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QUEST MEANS BUSINESS

Emirates Airlines Orders 32 Airbus A380s; Spanish Workers Stage Street Protests; World Cup in South Africa

Aired June 8, 2010 - 14:00   ET

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


MAX FOSTER, GUEST HOST, QUEST MEANS BUSINESS: A super jumbo order to match super jumbo ambitions, Emirates shocks its competitors.

Accused of gambling with billions of dollars, former trader Jerome Kurvial goes on trial.

And just three days to the World Cup, South Africa's tourism minister tells me, we're ready for action.

I'm Max Foster in for Richard Quest, this is QUEST MEANS BUSINESS.

Good evening.

A new force, then, is emerging in world travel just one day after IATA predicted a strong recovery for the industry, Emirates placed a record order for new jets. The move aims to transform Dubai into a connecting point for international travel. Tonight on QUEST MEANS BUSINESS we speak to the airline's president about his plans for the future.

Well, Airbus is calling it the most valuable commercial plane order, ever. And it is a sign of one airline's supreme confidence then in the future for the whole industry. Emirates and A380s, let's have a look at that then.

Emirates is the fastest growing carrier from Dubai, it has ordered 32 of the Airbus A380 super jumbos, that is the world's biggest airliner. And the list price, the publisher's price, it would cost $1.2 billion, but we don't actually know the actual price. You can count on it being at a sizable discount, because Emirates is buying so many.

The head of Airbus says he's delighted, of course, to have won the order.

(BEGIN VIDEO CLIP)

TOM ENDERS, CHIEF EXECUTIVE, AIRBUS: We are very happy about this additional huge order from Emirates. Almost two years into the operation of the 380 I think we can say (UNINTELLIGIBLE) this is a strong sign of confidence into the A380, into Airbus, and we wish Emirates many happy starts and many happy landings and much success on their future (UNINTELLIGIBLE).

(END VIDEO CLIP)

FOSTER: Let's look at the finances behind this deal, then. And Emirates is coming off a highly profitable year. Net profit rose five fold, to $960 million at a time when large swaths (ph) of the industry are steeped in losses. Passenger numbers rose 21 percent. But Emirates says that to cut costs and stop hiring new staff to keep those profits rising.

IATA says the aviation industry, as a whole, will make a profit in 2010 for the first time in three years. Airlines in the Middle East and Africa expected to earn a combined $100 million. But in contrast, here in Europe, longer established carriers are really struggling. So, with most of the industry clinging on by its fingernails, how can Emirates afford to go on this spectacular shopping spree? Richard Quest joins us.

Why do these things always happen when you are on holiday?

RICHARD QUEST, CNN INT'L. ANCHOR, QUEST MEANS BUSINESS: I was actually in Berlin, at IATA, and I was on my back today. This was simply too good to miss, Max.

FOSTER: You're making me nervous You know, take it away for a moment.

QUEST: All right.

There are few adjectives that one can use to describe the purchase of another 32 of these, taking the total order book for Emirates to 90 A380s. Now, put this in context. The next biggest customer for the 380 is round about Qantas with 20 of them. So the fact that Emirates has decided to buy so many of these planes at this particular time is a thumping great big change for the aviation industry. And, frankly, it will rewrite the rules, because with its Dubai hub, the amount of capacity-now a short time ago I spoke to the president of Emirates, Tim Clark, who joined me on the line from Berlin. And I asked him the critics say this is simply too much, too quickly, and too much capacity.

(BEGIN VIDEOTAPE)

TIM CLARK, PRESIDENT, EMIRATES AIRLINES: Well, look, this is just the execution of a plan that we have had under wraps for quite a long time. We were ready to do this during the course of last year, but because, you know, everybody faced a recession in the aviation industry, in fact, the world was facing a recession, we wanted to test just how well we could weather the storm. Now we carried on growing our business. We expanded our network. We took on more freight. We carried more passengers.

Importantly, we actually made quite a lot of money this year. And our cash position grew. So we decided that with that-that track record we decided we had the ability to grow the business over the next 10 years. And what you are seeing with these 90 380s, when they come, is the backbone of the fleet until 2017, 2018. So we have got a seven or eight year introduction program for these airplanes.

QUEST: But, Tim, the amount of capacity that these planes will adding to your route network, and to global aviation is phenomenal. I mean, other airlines are going to be seriously worried about this.

CLARK: Well, I can't speak for other airlines. And I can't speak for how they think about us. All we are doing is growing our business model along the lines that we have so successfully executed over the last 25 years. And we will connect more cities pairs, we will put the 380 on routes that we already know need it desperately. And don't forget the airplane is only about 120 seats more than the 77400 (ph) today.

QUEST: Right.

CLARK: I know that might seem a lot, but nevertheless everywhere we have flown our nine aircraft, we took (UNINTELLIGIBLE) day before yesterday. The aircraft has been completely full. It is hugely popular for the traveling public. They wait to travel on it and they thoroughly enjoy it. So, the track record of the airplane to date has been one of great success. And we don't see why another 80 of these aircraft shouldn't be the same for us when we expand operations into Africa, South America and places like that.

QUEST: Tim, are you going tell me how much you paid for them? What sort of discount you got.

CLARK: No.

QUEST: I heard numbers up to 40 percent.

CLARK: I would never, you know, disclose the pricing information like that, Richard. The billers (ph) for these are 11.5 billion for the 32.

QUEST: Right.

CLARK: And that is, of course, that excludes all the seats and galleys and all the things that we put into the airplane, the televisions and the bars, and the showers and things. So, you have probably add about another $30 million for each of those, so it is probably about, you know, another $900 million on top of that.

(END VIDEOTAPE)

QUEST: Absolute telephone numbers there from the president of Emirates.

And interestingly, I was with Sheik Ahmed yesterday, at IATA, he is the chairman. Not even-they kept this one very, very quiet. Not even a hint that this order was on its way.

FOSTER: Why is it that these Middle Eastern carriers seem to be doing so well, when we keep telling stories about the terrible state of the aviation industry.

QUEST: They have lower cost bases, they are newer airlines and they are managing to-they are well positioned, they are opening up new routes. There are claims that they are subsidized, whether it is on fuel, or landing charges. The airlines deny that categorically. But of the three probably only Emirates is profitable, really profitable, at the moment. Qatar is heading that way and so it Etihad. They are the big players.

I'll give you one final example, Max. From the U.K., Emirates has eight services a day, eight. Five from Heathrow and from the rest of the U.K. Now, you imagine that capacity going into Dubai and out the other side. You add in Abu Dhabi, with Etihad, Doha with Qatar, and you start to see that these three airlines will be the dominant force in the part of the century (ph).

FOSTER: (UNINTELLIGIBLE) doesn't it? Thank you so much for that, Richard.

Well, another CNN expert on airplanes, Ayesha Durgahee, has been taking a look at what is in store for the aviation sector this coming year.

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE: Not going anywhere, anytime soon.

UNIDENTIFIED MALE: They are watching this hour by hour.

UNIDENTIFIED FEMALE: The world's busiest international airport is silent.

UNIDENTIFIED FEMALE: Of flight cancellations.

UNIDENTIFIED FEMALE: This is not over, by any means.

AYESHA DURGAHEE, CNN INT'L. CORRESPONDENT (voice over): The volcanic ash disruption in April took the aviation industry by surprise. Setting back and slowing down its recovery from the global financial crisis. International passenger traffic slumped by 2.4 percent and cost the industry $3.3 billion.

GIOVANNI BISIGNANI, DIRECTOR GENERAL, IATA: I'm happy that it is over, but it was a European embarrassment. It took five days to organize a conference call, each regulator was acting in a different way. No coordination at all. And lessons learned for the future, short-term, let's follow what United States normally is applying in those occasions. They identify and area, it is a black area, they test this area with some special test plane.

DURGAHEE: Volcanic ash remains a challenge for European aviation. Continual analysis by the civil aviation authority has been able to determine that aircraft can fly safely through an ash density of 0.04 grams per cubic meter of air for short periods of time.

So far 10 airlines have approval for this new density from their engine manufacturers. EasyJet, along with the TLZ approval, is also testing a new infrared system developed by the Norwegian Institute of Air Research, to detect volcanic ash that could be the solution aviation needs.

DR. FRED PRATA, NORWEGIAN INSTITUTE OF AIR RESEARCH: The trick that we do is that we divide up the infrared spectrum into different parts. So what we do is we have two cameras, side-by-side, one measuring the red, one measuring the blue. And we know that when there is volcanic ash in the atmosphere, silicate particles, we get more radiation from the red than from the blue. And so we have a very easy way of detecting the ash.

DURGAHEE: If it works this infrared camera could be another feather added to aviations technological cap, along with advances in engine design, reducing fuel burn, and the impact of the industry on the environment, which means airlines and aircraft manufacturers have some tough marketing decisions to make.

KIERAN DALY, AVIAITON CONSULTANT: The bigger story, certainly in civil aviation this year, is going to be the questions of what are Airbus and Boeing going to do about renewing their fleet of narrow body airliners. We're talking here about the other side of 10,000 aircraft that are out there carrying passengers around every day.

DURGAHEE: Smaller aircraft manufacturers have been waiting in the wings and could force Airbus and Boeing to share the market. Bombardier, in Canada, has 90 orders for its new C series. Embraer, in Brazil, more than 800 orders for its 170 and 190 aircraft. And China could be the biggest threat, who have said they plan to build a new midsize aircraft over the next 20 to 30 years.

Which is the sort of time scale that Airbus and Boeing deal with, that really could be the end of this great duopoly forever, so the prize could hardly be bigger. And it is almost certainly this year that that decision is going to be taken.

DURGAHEE: From volcanic disruption to industrial action, and that is just the first half of 2010. The rest of the year will hopefully be profitable as the industry dusts itself off and gets back on the road to recovery. Ayesha Durgahee, CNN, London.

(END VIDEOTAPE)

FOSTER: And later this hour we continue our look at the aviation industry. We'll be hearing from Gerard Arpey, he is CEO of American Airlines and Alan Joyce, who runs Qantas Airways. That is still to come here, on QUEST MEANS BUSINESS.

Now see, pay cuts, billions of dollars in spending cuts, and angry protestors on the streets. Not Greece this time, but Spain. We'll be live in Madrid with the latest on a day of strikes.

(COMMERCIAL BREAK)

FOSTER: Civil servants in Spain are on strike over proposed 5 percent pay cuts. Spanish unions say as many as three-quarters of the 2.6 million people employed by the government walked out. Official estimates, though, say it was far fewer. Hundreds of people marched through the streets of Madrid. But the strike seemed to have little impact on public services with most transports still running and schools still open, too.

The government says it needs to save $18 billion this year alone, also this year and next. Spain had a budget deficit equal to more than 11 percent of GDP last year. It wants to cut that back to 3 percent by 2013. Mark Goodman is following the story in Madrid. He joins me now.

This was seen as a bit of a test as how the public were going to take these austerity measures. So, how would you measure it?

AL GOODMAN, CNN INT'L. CORRESPONDENT: Hi, Max, I didn't hear that whole question, but if you are asking the measuring of the strike today, you gave the numbers; union 75 percent, according to them, 11 percent according to the government. Now clearly public transport was moving this day. There was a spirited protest here to end the day, basically filling this street behind me leading to the central Porta de Sol Plaza, but that has been dampened, literally, by this rain.

Now, across the country a sort of uneven although clearly an impact, some are saying this was kind of a dress rehearsal for a potential general strike in the coming weeks if further market reforms are (AUDIO GAP), the government, Max.

FOSTER: How much are appetite is there for a general strike, because that obviously would be crippling?

GOODMAN: Well, the unions say-the union leaders say the red line will be, could come as early as next week when the government is expected to approve some labor market reforms. Translated, that means, making it cheaper to fire or lay off workers. The government says that would be the line where they would call-the unions say that would be the line where they would call a general strike. This day it was just the government workers, 10 percent of the workforce, called the strike over a reduction in their salary. This other thing would be much deeper, according to the unions, Max.

FOSTER: It is a big test, isn't it, Al, of the resolve of the government to go through with these austerity measures. And the rest of Europe is obviously looking very closely. How determined are they to just stick to their plans, or is there some flexibility there, do you think?

GOODMAN: Well, the prime minister, the socialist prime minister, it is his traditional allies who are in the streets, the unions, this day who were on strike. That is a deep blow to him. He's trying to see if he can find some sort of compromise by next week before having to ram through labor market reform, to make firing cheaper. But on the other side, he's got the other political parties, instead of in some countries, like in Portugal, where the opposition party is standing firm with the government in this austerity crisis. Here in Spain there is a lot of infighting, a lot of bickering, a lot of taking of positions and that has left this socialist government very alone in this whole crisis, Max.

FOSTER: And if we do go through this whole process do you think Spanish working practices will have to become more market friendly. Because there is some criticism that the Spanish workers don't reflect what their employers want so much, but after this it will be a more flexible economy?

GOODMAN: That is certainly what economists and the business owners would like. That is what the unions and many of the rank-and-file workers are resisting. Right now, the salaried worker, the best protected salaried worker gets 45 days per year worked, if he gets fired or laid off. They are trying to knock that down to 20 days. That gives you the kind of range that the unions are saying is the red line. Clearly, the country is in a great change after 15 years of a bonanza, this is really a hard blow for Spaniards to see things falling apart, Max.

FOSTER: OK, Al Goodman, in Madrid. Thank you very much for that. Expecting more strikes later so we'll bring you all the latest reporting on that from Al.

Now, how to prevent budget shortfalls turning into a debt crisis was the focus of the EU finance ministers in Luxembourg on Tuesday. The ministers agreed to start cutting debt aggressively by next year, at the latest. They also discussed power to (UNINTELLIGIBLE) oversight and impose sanctions on countries that failed to keep their budgets in line with EU rules. And they agreed to welcome a new member to the Euro Zone, Estonia.

Those discussions didn't do much to steady the stock market though. Share prices fell across Europe, led by losses in the banks and energy stocks. BP fell 5 percent in London on renewed fears over the Gulf oil spill. Despite those rises yesterday in that share price.

Now, the Dow rising after it jumped to a 7-month low on Monday. Let's have a look at the exact figures. Up, only very slightly. A slightly stronger euro indicating that anxiety about the European economy isn't quite so bad, the session, so people a little happier that are holding shares it seems.

Now, the English are coming. So are the French, the Americans, and the Japanese. As South Africa gears up for the World Cup, we talked the tourism minister there to see how well prepared he is, and they are.

(COMMERCIAL BREAK)

FOSTER: There are just three days to go until with World Cup kicks off on South African soil. South Africans see it as a privilege to be staging the games and their government is banking on the tournament leaving an enduring legacy. A short time ago I spoke to the tourism minister Marthinus Van Schalkwyk, and asked him how he's feeling as World Cup visitors start to arrive.

(BEGIN VIDEOTAPE)

MARTHINUS VAN SCHALWYK, MINISTER OF SOUTH AFRICAN TOURISM: We are three days from the World Cup. We are counting the last hours. We invested, as a government, $3.5 billion U.S. So we want a return on that. This will be a huge success. The single biggest tourism and sporting even ever on the African continent.

FOSTER: You may be aware that a British company was selling stab vests, which were publicizing which of the teams you were supporting, which you could take with you to South Africa. I presume you don't really like the idea of that and the message that that sends out?

VAN SCHALWYK: Yes, we saw that. But we know that people vote with their feet and their money. Millions of people every year can't be wrong. When the rest of the world are declining, in terms of tourism growth, we actually grew positive growth in South Africa. So people who go there, people who know the country, know that when you go to South Africa, like in London, or Moscow or Washington, D.C., there are certain areas that you go to, others that you rather avoid.

FOSTER: You talked about the massive investment that has been made to cater for all the people that are visiting and the matches themselves. How on earth are you going to justify that? I know that it is justified in terms of the profile of South Africa, in future tourism as well, but can you really put figures on that, like huge investment, when you have your domestic issues already?

VAN SCHALWYK: There are certain short-term benefits, obviously, but we always looked at the World Cup as a long term investment and to measure the investment over the life cycle of those infrastructure that we-that we develop and that we build (ph). But we will not repeat the mistake that previous hosts of the World Cup made. They build stadiums and airports that they had to demolish afterwards. Nothing that we have built, we will not be able to use afterwards.

FOSTER: What sort of people are coming to South Africa?

VAN SCHALWYK: Well, it is quite interesting, if we look at the countries participating, United States supporters, by far. We always thought it would be U.K., it is U.S., probably because all of us underestimate the size of that market. But after that, U.K., and then Germany, and then the normal spread of countries.

FOSTER: So, in your job as tourism minister, you'd like the Americans to get through, to keep those tourists there as long as possible.

VAN SCHALWYK: Well, you know, spend per head is also important to us. But very interesting, you know, recently people always underestimate the developing countries in Africa. That profile has been changing. And the highest spenders now, in South Africa, are no longer American tourists. There are Angolan tourists from the African Continent. So, like all over the world that relationship, developing countries, spend per capita, that is all changing.

(END VIDEOTAPE)

FOSTER: Fascinating discussion there with the South African tourism minister. Well, maybe we should stop calling football the bountiful game instead of the beautiful game. Economists polled by Reuters say the event will add between, .3 and .7 percentage points to South Africa's economy growth this year. Back in '94, the United States also broke new ground when it staged the World Cup for the first time. Richard Roth reports on the impact of that tournament.

(BEGIN VIDEOTAPE)

ALAN ROTHENBERG, 1994 WORLD CUP CHAIRMAN & CEO: The Rose Bowl, in all its splendor.

RICHARD ROTH, CNN INT'L. CORRESPONDENT: Allen Rothenberg is credited with bringing the World Cup to America, attracting a record 3.6 million fans.

ROTHENBERG: In commemoration of what I had done, and it is with the opening ceremonies of the World Cup, which was in Chicago, in 1994.

ROTH: Then-President Bill Clinton cheerfully kicked off the competition in Chicago's old Soldiers Field.

BILL CLINTON, FMR. PRESIDENT OF THE UNITED STATES: Good luck to you all. And welcome to the United States. Thank you.

ROTHENBERG: The whole idea was to take the world's greatest sport, which had been basically ignored in the United States, and introduce it to the United States, and needless to say, it was a smashing success in that regard.

SUNIL GULATI, PRESIDENT, USA SOCCER FEDERATION: I think we changed the face of the sport in the United States, as well as influence it dramatically, internationally.

ROTH: Hosing the '94 Cup certainly enhanced the acceptance of football, or soccer, in the U.S.

UNIDENTIFIED MALE: Welcome World! Welcome (UNINTELLIGIBLE)

ROTH: However, not everyone agrees on the last impact of the event.

ROBERT BOLAND, SPORTS BUSINESS PROFESSOR, NYU: It didn't cost us buying a new infrastructure. We had stadiums that already existed. So, there is no legacy from these games.

ROTH: So soccer interest in the U.S. spiked.

UNIDENTIFIED MALE: Goooaaalllll!

ROTHENBERG: The motivation was not to make money. The motivation was to develop the sport. And then create, basically, to host the world's greatest sports spectacle.

ROTH: A legacy was established. A debate lingers whether a profit was turned.

A broader benefit of the World Cup in 1994, in the United States, are probably less tangible. On the other hand the United States didn't have to go to enormous costs to host those games.

ROTHENBERG: Between the tickets, between the sponsorship sales, and between licensing, we generated a really handsome $60 million, plus, surplus.

ROTH: Sixteen years later the former U.S. president hopes the world will be in the America's corner again. The U.S. is vying to host more World Cups.

CLINTON: Huge crowd showed up and people found, even in '94, that all the teams had local supporters who were living in America.

ROTH: Another chance for America's cup to runneth over. Richard Roth, CNN, New York.

(END VIDEOTAPE)

FOSTER: On Friday, QUEST MEANS BUSINESS kicks off with a parallel tournament. We will research the Economic World Cup. Each day we will be looking at how each country would do on economic merits. I'm asking where their strengths and weaknesses lie as their footballers face off, in South Africa.

Now in Paris, a man is on trial accused of single-handedly loosing nearly $6 billion. Former Societe General trader Jerome Kurvial, is-on the face of all of the front pages there, and he is also in the dock, but he says he should not be there alone. The latest from Paris in just a moment.

(COMMERCIAL BREAK)

FOSTER: Welcome back. I'm Max Foster in London. More QUEST MEANS BUSINESS in just a moment, but first let's get a check of the main headlines.

(NEWSBREAK)

FOSTER: The Israeli military said on Monday it's establishing a team of experts to investigate lessons learned from the incident.

Shock and outrage in Poland over charges Russian soldiers may have tried to profit from a plane crash that killed the polish president and 95 others. Prosecutors in Russia say four soldiers have been admitted to stealing bank cards for a crash victim then withdrawing money from his account. The plane went down in thick fog in Western Russia back in April.

The trial of a man accused of losing nearly $6 billion in so-called rogue trades has begun in Paris. Jerome Kerviel, who was a trader with Societe Generale, is charged with forgery, breach of trust and unauthorized computer use. Kerviel ran the gauntlet of media attention on his way into the Paris courthouse today. He is the only person in the dock in connection with a huge trading loss, which was revealed in late 2008. The bank says he acted alone, without the knowledge of management. Kerviel denies the charges and claims his superiors knew what he was doing. If he's convicted, he will face up to -- to five years in prison and a fine of close to $500,000. The bank will also demand that he pays back the money he lost.

Our senior international correspondent, Jim Bittermann, joins me now from Paris.

What an extraordinary crase -- case -- Jim.

JIM BITTERMANN, CNN CORRESPONDENT: Max, I'd say -- absolutely. And I'd say good luck to the bank trying to get the money from Jerome Kara -- Kerviel. He's only making about 3,000 euros a month now as a computer consultant. So it may be a little tough for him to pay off that $5 billion euro debt that the bank would like to see.

But in any case, yes, the first day of the trial opened up today. It was probably mostly procedural items that were taking place. A lot of things have -- this is a very technical case. And the kind of things that -- that Jerome Kerviel was doing in the trading rooms is not really well understood by a lot of people who are outside of trading rooms.

So they started off with a list of definitions and a lot of fairly arcane material. I think it's going to be next week before we really get into some of the nitty-gritty of the trial and the -- sort of the -- the key elements that are -- are going to develop here. And I think we -- you mentioned a couple of them. One is that Kerviel says that he does not want to be made a scapegoat. He's made that very clear. He put out a book about a month ago. After a couple of years of not being in front of the press, he put out a book and then did a kind of a media blitz to talk about the idea that he doesn't want to be left a scapegoat here, that, in fact, Societe Generale, a lot of his managers knew what was going on, they knew that he was reaping large profits for the company and they had to be suspicious of how that was coming in. They must have known and been complicit in this.

And here's the way he put it in an interview with CNN a couple of weeks ago.

(BEGIN VIDEO CLIP)

JEROME KERVIEL, ACCUSED TRADER (through translator): I am convinced the criminal file is full of elements proving that my superiors knew and covered for me. At least I shouldn't be the only one in the dock. And this is the reason why I don't want to be the only one to pay for this. That is to say that during three years, these managers earned colossal amounts of money out of bonuses based on the ever growing results that I was making for the bank.

(END VIDEO CLIP)

BITTERMANN: And, Max, the bank says well to that that, in fact, they had had no idea this was going on. They would have stopped it if they had known. And it wasn't until they found out that Kerviel had -- in play had bets down, essentially, on stocks that were at least as much of the value of the entire bank -- $50 billion euros was in play. That's when they cracked down and decided they'd better see exactly what he had been up to all these years. And that's when the scandal developed and we found about -- found out about it in the press -- Max.

FOSTER: You call them bets, Jim, and obviously they are bets. But if you look into them in any more detail, this is probably the most complex type of math you could possibly go into.

How on earth is the court going to get its head around exactly what it was Kerviel did?

BITTERMANN: Well, there's going to be a problem, I think, because there's going to be a lot of argument over the details. And I think for people covering the trial, it's going to be difficult. But for the judges themselves, they've got to look at this massive information and say, well, did Kerviel commit fraud, did he -- for instance, one of the things he's accused of is falsifying a computer access code to get into computers to misrepresent the trades that he was doing.

And to what extent did he have the knowledge to do that?

And so I think, you know -- you know, there's going to be a lot of arguing back and forth on these details. And it really will be up to the lawyers to develop this. And we've got, in this case, two of France's most famous, high powered lawyers involved.

So it's going to be really spectacular, I think, in the courtroom, in terms of the arguments that go back and forth once they -- they get into some of the details of this case -- Max.

FOSTER: Is there any sense of how the French public or, if not, the media are going on this?

Is there more support behind the bank or from the -- the rogue trader?

BITTERMANN: I have to say the rogue trader on that one. After -- right after this developed, you know, it was a period of time, if you recall -- this was January of 2008 when the -- this scandal surfaced. And, of course, the banks were failing in other parts of the world. But in France, they were getting a little shaky. People weren't really happy with the way that the banks had behaved. They were finding out all kinds of nasty details about what banks had been doing, so banks weren't particularly popular in France -- not that they've ever been.

And as a consequence, you had the story of the guy -- this -- this trader deep in the bowels of Societe Generale who almost brought down one of the most prestigious banks in France. And there was kind of a -- he was made into kind of a folk hero here. And I mean you can go on the Internet even today and buy coffee mugs and barbecue aprons and all sorts of Kerviel kind of bric-a-brac that sort of shows a little bit about the kind of popular following that has developed around him.

The bank, of course, hates that -- or they really just would love to picture him the way they believe he should be pictured, and that is somebody who committed fraud and very nearly brought the bank to its knees -- Max.

FOSTER: Jim in Paris, thank you very much.

Let's wait for the movie next.

Now, the battle continues in the fight between man and oil off the U.S. Gulf Coast. The company responsible for cleaning up the mess says its underwater strategy has collected millions of gallons of oil. These are the latest live pictures. Still the leak is going on.

(COMMERCIAL BREAK)

FOSTER: Now, it's been 50 days since the Deepwater Horizon oil rig explosion. Now, some encouraging news from the man in charge of the U.S. government response. Coast Guard Admiral Thad Allen says a containment dome over the damaged well is siphoning off more and more crude.

(BEGIN VIDEO CLIP)

ADMIRAL THAD ALLEN, U.S. OIL SPILL RESPONSE COMMANDER: According to the containment operations, with the containment cap, in the last 24 hour period that was from midnight last night to midnight this night, we were about to recover 14,842 barrels. This has climbed steadily from the first day, which you remember, we went -- I think the last four days it had gone from about 6,000 barrels up to almost 15,000.

We continue to optimize production and make sure we can take as much oil out of that stream as we can right now. One of the four vents on the containment cap is closed at this point and we continue to monitor it moving forward.

(END VIDEO CLIP)

FOSTER: Now, in an interview with NBC, U.S. President Barack Obama strongly criticized BP's chief executive, Tony Hayward, saying he wouldn't be working for me after any of those sorts of statements -- the statements -- the controversial statements that Hayward had made.

Well, President Obama was referring to Hayward last week, saying he wants his life back, amongst other comments.

Now, beyond the public relations nightmare, BP could face serious criminal charges and that could create months of uncertainty for the company.

Here's Maggie Lake.

(BEGIN VIDEOTAPE)

RICHARD THORNBURGH, FORMER U.S. ATTORNEY GENERAL: Those incremental changes are just as rewarding in the big story.

MAGGIE LAKE, CNN CORRESPONDENT (voice-over): Dick Thornburgh is no stranger to the big story. Now a lawyer in Washington, DC, he served in the administration of George Bush, Sr.

As attorney general, he oversaw the investigation into the Exxon Valdez disaster, when a tanker leaked 11 million gallons of oil into the sea in 1989.

(BEGIN VIDEO CLIP FROM 1990)

THORNBURGH: By pursuing criminal charges in this case, the federal government is sending a strong signal that environmental crimes will not be tolerated.

(END VIDEO CLIP)

LAKE: After a year of wrangling, Exxon eventually pleaded guilty to criminal charges.

THORNBURGH: I think there's a -- a justifiable concern about the reputational damage. No one likes to be branded as a felon or a criminal. Your task is -- is really to go where the evidence leads. You know, you don't go any further, don't stop short.

LAKE: As the environmental crisis in the Gulf deepens and political pressure mounts, U.S. Attorney General Eric Holder, last week, announced he, too, was conducting a criminal investigation.

ERIC HOLDER, ATTORNEY GENERAL: If we find evidence of illegal behavior, we will be extremely forceful in our response.

LAKE: The Justice Department is looking into violations of some of the same laws breached in the Exxon Valdez case.

DAVID UHLMANN, ENVIRONMENTAL LAW PROFESSOR: For the Migratory Bird Treaty Act, if the oil spill affects migratory birds, which it already has, there's a crime. Under The Refuse Act, if the oil reaches U.S. waters, which it already has, there's a crime. So both of those charges -- strict liability charges -- have already been proven.

LAKE: Environmentalists may be confident, but criminal charges impose a greater burden of proof on prosecutors than civil and some firms, such as big tobacco, have fought all the way.

But news of the probe and uncertainty over the crisis have already shaved tens of billions of dollars off BP's market value and some believe BP may want to move quickly to put this ugly chapter behind it.

THORNBURGH: My experience would lead me to think that there would be a tendency to want to settle these cases rather than go through a full blown trial, simply that corporations are in business to do business, not conduct litigation.

UHLMANN: I don't think BP will fight these charges. The last thing BP wants is to relive what's been going on on the Gulf the last several weeks in the U.S. courtroom. It would be a losing fight. It would be a bad publicity hit for them.

LAKE: Something BP shareholders do not want to see happen.

Maggie Lake, CNN, New York.

(END VIDEO TAPE)

FOSTER: Well, as BP fights on to contain America's worst ever oil spill, it's also dealing with a public relations nightmare. The company's trying to get its message out to anyone who shares online for information about the spill before anyone else does.

It bought up sponsored links on Google and Yahoo. That means that if you tap in words like "oil spill" or "oil spill compensation," you get this. Let's have a look -- BP oil spill, a search on Google, it would help if I spelt it correctly. Sorry, I've just got to get the wording right. It's live TV, after all.

OK, "BP oil spill" and what you get here is BP paid for ad.

And what does it do?

If we click on it, it takes you through to the BP Web page. And this is so that searches online will be directed to BP's page. So from its point of view, it can give you the true message of its perspective.

The company says it wants to help those who have been most affected by the spill.

An interesting use of social media and ad words, particularly, on Google.

We're going to check out the weather now.

Guillermo is at the World Weather Center -- Guillermo, what do you have?

GUILLERMO ARDUINO, CNN METEOROLOGIST: Hey, I was thinking about the Gulf of Mexico. It remains pretty much the same. Now the winds are shifting back toward the coast. Unfortunately, the same areas are going to continue to see some beached oil.

As -- when I look at the satellite and the radar here in Britain, I see that last hours, it has improved a little bit in London. But we are not going to see any relief until Saturday, Max. So it's going to rain very heavily. We're going to see heavy rain showers and heavy rain in general for London.

There are many, many areas of Britain where we have some alerts. The same for France and Spain and Portugal. I was looking at Germany, particularly. Hamburg appears to be OK. Berlin is fine. You see this section. But Bavaria here in the south, in Bayern, Munich, Augsburg, Wurtzburg, Badu, all those cities are going to see intense rain and thunder.

And also, my interest goes into what's going on in Poland, because of the floods that we have in the region. The weather is going to cooperate. We will see on and off rain showers, not long lived. But we will see warm and dry conditions instead. And that is pretty good.

Temperatures are on the rise in that area. All protected by this jet stream. While, on the other side of the map, this low is going to bring intense winds action to the Bay of Biscay in the next days. So look at what's going on in Poland -- warm, up to 33 degrees on Saturday -- Friday and partly cloudy skies. On that respect, we are fine.

Look at the winds here, how they erupt all of a sudden, two days from now, especially here in the Bay of Biscay, the coastal parts of France, the northern sections of Spain there, with intense winds. The same for Britain. We are going to see winds in the North Sea in both coasts, by the way.

Dublin with the winds that I was talking about. Paris with rain showers here and there. I was watching the live shots that we got from Paris and you see all those clouds looming over the city. Then Madrid with cloudiness, as well, though it's going to remain hot in the east. Look at Madrid. Look at this big change. Yesterday for today, well, we're talking about like 30 degrees. We're going down now all of a sudden with the winds of change and also all the cloudiness. It's going to be even colder than London. London has a high of 21 for Wednesday.

But then this area -- and when I see Istanbul, I'm thinking there are severe storms in Istanbul, as well. We may see some floods. It floods very quickly over there. The abundance of water everywhere in the Bosporus and on both seas here. We are going to see the likelihood of floods.

And then the central and eastern parts of Turkey, with more storms coming up. Greece is going to be OK. So we are going to see some bad weather over there.

Look at China now. If you are watching from there, it's 2:45 in the morning in Hong Kong right now. And you will continue to see the cloudiness and the rain over there, though it will remain quite warm in Beijing. The same time for you, very early in the morning -- Max.

FOSTER: Guillermo, thank you very much today, indeed.

Well, the winds seem increasingly favorable for the aviation industry. We've had confirmation of that today with news of the giant

A380 super order from Emirates. In a -- in a moment, we'll hear from two more airline bosses on the outlook for the business.

(COMMERCIAL BREAK)

FOSTER: Our top story tonight is the news that Emirates has placed an order for 32 A380s. Airbus is calling it the most valuable order for airlines ever made. Emirates is one of the few carriers that's expanding right now. American Airlines is trying a different tack. It's seeking a closer alliance with British Airways and with Iberia. That deal depends on anti-trust regulators giving their blessing.

Gerard Ardey -- Arpey is the CEO of American Airlines.

Richard Quest spoke to him earlier this week.

(BEGIN VIDEOTAPE)

RICHARD QUEST, HOST, QUEST BUSINESS: The situation in the domestic U.S., do you feel the need to do a deal now that Continental, United, Delta, Northwest?

You're -- you're out on your own a bit.

GERARD ARPEY, CEO, AMERICAN AIRLINES: Well, I think the most important thing to point out is that we have a very strong U.S. network because of where we are concentrated. So if you look at the biggest markets in the United States, that's where you'll find American Airlines. So we have hubs in Dallas-Fort Worth, in Chicago, in Miami, in New York. We're building a very powerful hub at Kennedy. And we're very strong in Los Angeles.

So if you look today at our domestic U.S. network, what you'll find is a very strong network in the right places. And then if you take a more global view, as we've discussed here today, the Oneworld Alliance represents the strongest airline brands in the most important markets in the world.

So when you take our domestic strength -- and, of course, we have a big international operation, as well -- couple it with our Oneworld partners, we believe we're in a very strong position both in the U.S. and - - and globally.

QUEST: Would you and can you imagine a situation where you will start talking to U.S. Airways?

Let's -- let's put it straight on the table. Let's go straight for the jugular.

ARPEY: Well, I -- I certainly, as we have said publicly, we wouldn't rule out anything. On the one hand, I'd come back to what I suggested earlier, which is we have a very strong position today. We did just announce a -- an innovative partnership with JetBlue in New York to help strengthen us at Kennedy. I don't believe JetBlue, prior to this agreement, has interlined with any big U.S. carrier. So it's a big step for them. It will help us at Kennedy.

And again, I think we're in a very strong position. I wouldn't rule anything out. But we're -- we're in good shape competitively going forward.

QUEST: Domestically and internationally, what are you seeing in the underlying business?

Everyone says the passenger -- the butts are back on the seats...

ARPEY: Yes.

QUEST: -- they're just not paying very much to be there.

ARPEY: Yes, well, that's always the issue in the airline business. It's never hard to -- to drive load factor, because if you lower the price enough, you can get people to travel. But we are seeing this year -- I think the most important thing that we're seeing is the recovery of business travel. I mean if you look at last year with the -- with the just horrible economic downturn, the drop in corporate travel was unprecedented.

So we are seeing that come back this year and -- in the U.S. -- and we're seeing it around the world. So we're encouraged by that. But I think the right word for the recovery that we're seeing -- at least from my standpoint -- is that it's fragile. And I say that because the -- of course, what -- what's going on in Europe is -- is certainly troubling.

QUEST: Yes.

ARPEY: And then if you look in the United States, we're seeing positive GDP, but we're not seeing a lot of jobs created. And so a combination of GDP strength, we need to get employment going again so that we -- that this feels less fragile.

But, you know, certainly business has picked up and, in fact, where you started, we -- we've never had a problem filling the seat. You know, we've got to get prices up.

QUEST: Many thanks.

ARPEY: Thank you very much.

QUEST: Much appreciate it.

(END VIDEO TAPE)

FOSTER: The CEO of American there.

Richard also caught up with Alan Joyce, the boss of Australian carrier, Qantas.

Richard asked him whether he's seen the same encouraging signs as others in the industry.

(BEGIN VIDEOTAPE)

ALAN JOYCE, CEO, QANTAS: It's very fragmented, Richard. And some of the markets, like the domestic Australian market, we are seeing the business market return. We're seeing the business market return in international operations in and out of Australia.

The U.S. is actually seeing some signs of improvement. Asia-Pacific seeing very solid signs of improvement. But Europe is still very weak for us.

QUEST: Which means, for you, thinking about rebalancing the airline - - because if we look at Australia, your domestic Australian economy is absolutely booming at the moment.

JOYCE: Yes. And I mean it's great. We've avoided a recession. Unemployment levels never reached over 6 percent. So it has defied gravity in Australia. And as a consequence of that, that's given us a solid base.

QUEST: Are you tempted to rebalance the airline more to capacity to those parts, like Asia, that are growing?

JOYCE: Well, we always see it as a portfolio. And it's very important to look at it both within our full service brands and our low cost brands. And in the portfolio over -- over the years, some parts of our operations have lost money, like at the moment, the U.K. and the United States are losing money, but Japan has come back into profits and domestic is profitable.

And I -- I don't think you can walk away from markets because things can change. And the dynamic of having a spread portfolio really helps us quite considerably. And we are unique. We've got the full service and the low cost alternatives, which really work well for us.

(END VIDEO TAPE)

FOSTER: Well, the first man on the moon, Neil Armstrong, was the star guest of this year's IATA meeting, where Richard was. He was presented with the Global Aviation Leadership Award in recognition of the space program in making aviation safer and more efficient.

Well, Richard happened to bump into Mr. Neil Armstrong.

(BEGIN VIDEOTAPE)

QUEST: (INAUDIBLE) whether you -- you're responsible for (INAUDIBLE) you must get this everywhere you go.

NEIL ARMSTRONG: That's why I'm not talking (ph).

(LAUGHTER)

Richard, (INAUDIBLE).

QUEST: Thank you.

Thank you, sir.

(END VIDEO TAPE)

FOSTER: He is a living legend, after all. IATA's director general said that as a test pilot of over 200 models of aircraft, Neil Armstrong challenged the limits of speed and altitude. After retiring from NASA, he dedicated himself to preparing the next generation of aviators by teaching aerospace engineering.

Let's have a look at the latest market news then from the United States and Wall Street in particular.

Let's see what the Dow is doing. It is up a bit more now. It was up only slightly around half an hour ago, up nearly half of 1 percent, 9861, 8058 now.

You're watching QUEST BUSINESS.

We're looking at the European markets coming up and the latest from other parts of the world, too.

(COMMERCIAL BREAK)

FOSTER: Well, there really wasn't much to shout about on the European markets this session. All the big indices fell by between 1/2 of 1 -- 1/2 and 1 percent, led by losses in the banks and energy stocks.

BP fell 5 percent in London after the U.S. president promised a full investigation into the Gulf oil leak. That was despite the rises yesterday. Investors feeling positive one day about BP and very negative the next.

In currencies, the euros -- the euro had a -- had a steadier day, but the British pound is sharply down against the dollar. It follows a warning from Fitch Ratings that cutting the U.K. deficit will be a, quote, "formidable challenge." It's calling on Britain's new government to speed up cost cutting measures, putting pressure on them.

Gold has, this hour, hit a record high as Europe's debt troubles spark demand for perceived safe havens, like the precious metal. And investors hedged against inflation. Let's have a look at the figures. Gold for August delivery rose $5.70, to settle at a record $1,246.50 an ounce. Earlier in the day, it reached an inter-day trading record of $1,254.50 an ounce -- an absolutely massive figure and a real illustration there of how investors are feeling now.

In Asia, most markets made it back into the black following a rout the previous day.

That is QUEST BUSINESS.

I'm Max Foster in London.

"WORLD ONE" starts right now.

END