggested his party is not that popular. He is not that popular as a leader. Ireland is
facing a general election within the year. So that is probably weighing on his decisions. And in the last few days and weeks, a number of members of
his own party, Fine Gael, have announced they're not running in the next general election. I think that has put a bit of fear into his governing
Fine Gael party and he decided that now was the time to step down.
QUEST: It's the way in which he also said I may not be the best person to carry forward. And there was almost like Ardern in New Zealand this idea of
the tank is empty.
LYNCH: Yes.
[16:45:02]
QUEST: I think personal and political reasons.
LYNCH: Yes. And I mean that comparison with the former New Zealand prime minister is very apt. They're both sinner generations, they were elected on
a promise of change, of a new generation of leaders. And yet both of them are leaving office at a much younger stage. I mean, Leo Varadkar is only
45. He had said before that he told he would be out of politics by the time he's 50, but he's not 50 yet.
But, yes, he's hinted at that. Now, like a lot of politicians, you have a lot of social media abuse with a lot of discussion around Europe, around
the world, about the abuse politicians are coming under. He didn't specifically mention that, but that is very much in the air. But I think
that prospect of a general election coming was also weighing on his mind.
QUEST: Who's the frontrunner?
LYNCH: Well, there are a lot of names in the (INAUDIBLE) but significantly just a couple of hours ago, Simon Coveney.
QUEST: Yes, took himself out.
LYNCH: Took himself out. So he was the foreign minister, well-known during the Brexit negotiations. He said he's not running. There's another Simon,
Simon Harris, another very kind of ambitious, very articulate, younger politician, who has really said before he would be interested. Also Paschal
Donohoe who is well-known as the chairman of the Eurogroup here in Brussels, finance minister, former finance minister, he is a possibility.
We haven't heard from them yet.
QUEST: Let's talk generally about this place behind. European elections taking place very soon. June. We have a new commission or mandate as they
like to call it and we had the fiasco of Charles Michel wanting to run off and become MEP and now he's staying until at least until he's out. And what
is the mood here?
LYNCH: Well, look, this is the end. The commission run for five years and we're in the final few months, so it's kind of race to the finish. So
Ursula Von der Leyen, the woman who had her office up here behind us, very hard working, head of European Commission, she has now thrown her hat in
the ring for another five terms.
QUEST: She'll get it.
LYNCH: She'll get it. I mean, she has to go through a lot of hoops. The parliament after -- well, yes, I would bet that she actually will get it.
So --
QUEST: Has her five years generally been regarded as a success?
LYNCH: I think, yes. I'm not saying she's beyond criticism, but she is without a doubt one of the most effective or powerful commission presidents
in history. Now, you might not agree with everything she's doing, but for example she has a very strong relationship with Joe Biden, she oversaw the
EU's response to Ukraine back when France and Germany, Macron, Scholz, were not really listening to the Americans' warnings about the imminent invasion
by Russia, she was dealing with America, she stepped into that leadership role.
One of her problems, though, is climate change. She's got a lot of pushback from people. Now, will she continue that kind of green deal that was part
of her first term in the second?
QUEST: Isn't true she sleeps in the building sometimes?
LYNCH: It's true. It's true. A converted office, we believe, yes.
QUEST: Really?
LYNCH: Yes. She's very, very hard worker.
QUEST: She's with the defense minister in Germany. And you think she's having to keep --
LYNCH: Well, she should be there now.
QUEST: She works hard.
LYNCH: She does. She does a lot of traveling as well. Those which she made, although we are on the eve of a European summit so she will be attending
that. All the E.U. leaders, including Leo Varadkar will be arriving here.
QUEST: His last one.
LYNCH: His last one.
QUEST: All right.
LYNCH: Would be arriving here tomorrow morning.
QUEST: Very grateful to have you as always. Thank you for coming and talking to us.
LYNCH: Thank you.
QUEST: When we're in Brussels. Very good. Thank you.
Now QUEST MEANS BUSINESS from Brussels. After the break, we're going to be talking to the CEO of airBaltic. Fascinating airline with lots of
interesting developments, after the break.
(COMMERCIAL BREAK)
[16:50:57]
QUEST: AirBaltic is one of perhaps smaller carriers in Europe, but it punches its weight considerably and it's still facing considerable
challenges as a result of the war in Ukraine. Now, two years ago as the war began, Martin Gauss, the CEO, told me that they were the last out. "We
stopped there as the last airline. We will be the first one going back in." We'll find out more about that.
For the airline itself, record profits of last year, $37 million. It's the first profit since '18. And there's the potential for an IPO as the airline
gets ready to list.
Martin is with me, Martin Gauss, CEO of airBaltic.
Let's start with this idea of Ukraine and what your plans are.
MARTIN GAUSS, CEO, AIRBALTIC: So I'm traveling actually to Kyiv next week to discuss with Boryspil Airport and officials of how that could look
because Ukraine is ready to open the airspace as soon as it's safe and once it is safe, as I said two years ago, we also want to be the first ones
flying out of Ukraine and help rebuild Ukraine.
QUEST: Just safety require that, in your view, there to be a cessation of hostilities, a ceasefire of whatever sort.
GAUSS: I would say, you would need that. Plus, we need of course from European authorities the OK that the airspace is safe. So I think we need
both. I think there could be a staggered approach that you have one area, Lviv, which is closer to the border first, and then maybe Kyiv later. But
that's something I want to discuss with them. And of course, we are hoping that that is coming as soon as possible.
QUEST: In terms of the countries that you fly to and from, obviously, based around the Baltic countries, and the difficulties now with Russia, with
Ukraine, they mount for you as an operator.
GAUSS: I think we are -- we're circumnavigating on all the flights different airspaces. We cannot go direct to wherever we go, even not going
to the West because there's the corridor between Kaliningrad and Belarus which is also very narrow so we go via Sweden to the south. Everything
southeast, like Dubai and all these flights, we have to circumnavigate. So it's something we do for two years. It increases cost. It's more time and
it's something we are living with.
QUEST: There was a discussion for you today that the E.U. should impose a ban on those airlines who still fly over Russia and London. There's lots of
Asian carriers and some Middle Eastern who have not -- who still fly over Russia. And the view is, if you're flying to an E.U. country even if you're
not E.U., you shouldn't fly over Russia. Where do you stand?
GAUSS: I fully agree because if we fly to Dubai, for example, it cannot be that the carrier coming from there can fly through the Russian airspace
while we have to circumnavigate. That's just a competitive advantage. It's not fair and I think it should not be that they can come through the
Russian airspace and then land in Europe.
QUEST: One of the perennial problems as A4 is, sustainability, single European skies. But it always leaves me wondering just how much power,
weight, clout, whatever you want to call it, do airlines have? I mean it is -- all right, it's not a unitary system in the same sense as the U.S. with
the federal and the FAA and the DOJ or DOG. But you don't really seem to get many wins.
GAUSS: No, because we have still 27 member states and one member state can kill it all. So the E.U. doesn't have the same power at the E.U. level. So
if the member states don't want the single European sky and one of them doesn't want it we will not have it. So therefore we are different, but
we're still fighting for it. And I think we showed that this meeting how united the airlines in Europe are when it's about our future.
QUEST: I just want to touch on this single European skies because we talk about it quite often on this program. The reality -- basically single
Europeans skies means that you can't fly the most direct route. You have to go round because of that national airspace, blah, blah, blah. How bad is it
in reality?
[16:55:06]
GAUSS: It's really bad because --
QUEST: Give me an example.
GAUSS: You fly zigzag so each country in Europe you need to take a turn and you can't fly the straight line, which means you need longer, you need more
fuel, you have more emissions, and the reasons for it is that there are some of the airspace is still restricted in Second World War and they
haven't been changed. So old --
QUEST: But they won't change it.
GAUSS: They have to change it. They say they do it already for 25 years. So we still have the hope that it's coming one day.
QUEST: I'm grateful to end on a note of hope rather than a note of what hasn't been done. Good luck in Kyiv. Come back (INAUDIBLE). Let us know how
things are going.
GAUSS: OK.
QUEST: Very grateful indeed. Martin Gauss there, talking to me.
Quick look at the markets. Show you exactly how things are trading. It was a record day on Wall Street. The market was up strongly after those
comments by the chair that rates will have to on hold. But 1 percent on the Dow, 1.25 percent on the Nasdaq.
We will take our "Profitable Moment" after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment" from Brussels. To be an airline CEO, you need many things. But one of the greatest attributes is to be a
realist. To be honest, they're all absolutely pissed off at the problems with both Airbus and Boeing. The delays that mean that they can't have
their growth forecast, open new routes, carry more passengers as planned. But that realism also tells them there's very little they can do about it
so they have to circumnavigate, they could protest, and they can take the compensation.
For the time being, though, on the question of safety, they are all unanimous. There are no problems with the planes. All it needs to happen is
they need to be made properly and delivered on time. The last bit not so easy.
And that's QUEST MEANS BUSINESS for this Wednesday night. I'm Richard Quest in Brussels. Whatever you're up to in the hours ahead, I hope it's
profitable. I'll see you tomorrow in Brussels.
JAKE TAPPER, CNN ANCHOR: For the first time in recent memory, American journalists and Senate staffers were not allowed in the hallways outside an
important meeting on Capitol Hill, not the meeting itself, but the hallways. That meeting was a Senate Republican policy luncheon. The
featured speaker was Israeli Prime Minister Benjamin Netanyahu appearing virtually.
Coming up the invitation that could soon follow that meeting.
END
