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QUEST MEANS BUSINESS
From Hero to Zero; Paris Air Show; Crystal Clear Transformation; Technology in Advertising
Aired June 23, 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, CNN ANCHOR, QUEST MEANS BUSINESS: Ladies and gentlemen, start the pumps. The IEA is turning on the oil taps. Oil, you'll be seeing, crude prices and stock markets are down tonight.
And it is a sorry state of affairs at Saab. It can't afford to pay its employees.
We've an hour together, I'm Richard Quest, and I mean business.
After months of high oil prices the international community has decided it is time to act. As Libya's civil war rages on, a coordinated global effort has begun to plug the energy gap of oil that that war has created. The International Energy Agency is now releasing 60 million barrels of oil on to the world market, that will take place over the next 30 days. Half of it will come from the United States. The rest from among the IEA's other 27 member nations. The announcement is hitting the oil prices somewhat difficultly and hard. Brent crude is down at $108 a barrel, that is down $5.11. NYMEX is down now, under $91.65, it is a drop of $3.71.
Somewhat unusually, when you have oil prices that are falling, you expect stocks to actually rise.
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As the Dow Jones shows, stocks are down, sharply, today. It is the second day of losses. It is off $169 points, under 12,000; perhaps a delayed reaction to the comments from Ben Bernanke yesterday. And we'll talk markets and why the Dow and the New York market is lower in just a moment or two.
Also, on this program, coming up shortly, the IEA's deputy director will joins us to discuss why the IEA decided it was time to move now. And as you can see, the traffic lights are back. Who was talking about flashing red? We'll have that for you as well.
We stick, though, again with the issues of oil and the announcement that 6 million barrels a day are to be released from the strategic petroleum reserves around the world. John Defterios is over in the library this evening to tell us more.
JOHN DEFTERIOS, CNN FINANCIAL CORRESPONDENT: It is quite a surprise attack, Richard. It reminds me of the time when the G7 acted in coordination with each other. And it certainly seems to be the case of striking when the market least expects it. You remember the Louvre Accord and the Plaza Accords, going back to the 1980s.
The IEA says it is going to release 60 million barrels a day, in total, with its members, onto the energy market. It is only the third time the IEA has tapped reserves. Once during the 1991 Gulf War, and again in 2005, when Hurricane Katrina interrupted production. Just last week, in St. Petersburg, Nobuo Tanaka, the executive director of IEA, hinted at such a move. But, of course, hindsight is always 20/20. In this case, that is certainly the case.
Let's take a look at the spare capacity that is in the market. The IEA's market intervention comes when spare capacity is in short supply. All of that sits within OPEC itself. Saudi Arabia is said to have around 3 million barrels a day, after supply 1 million barrels a day to replace Libya in its production of 1.3. UEA oil minister says they have about a 500,000 barrels a day of spare capacity, if needed. And Kuwait is said to have about the same right now. So, a total of 4 million barrels of spare capacity. You see the break down within OPEC, Saudi Arabia, the UAE, and Kuwait.
Finally, let's ask the question, why now? Oil peaked in April at the height of Libya's war, as Richard noted. Then earlier this month OPEC ministers left Vienna, at loggerheads with each other, agreeing to disagree on raising their production quota. Basically, it was down to Saudi Arabia versus Iran and Venezuela, who have wanted to maintain $100 a barrel. The quota of 24.84 billion barrels a day goes back to December 2008. But take a look at actual production right now, 29.81 million barrels a day. You see the gap here.
So when these OPEC ministers decided to meet and then leave Vienna without an agreement, it was up to Saudi Arabia to, perhaps, act. They say they are going to add 1 million barrels a day into the market in July, but since OPEC did not officially act, the IEA finally has now decided to do so.
QUEST: This is the bit. This is the cheating, isn't it?
DEFTERIOS: This is the cheating.
QUEST: This is the cheating. They cheat by about 4 or 5 million barrels a day. Now look, John, if there is this spare capacity, and they are-effectively we know the Saudis are going to pump more. And we know the others-
DEFTERIOS: They have declared it now in the last week.
QUEST: -Will pump more. So what do you make of the IEA's decision to basically put peanuts into the market?
DEFTERIOS: Well, to break it all down, I think it is power politics at its finest. The IEA decided right before the OPEC meeting, at the start of the month, to come out and say, look, this $100 plus oil is going to undermine the recovery in the second half of 2011. That didn't play well with the price hawks who want to maintain that price. Iran and Venezuela, Venezuela, in particular left the meeting with a big smile on his face, saying basically we agreed not to move forward and raise that number and raise that spare capacity.
QUEST: Right. John, we thank you for that. John Defterios.
We'll talk to the IEA deputy director in just a moment or two. He'll be joining us from Paris. But we do need to consider what is happening in those other markets and particularly, the equity markets. Oil isn't the only thing giving investors jitters on Thursday. Comments from the world's top two central bankers haven't helped matters. The Federal Reserve Chief Ben Bernanke was in gloomy mood about the U.S. economy late on Wednesday. And of course he had this to say on Greece and Europe.
(BEGIN VIDEO CLIP)
BEN BERNANKE, CHAIRMAN, U.S. FEDERAL RESERVE: I think the Europeans appreciate the incredible importance of resolving the Greek situation. If there were a failure to resolve that situation it would pose threats to the European financial system, the global financial system, and to European political unity.
(END VIDEO CLIP)
QUEST: Ben Bernanke. Now, his counterpart, in Europe, President Jean-Claude Trichet, was just as dour today. And he warned that the debt crisis contagion, that is when Greece, perhaps then Portugal, Ireland, Spain, who knows where next, is still a major risk to the stability of the Eurozone.
(BEGIN VIDEO CLIP)
JEAN-CLAUDE TRICHET, PRESIDENT, EUROPEAN CENTRAL BANK: The most serious threat to fund for stability in the EU stems from the interplay between the vulnerabilities of public finances in certain EU member states, and the banking system with potential contagion affects across the union and beyond.
(END VIDEO CLIP)
QUEST: Trichet didn't stop there. When asked what color the European system risked boards (ph) traffic system warning, he said, of course, that of course, it was only one particular color in his view.
(BEGIN VIDEO CLIP)
TRICHET: If I may, on a personal basis, I would say yes, it is red.
(END VIDEO CLIP)
QUEST: Which, of course, is exactly why we have our traffic light flashing red today. Because on so many fronts the financial world has the sign of stop, and of danger. Let's stay with the question of oil and what is happening there. Richard Jones is the deputy executive director of the IEA and he joins us now, live, from Paris.
Mr. Jones, the Libyan crisis, or conflict has been going for several months. We have an oil price that at one particular point did reach $125 back at the beginning of April. So, why now, when the price was already slowly coming down?
RICHARD JONES, DEPUTY EXECUTIVE DIRECTOR, IEA: Well, first of all, where we are looking at the oil market in terms of the balance of supply and demand, not particularly at price. We have been watching the market very carefully. I mean we watch it all of the time, but particularly carefully since the Libyan disruption began in February.
And over time we have seen that our stocks have come down more and more. Basically over 130 million barrels has been lost from the market, since this disruption began. And as we are going into the summer season, where we expect, naturally demand would increase. We believe that there is a potential for a serious disruption of the market. And according to our rules, we can act on the basis of a potential for disruption in the market.
So you would accept, I mean, the cynics would perhaps say it is political, but you are basically saying that the U.S. driving season, the European holiday season, the demand for oil does increase and it is politically a good thing to have oil, petro and gasoline at a lower price. I think we can agree on that.
JONES: Well, I'll leave political judgments to the politicians. I'm an oil person and I look at the market and I want to make sure it is well supplied. And we have a lack of supply in the market. Now, of course, after the OPEC meeting, Saudi Arabia made some very welcome statements. We're not trying to compete with Saudi Arabia with this release. In fact, we are trying to complement them. But we believe as sincere as the Saudis are to increase their production it will take them some time to ramp up.
There will also be a question of quality differentials. Remember, Libyan crude is light and sweet, most Saudi crude is a little bit heavier and sour. And so we thought that because of the quality difference, because of the time it would take the Saudis to ramp up, that we could step in and bridge, until they are successful in doing that.
QUEST: Mr. Executive (ph) I've got the numbers here. OPEC does have quite a bit of spare capacity, the quota was maintained. How far is IEA's decision, though, in some ways a thumbing of the nose and a slight annoyance at OPEC's decision not to respond at their last meeting.
JONES: No, that is not it at all. I mean, we have pretty good relations with OPEC these days. We recognize our respective roles. We have a dialogue with OPEC our executive director speaks regularly with the OPEC secretary general. So, it is not something from the playground. This is serious business. We are concerned with the health of our economies.
QUEST: And will you go more than 30 days if necessary? Got to ask you that question.
JONES: Well, you have to understand that this approval came under a simplified procedure that we adopted back in 2000.
JONES: It is the same procedure that was used at the time of the Katrina disruption. And under that disruption the initial release is always for 30 days. And then we review it. We are basically doing it on a kind of accelerated procedure and you know, basically working with e-mails, rather than face-to-face meetings.
QUEST: All right.
JONES: And so we'll review it over the course of month. And we'll see, in a month's time, if people judge that it has been sufficient or not. It could be continued. There could be a new decision made, or we could decide to end it.
JONES: It is really up to the member countries, depending on what happens in the market between now and then. It is impossible for me to speculate.
QUEST: Richard, Richard Jones, many thanks for coming in and talking to us. We very much appreciate it as always and good to see you. Thank you for joining us tonight on QUEST MEANS BUSINESS.
The markets are heavily down in New York. And at first blush, Maggie Lake, who is at the market.
Maggie, oil is dramatically lower. That should have boosted it. And yet, as the super screen shows me here, we are off nearly-over 170 or so?
MAGGIE LAKE, CNN FINANCIAL CORRESPONDENT: You are right, Richard. And it is off the lows, but remember we were seeing selling coming into this session. And the situation with oil is that longer term it will be a benefit to the economy. It will help consumers at the pump. It will help businesses.
Short term, though, it hits the energy stocks themselves. And they have a very heavy weighting in the Dow. That is why you are seeing the Dow down about 1.5 percent, a little less. The Nasdaq is only down about 0.35 percent, less than 0.50 percent. So that is why you are seeing the big impact. But there is something else going on, too, Richard, and you have this confluence of events, don't you? So, you have the surprise, which always catches markets off, on the decision to release the reserve, against the back drop where you have the economic outlook downgraded from central banks. You have weak economic data-and this is very important-concerns about those debt crises. And I asked traders here on the floor. Are they confidence that officials can come to terms with it and deal with it to prevent contagion. Here is what they said.
(BEGIN VIDEO CLIP)
KEN POLCARI, ICAP EQUITIES: I think the market is telling you that is a little bit of a problem. I think people are concerned that there is going to be an impasse. That they are not going to be able to come to an agreement or at least an agreement that is going to seem to work. So you get this, you know, there is this real nervousness in the market. And you know one day it feels like it has all gone away, but then when it rears its ugly head it comes right back, as it did today. You know, we have this sense of fear that you feel in the market. Not panic, but there is a sense that this is going to be more difficult than maybe they are playing it off to be.
(END VIDEO CLIP)
LAKE: And so, Richard, in that environment you sell first, ask questions later. We keep hearing people say that they feel like there is this echo of 2008. It is making them extremely uncomfortable. And it is keeping fear in this market.
QUEST: Maggie Lake, who is at the New York Stock Exchange for us this evening.
Maggie, many thanks for that.
This is where the Dow stands at the moment, 11,929. We're off just 179 points with still two hours to go.
When we come back, flexing their muscles, a stern message for Greece from European leaders who are gathered in Brussels. QUEST MEANS BUSINESS, good evening to you.
QUEST: Tonight piling on more pressure in Greece. European leaders are meeting in Brussels and they are flexing their collective muscles, signaling to Athens to push through those austerity cuts or else. The EU's economic and monetary affairs chief, Olli Rehn, is seeking unity. Saying cross-party support for Greece's reforms is essential. Greece is supposed to get $17 billion in bailout cash on July 3, so it won't default on its debts. Firstly, though, it has to get those deeply unpopular spending cuts through parliament next week.
The Greek government is telling CNN that next week's big vote has been pushed back one day to Wednesday 29th. Union leaders say they'll hold a two-day strike next week to protest against the plan's cuts. The Greeks are already feeling the pinch of higher taxes and pensions. Those most fed up with the austerity seem to be the private sector workers.
Diana Magnay in Athens spoke to those who say they are tired of carrying the weight of bloated government.
DIANA MAGNAY, CNN INTERNATIONAL CORRESPONDENT (On camera): This time a year ago, when Greece negotiated its first bailout package, we came to this furniture repair shop to find out how the austerity measures would affect them. A year later we are going to find out what happened in the meantime.
How are you? It's nice to see you.
UNIDENTIFIED MALE: Nice to see you again.
MAGNAY (voice over): Sakis Grassos has had to fire one employee since we saw him last. The other three work a reduced three-day week. Business is down 80 percent as demand has fallen away. The country is struggling under the weight of massive debt.
SAKIS GRASSOS, FURNITURE RESTORER: We have a lot of public debt, which always grow, grow, grow. I'm thinking that right now we owe, as a family, about 250,000 or 300,000 euros-in euros, in the bank, as a family.
MAGNAY (on camera): As a family?
GRASSOS: As a family, as a family.
MAGNAY: Just because of the debt that Greece has?
GRASSOS: Yes, that is our part from the public debt. This is why I have to be working while I have two be working while I have two less, three less, to pay them.
MAGNAY (voice over): Then there are the new taxes, which make everything more expensive.
GRASSOS: We pay the same and we eat less. Even in the super market, we pay the same, we pay the same. We pay for the family, I pay maybe 50 euro, or 100 euro, and I take less, less, less. That is why we like macaroni, the cheaper food.
MAGNAY: It is the same story in many of the small family run businesses so typical of the Greek private sector.
Stelios Papadopoulos and his brothers used to get five customers an hour, they say. Now, they are lucky to get five a day.
STELIOS PAPADOPOULOS, SMALL BUSINESS OWNER: People are very much afraid of tomorrow. So they are holding back their consumer instinct I would say.
MAGNAY: Like Grassos, he feels that businesses like his are having to pick up the cost for a bloated and inefficient public sector.
PAPADOPOULOS: There are a lot of people working in the public that are paying, that are paid huge amounts of salaries. Most of the time they don't work that amount of salary and through the tax from small, private businesses, they are paid their funds, that is unfair.
MAGNAY: He doesn't believe this government has the capacity to change things. He hasn't seen it happen yet. Now he, like the rest of the world, waits to see how Greece will emerge from this debt crisis. Diana Magnay, CNN, Athens.
QUEST: Coming up after the break, it is time for the battle of the brains, in "Q&A". A recorded "Q&A", as you will see. I'm clearly wearing a different suit, but it doesn't matter. Ali and I will be talking about which country, which place, is the best place to live, in the world.
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QUEST: It is time for a little "Q&A", when Ali and I get together from the CNN NEWSROOM, and around the world. We are talking business, travel, innovation.
A good day to you, Sir.
ALI VELSHI, CNN ANCHOR, CNN NEWSROOM: And to you, Richard.
As always nothing is off limits. So today we are not even limiting our minds. We are talking about the best places in the world to live and to work. You and I travel a lot, but if we could choose where it would be, which countries would we choose?
QUEST: It is going to be a difficult tricky one, because it is a dream segment today. And whilst you at home will have your own opinions, we have a show to do.
And, Ali, you go first. You've got 60 seconds on the clock.
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VELSHI: All right. I have searched high and low and here is the answer, Richard, get ready for this, Norway. The standard of living is high. Norway ranks No. 1 on the U.N.'s Human Development Index. Life expectancy is long, 81 years on average. People are well educated, the cost of the education in Norway, as in many Northern European countries, generally free all the way through university. Jobs are not even hard to come by, even today's economy, Richard, Norway's unemployment rate was 2.5 percent last month.
Norwegians are not just cross-country skiing and eating lutafiss (ph), which is a fish, by the way. They are plugged in, Richard. Norway ranks fourth world-wide, when it comes to wireless broadband penetration; a question that tripped us up a few weeks ago. And that is a sign, by the way, that the country invested in infrastructure and planning. It is rich, as you know very well, in natural resources, lots of oil and natural gas.
Here is the problem with Norway, Richard, you know what it is? It is cold; 40 below in both Fahrenheit and Centigrade, in the winter. It is not cheap. Oslo is Europe's most expensive city.
But the GDP per capita income, 58,000 bucks, Richard. Norway is the place to be. Shall we move?
QUEST: I'll buy you a ticket to Norway in the middle of the winter, and let's see, excuse me, if you are still saying Norway.
Here is my 60 seconds on the best place in the world to live.
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The best place in the world to live is very simple. It is wherever I'm living at the moment. Because, frankly, there is no place like home, for livability, for culture, for history. When I live in the United States that clearly was the best place in the world to live; to enjoy the warm hospitality of the American people, the food, and indeed the large, giant sizes of portions.
The best in the world now is clearly the United Kingdom of Great Britain, the royal wedding, the monarchy, the theaters. Yes, it might be a little bit expensive for you with your wishy-washy dollar. But now the best place in the world is right here. Home, sweet home.
Of course, if next year I should happen to move to Australia, or Singapore, well, you know where I'm going with that. The best place in the world will be down under, because wherever I am, that is the best place in the world.
VELSHI: What a wholesome, healthy outlook for you, Richard. You will be a happy man for the rest of your life.
Time now to bring in The Voice to test us, to see how much we really know.
UNIDENTIFIED MALE: Hello, Gentlemen. Mr. Quest, you are mighty full of yourself today. Let's see how you do on the quiz. Let's jump right in. According to the annual wealth report which of these is the best city to live in based on quality of life, economic activity and political power. Is it A., New York; B., London; C., Singapore, D., Johannesburg?
VELSHI: I'm going to beat him at his own game.
UNIDENTIFIED MALE: Ali?
VELSHI: It is London. It is London.
UNIDENTIFIED MALE: Incorrect. Richard?
QUEST: It actually becomes, it is a toss between New York and Singapore. I think it is New York.
UNIDENTIFIED MALE: That is correct. Good job, Richard.
UNIDENTIFIED MALE: New York tops the list, followed by London and Paris. Johannesburg finished last in the 40-city survey.
On to No. 2.
UNIDENTIFIED MALE: According to "Global Finance" magazine, which of these countries has the highest price for a cup of coffee, including service? Is it A., Paris; B., Moscow; C., Tokyo; D., Beijing?
UNIDENTIFIED MALE: Richard?
QUEST: I'm going to go for Moscow.
UNIDENTIFIED MALE: That is correct. Moscow ranks highest at more than $8 a cup, excluding the tip. On to No. 3, now to the other side of the coin. According to the Mercer Consulting Group, which city is the absolute worst place to live? Is it A., Baghdad; B., Kandahar; C., Tripoli; D., New York?
UNIDENTIFIED MALE: Richard?
VELSHI: I would say Kandahar.
UNIDENTIFIED MALE: Incorrect.
QUEST: It is, I mean-all right, I'm going to go for Baghdad.
UNIDENTIFIED MALE: That is correct. The answer is Baghdad. I have nothing left to say about that. Richard, you win yet again. Well, done, Sir.
VELSHI: Two weeks in a row, Richard.
QUEST: Not only two that, two weeks in a row with a clean sweep.
VELSHI: Yes, no, you are right.
QUEST: That will do it for this week.
VELSHI: I'm going to be back strong next week.
QUEST: We are back, each Thursday on QUEST MEANS BUSINESS, which is at 1800 GMT.
VELSHI: And in the CNN NEWSROOM, 2:00 p.m. Eastern. Keep the topics coming on our blog. CNN.com/QMB and CNN.com/Ali. Tell us each week what you want us to talk about.
See you next week, Richard.
QUEST: See you next week.
QUEST: Some day Ali will actually work out which is the correct way to look.
On the road and in the air, planes and cars are proving to be a moving experience for investors tonight. One company may be on its last legs, whilst another has been breaking records at the Paris Air Show, past the break.
QUEST: Hello, I'm Richard Quest, QUEST MEANS BUSINESS.
This is CNN. And on this network, the news always comes first.
The European Union is putting more pressure on Syria, with expanded sanctions against the regime of President Bashir Assad. It's freezing the assets of seven people and four businesses with connections to Mr. Al- Assad. There are already sanctions in place against 23 people, including the president himself.
France says it's going to start withdrawing its troops from Afghanistan, with all French forces potentially out of the country by 2013. The move follows a drawdown of American troops from Afghanistan announced last night by President Obama.
After a manhunt lasting more than 15 years, the Boston crimes boss, James "Whitey" Bulger is finally behind bars. Authorities arrested Bulger and a companion last night in Santa Monica, California. One of the FBI's most wanted criminals, Bulger is said to have been an inspiration for Jack Nicholson's mobster character in "The Departed".
U.S. stocks are tumbling on Thursday. The Dow is down more than 1.3 percent. Investors are rattled by the International Energy Agency's move to release 60 million barrels of oil and gloomy comments from the heads of both the U.S. and European central banks.
Tonight, how the car company, Saab, went from hero to zero. It was a cool car brand, but now it says it can't pay its workers and find fresh funding.
So the question becomes, of course, the future for Saab.
Its owners, the Swedish automobile, formerly Spica Cars, bought Saab from GM in 2010, thinking it could return to profitability. Far from that happening, now, 3,500 workers have to get emergency loans to pay their bills. Investors ran from shares of Saab's owner. The Swedish automobile stock sank more than 61 percent on the day.
Jim Boulden is here.
When a company says to its employees, in an e-mail, we can't pay your wages...
JIM BOULDEN, CNN CORRESPONDENT: Yes. And they can't pay the suppliers, either. And this has been a really tough couple of years for Saab. You'll remember that GM almost shut it down in early 2010.
But let's look at the history of Saab. Now, of course, it started in 1937 as an aerospace company. It made its first cars just after the war. But, of course, we put a question mark here on 2011 -- will Saab be able to survive?
Will I be able to go through yet another transformation and be able to make cars?
But let's look back at the history of Saab. Of course, it wasn't always a sob story.
(BEGIN VIDEO CLIP, COURTESY YOUTUBE/SAABCARSOFFICIAL)
UNIDENTIFIED MALE: It's here. I've got it.
(END VIDEO CLIP)
BOULDEN (voice-over): A lot has changed since then, and so has Saab. The first Saab car rolled off the assembly line in 1947, with the launch of the Saab 92. Right there began a lengthy history of producing high quality and uniquely engineered cars.
Over the years that follow, Saab played up its engineering talents, with adverts such as this one, comparing the quality of its jets with its cars. Saab had a good reason to play this up. Before it produced the cars, it was making military aircraft for the Royal Swedish Air Force.
But that was then.
UNIDENTIFIED MALE: Saab 95...
BOULDEN: Fast forward to the 1960s and Saab had established a reputation for building safe and reliable cars. And that played well into the family unit.
Come the 1990s, the jets were gone, General Motors was in and the car maker looked to target the male customer -- those looking for value and performance.
UNIDENTIFIED MALE: What becomes of the broken-hearted?
The smart ones buy a Saab.
BOULDEN: Come this decade and Saab makes just two models -- the 9-3, the current model of which is a decade old and won't be replaced for another two years, if ever, and the 9-5, which was replaced 18 months ago after 12 years.
(END VIDEO TAPE)
BOULDEN: Now, let's look at some of the money and some of the numbers now.
General Motors paid more than $700 million for all of Saab. And then in 2010, Spyker paid a fraction of that to GM when GM, of course, was going through its whole mess and went into bankruptcy.
Now, with the 39 percent fall in the share values this year, Bloomberg estimates that Saab is worth only $64 million. And it says that it owes suppliers $56 million.
Now, also remember that it received a European loan of around $560 million. So it owes a lot more than it's worth.
So some people say Saab could sell around $46 million of real estate in Sweden.
Now, look at the Saab's numbers. I remember when they were making around 95,000 cars a year and the new Dutch owners last year pledged to keep the number at around 55,000. But in 2010, Saab made only 30,000 cars and, of course, at the moment, Richard, they're making no cars.
QUEST: What happens to Saab?
BOULDEN: It's very unlikely that it could survive. The Chinese have been looking around and the Chinese have bought some of the assets. There are a couple of companies looking at it.
Will it remain in Sweden and making cars with -- with Chinese background or with some Russian money?
That's the only thing that looks like it could save it.
QUEST: A sad story.
BOULDEN: Um-hmm. Yes, well, people in America especially loved the car. There weren't that many, but you saw Saabs around. People -- I remember back in the '70s, I thought a Saab was similar to a BMW.
QUEST: We won't comment about your memory and that sort of thing.
QUEST: Jim, many thanks, indeed.
From cars to planes, Airbus had a record week at the Paris Air Show, leaving their rivals lagging far behind. And, of course, it has been a week-and-a-half where the number one plane that was the plane that was the big seller was the A320 Neo.
If you want to see just how much of a -- an event it was for them, look at this. This is the difference between Airbus and Boeing in terms of orders. Airbus managed to bring up $72 billion worth of orders. Boeing managed -- oops -- just $22 billion worth of orders.
And if you want to put that in terms of number of aircraft, Airbus, 730 jets were ordered, which 700 of them were the A320 Neos. Boeing, 140 - - a huge difference, which really puts the focus on Boeing's ability to -- to compete against the A320 Neo.
The big order came from AirAsia, which ordered 200 of the A320 Neos.
I was -- I'm joined by Tony Fernandes, the chief executive of AirAsia.
When you order that many planes, 200, it clearly is a magnificent vote of confidence in the future of aviation.
TONY FERNANDES, CEO, AIRASIA: I think particularly in our part of the world, really, Richard, in that Asia is really growing at rapid pace, its - - rapid pace, if you look at Southwest Airlines, they have 500 planes in a market of 300 million people. And just in Southeast Asia, we have 600 million people. If you add China and India, that's another billion odd people.
So, you know, we -- we are confident that Asia-Pacific is going to grow tremendously.
QUEST: You chose the 320 Neos. Boeing didn't have an offering, really, that would have even been close.
Is Boeing in trouble, do you think, for this?
FERNANDES: Well, I mean I -- you know, I think Airbus have -- you've got to give them credit. We asked for this aircraft. They went out and did it. And it's a far superior aircraft from anything in the market. I think Boeing has to respond with something or Airbus is going to clean up, because, you know, they have taken 1,000 orders in the last week or so.
I think we -- we pushed for this aircraft. We got it. We got the early slots. I think those are very valuable. But I think Airbus will start piling up the orders.
QUEST: And did you consider the Comac C919?
Michael O'Leary, of course, is getting his foot in the door over there.
Are you interested in that one, perhaps, for the future?
FERNANDES: Perhaps for the future at some stage. I mean I think we'd rather go with a product that has been well tested and experienced because we are heavy users of the aircraft. And, you know, in the same way that we picked the GFM engine, from -- between G and Sykos (ph) is because that engine is well tested, even though there's lots of positive reviews on the Pratt & Whitney engine.
So we've been -- we're a conservative airline in that way, in rather going with the well tested product.
QUEST: As we look at what this will do to your fleet size, it pretty much doubles the fleet size and more.
And it really sets you on a very fast trajectory of growth, doesn't it?
How are you going to manage that growth?
FERNANDES: Well, I mean, Richard, you know, nine years ago, we had two planes and now we have 100 aircraft. It was a -- it's been a huge growth pattern for us, but a lot of the hard work has been done in building up the infrastructure. And now, we can just fly on capacity at a fairly easy pace.
QUEST: Finally, tony, it's just you and me talking here.
How much did you pay for those planes?
FERNANDES: If I told you, Richard, I'd have to shoot you, my friend. But maybe when I get you into a Formula 1 car, I'll tell you.
QUEST: You get me into a Formula 1 car and you can tell me then.
Tony, many thanks, indeed.
FERNANDES: Thanks very much, Richard.
(END VIDEO TAPE)
QUEST: He'll never tell you, never. I've tried many, many times and they never tell you how much they paid for their planes.
Tony Fernandes of AirAsia.
If you thought Wedgwood China was all blue, well, something's changed at Wedgwood. The chief executive will explain why this is the new look for the company, provided I don't drop it.
QUEST: I never thought of Wedgwood as being all sort of black in that sense. But then perhaps, well, I never really thought of Wedgwood as being all gold, as well. They call this one Pure Gold. This is the new look of Wedgwood, a story that's a turnaround tale that Saab, we heard of earlier, would envy.
Word about Wedgwood is in profit. It's growing, albeit slowly. And that's the declaration from the chief executive.
A short time -- he joined me earlier.
Now, you might want to think back to January '09, when Wedgwood went out of business, filed for bankruptcy. It happened for a reason. It couldn't compete.
So I asked the chief executive, Pierre de Villemejane, what changed all of that?
PIERRE DE VILLEMEJANE, CEO, WATERFORD WEDGWOOD: What we've changed is really two things. One, we have realigned our infrastructure and our resources to the sales level -- the current sales level. And secondly, we really refocused the brands to be more appealing to a wider consumer audience.
QUEST: What does that mean?
I mean at the end of the day, it's glasses, it's flatware, it's cups and it's saucers.
DE VILLEMEJANE: Well, that's how it started.
QUEST: Well -- well, it started with a design that your grandmother would like or a design that somebody contemporary would like.
DE VILLEMEJANE: Exactly. And -- and/or other type of products that can fit not just your table, but your home -- decorative products, ornamental pieces, which is where Josiah Wedgwood started, in -- in the 18th century.
QUEST: So are you breaking the crockery and going for all these different things instead, cushions and home furnishings and the like?
DE VILLEMEJANE: No, we're staying to our core ceramic core competencies. But what we're doing is we're trying to transform a traditional tableware company into an exciting home lifestyle brand that can become the reference of England -- English elegance.
QUEST: Isn't that the problem that you've got?
Everybody likes the English elegance bit, but Wedgwood needs to become cool. All your brands within the house need to become cool, don't they?
DE VILLEMEJANE: They do. They need to become more contemporary and more relevant. And that's really the key of our challenge today. We will continue to draw from our archives the expressive patterns that have been the success of Wedgwood over a couple of centuries. But, really, what we're trying to do now is to offer a -- a new design territory, which will appeal to a younger audience, a more contemporary feel to our products.
QUEST: How long have you got to do this, do you think, before you'll know whether it's being successful?
I don't want to sound like a -- you know, sort of the Timber Jones (ph) of forecasting doom before it's happened.
DE VILLEMEJANE: Well, you know, if you look at even just what happened over the last two years, where Wedgwood has been declining slowly over the last 10 years, we have now entered into a growth phase, a slow growth phase, but into a growth phase. We're now financially sound and profitable, so it's a good...
QUEST: You're profitable?
DE VILLEMEJANE: We are profitable. So that's a good start. And now we're focusing on growth like any of our peers in the luxury I need in some of the emerging markets.
QUEST: So where is your core market, because you're -- well, I think I know the answer to this question. You're going to tell me it's Asia, it's high spending countries in the Gulf, it's all those places where you really want to clean up on?
DE VILLEMEJANE: Exactly. And you -- you have a great starting point, which is Japan. We have a -- a very longstanding very successful market in Japan. We have a great Wedgwood business over there that is really -- relies on two key things. One is the bridal market. And, two, the -- the gift giving.
QUEST: What's your number one challenge for the next 12 months?
DE VILLEMEJANE: My number one challenge for the next 12 months is to make sure I capture the Chinese and the emerging markets.
(END VIDEO TAPE)
QUEST: That's the chief executive of Wedgwood.
Weather forecast time now.
Guillermo is at the World Weather Center -- all I want to know from you, Guillermo, when will the showers stop?
GUILLERMO ARDUINO, CNN METEOROLOGIST: I think they're going to stop very soon. And you see that the forecast, the temps that we are forecasting, actually, the cool air is moving to the east, while in Britain, we get now invaded by some warmer weather.
So Wimbledon is going on. So we know that Thursday was rainy. We are expecting Friday with mostly cloudy skies and Saturday the rain showers come back. So you see some mess. But it's getting a little bit better, especially the storms here in the Midlands. Then they are moving away.
France, in the meantime, also clearing, because we saw some bad weather, but Germany will have to wait a little bit more and the Czech Republic, too.
This, and especially southward, is where we have dangerous storms. Here in Iniesta, you're going to see fantastic lightning bolts and all that because this is a typical area where we see all that action. And this is the outlook for the next -- I want to end on a positive note. So this is the outlook for the next two months. We are going to see wetter than normal here in the south, drier than normal here in the north and especially drier into northern sections.
Temperature -- the temperatures accompany that concept. It's going to be cooler than normal in Spain and warmer than normal in the cool areas. So I think that we are pretty good.
Thirty-six the high for tomorrow for Madrid, so remember to drink plenty of water. I didn't say wine.
Nineteen in London. And Kiev also quite warm, with 28 degrees.
So when we looked, Richard, at the satellite picture, it didn't look that bad at all. Most of the clouds are here in the area where we will see the severe weather. Britain, hold it, because it's going to get a little bit better tomorrow.
QUEST: If that's a cheerful forecast, Guillermo, I'd hate to see it when it gets bad.
ARDUINO: Come on.
QUEST: Many thanks.
ARDUINO: Live with it.
QUEST: Guillermo -- I've got no choice.
Guillermo at the world weather fore -- center.
ARDUINO: Thank you.
QUEST: We're back in a moment with a look at some interactive advertising. We're in Cannes, after the break.
QUEST: Gone are the days when sitting back and watching an advert was enough to make you spend cash. Advertisers now want you to take an active part in their campaigns and so embrace technology. It allows them to engage with you.
Max Foster got his starring role at the Cannes Lions International Festival.
UNIDENTIFIED MALE: Hello, ladies. Look at your men.
MAX FOSTER, CNN ANCHOR: The technology on display here at Cannes Lion is pretty incredible. This is an advert. This is me in the same advert. And the creative industries are, by definition, the cutting edge. But to stay there, they need to keep up with the very latest technologies.
NILS VON SYDOW, EYETRACKS: And we have to follow those dots.
FOSTER: Nils von Sydow has developed a technology that works out where people look on an advert. The camera in the laptop is tracking my eye. And here's the analysis of where I looked.
(on camera): That's going to really affect the way agencies design their adverts, right?
So they need to have the message in the right place?
VON SYDOW: Yes. All the lovely parts and everything. It's so interesting.
FOSTER: But when you have -- when you see an advert sometimes, you can't remember who -- who the brand is.
VON SYDOW: Yes.
FOSTER: So they can now address that.
VON SYDOW: Yes, exactly. And I mean I care for something. They use it in post-testing because they want to see in which media does -- do we have the -- the most return on the investment. So they check it out for different sites. You can see, oh, here, much more people see it.
VON SYDOW: I mean there's -- so all these that are right here have been so successful.
FOSTER (voice-over): But maybe the answer is disguising the advert altogether. BMW has developed an electric car, but research shows that drivers worry about how far electric cars can travel. The agency, KBS+P, created an application for drivers so they can put in a route to work, for example, and work out that the BMW would be suitable. It's, in effect, an interactive advert, gathering useful consumer information on the way.
LORI SENECAL, PRESIDENT AND CEO, KBS+P: The whole area that technology has opened up, you know, in terms of creativity, is the opportunity to create experiences that the consumer can actually engage in with a brand rather than just receive a message from them. So they're now actually able to engage with a brand and get some real utility, value and entertainment out of it.
ED BROJERDI, CHIEF CREATIVE OFFICER, KBS+P: I think a lot of it, as we discussed, is really getting to the point where there's consumer participation at all levels. And to your point, you know, they just don't need product messaging. You know, they can find out how fast this car is and -- and the performance figures. They want to know what does this brand think about this and -- and the sort of impact of this type of vehicle in the marketplace.
So we started a conversation. You know, whether it's content or utility that we provide, it's really to bring that consumer closer to the brand.
FOSTER: But heralded here at Cannes as a triumph in gathering consumer data is Nike Plus.
UNIDENTIFIED FEMALE: You completed 30 minutes, 27 seconds.
FOSTER: Runners can by sneakers with a sensor inside which talks to your iPod and the iPod tells you how fast, how far and even where you're running -- reams of data that Nike encourages you to feed back to them.
BOB GREENBERG, FOUNDER, RG/A: The newest thing is a GPS enabled iPhone 4 application. It no longer requires that you have a chip in the shoe. They can have other people that -- that are wearing Adidas or -- or New Balance and yet they're still interacting with Nike, on average, three days a week on the platform.
FOSTER: Technology works when it supports an idea, but another ad guru warns against creatives falling into the technological trap, using it for the sake of it.
DAVID DROGA, CREATIVE CHAIRMAN, DROGA5: You know, I'm a little old school. And, you know, i -- look, I love technology and what it does. But I think when technology is humanized, I think it's much more interesting. But I just -- I think this is -- it's almost like an arms race in technology and -- and people, you know, before we ever work out really what the value of something is, we're on to the next thing. And it's kind of this weird thing.
But who knows?
If -- if it adds value, fantastic. If not, you know, it will be null and done really quickly.
FOSTER: Consumers are certainly getting more fickle. They're not going to seek adverts out anymore. But adverts need to seek them out. And that's where the right technology is proving particularly handy.
Max Foster, CNN, Cannes.
(END VIDEO TAPE)
QUEST: How did he get that assignment and I didn't even realize it was up for grabs?
A Profitable Moment next.
QUEST: Tonight's Profitable Moment.
In New York, NYMEX crude has just closed, down 4.6 percent. The price is now $91 and change. The reason for the sharp fall downwards was the IEA's decision to pump oil from the Strategic Reserve. It seems to be working and bringing prices down.
But why did the IEA act now?
The civil war in Libya has been running for three months and oil prices had been higher than they were at the moment. As the prices fall, the IEA acts. Cynics say it's because the U.S. driving season is about to start and the president, up for reelection, wants gasoline prices to stay down.
The IEA says it's because of supply and demand.
And then there are the true cynics who say it's a battle of the advanced countries against the will of OPEC. Something, frankly, that the IEA denied on this program.
Whatever, 60 million barrels won't make much of a difference in the long run. It will just take the feet out of the market.
And that's 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.