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Quest Means Business
U.S. Trade Partners Criticize Trump's 25 Percent Auto Tariffs; Trump Threatens Canada and E.U. with Large Scale Tariffs; Ryanair CEO: We Should be Grateful for Trump. Lufthansa CEO on Transatlantic Relationship; Air France-KLM CEO on Growth Happening Outside Europe; Automaker Shares Tumble After U.S. Tariff Announcement. Aired 4-5p ET
Aired March 27, 2025 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:07]
RICHARD QUEST, CNN INTERNATIONAL HOST, "QUEST MEANS BUSINESS": Closing bell ringing on Wall Street. The Dow Jones is ringing the Dow Jones closing
bell. You don't often see that, but there you are. The market has been down throughout the whole of the session. Miserable day. I think we are almost -
- we are not quite at the lows of the day.
Hit the gavel -- bring our misery to an end. One or two and there you go again. Trading is over. Those are the markets and these are the main events
of the day.
Canada's Prime Minister promises to retaliate after Trump plans 25 percent auto tariffs. Mark Carney says it is clear the U.S. is no longer a reliable
partner.
Ryanair's outspoken chief exec, Michael O'Leary is with us tonight saying Trump terrifies Europeans and we should be grateful.
And first class come back. Lufthansa and Air France new products for those with deep pockets and wanting comfortable rides. Five windows worth.
Tonight, we are live in Brussels. On Thursday, it is March the 27th. I am Richard Quest in Brussels, as elsewhere, of course, I mean business.
Good evening.
The top names in European air travel are here tonight with us in Brussels. There are no shortage of issues to discuss. It is Airlines for Europe, the
Annual Summit, which is at a critical time for the industry.
Relations are strained between the U.S. and Europe. The chief executives of Europe's leading airlines are saying, it has made innovation even more
important.
Look at that wonderful view of the Berlaymont. I have to say, that view of the building that you're seeing on television seems to be a great deal
nicer when you actually look at it, but there you go. It looks gorgeous tonight.
Ryanair's chief executive, Michael O'Leary, Lufthansa's chief executive, Carsten Spohr, the head of Air France-KLM, Ben Smith, all we will be
hearing from tonight. We've got the governor of the Central Bank of Belgium.
Let's begin with our business agenda.
Anger, outrage and downright disbelief is the reaction of some of America's closest trading partners after the Trump administration announced a 25
percent tariff on all imported automobiles and car parts and it starts next week.
Canada's new Prime Minister, Mark Carney, who is facing an election, you're aware at the end of April, has promised retaliatory trade actions against
the U.S., saying his country will not be broken by U.S. economic aggression.
Germany, Europe's biggest automaker, has called for a firm response, whatever that means. South Korea says the tariffs will pose significant
challenges to its automakers, and Japan has made a statement saying it is looking at all options again, whatever that means.
Anna Stewart joins me from London.
Anna, we knew this was coming. I guess first thing is 25 percent higher than they were expecting or had they somehow, in some naive halcyon world,
believe it was not going to happen?
ANNA STEWART, CNN REPORTER: Well, I think some countries were actually still hoping they could negotiate, and many people weren't expecting this
to happen until President Trump's so-called Liberation Day next week. We've had reaction all day on the markets. I can tell you it is a sea of red.
Asia, Europe, U.S. car stocks are significantly lower. And the reaction you just mentioned from in terms of the politics, we are having a huge spectrum
of reaction. Some saying they are still going to seek negotiation like the president of the E.U. Commission behind you.
Others like France and Germany really pushing for retaliation. And I think the strongest comments we've just heard from Prime Minister Mark Carney in
Canada.
QUEST: If we look at the way in which Canada is leading the way, in that sense, Canada is being far more forthright than, say, for example, the sort
of we are going to decide what we are going to do in the near future. It is difficult to know who has got this tone right.
STEWART: Yes, I mean, from Mark Carney, the Prime Minister of Canada, "We will respond forcefully. Nothing is off the table." Retaliating, though, of
course, against President Trump will involve more retaliation. In fact, Richard, what was possibly most interesting last night was the post from
the President on Truth Social, where he almost got ahead of this and said, if the E.U. and Canada collude and cause economic harm to the U.S., they
will have even bigger tariffs than they are currently expecting placed against them.
[16:05:10]
So clearly there is some concern that this will happen.
QUEST: You see, that's -- I was just about to ask you about this because we just don't know how the U.S. administration will interpret any action by
potentially as collusion or ganging up on the U.S. and it is almost impossible to sort of formulate a policy as a result.
Is the feeling from your sources and soundings that this is going to happen and it is not going to be pulled back at the last moment?
STEWART: I think it is going to happen, but I am happy to eat my words if it doesn't, but what we have seen is the E.U. has already had to delay part
of the tariffs that they use to retaliate against the U.S. because the U.S. retaliated against them.
You know, this is how this works. I don't think anyone would be surprised to learn that President Trump will retaliate if they retaliate. And, you
know, where do we end with all of this?
I think that's possibly why we are not seeing any tit-for-tat tariffs, you know, emergency tariffs from partners today. But we may get that next week.
It is going to be a really interesting week, a bracing week for investors - - Richard.
QUEST: Oh bracing. There is a good word. I am braced and ready for it.
Anna Stewart, good to see you. I hope you're braced. You're in the brace position, as they say. Well, we are talking about airlines tonight, so we
will talk more about it. Thank you very much.
Now, Anna was just talking about this warning from the U.S. President for the E.U. and Canada. Don't join forces against the United States in a trade
war, whether deliberate or otherwise. In a post online, he said, he threatened to slap far larger tariffs on both if they attempt to work
together to do economic harm to the United States.
But how you interpret that is going to be difficult because the economic damage, arguably, is already there.
Pierre Wunsch is with me, the Governor of the National Bank of Belgium. Good to see you, Governor. Thank you.
How do we make sense of this? I mean, what do you believe? Obviously, the ECB is looking at it from a Eurozone area, but what do you see as being the
effects of tariffs?
PIERRE WUNSCH, GOVERNOR, NATIONAL BANK OF BELGIUM: Well, it is going to be bad for the economy in the U.S., but also in Europe, that is for sure. You
could argue that in Germany, it is going to be compensated by the fiscal expansion that they've decided upon and the orders of magnitude are more or
less comparable.
The big question for us is the impact on inflation. I tend to believe that at the end of the day, it will push inflation upwards. Part of it depends
on the reaction of the exchange rate, but --
QUEST: Sorry, there is a lot there. Let's start unpacking that a bit. First of all, let's do the German bit. I mean somewhat, if the tariffs -- first
of all, Germany is going to be clobbered most in terms of cars. Correct?
WUNSCH: And some countries in Eastern Europe that are part of the same value chain.
QUEST: Right.
WUNSCH: Slovakia and others.
QUEST: But it sort of will negate the supposed boost from the increased defense spending, ones, not necessarily literally, but they are going to
cancel each other out.
WUNSCH: Roughly speaking, that would be my best guess. Yes.
QUEST: And then if you talk about inflation, if we know where the inflation is coming from, i.e. the tariffs, is that structural or cyclical or what --
how do you interpret that?
WUNSCH: Well, we are still slightly above target. So you know we are in a position where if it lasts a bit longer and if we have some more push to
inflation, it is difficult to navigate because if the impact on the economy is negative, but the impact on inflation is on the higher side, then of
course, it is the worst case scenario for us.
QUEST: Right. But is that the sort of inflation that you believe the ECB would need to contain to bring down again? You know, you can see where it
is coming from and why it is there. It is not quite the same of demand led inflation, I guess or maybe I am just being naive.
WUNSCH: No, it is not and the economy is relatively weak, so I guess at the end of the day we are going to have to find a way in between the negative
impact on growth and the potentially positive impact on inflation, we will manage.
We've been there before, but it is not an ideal position to be in.
QUEST: Here in Belgium and in the Eurozone, do you think you're looking at stagflation?
WUNSCH: At the margin, it is going to push inflation up and growth down. Whether it is going to bring us to a recession? I don't believe so. I think
we have enough momentum, and again, with the fiscal expansion in Germany, but in other parts of Europe as well, I think we can manage.
QUEST: This is a sort of, I guess, this is more of a touchy feely type question, which you don't often ask central bankers. But do you -- are you
frustrated by what is happening? Because it seems to be unnecessary. This is entirely self-inflicted from the United States on Europe.
[15:10:02]
WUNSCH: I mean, let me put it this way. I studied in the U.S. and when I see what is going on and the way the relationship between the U.S. and
Europe is evolving, yes, I am a bit frustrated.
As an economist, because at the end of the day, that's my job. It is a lose-lose. It is a lose-lose and that's also frustrating.
QUEST: But what can you do for Belgium, in a sense, bearing in mind monetary is over in Frankfurt. What can you do to help mitigate the worst
effects of this, if anything, or is it just hold your nose and swim?
WUNSCH: That's part of the answer. We also need some structural reforms, and actually we have a new government and they've decided on some
structural reforms of the labor market.
So part of the pressure is having a positive impact on Europe. Sometimes we need a little bit of that, but it is a little bit too much in this case.
QUEST: I am very grateful that you came to see us, sir. Thank you very much.
WUNSCH: My pleasure.
QUEST: Lovely to be here in Belgium. Thank you very much indeed.
Now, the chief executive of Ryanair says Donald Trump has frightened Europe into action. I sat down with Michael O'Leary at the Airlines for Europe
Conference here in brussels.
Ryanair is interesting. Ryanair is the largest airline in Europe, 200 million passengers, and it is one of the largest purchasers of Boeing
aircraft, making what happens in the U.S. even more significant.
Michael O'Leary says Europe has been forced to get its house in order.
(BEGIN VIDEOTAPE)
MICHAEL O'LEARY, CEO, RYANAIR: I don't think I've ever been more optimistic on getting something done. And, you know, we should be grateful for Trump's
arrival in the White House. He terrifies the Europeans.
And I think, you know, the combination of Trump's arrival on top of the Draghi Report has now put competitiveness at the top of the agenda. I've
met four commissioners in the last two months, and all they want to talk about is how can we make aviation more competitive? Great. Stop taxing it;
two, fix your broken ATC system. And three, let's get on. Let's roll back some of these idiotic regulations that makes air travel more expensive.
QUEST: If we look at Ryanair, the sheer size and scale of it, people just don't realize how big you are. I mean, you're the largest --
O'LEARY: We are a very small little Irish airline.
QUEST: How many passengers?
O'LEARY: We carried our 200th millionth passenger yesterday, a wonderful 86-year-old lady traveling from the Canaries to Madrid. She was -- it is
the first time in the history that any European airline has ever carried 200 million passengers in one year.
QUEST: That's extraordinary.
O'LEARY: I think what's extraordinary is, though, 200 million passengers have saved eight billion euros compared to the airfares being charged by
our competitors.
QUEST: I knew you'd get that in.
So where do you grow? I mean, you're not quite saturated, but you're getting quite close.
O'LEARY: No. I mean, we are seeing -- the remarkable thing at the moment, and again, it shows how idiotic some of Europe's airline taxation is.
Our fastest growing markets at the moment this year are Morocco and Albania. So you have the two kind of non-European destinations. We don't
pay any ETS on flights. Passengers don't pay any ETS on flights to Morocco and Albania, which are now cheaper to visit than neighboring Greece or the
Canary Islands.
QUEST: Right. But you've bullied all of the other airports, you've bullied all the others. You've refused to fly to some places where if they don't
cut or they don't maintain the subsidies, you've done all of those things in all of the other airports.
O'LEARY: Well, firstly, we don't get any subsidies, but we do negotiate hard on behalf of our customers. We want --
QUEST: You threaten to take flights out if they don't maintain.
O'LEARY: Of course, I mean, like your average supermarket is having these discussions with their vegetable suppliers, their meat suppliers on a daily
basis. For far too long, airlines have just been, yes, we will just agree whatever the cost of the airports and we pass it on to customers.
We are fighting on behalf of our customers. We want to lower the cost of air travel, and airports need to get more efficient.
QUEST: Okay. So what happens with your planes? I mean, you've done a couple of exceptional deals with Boeing by getting them at their weakest point and
getting some great deals, but now you've just got to get the planes.
O'LEARY: To be fair to the team in Boeing, the new team in Boeing, they've done a terrific job of improving the quality coming out of Wichita. Nothing
is coming out of Wichita with carry forward defects, which is a huge improvement.
We are seeing much better quality being delivered out of Seattle. The challenge is, they are still not up at producing 38 or 42 aircraft a month.
So we are about -- they have left us about 30 aircraft short this summer. We think we will pick them up -- they have asked us to take those
deliveries in August, September and October, the peak summer months.
And working with them, we said, fine, we will take them so that at least we have them for summer 2026.
QUEST: And will it be a miserable summer because of ATC?
O'LEARY: I think ATC will fall over again next weekend for the next ten, 12, 18 weekends. ATC is going to fall over because the French are short
staffed, the Germans are short staffed, the Spanish are short staffed, and they have not recruited the air traffic controllers they need, but they
don't suffer any consequences.
We have to pay customers for the E.U. for compensation for delays, and yet we can't recover those costs from the national ATC provider.
QUEST: Happy birthday E.U. 261. Twenty years old.
O'LEARY: I know. Time for reform. Let us push.
QUEST: What do you want? You don't want to get rid of it
[16:15:02]
O'LEARY: No. We want to apply E.U. 261. Make E.U. 261 apply to the ATC providers. Ninety percent of flight delays in Europe are due to air traffic
control. The way to fix that is actually make the air traffic controllers or the providers pay the compensation back to the airlines so we have to
pay to our customers.
And the other thing we need is a modest increase in the two hour delays, because frankly, if you're stuck at an airport on the next Saturday in
Europe, two hours is going to be a small delay. The ATC is going to be -- is going to create far more delays than just two-hour delays.
QUEST: Finally, were you surprised when you got the restaurant bill?
O'LEARY: I always thought --
QUEST: The viewers may not know. You were given a restaurant bill.
O'LEARY: I wasn't.
QUEST: That had a load of extras, ancillaries and ancillary costs, extra -- a booth charge, an extra leg room charge.
O'LEARY: My wife and I were having dinner in Ireland last weekend and they said, do you mind if i take a selfie? No problem. So, I did a selfie with.
And then the restaurant produced something up on social media with my bill, where they'd added all of these extras -- seating, extra legroom at the
table, which was brilliant.
My only annoyance is actually, if I'd known they were going to do that, I should have got the meal for free.
(END VIDEOTAPE)
QUEST: Michael O'Leary, who could always find a way to get a free meal.
An emergency court hearing has just begun over the Yemen attack plans that were accidentally shared with a journalist. We will explain why one
advocacy group says those Signal chat groups and messages violate federal laws if they are not kept properly.
In a moment, QUEST MEANS BUSINESS in Brussels tonight.
(COMMERCIAL BREAK)
QUEST: And now, it is over to the courts. The Trump administration's use of that Signal group chat to discuss the Yemen attack plans is facing scrutiny
in a U.S. federal court.
The administration is being accused of violating the federal record keeping laws. Remember, all official documents have to be kept. By using the
texting app that can be set up to automatically delete messages, we don't know whether many of those people did have auto delete on after so many
weeks or days.
The judge assigned to the case is the chief of Washington, D.C. federal trial court, James Boasberg. He is also presiding over that case
challenging the deportation flights that invoked the Alien Enemies Act earlier this month.
Elie Honig is in New Jersey. Elie is with me now.
[16:20:07]
You couldn't write this. You could not write this, Elie. The same judge that has -- the same judge that has held the feet to the fire is now
dealing with this case. Explain.
ELIE HONIG, CNN SENIOR LEGAL ANALYST: It is a spin of the wheel, Richard. The judges are assigned randomly, and I don't know if he is lucky or
unlucky, but he has now come up, Judge Boasberg in two of the biggest cases involving this administration, just in the last week or so.
QUEST: So, I mean, if they can't prove that these things are being kept and, you know, they've -- in a sense they've been kept for the purposes of
being kept, not by accident, then this case has got a good chance of succeeding.
HONIG: I think that's the essence of it. The first thing that's really important to understand about the case that's being argued right now in
federal court is it is so limited in scope, it addresses such a small portion of this whole scandal.
What this is, is a group of plaintiffs, an oversight group has basically brought a lawsuit and said, well, Judge, were concerned that by using this
Signal app, they have violated the Records Act because there may be documents there that are auto deleted, that are not maintained, and
therefore all that they are asking for is an order that they can't delete and need to maintain all the prior messages and that they can't use this
app moving forward.
The administration's response so far, we will see how it tests out in court, but the administration's response so far is nothing to worry about,
all of the texts have been saved and maintained and will be saved and maintained moving forward.
So if you're thinking about larger accountability for this, if you're thinking about potential firings, inspector general hearings, congressional
hearings, even DOJ criminal investigation, which is not going to happen, should happen, but is not going to happen, none of that is on the table
here. It is just a question of retention of those documents.
QUEST: Right. But Elie, the when the administration says no, no, no, nothing to see here, everything's being kept. Doesn't that just bring an
end to the case? And the judge has to say, well, look, they've said they're being kept. We take them at their word, they're being kept.
HONIG: I don't think that in itself is enough. Judges aren't usually going to take the unilateral, unsupported word of one side. So the judge may want
something more concrete than that. He may want sworn affidavits. He may want evidence or testimony from a records' custodian.
But yes, I mean, if the government can establish these records have not been deleted and are being kept, the judge, I think the right move legally
is to throw up his hands and go, well, what do you want from me then, plaintiffs?
QUEST: Right.
HONIG: So again. But one thing we may get out of this court hearing is a little more transparency as to who all knew about this. Were there
precautions being taken to preserve the records or not? And by the way, that could shed brighter light on the ultimate question here, which is just
how negligent it was of these officials to be using Signal app.
QUEST: Now, I am going to take you into something completely different, of which I have not given you any notice of. But here we go, look, looking at
the bigger issue now of how the federal courts, as it works up to the Supreme Court. I was reading an article today, it might have been "The
Times" or somewhere else, that basically says Judge Amy Coney Barrett, and they said, Kavanaugh, I might have said Judge Roberts, these two or three
could be the future secret, in a sense, to a Supreme Court that is the counterweight to the administration.
Is that what -- when you're in your legal circles, having a strong lemonade, is that what you're all saying amongst yourselves?
HONIG: That's what Joan Biskupic and I like to kick around our Supreme Court analyst. And I think I mostly agree with that assessment.
So the first thing to keep in mind is we are hearing almost on a daily, sometimes multiple times a day basis, these decisions coming down, these
temporary stays from the district court, which is what we call the federal trial court from the circuit court, which is the sort of intermediate court
of appeals.
Keep in mind, Donald Trump and the administration, sure, they'd like to win those lower court rulings, but ultimately they're playing for the Supreme
Court.
Now, our Supreme Court here in the United States does not have to take any given case. It is up to the Supreme Court. They typically take a minuscule
fraction, under three percent of all cases that come to them. But the ones they do tend to take tend to be the big constitutional issues.
If we are looking at our court right now, let me sort of break it into three, three, and three. You have three very reliable liberal justices in
Justice Sotomayor, Justice Kagan and Justice Ketanji Brown Jackson. You have three very reliable conservative justices in Justice Thomas, Alito and
Gorsuch and that leaves the three in the middle, I guess, that you just laid out, which would be the Chief Justice Roberts, Justice Amy Coney
Barrett and Justice Kavanaugh.
The reason I said, I guess, is because they are all staunch conservatives. I mean, they were all nominated by Republican presidents.
[16:25:07]
They all have sterling conservative credentials, but those three in the middle have shown an ability to rise above the politics of it and to not
just automatically say what's good for Trump or good for Republicans, or bad for Trump or bad for Republicans, they have shown an ability to decide
on the law in a little bit more of an impartial way.
QUEST: Elie, I am grateful. Please invite me along to your strong lemonade with you and Joan at some point, and I will just tell you, while you and I
have been talking, the judge, Judge Boasberg has ordered the government to preserve the messages as you predicted he would and the date is March the
11th to the 15th. Now, there we go. Thank you. Very grateful.
Now, the chief executive of Lufthansa has been talking to me. He says aviation is important during politically unstable times. He describes the
transatlantic relationship as robust. Carsten Spohr is next.
(COMMERCIAL BREAK)
QUEST: Hello, I am Richard Quest. There is more QUEST MEANS BUSINESS in just a moment.
The chief executive of Air France-KLM says the White House's attacks on Canada have left him personally hurt and surprised. After all, he is
Canadian, Ben Smith.
President Trump's auto tariffs could hammer Europe's car industry. I will be speaking to the Director General of the European Automobile
Manufacturers Association.
All of that will come after we've had the news headlines, because this is CNN and on this network, the news always comes first.
European leaders say sanctions against Russia must remain in place. It was part of their message of support for Ukraine, which was given today at the
so-called Coalition of the Willing Summit taking place in Paris.
Ukrainian President Volodymyr Zelenskyy says the U.S. needs to be stronger in relation to Russia.
At the moment, a federal judge has been presiding over an emergency hearing about the attack plans that were leaked to a journalist on the Signal
messaging app. The judge has now ruled that the hearing concerns where the federal officials violated record keeping laws because the message were set
to be deleted. He has ordered the Trump administration to preserve those messages between the 11th of March and the 15th.
The chief of Sudan's army is back in Khartoum for the first time in nearly two years. He returned to the capital after the Sudanese army recaptured
the city's international airport. It brings the military closer to regaining full control of the city. It's been under the control of a rival
paramilitary group, the Rapid Support Forces.
President Donald Trump is withdrawing his nominee to be the U.S. ambassador to the United Nations. He'd asked the House Republican Elise Stefanik to
serve as U.N. ambassador, but that move would leave -- to the U.N. would leave the Republicans with a smaller majority in the House.
According to the latest number, air travel between Canada and the United States has considerably slowed down. Some people say it's dried up.
According to OAG, the analytics firm, forward bookings have fallen 70 percent. Yes, you heard me right. 70 percent compared to a year ago.
The chief executive of Lufthansa, Carsten Spohr, says the transatlantic relationship remains intact despite a trade war and political differences.
Lufthansa will have more than 200 flights a week between Germany and -- the Lufthansa Group, and the United States.
I spoke to Carsten about demand and the issues Lufthansa has faced with its new business class seat being certified by the U.S. Federal Aviation
Authorities. I started by asking for the question on competitiveness of airlines in Europe.
(BEGIN VIDEOTAPE)
CARSTEN SPOHR, CEO, LUFTHANSA GROUP: I do see the trend turning. Suddenly the question of European airlines regaining market share of passengers
spending too much on regulatory costs, where there's other parts of the world is a new debate, a clear, fresh debate on trying to improve the
competitiveness of European carriers. So I think, yes, there is a trend and we see it clearly going in the right direction.
QUEST: You're all saying at the moment, you're not seeing any weakness in transatlantic bookings because but it's still early days. And certainly if
you look at the cases of the German tourists who've been detained and deported, et cetera, et cetera, it will. But do you not fear it could
eventually turn a tide?
SPOHR: No, I think the transatlantic relationship being under stress in terms of politics, defense strategy clearly is proven to be intact when you
measure the amount of people who act on the transatlantic relationship, seeing each other. We in Lufthansa see a nice 4 percent growth this year.
First time ever. We have more than 400 flights every week and the forward bookings are as healthy as they could be.
So I think we should not be, let's say, distorted by those stresses on the political level towards Americans and Europeans. They want to meet, they
want to see each other, they want to visit each other. And let's keep that also as another element of how important aviation is in times of more
unstable politics.
QUEST: The problems you're having, the, you know, the individual problems with the seats, getting the seat certified, it's quite extraordinary that
the length of time it's taking, you must be getting really frustrated. You've got -- you're having to either keep planes on the ground or fly
seats empty.
SPOHR: Well, it is frustrating and especially it has been frustrating. But looking forward now, I think there's light at the end of the tunnel.
There's more than 100 airplanes going our way in the next years on the widebody side, mainly to the Lufthansa Airline. More than two-thirds are
going there because were freshening up our main brand. So with all the frustrations more or less behind us, we're now looking to the deliveries
and 777-X hopefully being delivered next year. Just confirmed by Boeing.
QUEST: Are you prepared to better coffee on it?
SPOHR: Coffee, yes, maybe all my, all my pension payments. Not really. But again, this is going to be the last, we're looking obviously forward to it
being the launching customer for the 777-X. It's going to be the last introduction of a new airplane type for many years to come.
QUEST: Where do you take it from here? Airbus has pushed hydrogen well beyond your and my retirement date.
[16:35:03]
Airbus has pushed that into the future, so there's no new airframe coming along that we know of. There's no -- they're going to fiddle around with
the engines. But what is the next development?
SPOHR: Well, again, I don't recall any moment in this industry that we have not had one new program in the pipeline. So once we pick up the first 777-X
in Seattle, I cannot wait for, we'll be out of programs. So I think the next program must be a new narrowbody airplane replacing the 737 and the
320. And we're pushing for that both in Seattle and in Toulouse. Obviously, the propulsion topic is a huge topic for the airframers to take that
decision.
But we as an industry, the large carriers, the airframers, the engine manufacturers, we must be continuously pushing technical innovations, which
we have been known for for decades.
QUEST: And everybody's -- the death of first class is greatly exaggerated as, to paraphrase Mark Twain. I mean, everybody is putting first class back
or refreshing. And you are, you are as well.
SPOHR: Absolutely.
QUEST: Both at Swiss and at LH. What is the attraction of first class?
SPOHR: Well, first class is seeing the biggest, best growth in all of our classes at this point, which is probably reflecting to a certain degree
what we see in consumer products around the world upper end cars, upper end watches, upper hand fashion, is, you know, seeing significant growth rates.
And we in aviation at least those of us who offer first class, want to be part of it.
In Swiss, we stick with the decision that every single aircraft is equipped with a first class, which is the only airline in the world offering that.
In Lufthansa, we are right now introducing our new first class, which I think is taking first class to a new level. And the forward bookings are
very strong. So I think the decision to fresh up first class was brave when we took it. The numbers didn't really support it, but I'm very glad we took
that brave decision because it will now pay off.
(END VIDEOTAPE)
QUEST: Carsten Spohr, refreshing first class.
Another airline that's doing likewise is Air France-KLM. At least the Air France part, which has just revealed its la premiere, and indeed that
starts in two weeks' time. According to the CEO of Air France-KLM, there's plenty of growth in the aviation industry. Unfortunately, it's just not in
Europe. If it's in the Gulf, it's in Asia.
I spoke to Ben Smith earlier and he laid out for me his concerns for the future.
(BEGIN VIDEOTAPE)
BEN SMITH, CEO, AIR FRANCE-KLM: Those people that have been flying for many years see that the growth of aviation is happening outside of Europe. So
the job growth is outside of Europe. The strategic decisions on, you know, where an airline flies outside of Europe. So for a city in Europe to be
connected globally becomes, you know, more and more difficult when the hub is not in Europe. So there is plenty of growth around the world. It's just
not taking place in Europe.
QUEST: If we look, for example, now, the transatlantic situation, the worsening of relations, do you see that as being going to have an effect? I
mean, tariffs per see don't really affect you in a sense because so far there's no question of tariffs and airlines or air purchases, are there?
SMITH: The U.S. government, from what we see today, has an interest in ensuring that, you know, airplanes that are manufactured in the U.S. are
competitive to sell them around the world. And I think it's the same for Europe. So we have not seen anything, and we don't have a sense that that
is at risk. And of course, we're following that. But, you know, with the transatlantic situation, the demand for travel, we don't see any material
change, which is encouraging.
QUEST: Looking at the group itself, there's a feeling of turnaround is definitely there. The AF-KLM group seems to be performing much better than
it has, as you've just celebrated I think it's 20 years, isn't it?
SMITH: Yes. The group, the group's formation, 20 years.
QUEST: 20 years. And a lot of it's been troubled from a lot of the 20 years, but it seems to be functioning better. And now you're about to add
SAS at some point. You're going to change the name, Air France-KLM, SAS?
SMITH: To be seen, to be seen.
QUEST: Oh, so you are thinking of doing?
SMITH: Well, no, no, we are trying to see, you know, we're not going to become AFKLM-SAS but we'll see, you know, what makes sense. It's now
priority number one for us to consider is to how do we integrate SAS into our group. I mean, that's priority and how to do it in the right way. But
no, look, the group -- fundamentals of the group are getting much, much better. What's become much more difficult is, you know, the policies that
the governments have on us so the Dutch state and the French state, this is where, you know, we're taking a step back.
So, you know, if we were just in the position that we were in, let's say, five or six years ago, with the relationships that we have with our
governments and the policies and taxes that were in place, then we would be doing much, much better. So it's very frustrating, you know, two steps
forward, one step back.
[16:40:01]
QUEST: But the airlines had always been thought of as arms of the government in a sense. That's changed. You've changed that to a large
extent, but on both sides, I mean, they may still have ownership stakes, but there has always been a vision that they were arms off. Now that's not
really the case.
SMITH: I think, you know, the -- an internal disagreement around what were the objectives and what were the most important things for each other with
the one group that was a bit of a challenge, a big challenge before I arrived. Today, we're focusing on something else, and we've got big
challenges where especially in the Netherlands, they do not, the government does not seem to balance out the benefits of air travel with the cost and
the issue around pollution.
And here we see a disproportionate I'd say separation or lack of agreement around the benefits that aviation bring to the Netherlands. And it's
extremely frustrating. We think it's really bad for the Dutch state and the Dutch economy.
QUEST: You've just brought the premier out or you're -- it's about to start flying five windows.
SMITH: Yes.
QUEST: Five windows. Have you gone mad?
SMITH: Well, La Premier is not new. We brought out the new seat.
QUEST: Yes.
SMITH: You know, an updated seat that was -- so it is the longest seat in the sky. The product, the service is more profitable than it's ever been.
We're meeting the demand of what our customers are looking for, and this seat is the reality of what our customers are looking for. And we're really
excited. The reception has been fantastic, and I only wish we could go faster converting the fleet that we have and adding more airplanes with the
product.
QUEST: You're Canadian.
SMITH: I am Canadian.
QUEST: There is an election. It's a fraught election where clearly it is the relationship. So take off your CEO hat and put on your Canadian hat,
and tell me how you view the situation.
SMITH: Well, personally, we're, you know, just surprised, you know, we're very, very hurt, you know, these Americans are our best friends. And you
know, I think we're quite, quite disappointed where, you know, our best friends have turned on us. And how can we like to -- we like to repair
that, but we're hurt. And I think if you go back, you know, since the beginning of the relationship, we've been there for each other. And it's
not good.
(END VIDEOTAPE)
QUEST: That's Ben Smith, the CEO of Air France-KLM. Wide-ranging discussion, many issues to cover there.
QUEST MEANS BUSINESS tonight, we are in Brussels, headquarters for the E.U. and of course capital of Belgium. Now see how Uganda's endangered mountain
gorillas are facing new threats from their human neighbors. That's coming up next. QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
[16:46:09]
QUEST: Welcome back to Brussels now. This week, "Call to Earth" is in Uganda. We are following a woman who's helping to save the mountain gorilla
from extinction. Today we're going to look at how disease transmission, oh, yes, from humans has to become one of the biggest threats to the Ugandan
mountain gorillas. So what is being done to help prevent it?
(BEGIN VIDEOTAPE)
BILL WEIR, CNN CHIEF CLIMATE CORRESPONDENT (voice-over): When Dr. Gladys Kalema-Zikusoka first came to Bwindi Impenetrable National Park, scientists
knew little about the transmission of disease between humans and mountain gorillas. Even legendary conservationists like Dian Fossey and David
Attenborough often seen in close contact with the animals. But it's a different story now.
DR. GLADYS KALEMA-ZIKUSOKA, FOUNDER AND CEO, CONSERVATION THROUGH PUBLIC HEALTH: When I worked as a first veterinarian for the Wildlife Authority,
within nine months of the job, they called me and said, the gorillas are losing hair and developing white, scaly skin. I asked the human doctor
friend of mine in Kampala, I asked her, what is the most common skin disease in people? And she said to me it's scabies.
WEIR: The scabies had spread to a small gorilla family, and despite quick treatment from Gladys, one of the babies died.
KALEMA-ZIKUSOKA: It was a very severe infestation. And this made me realize at that point in time that you couldn't protect the gorillas without
improving the health of their human neighbors. Just like the baboons interact with the people so to the gorillas. They go to people's banana
plantations to eat the banana plants, and they often find dirty clothing on scarecrows. And that's how they picked up the scabies, not by touching a
person.
WEIR: That moment was a turning point. Gladys realized that to save the gorillas, she had to improve the health of the people living alongside
them. And in 2003, she founded Conservation Through Public Health. It would promote a one health philosophy protecting the gorillas by first ensuring
the well-being of the local communities.
KALEMA-ZIKUSOKA: We can make each other sick, but we're not making each other sick because you're clean.
WEIR: Compared to many of Africa's other iconic national parks, Bwindi is small. At 321 square kilometers, it is less than 2 percent the size of the
Serengeti in Tanzania or Kruger in South Africa. Unlike larger parks, Bwindi has farmlands and villages pressing right up against the forest,
making human gorilla encounters inevitable.
JOSHUA MASEREKA, COMMUNITY CONSERVATION WARDEN, UGANDA WILDLIFE AUTHORITY: People here have lived with this animal for centuries. They have -- they
were born and they found themselves coexisting with the mountain gorillas.
We have a hard edge boundary between the park and the communities, that you have a park boundary here and then next to it you have a garden. And this
is presenting a very big challenge to conservation.
WEIR: In order to improve hygiene in the community, Gladys set up a network of village health and conservation teams to educate families on a range of
topics that help prevent the spread of diseases.
KALEMA-ZIKUSOKA: We reach about 10,000 households around Bwindi. We developed a whole set of indicators that they should have to show that they
have good health and hygiene, anything to avoid human wildlife conflict.
This is the first (INAUDIBLE).
WEIR: Back in the forest, rangers collect dung samples from each of the habituated gorilla groups once a month.
KALEMA-ZIKUSOKA: It's always good for us to know which particular gorilla passed, which fecal sample. It's more useful then.
[16:50:01]
WEIR: These samples are then delivered to the Conservation Through Public Health field lab, where they can be analyzed for any abnormalities in the
gorilla's health.
KALEMA-ZIKUSOKA: When we came across the mountainous normal, we are seeing here parasite egg that could be part of their normal gut microflora. So it
doesn't look, I don't see anything that's alarming. This particular silverback gorilla looks fairly healthy. Yes. So we're pleased about that.
(END VIDEOTAPE)
QUEST: Phenomenal when you see the gorillas. Now let us know what you're doing to answer the call. It's hashtag "Call to Earth."
(COMMERCIAL BREAK)
QUEST: Imported tariffs are coming to the U.S. for cars. The U.S. imported $217 billion worth of passenger vehicles last year, and more than a third
of those cars value came from the E.U. The European Automobile Manufacturers Association says it's concerned by the tariff announcement.
Sigrid de Vries is the director general, joins me now.
Do you believe that the E.U. should retaliate tit-for-tat against these tariffs?
SIGRID DE VRIES, DIRECTOR GENERAL, EUROPEAN AUTOMOBILE MANUFACTURERS' ASSOCIATION: Well, there's a lot at stake. We certainly believe that the
E.U. should be assertive. And I think that's also what's happening. There were some strong comments made already immediately after President Trump's
announcement. But we also believe that there needs to be a balance struck. There needs to be always a door open for dialogue and to try to find a
negotiated solution to the problem and avoid, avert an escalating trade war.
QUEST: But to the fundamental accusation that the E.U. has non-tariff barriers, restrictions on U.S. cars coming into the union, do you reject
that or has the U.S. got a point that it is not a level playing field?
DE VRIES: Well, there are tariffs on both sides. And I think there have been attempts made in the past already to come to a bilateral trade
agreement between the U.S. and the E.U., which would have resolved the tariff issue.
[16:55:03]
Usually tariffs are abolished in such an agreement and would also have taken care of a range of other issues that you generally take care of in
such a trade agreement. And these agreements tend to benefit both sides very much. So I think there is a strong partnership which has been built up
for decades, also reflected by the strong industrial links between both countries. And I don't think the level of tariffs that we see have -- has
been in the way.
QUEST: Right.
DE VRIES: But the levels that we now see being talked about and have -- those that have been announced are disruptive.
QUEST: Are your members ready for this? Are they prepared? Obviously, we know Germany is going to be perhaps the most affected. Other countries in
Central Europe. But are your members ready?
DE VRIES: Yes, I would say all industry will be affected in Europe because there are a lot of suppliers as well that will be impacted by a reduction
in the exports to the United States. Well, I don't think anybody can be ready for a situation like this. It's very ad hoc, short term. It's very
disruptive. But of course, they're taking all measures they can to be as prepared as they possibly can and do damage control.
But I think the concern that has also been voiced very loudly today from all corners, policymakers, also industry and economists and other analysts.
QUEST: All right.
DE VRIES: Signifies that this is a major blow potentially.
QUEST: I'm grateful for your time tonight. Thank you. Thank you for joining us.
We will have a "Profitable Moment" after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment." You know, the old thing about the seven stages of grief? You go through denial, bargaining, and et cetera, et
cetera. And you finally come to the seventh stage of grief, which is acceptance.
I think there's a heavy dose of acceptance by the aviation industry that we heard about today, that there has to be real change. And here in Europe and
here at the E.U., there is acceptance that the environment has now completely changed and they too need to alter to help make the European
aviation industry more competitive.
The Draghi Report has pointed this out. And now of course things need to change, whether it's on E.U. 261, whether it's on emissions trading,
whether it's on SAFs, sustainable aviation fuel, whatever it is. The reality is everybody accepts it could no longer continue. But getting from
here to there is going to be the challenge because we've heard all this before which is why we come back to the seven stages of grief, because I
believe in the building behind me, the realization has arrived that there's no going back.
The change is going to take place. The transatlantic relationship will be different. And they need to help make sure European aviation is more
competitive.
And that's QUEST MEANS BUSINESS for this evening. 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 London.
END
