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QUEST MEANS BUSINESS

Interview With Jose Manuel Barroso; QE2 to End?

Aired June 21, 2011 - 14:00:00   ET

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


RICHARD QUEST, HOST, QUEST MEANS BUSINESS: If Athens acts, we'll deliver. Tonight, the EU Commission President Barroso tells me Greece has no alternative to austerity.

Is it good-bye to QE? A key Fed meeting is underway in Washington.

And RyanAir, a one-plane airline no more, with potential big plans unveiled in Paris.

I'm Richard Quest. We've an hour together. I mean business.

Good evening.

Greek lawmakers are deciding this hour if their prime minister is fit to lead. The problems facing the country go far beyond a mere crisis of confidence. This is what is happening in the Greek parliament at the moment. It is the new finance minister addressing parliament. Let's listen in for a few seconds.

(BEGIN LIVE FEED, IN PROGRESS)

EVANGELOS VENIZELOS, FINANCE MINISTER OF GREECE: In the investment initiatives from their countries. Not all in privatizations (ph), but in many other programs which can be developed. There is opportunity to implement it without no additional funds from the community. Without-this should just be utilized. They should be very specific, the programs.

And measures of the, also solidarity-

QUEST: The finance minister is in the middle of a long speech, in which he is giving the reasons why George Papandreou's government, new government, should be granted a vote of confidence, the first part of the stage. And as you can see on the split screen, from our affiliate, there are the protests outside the parliament building. Where protestors have been gathering once again, they are united against the austerity that is on the cards, if Mr. Papandreou survives, his government, it will be a huge shock if he doesn't win his colleagues support. It is the first battle in what will be a bitter and painful struggle to secure desperately needed funds.

The pressure is being ratcheted up at the moment, by all sundry, from the IMF to European Commission. The president of the European Commission says if Greece acts then Europe will deliver. Jose Manuel Barroso says the country is approaching a moment of truth. I spoke to him earlier from Brussels. And the question, of course, is if Greece doesn't act. Are they on their own?

(BEGIN VIDEO CLIP)

JOSE MANUEL BARROSO, PRESIDENT, EUROPEAN COMMISSION: I mean, the question is what you mean by austerity. I think what Greece is now having is really austerity. Because the euros (inaudible) with a high interests rates are euros that cannot go to people. The only way to reduce the austerity is precisely to have fiscal consolidation. To have a program, a credible program of reducing the high level of debt in Greece. And this is the first social policy to avoid the debt going up.

QUEST: But if Athens and the Greek parliament does not take the measures, then Europe will not provide more assistance. That is the long and short of it.

BARROSO: Neither Europe, nor the IMF. There is not alternative to this program. Let's face it. That is why it has to be clear. We need Greece to deliver. And if Greece wants this program of support, Europe is ready to support it. All the ministers agree that it should be supported and, of course, we want to support Greece because of European solidarity and also because we believe it is important for the financial stability in Europe.

QUEST: Why do you have anymore confidence in this plan and this proposal than we had 12, 13 months ago, when we were told that that would work?

BARROSO: Because in fact there were some problems in implementation. It is started well, but the reality is that the capacity-capacity of administration is not so impressive. And now we are concentrating on other matters like a program of assistance to be sure that implementation is taking place. And I believe now, also, the revenues of privatization, it can make that sustainable, if at the same time we implement and growth advancing measures. And the reality is that the Greek authorities, they made huge efforts in terms of fiscal consolidation and their reduction of the deficit was indeed impressive, but there was not enough progress in terms of privatization, in fact, nothing almost happened. And there were not enough structural measures. And now, we need measures for growth. It is not only about austerity it is about growth. And that is the point we are now focusing on.

QUEST: We all agree and the market agrees that a disorderly restructuring would be a disaster. But whether we call it a reprofiling, rescheduling, a roll over, it doesn't really matter. Ultimately Greece debt burden has to be reduced.

BARROSO: Yes, debt burden has to be reduced. But look the debt burden alone and reduction of the debt burden will not solve the problem. The problem of Greece is that there is a struggle (ph) deficit. It means that the country spends more than what it can afford. So the reality that there is no alternative to the reduction of the structural deficits, so lets not suggest that reducing the debt burden, through some kind of mechanism will solve the problem, because this is not true. We have made a study with the IMF and we believe that it is sustainable, the reduction of the debt-if-if Greece pursues fiscal consolidation, if it uses a credible program of privatization, and if there are reforms for growth. Growth is the key as well.

But at the same time we are not opposed to private sector involvement. So the burden of the debt reduction could come also from the private sector. Provided it is voluntary, so real voluntary, so avoiding any kind of credit event or default and also if it is made in full accordance with the European Central Bank. And that is a consensus now in the European Union and member states and I think this is the way to go.

QUEST: So finally, I know you talked today about offering Greece cohesion funds and perhaps money to help in these things. But the fact is it is if the Greek people do not want these measures and are not prepared to go through with these measures, then they are on their own, aren't they?

BARROSO: I don't agree. I just saw yesterday the prime minister of Greece and he has a majority in the parliament. And he said to me that they are ready to go for these measures. Of course, they are alternative measures. But what is an alternative? The alternative I can tell you will be much, much worse. It will be in fact a default. It will be in fact a collapse of the Greek economy and I think that nobody wants that. So what we are trying to do with the Greek, France and partners, is to avoid this kind of collapse by the combination of these policies. Not only austerity but also growth, and growth, I repeat, is the key.

(END VIDEOTAPE)

QUEST: That was Jose Manuel Barroso, the president of the commission, talking to me earlier.

Lawmakers are debating and the voting will go long into the night. Diana Magnay is live in the Greek capital, for us.

Diana, he is going to get his majority, or he is going to win the confidence vote it seems likely. But you just heard then, President Barroso say there is no alternative. Is that the way it is seen, basically, painful but we'll have to live with it?

DIANA MAGNAY, CNN INTERNATIONAL CORRESPONDENT: Yes, exactly. But when you talk to the people out in the streets they are not sure whether the alternative of default is really all that bad. And it seems to be a matter of explaining to them what exactly it might mean for them. And what does exactly this austerity program means also. You know, if it is, as the president of the European Commission just said, all about growth. Then these people need to know and understand that.

And the new finance minister, Evangelos Venizelos, is speaking right now, in the parliament. And he is emphasizing that this is a question of structural reform. That Greece in the long term needs, emphasizing that it isn't just imposed by external forces. But that this is something Greece needs in order to move forward. He has also said, very importantly, Richard, that he had a telephone conversation with the leader of the opposition who had promised his support for the midterm austerity program, and of course, it is that program and the parliamentary (AUDIO GAP) program, upon which aid, the next installment of funds, from the IMF and the EU is to continue (ph). (AUDIO GAP) That is a very important step.

Obviously tonight, Richard, we had a vote of confidence that is widely expected to go through, a vote of confidence in the new government. Next week we will have the vote in the parliament on these (AUDIO GAP) package.

QUEST: Diana Magnay, who is in Athens this evening. Diana, many thanks.

We'll have more on the Greek crisis later in the program. We'll be gauging the market and the moods in the market. Bob Parker will be with us to put that into context.

The European markets themselves, today, got a much needed boost in the trading with a degree of optimism in the situation. There was the slightest hint of all three recovering solid gains. Greece's benchmark index was also up by 3.75 of a percent. That is a bit more than a little bit. But a 2 percent gain in the CAC. Xetra DAX up nearly 2 percent. SAB Millers bid for Fosters sent the Australian brewer's stock soaring. Now, it is a bid that Fosters have flatly turned down, which he said significantly undervalues the company.

However, of course, Fosters is now in play and the question is merely whether SAB can back, and if so at what price that deal has to be done. SAB Miller shares fell almost 4 percent. Clearly they believe that maybe they are overpaying.

U.S. central bank officials talk QE2 in Washington. Ben Bernanke will be ending America's second round of stimulus.

(COMMERCIAL BREAK)

QUEST: In Washington, there have been meeting at the central bank. The Fed, where it is widely expected a signal will be given to officially end QE2. America's second round of quantitative easing worth $600 billion. The economy though, still remains exceptionally weak. And there are those who suggest that further easing or stimulus will be required. Maggie Lake has been looking at both sides of the argument. Speaking to Mohamed El- Erian, who is the chief executive of the global investment firm, PIMCO. And Laura Tyson, from the University of California, who chaired President Bill Clinton's council of economic advisors.

(BEGIN VIDEOTAPE)

MAGGIE LAKE, CNN FINANCIAL CORRESPONDENT: What is going to happen to the economy when the Fed withdraws this extraordinary stimulus that they have put in place?

LAURA TYSON, FMR. WHITE HOUSE ECONOMIC ADVISOR: Well, I think that the Fed has made it perfectly clear that it is going to do it. It has made it perfectly clear that when it was going to do it. I think the market has absorbed that information. The Fed has also made it perfectly clear that they are going to continue with their low-interest rate policy for the foreseeable future. They have made all of their reasoning apparent. So, I actually think it is not a source of uncertainty in the market. There is a lot of uncertainty out there right now. There is the Greek debt uncertainty. There is oil prices. I don't think this is a point of uncertainty.

LAKE: Because it is so well--

(CROSS TALK)

TYSON: Yes.

LAKE: Do you-people, I think there is some concern that the economy has been on life support and it has not actually strong enough once you take away that, you think it can stand on its own without that support.

TYSON: I think that the view has been clearly articulated that for now at least, given what we know about the economy, the economy has slowed down a bit. The reading right now is that the slowing down has been for a variety of transitory factors. And that for now, this seems to be, as I said, well absorbed into the market place. It is not to say that all support for the economy is going to be withdrawn. Because the Fed has made clear that the continuation of the interest rate part of their unconventional policy will continue. So the Fed has made that signal very clear.

LAKE: Mohamed, what is your perspective? It is telegraphed, we know it is coming, but is the transition going to be that smooth?

MOHAMED EL-ERIAN, CEO, PIMCO: I'm a little bit more cautious. And I live in the market place. And it is not because it is not telegraphed. Everybody knows that QE2 will end at the end of this month. The reason why there is uncertainty is there is fundamental disagreement on the analytics of QE2, how QE2 operates. Some people feel that it operates through a stock effect. Some people think it operates through a flow effect. But the fundamental issue is we don't know. Plus there is no historical precedent. So while the market knows that QE2 is going to end, the market is less clear as what the consequences of that, and in fact, you have people taking very extreme positions because they disagree on the analysis.

TYSON: Yes, and you-

EL-ERIAN: Not on the fact that it is going to end, but how do you analyze it?

LAKE: And PIMCO is one of those entities taking an extreme position. And a lot of people have taken the other side. You think this is going to be difficult. It is going to be bad for you as Treasuries. Are you still sticking by that? What is your forecast? What happens once QE2 ends, to interest rates?

EL-ERIAN: You know, Maggie, we look at it very simply. We are involved in the different Treasury auctions. And we look around to who else is buying. And when a big buyer, and the Fed has been a big buyer-the Fed has been buying about three-quarters of what the Treasury has been issued-when a big buyer steps away, any investor has to ask the question, who else is going to be buying. And we can't find another big buyer to step in where the Fed steps back from. We can't find a new buyer, but other things being equal, that means higher interest rates, unfortunately.

TYSON: I take the point that you have to worry about where the demanders for the Treasuries will come, but on the other hand there are a lot of other things going on in the global economy right now, which may by comparison to other opportunities, U.S. Treasuries, 10-year Treasuries, an attractive place to park your money.

LAKE: And this is, I think, Mohamed, you, all things being equal, were referring to; I mean, can you be right about quantitative easing but it doesn't matter, because everything else, everywhere else it the world is so uncertain. And does that just buy us time, or is that a longer term development?

EL-ERIAN: So, we have seen two things happen over the last few weeks that have pushed interest rates down, despite the end of QE2 that is coming up. First there has been an enormous downward revision, in estimates, for this quarter's GDP growth. I've never seen anything like it. You know, people were expecting 4 percent, now people are expecting 2 percent. That is a massive change for a current quarter.

And secondly we have a big mess in Europe that is making people more cautious. The question is, as one of my colleagues often said, can you go to heaven twice for the same deed? Right? How much can you push interest rates lower and lower when valuations look out of whack? And we are going to find out over the next few weeks.

(END VIDEOTAPE)

QUEST: Mohamed El-Erian and Laura Tyson.

(DESK BELL CHIMES)

The markets in New York are pretty much expecting-at least a continuation of the totality of purchase, through the reinvestment, if not a QE3. Up over 100 points on the Dow; 12,186, a gain of 0.8 percent. They are also betting that Papandreou gets his vote of confidence and that the Greek government, well, also gets the austerity measures through. During the course of the afternoon, JP Morgan Securities, it was announced, is to pay more than $150 million to investors and to the U.S. government.

Now after agreeing to settle claims over it misled investors. It was a frighteningly complicated deal but the sort of thing we have seen before. It all surrounded this deal with JP Morgan Squared CDO. Very familiar to the deal that we saw with Goldman Sachs and the Abacus. Basically, JP Morgan didn't tell investors who were buying into the CDO, that somebody else was betting against it. And it stuffed the thing with rubbish. The whole object was that it would blow up in their faces, they'd make off like bandits and JP Morgan would make a fee. Now they've had to pay the investors back and they've also paid their own find of $150 million, without accepting that they necessarily did anything wrong.

When we come back, in a moment, it is Michael Wu and Steve Hindy, they are two of the bosses who are learning about taking risk.

(COMMERCIAL BREAK)

QUEST: In our series "The Boss" we do, of course, bring you face to face with the men and women who run companies and have to make major decisions. Tonight the decisions are all about new products. In the case of this gentleman, Michael Wu, it is a chocolate cake. Can that be so difficult? For Steve Hindy it is a new beer. It doesn't really matter whether it is beer or cake. Millions of dollars ride on the strategy put forward by "The Boss".

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE (voice over): Previously on "The Boss": A summer selling spree. Steve Hindy unveils some seasonal tactics.

STEVE HINDY, FOUNDER & PRESIDENT, BROOKLYN BREWERY: Getting that beer to the customer and creating a demand for that beer is a real tough part of the business.

UNIDENTIFIED MALE: And in Hong Kong, Michael Wu plays up the celebrity factor.

MICHAEL WU, CHAIRMAN, MAXIM'S GROUP, HONG KONG: She cares about the community. She cares about Hong Kong. So we think that type of image resonate with the Maxim's brand.

WU (speaking Chinese, translation on screen): How is it selling?

UNIDENTIFIED FEMALE (speaking Chinese, translation on screen): Actually, it's doing really well.

UNIDENTIFIED MALE: Michael knows no amount of marketing will help if the product is not right.

Back in December he tasted, tested and named the Verona Chocolate Cake.

WU: I think it is good. I like it. I think it will be a very good top seller.

UNIDENTIFIED MALE: Now, six months later, the cake has hit the shelves and Michael is keen to know how it is being received.

WU (speaking Chinese, translation on screen): What are people saying about it?

UNIDENTIFIED FEMALE (speaking Chinese, translation on screen): They don't think the cake is too sweet. Or the chocolate flavor too rich.

WU: At first I thought that maybe people would think it was too sweet, maybe it didn't have fruits. They didn't know what it was. But the response was very good, so we decided to launch a mini cake just in time for Father's Day. And so far it is doing very well. It is amongst our top mini cake sellers.

UNIDENTIFIED MALE: Knowing your customer is one thing, but Michael must also have confidence in his convictions.

WU: Usually our cakes in our Maxim's cake shops are with fruits and they are with cream, which suits Chinese tastes. And we very seldom launch a pure chocolate cake. So this is something new to our customers.

UNIDENTIFIED MALE: To get the results you have to take the risk. But Michael has confidence in his experience.

WU: This is the strategy we like to use; 20 years ago, when I first launched Tiramisu, people were saying Tiramisu will not work in Maxim's cake shops. After 10 years it has become our best seller.

UNIDENTIFIED MALE: New cakes in Hong Kong, new beers in Brooklyn.

People are queuing up outside the Brooklyn Brewery to try the newest product, a beer with the taste of a cocktail.

UNIDENTIFIED MALE: Thank you so much.

UNIDENTIFIED FEMALE: Thank you.

STEVE HINDY, FOUNDER & PRESIDENT, BROOKLYN BREWERY: I'm not worried about what people will think. I don't read the blogs. I know our brewers do and sometimes they get upset about things they read. But to me it is all good. Because are going to have a good time tonight. They are going to try something like they have never tried before. And I think they are going to go away and talk about it.

UNIDENTIFIED MALE: Finding the right name for this beer was no easy task. The original idea was The Tonic, until the U.S. government said that sounded too much like a medicine. So it was back to the drawing board.

HINDY: The name, actually that I came up with, the Brooklyn Concoction, was approved. So we are changing all of our posters and all our marketing materials to say, "The Tonic, Brooklyn Tonic, is now the Brooklyn Concoction, thanks to Uncle Sam."

UNIDENTIFIED MALE: Luckily for Steve the taste is making a better first impression at the launch.

UNIDENTIFIED MALE: Really nice for the summer.

UNIDENTIFIED MALE: Yeah.

UNIDENTIFIED MALE: Clean, crisp. Nice, sort of light.

UNIDENTIFIED MALE: Not very hoppy.

UNIDENTIFIED MALE: No.

UNIDENTIFIED MALE: Steve knows niche products like this are not for everyone and they need careful marketing. The Brooklyn Concoction will only be produced in small batches.

UNIDENTIFIED MALE: We use honey from Trimbley (ph) Farms in Upstate New York.

UNIDENTIFIED MALE: Brew master Garret Oliver (ph) explains why in this case, less is more.

UNIDENTIFIED MALE: These are beers that we kind of dream up, every once in a while, and they'll stick around for only several weeks and they are gone. And we move onto other things. Kind of like the chef's specials at a restaurant.

UNIDENTIFIED MALE: Steve has given his creative teams free rein to experiment. But he says he doesn't see it as a risk.

HINDY: I trust Garret implicitly with this. He has a great team working with him. And you know, they are really good at this. And this is a great example of a pretty abstract notion to get into a glass of beer, but they have done it.

UNIDENTIFIED MALE: Next week, on "The Boss".

WU: Seeing yourself on TV is great self-awareness. And I think I have learned a lot from that.

UNIDENTIFIED MALE: We shared the highs and the lows, witness past successes, and learned of his future plans. Now, though, almost a year on since our first visit to Maxim's, it is time to say goodbye to Michael Wu. That is next week on "The Boss".

(END VIDEOTAPE)

QUEST: Michael Wu and "The Boss", next week.

When we come back in just a moment we are watching events very closely in the Greek parliament. The debate will last many hours before a vote takes place. And substantially, even if he wins, the prime minister, well, there is still that austerity package to push through, after the break.

(COMMERCIAL BREAK)

QUEST: Hello, I'm Richard Quest, QUEST MEANS BUSINESS.

This is CNN. And on this network, the news always comes first.

Let me tell you, Syrian state TV has showed images of thousands of people rallying across the country in support of President Bashir Assad. The rallies come a day after anti-Assad protests flared following the president's speech. Activists also report two people were killed today during clashes in Homs.

The White House says President Obama will address Americans on Wednesday night to talk about the drawdown of troops in Afghanistan. One official says he will announce the U.S. is withdrawing 30,000 forces by the end of next year. And that will bring troop numbers back to pre-surge levels.

Greek lawmakers are speaking their minds right now. In less than three hours, they will be voting. The government of George Papandreou is facing a confidence vote called by him. If it falls, European bailout money could dry up. However, if the prime minister stays, then Greece is likely to face increasingly painful budget cuts.

While Greece searches for unity, the U.S. Treasury secretary, Timothy Geithner, says the EU could do with some more unity of its own. Mr. Geithner was speaking in Washington, where he said he wants the European Union to find its voice.

(BEGIN VIDEO CLIP)

TIMOTHY GEITHNER, SECRETARY OF THE TREASURY: I think it would be very helpful to have Europe speak with a clearer, more unified voice and a strategy. I think it's very hard for people who invest in Europe, within Europe and outside of Europe, to understand what the strategy is when you have so many basic people talking. And a simple rule of crisis management is you want to have a simple, clear, unified, declarative strategy. That would be helpful.

(END VIDEO CLIP)

QUEST: Bob Parker is with me, the senior adviser, Credit Suisse.

What Tim Geithner is saying is what pundits like me have been saying and people like yourself have been saying. It's time to sort this out.

BOB PARKER, SENIOR ADVISER, CREDIT SUISSE: In Europe, we've obviously got a number of different components. You know, we've got the independent central bank, the ECB. We've got the EU Commission, the EU Council, and then, obviously, the different national governments. And this is a complex mixture of a whole series of different interests.

QUEST: The confidence vote is tonight. It looks like you'll win.

PARKER: Yes.

QUEST: The austerity or the next measures. But what President Barroso was telling me is that that's only half the equation.

PARKER: Well, you've got a whole series of things that need to be achieved. First of all, there's the political dimension.

And at the confidence vote, will the austerity package be implemented -- be passed?

And you've got will it be implemented?

And, you know, the package last year for Greece, obviously, there have been some failures, actually, on the implementation of that package in May 2010.

Then that's the very next issue of how Greek debt will be restructured, because Greece is incapable of repaying 330 billion euros.

QUEST: And then, growth.

PARKER: Well, I think the growth dimension has not been focused on enough, because if you just have austerity package after austerity package, you will have many years of the Greek economy contracting. That doesn't generate tax revenue. That doesn't pay interest on the debt.

QUEST: But formulating a growth package that also allows a pay down or restructuring and cuts, there's a -- pretty much the Gordian knot. That's very difficult to do.

PARKER: Well, I think you need -- I think one has to face the inevitable, that, you know, if one looked at what is the optimal size for Greek debt for the size of that economy?

And the answer is, it's probably somewhere less than 100 billion. Greece cannot sustain a debt level of 330 billion.

QUEST: So when the -- the ECB and everybody comes together and seems to finally agree that a voluntary rollover will be allowed...

PARKER: Yes?

QUEST: -- there's nothing voluntary about that, is there?

PARKER: Well, do -- how do you define the word voluntary?

I think, you know, investors are basically facing the issue of do they take a write-down today and the markets discount, you know, write-down in Greek debt of 50 to 60 percent, or do they write off Greek debt over a long period of time?

And, frankly, that is the more...

QUEST: What...

PARKER: -- palatable solution.

QUEST: So that's what the market is telling you?

That's what...

PARKER: Right.

QUEST: -- investors are telling you.

PARKER: Yes.

QUEST: Sobs, it's a shotgun marriage -- they'll go along with it, but they don't know particularly where it leads?

PARKER: I think investors -- and, sir, let this be clear. The owners of Greek debt are the Greek banks, the Greek pension funds, insurance companies and the ECB, the EU and the IMF.

QUEST: Right.

PARKER: There is actually very little Greek debt which is owned outside Greece.

QUEST: In this -- as we come into the summer in the Northern Hemispheric summer, and investment strategy -- I always love you to tell me where I should be thinking of keeping me...

PARKER: Well...

QUEST: -- little what has left.

PARKER: Well, over the last two months, we have been very defensive. Markets, equity markets have performed badly. We've seen negative returns in the last two months.

Now, as we go into July and August, I think markets actually -- there is a high probability of an equity market rally. Now, the reason why I say that is I think economic data, which has been poor in America, certain countries in Europe and certainly Japan, I think economic data shows signs of improvement.

Investor sentiment is very poor, as well. And I think that could improve.

QUEST: Would you -- in that scenario, would you switch and proper for that rally or would you wait to see it start and get underway?

PARKER: I would wait another couple of weeks and then average into markets. And in the very short-term -- the next few days -- you know, we can't ignore this extreme risk of the Greek package possibly going wrong. And I would much rather have a little bit more certainty on the Greek situation.

I'd also have -- I'd like some more certainty on the U.S. debt ceiling extension. I want to have that certainty or more confidence than average back into markets for an expected equity market really, over the third quarter.

QUEST: Bob, wonderful to have you.

Thank you very much for the analysis tonight.

PARKER: Thank you.

QUEST: Now, when we come back after the break, (INAUDIBLE) at the Paris Air Show -- how deal making and old rivalries are creating billions of dollars. We're looking at the order books and were talking to the deal makers and one particular deal which is very interesting.

(COMMERCIAL BREAK)

QUEST: Tonight, plane sailing and deals, deals, deals at the Paris Air Show. And we're talking about billions of dollars in orders taking flight at the world's biggest air show. It's only day two, but I want to show you here at the super screen, the super orders that have taken place that we've announced so far on day one.

Now, Airbus, which does tend to aggregate its orders, even more so when it's in Paris, which is often considered its home market, Airbus has so far announced roughly $14 billion worth of orders on day one.

Boeing, for its part, comes in at just about $9.3 billion.

So as you can see, the Airbus orders to the Boeing are considerably -- are considerably larger.

And this is even more so when you look at the planes that have been spent. In Airbus's cases, it's the 320, it's the 350, whilst in Boeing's case, it's the 747 and the 777 that have been making the running.

One of the first and biggest orders came from Qatar Airways, which is staying loyal to Boeing, spending almost $2 billion buying six wide body jets.

Jim Boulden sat down with Qatar's chief executive, Akbar al-Baker, for the long view of the first confirmed deal that we saw in Paris.

(BEGIN VIDEO CLIP)

AKBAR AL-BAKER, CEO, QATAR AIRWAYS: Well, you know that we are already Boeing operators since 2007. The 777 aircraft is -- is the best of its kind. We want to grow. And we feel that we are in need of more lift. We decided to buy some more of those airplanes, taking the entire total number of 777s to around 14. So we still have another 15 to deliver.

JIM BOULDEN, CNN CORRESPONDENT: Two years ago, when I interviewed you, you were not very happy with Boeing, for a number of reasons.

All that has been settled?

AL-BAKER: I was very unhappy with Boeing at that time. But you know that my message of bean counter was taken very positively...

BOULDEN: They listened?

AL-BAKER: -- by Boeing. Jim is there. He's doing a fantastic job. He has resolved all of our problems. We are back on track. The 787 will be delivered to us at the beginning of next year.

We look forward at a very good relationship with Boeing.

BOULDEN: That's Jim Albaugh, the head of the commercial side.

AL-BAKER: Yes.

BOULDEN: Did you get some deep discounts, then, on the 787, given the fact that it's more than two years late?

AL-BAKER: No. We have a contract. We have penalties. And Boeing has honored that contract.

(END VIDEO TAPE)

QUEST: And the 787 arrived at Paris. It's not the first time it's been at an air show. It was at Farnborough. But, of course, it's the first time at the Paris Air Show. And that certainly is always worth looking at.

Boeing saying they are thinking of a longer range, larger version of the 787.

Perhaps they'd like to think -- or somebody would like to think of this particular aircraft. It's got a certain look about it, me thinks. The plain facts of the big issue at the Paris Air Show. It is a narrow- bodied plane, the backbone of aviation, particularly the low cost, budget aircrafts. And that has been a huge talking point.

Now, the Airbus A320, particularly the Neo, which, of course, comes in in a few year's time, has received orders of more than 100 planes so far this week. It's on course to be the largest and most successful launch for them, at over 500.

Compare that to the 737 from Boeing, Boeing has to decide whether they're going to reengine the plane or redesign it. Boeing says they won't be bounced into an early decision.

But this duopoly of these two aircraft is coming to an end. From Bombardier, we have the C-Series, which has only sold a couple of dozen and is due to fly in 2014, but it is opening up a new bridgehead in the 100, 150, 200 seater market.

But this was the thing people were talking about, the Comac from the Chinese -- the C919. Comac, the Chinese aircraft manufacturer, announced it's doing a deal where Ryanair, the European low cost carrier, will assist and work, helping to developing this new plane. It will obviously turn Ryanair into a two tier model if they go with it.

Michael O'Leary joined me on the line to discuss why he was teaming up with Comac.

(BEGIN VIDEO TAPE)

MICHAEL O'LEARY, CEO, RYANAIR: And we really want to encourage them to develop a slightly larger, that air C-Series. The 919 is 174 aircraft. We have a number of meetings at senior level with the Chinese. They're very keen to understand what the needs are for a low fares airline in the - - in the West. And we're going to work closely with them over the next 12, 18 months, to try to help them design a 198, 199 seater aircraft that will knock the socks off Boeing and Airbus.

QUEST: And if that does come along, you would be in poll position to order it, be even the launch customer and get a very good price.

O'LEARY: Well, perish the thought, but absolutely. All of us, with our customers in mind and lowering the costs of air travel across Europe.

QUEST: When you -- you tried to reach a deal with Boeing.

O'LEARY: Yes.

QUEST: And that didn't come to fruition. You're still talking to them.

O'LEARY: Yes.

QUEST: So is this a shot across Boeing's bows or are you serious here?

O'LEARY: No, I mean we're very serious about working with the Chinese. If they meet our pricing and seating requirements, then we will definitely order Comac aircraft. And, you know, we can't send shots across Boeing's bow. Boeing has their own problems at the moment. I mean there's still a decision to be made as to whether they re-engine the 737 or redesign it. And so there's a lot of uncertainty in the market about Boeing.

QUEST: Fundamentally, what you require, of course, is undertakings, not only on performance of the new aircraft, but also guarantees about the cost, but could you be running a dual fleet, wouldn't you, which is something that you've always been pretty loathe to do?

O'LEARY: That's -- that's true. But I'm I think we're so big, at this stage, I think it's inevitable that we'll run a dual fleet some time in the next number of years in Europe.

QUEST: While everybody else is buying the 320 Neo, its Neo not for you?

O'LEARY: No, definitely not for us. We don't see ourselves an Airbus customer. And, frankly, we think that the -- that the Comac C919 will be a better, lower cost alternative (INAUDIBLE) and will widen the gap between Ryanair and Airbus customers in Europe.

(END VIDEO TAPE)

QUEST: You've got to admire the man.

Michael O'Leary puts it exactly as it is.

He was in Paris but aviation disruption in Asia. Virgin is among the airlines who have canceled flights in Australia because aviators said the volcanic ash cloud from Chile says that that is getting worse again.

Qantas is resuming flights in and out of Sydney and Melbourne on Wednesday mg. Tuesday flights were canceled, with the Cambria-Adelaide- Tasmania were affected. The ash cloud is now spreading quickly eastwards. Australia's air traffic control says there will be disruptions across Australia throughout Wednesday, even after the skies clear.

Guillermo is tracking the path of the cloud for us and has a spring update.

GUILLERMO ARDUINO, CNN METEOROLOGIST: Can you imagine if this had happened as long as Chile in the Northern Hemisphere, in Iceland?

It would be chaotic. But fortunately, we don't have so many -- so many flights in here.

Well, let me show you the next graphic. And I'm going to tell you, what I have is the image of where the cloud is with respect to the flight operations. So we have some problems here at surface to 40,000 feet in the middle of the air. Then we have some there in the Southern Hemisphere, closer to South Africa. But this is the problem -- fortunately, Richard, we can take off and land in here, because it's all in between 12,000 and 40,000 feet. So below 12,000, it's fine. They can take off and land.

But we have an issue here. And we need refueling for some of the flights that cannot go here, through the -- the South Pole, their usual route. So they have to stop in Papette, for example, on the way and back from Argentina or to Johannesburg, they have to stop and refuel at -- at Perth in W.A. So those are the issues that now Qantas has to face up to.

But I encourage our viewers to go to the Qantas airline if they have any doubts, because it is fantastic, all the information that they have posted there and -- and how clearly displayed it is. Sometimes, due to circumstances out of our control, Qantas says, your flight may be canceled or disrupted. But they explain exactly what's going on.

It seems that even though this continuous, we have some window of operations and opportunities to operate. And that's what's happening. And we don't know how long this is going to last, because this is the situation with the Chile volcano.

QUEST: Guillermo, we thank you for that tonight.

ARDUINO: Thank you.

QUEST: Guillermo at the World Weather Center.

Sunday night on CNN, viewers can see the premier of a new, compelling documentary. The actress, Demi Moore, who is an outspoken and passionate advocate for victims of human trafficking, has partnered with CNN Freedom Project to put a face on the victims and survivors in Nepal. now, in her search for answers, she's traveled with the 2010 CNN Hero of the Year to a place where Nepal's young people are smuggled into the sex trade.

(BEGIN VIDEO CLIP FROM "NEPAL'S STOLEN CHILDREN")

DEMI MOORE, ACTRESS: Today I'm with Honorata at the Katmandu Airport, boarding a plane for India -- or to be precise, to take me to the border Nepal shares with India.

It's across that border that thousands of Nepalese girls are trafficked each year, into brothels of Mumbai, dlii, Calcutta and other Indian cities.

In just four hours at the border, I saw several thousand people crossing over. Honorata introduces me to Maiti Nepal's own border guards. Their slight appearance belies an intense determination, which is born from their own experience. All of Maiti Nepal's guards were themselves trafficked into brothels.

There are 50 guards working for Maiti Nepal across 10 checkpoints. Every day at the border, they will intercept, on average, 20 girls at risk of being trafficked.

(on camera): Can you explain to me like how it exactly works?

UNIDENTIFIED FEMALE (through translator): She says every girl they watch. And they watch the men, also. They watch. And as soon as they catch the suspect, they take the -- one, she takes the girl away. She takes the boy. And then they cross questions. After cross-questioning, if they find that whatever they are saying is not true, then if it is a boy, they hand over the boy to the police station. And then they take the girl and go to the transit hall.

(END VIDEO CLIP)

QUEST: Now you can hear the emotional firsthand experiences of the young survivors that Moore met on her journey and what's been done in Nepal to stop human trafficking. "Nepal's Stolen Children," a CNN Freedom Project documentary. It is on Sunday night at 8:00 in London, at 10:00 in Abu Dhabi and, of course, on CNN.

(COMMERCIAL BREAK)

QUEST: The financial markets have long had their collective eye on emerging markets. Now, the developing world looks like the next big thing, and among those who call themselves the creatives.

CNN's Max Foster has had a close-up look at the battle for the emerging markets at one of the world's most established talent enclaves. It's the Cannes Lions advertising festival.

(BEGIN VIDEOTAPE)

MAX FOSTER, CNN ANCHOR (voice-over): A Hollywood A-Lister in Cannes, but this time, for the creativity festival.

ROBERT REDFORD, FILMMAKER: Favorite movies?

I've been asked that before. There's no one favorite in particular. There -- there are different ones for different reasons.

FOSTER: Redford made his name in the wild west. But that market is now developed. Now, it's all about the wild east.

BOB JEFFREY, GLOBAL CEO, JWT: One of the phrases I kept talking about in the agency is that we need to break down the Anglo-Saxon mafia. Even though I come from New York and early on in my career, I loved the work coming out of London, my observation four or five years ago was that was all changing and the world was becoming flatter and that the level of talent in all the emerging markets far surpassed what people even realized.

And now, I think when you look at Cannes even this year, you see evidence of that on an ongoing basis.

FOSTER (on camera): The rivalry between the agencies really shows itself in this football tournament on the beach here at the Cannes Lions Festival. A big Western agency versus a smaller agency from an emerging market, for example. It's just the type of battle that's also taking place in the marketplace.

JULIAN BOULDING, PRESIDENT, THENETWORKONE: There is going to be a big, you know, fight, if you like, between kind of the Western brands, who want to establish their premium and their positioning and cachet of, you know, European style or whatever the positioning might be. And, you know, the Chinese brands will look at it and go, you know what, we can do that, too.

FOSTER: Who's winning that fight at the moment, the local brands or the big international, Western brands?

BOULDING: In India, I would say the local brands. In China, I would say the Western brands. You know, look at what -- Louis Vuitton or LVMH is doing in China, I mean, 30, 40 percent of their profit now comes just from China.

FOSTER: The creative business is all about people. Talent is pretty much the only asset in the business. And that's what the real fight is over.

DANIEL MOREL, GLOBAL CEO, WUNDERMAN: We have no issue finding people with the basic mathematic requirement, the basic educational background. And then it's up to us to bring them in and train them in what our business is about.

But there's a lot of competition and a lot of churning, I would say. Fifty percent of our workforce -- it's sometimes more --- churns and goes to the competition. We are one of the big actors in those markets, so we are the obvious place to recruit.

(BEGIN VIDEO CLIP FROM IO MARKETING, COURTESY ALFA BANK, "HONESTY PAYS")

UNIDENTIFIED MALE: All right, listen everyone. Who can work during the (INAUDIBLE)?

(END VIDEO CLIP)

FOSTER: Alfa-Bank's "Honesty Pays" campaign for Russia is an example of a local agency tapping into local humor. The tag line is an ironic take on the Russian mistrust of advertising and propaganda. The brainchild is I.Q. Marketing founder, Natalia Stepanuk, who left her job with a global agency to go it alone.

(BEGIN VIDEO CLIP FROM IO MARKETING, COURTESY ALFA BANK, "HONESTY PAYS")

UNIDENTIFIED MALE: Marsha will be your translator.

(END VIDEO CLIP)

NATALIA STEPANUK, IQ MARKETING: It was a romantic time when the Russian market started to boom, Internet started to raise up to stream, when mobile operators started to change the landscape of media. And I thought this is the perfect opportunity to start very local, very fast, very open-minded agencies.

(BEGIN VIDEO CLIP FROM IO MARKETING, COURTESY ALFA BANK, "HONESTY PAYS")

UNIDENTIFIED MALE: Didn't you hear me?

Who did this?

(END VIDEO CLIP)

STEPANUK: Unfortunately, what's going on in the economy now, governments -- governmental companies, they buy independent business in a massive scale. I think it's going to slow down development. It's going -- it's going to slow down competition. And so I feel like this is the (INAUDIBLE) agency because my role, my mission to support independent business. And, unfortunately, the development of these independent businesses is slowed down by the, basically governmental politics.

FOSTER: Things are pretty relaxed here at Cannes -- time out from a fiercely competitive business, now firing all its top talent of those emerging markets.

Max Foster, CNN, Cannes.

(END VIDEO TAPE)

QUEST: And there's more from the Cannes Lions Festival tomorrow.

A Profitable Moment for you after this break.

(COMMERCIAL BREAK)

QUEST: Tonight's Profitable Moment.

President Barroso of Europe was clear -- if Athens acts, Europe delivers. As much as Greece needs the support, that cannot be much comfort to the Greek public tonight. Europe is not going to be their knight in shining armor, plucking them to safety. Europe wants something in return - - quid pro quo. And that means austerity tinged with growth.

You can't blame the EU and the IMF for taking tough stands. Twelve, 13 months ago, mistakes were made the last time a deal was done. Greece was given the chance to sort itself out. Promises made -- some were not deliver.

Now, the country is in the position where it has almost nothing left to give.

As Mr. Barroso himself said, there's no alternative to accepting austerity now. The house of cards, it's stacked too high. Just as it was before this crisis started, Greece will be pushed from one hard bargain to the next.

And that is QUEST MEANS BUSINESS for tonight.

I'm Richard Quest in London.

Whatever you're up to in the hours ahead, I hope it's profitable.

"PIERS" is after the headlines.

END