Return to Transcripts main page
QUEST MEANS BUSINESS
Algerian Hostage Crisis Continues; Boeing's Dreamliner Problems Continue; High-Tech Hurdles; US Stocks Slide Slightly After Rally; US Earnings Season; European, Asian Markets Update; Australia's Economy; Euro, Pound Falling; Make, Create, Innovate: Power of Protection
Aired January 18, 2013 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
NINA DOS SANTOS, HOST: Dreamliner investigations begin as Qantas suspends its order and Air India asks for compensation.
China shifts up a gear. Growth quickens in the world's second-largest economy.
And the power of protection. The technology to waterproof absolutely anything.
Hello, I'm Nina Dos Santos, and this is QUEST MEANS BUSINESS.
Good evening. Well, we start tonight with the ongoing hostage situation in Algeria. Algerian media has been reporting that some 12 hostages have been killed since the country's special forces launched a ground offensive on Thursday. Some hostages may still be hiding in a gas production complex, which has been under siege for three days now.
The United States has rejected an apparent offer to negotiate the release of an unknown number of Americans. Earlier, the Algerian press service said that 650 hostages have been freed in a military operation. Our senior international correspondent Dan Rivers is in our London studio to join all the dots for us.
So, so far, Dan, what do we know? This has been a totally confusing picture over the last 48 hours.
DAN RIVERS, CNN SENIOR INTERNATIONAL CORRESPONDENT: It has, and I'm afraid I can't give much more clarity at the moment. The numbers are still very confusing and conflicting. The latest wire from the Algerian News Service, which has been reasonably reliable so far, is saying that the total death toll so far is 12.
Now, it doesn't give any more details about how many Algerians, how may foreigners that includes. Earlier on, that same news service was saying that 650 people had been freed and that 32 foreign hostages remained unaccounted for.
This situation is not resolved at the moment. We understand there's still several terrorists holding out in this gas facility.
Some of the freed, hostages, though, have been speaking today, British nationals who managed to get out. Here's what they said.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: I don't even -- it happened so fast.
UNIDENTIFIED FEMALE: What do you think?
UNIDENTIFIED MALE: It happened so fast.
UNIDENTIFIED FEMALE: So fast? What time? Do you remember the time?
UNIDENTIFIED MALE: Afternoon.
UNIDENTIFIED FEMALE: At what time, exactly?
UNIDENTIFIED MALE: I cannot remember.
(END VIDEO CLIP)
RIVERS: You can see, terrible injuries on that man. David Cameron the British prime minister, has also been talking in the House of Commons not, again, putting much detail on it. But clearly irritated by the fact that he felt that the British government and the American government have not been kept well-informed by the Algerians as to exactly what was happening and when.
(BEGIN VIDEO CLIP)
DAVID CAMERON, PRIME MINISTER OF BRITAIN: Mr. Speaker, during the course of Thursday morning, the Algerian forces mounted an operation. Mr. Speaker, we were not informed of this in advance. I was told by the Algerian prime minister while it was taking place.
He said that the terrorists have tried to flee, that they judge there to be an immediate threat to the lives of the hostages, and had felt obliged to respond.
(END VIDEO CLIP)
RIVERS: So, a number of freed hostages are flying back. Some, we understand, through a US air base in Germany, some through Gatwick Airport, some going on to Norway.
DOS SANTOS: Now, the other thing that remains confused is the motivation of the people who've taken these people hostage. What are the links? At first, we thought it was Mali. It turns out that the operation was planned well before that. It could be Libya.
RIVERS: It looks like there is an emerging link from Libya. Now, US officials are telling CNN they think that some of these terrorists, at least, may have crossed from neighboring Libya.
Also, a Libyan former intelligence officer says that they're aware of at least three camps in southern Libya where a number of insurgents have been camped out, and that could be linked. So, how far this is proven, we'll have to wait and see, but it's not over yet.
DOS SANTOS: It certainly isn't. Dan Rivers in our London studio, thanks so much for bringing us the latest on that.
Well, Australia's deputy prime minister says that China is now on a path to stable growth, and the quarry in its backyard, as such, will continue that wave. We'll hear from Wayne Swan after the break.
DOS SANTOS: Welcome back. Well, from compensation to cancellation, Boeing's Dreamliner drama continues apace this Friday. Both Boeing and also the US aviation officials are currently meeting in Takamatsu, Japan.
What they're doing there is joining an investigation that's ongoing into electrical errors that caused the emergency landing of an All Nippon Airways flight -- we're talking about a 787 -- just on Wednesday.
And then, the latest has been that in India, that country's civil aviation minister said that Boeing must now compensate its national carrier, Air India, for losses incurred by the grounding of its own Dreamliner flight.
We're talking about the state-run airline having a total of six 787s out there in circulation at the moment, obviously all grounded. But it still, remember, had about 21 Dreamliners on order at present.
Well, speaking of orders, all the way over in Australia, Qantas has actually decided to cancel an order for one of its 787s. That was for its Jetstar unit. However, it does say that this decision was made late last year, and as such, it doesn't appear to be related to the grounding of the 787 fleet, which is more recent.
And over in New York, what we're seeing is this: shares in Boeing continuing to fall. This is continuing a trend that we're seeing for the best part of the last week or so. Shares at present are down around about two thirds of one percent in New York at the moment.
And right now, if that continues and they don't recoup those losses before the end of today, well, it looks set to end a very volatile week for Boeing shares in the red.
Now, the newest planes coming from Boeing and also its rival, Airbus, are packed full of all sorts of groundbreaking new types of technology. And both the Dreamliner and the Airbus A380 have experienced their fair share of teething troubles. As Jim Boulden now reports, the designers of these planes were flying into uncharted territory fraught with unknown risks.
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT (voice-over): They are the symbols of modern engineering. The Airbus A380 and Boeing's 787 Dreamliner are milestones in aviation history. Not design evolution, but design revolutions, making them the most fuel-efficient airliners in the sky.
This, of course, came at a price, both over-budget, both three years overdue. And in just the same way, these rival air frame manufacturers have mirrored each other. Airbus and Boeing are now playing leapfrog, with delays and setbacks since entry into service.
First, there were problems with the Airbus A380. A midair engine explosion last year. The plane landed safely. And then cracks in the wing components.
FABRICE BREGIER, CEO, AIRBUS: It was not a walk in the park, but we did it. We have developed the solutions. We have tested the solutions in flight. And we can say that this A380 wing rip issue is now behind us.
BOULDEN: And now it's Boeing, which is firmly under the spotlight with its flagship Dreamliner aircraft.
KEITH HAYWARD, HEAD OF RESEARCH, ROYAL AERONAUTICAL SOCIETY: There is a chance, a relatively remote chance, that there's something more systematically flawed with the Boeing electrical system. Now that in -- that would be a much more complex and much more expensive issue to resolve and certainly would lead to series delays in the program.
BOULDEN: It was two airlines in Japan that took the first step to cease operations, with aviation authorities echoing their safety concerns for the lithium ion batteries, grounding the entire Dreamliner fleet to 50. And these are the same type of batteries that Airbus will use in the A350 XWB.
BREGIER: Regarding the 350 electrical architecture, we don't see any reason -- at least until we get additional information -- to change our design.
BOULDEN: Teething problems are part and parcel of groundbreaking technology, where the warning signs come early so that manufacturers can tweak after a bit of wear and tear.
HAYWARD: The 787 and the technology that it embodies is the next generation. Airbus will already be incorporating some of that technology into its new aircraft. And you can be assured that the next generation of airplanes in the 2020s will have the technology that's been pioneered by the 787.
BOULDEN: But whether a minor fix or a major refit is needed, even without these incidents, these next generation of aircraft will take years for the manufacturers to turn a profit, if ever.
Jim Boulden, CNN, London.
DOS SANTOS: Let's move on and talk about the markets, because the S&P 500 is falling from yesterday's five-year high. Let's get the latest from Felicia Taylor in New York. So, Felicia, is the rally over, eventually?
FELICIA TAYLOR, CNN INTERNATIONAL CORRESPONDENT: Well, you know, look. It's not surprising that the S&P's going to pull back a little bit today, but still near its highest level in five years, as you said.
The run-up has been from solid economic data and fairly decent earnings. But you've got to put it in perspective. As one analyst said, people weren't really expecting a great earnings season, and frankly, they're not getting one. They're getting a decent one.
As you and I have talked about, earnings are meeting lowered expectations, and that's the key part of this. There's a certain amount of comfort, though, in the markets, in that there is a bit of an economic recovery, as long as Washington doesn't mess it up.
The Dow is also near a five-year high, but getting dragged down by weaker earnings from Intel. Nina?
DOS SANTOS: Ah, now that's what I wanted to home in on. Intel, GE, Morgan Stanley. The earnings season continues apace. What's it bringing us?
TAYLOR: Yes, this is -- this wasn't too much of a surprise, though, but unfortunately, Intel shares are down, now, about 7 percent. The chip maker reported quarter profits that fell 27 percent from a year ago, obviously dragged down by slumping PC chip sales. It's worrisome, since obviously, that's their biggest business.
There was a day when we thought of having a PC and a tablet. The reality is, people are just not necessarily buying new PCs. So, even so, profit was still slightly better than expected and industry analysts believe that Intel and the PC makers have failed to overcome that iPad challenge.
But Intel insists it does have products that customers will crave. The question is, what is it?
DOS SANTOS: Yes, so that's a continuation of the kind of trend we've seen over the last two or three years for Intel, isn't it? We should home in on GE and Morgan Stanley, because obviously especially GE, that's a really, really big name that tends to set the tone for manufacturers.
TAYLOR: Sure. Yes. GE obviously is a bellwether for the marketplace, and it's kind of been stuck in a neutral in terms of the stock for quite a while. But it beat fourth quarter earnings and revenue estimates. It is the world's biggest maker of jet engines, among other things, and wind turbines, and it said it was seeing growth in China, so that's a good thing.
The company says it now has a record backlog of equipment orders. Its CEO, Jeff Immelt, said economic uncertainty in the fourth quarter caused an investment pause. That's a nice very delicate way of putting it. And that hurt sales, but overall, he forecast growth in 2013.
Of course, that's what Wall Street wants to hear going forward, and GE shares were up 3 percent, leading the Dow industrials. Most importantly, their capital side of the business was also growing, and that's been a lagger for them in recent years.
OK. As far as Morgan Stanley, that was the last of the big bangs to report. It beat expectations in the fourth quarter, shares up 7.5 percent. It's surging in trading. It had strong margins in its wealth management business, and its CEO, James Gorman, says our firm is now poised to reach the returns of which it is capable of on behalf of our shareholders.
Of course, again, that's exactly what Wall Street wants to hear. Five of the big six top forecasts, Citi of course was the only exception, and that's not a surprise there. They have a lot of management restructuring going on, and moving forward, they haven't been able to have the mortgage up-kick that other banks have had. Nina?
DOS SANTOS: Yes, there's very compete picture, I must say, of the earnings season. Thanks so much, Felicia Taylor, and have a great weekend. Sounds like you might need to rest up before we have more earnings coming next week and, of course, Davos.
Well, the weak consumer sentiment in the United States is worrying investors in Europe as well. As you can see here, it was mostly a day of red arrows for the major European markets, with the exception, as you can see there, of the FTSE 100, which did see some gains.
But remember that that market was still affected by a whole host of disappointing economic numbers, particularly on the retail numbers, with retail sales across the UK rising only a third of one percent, which isn't great for the Christmas period.
As you can see here, in Asia, a completely different perspective, here. Japanese stocks in particular climbed almost 3 percent. This was after the yen continued its fall against the US dollar. It's now at its weakest level since June 2010. We're talking about a level of around about 90 yen to the dollar.
Remember that the Bank of Japan will be hosting a really important policy meeting next week. They could put forward a 2 percent inflation target, that's what people are expecting.
Take a look at Shanghai. It was a pretty good say for stocks over there, finishing almost 1.5 percent higher. There's a specific reason for that. All of this, yes, as you can see, came after Chinese growth finally picked up in the final quarter of 2012 following a bit of a slow start to the year.
The economy grew about 7.9 percent in the three months up until December, and that compares with 7.4 percent in the previous quarter. It is better than analysts had been expecting.
Well, Australia's deputy prime minister said that concerns about China's economy had been overblown so far. Wayne Swan is currently in New York to meet with leaders ahead of the World Economic Forum next week in Davos. I spoke to him from the NYSE, and I began by asking him where he thinks the world's second-largest economy is headed.
WAYNE SWAN, DEPUTY PRIME MINISTER OF AUSTRALIA: I think some of the pessimism about the Chinese economy was overdone at the end of last year. Naturally, there will always be challenges in the Chinese economy, but authorities there have been containing inflation, they've been changing their economic model to make it more internally focused on consumption. They're all very good trends in the Chinese economy.
I think the Chinese economy is stable and will contribute significantly to global growth as we go through this year. The Chinese economy is now 40 percent larger than it was prior to the global financial crisis, so it's still making a very big and substantial contribution to global growth.
DOS SANTOS: Now, you have said in the past that the commodities boom is showing signs of being over. Give us your thoughts on whether or not it's over, what that's going to mean for the Chinese -- for the Australian economy, and also your trading patterns with China, your biggest trading partner?
SWAN: There is a very big and strong investment pipeline in mining in Australia, as I said before. In terms of committed projects, something like $270 billion.
It's true that prices have come up, so when you're talking about a boom in mining prices, they have come up, but we've got a very strong investment pipeline. And of course, as that pipeline produces goods for export, then they will flow strongly through our economy as well and be reflected in our trade figures.
So, looking at mining, there are really three phases in Australia. There's a price boom phase, followed by an investment boom phase, followed by a substantial increase in production and exports. And of course, mining is going to continue to make a very significant contribution to the Australian economy for a long time to come.
DOS SANTOS: What is the Australian economy looking like for 2013? What are your prospects?
SWAN: Well, the Australian economy will be one of the better- performing developed economies in 2013. Of course, we didn't go into recession during the global financial crisis, one of the few developed economies not to go into recession.
Our economy is now 13 percent larger than it was prior to the global financial crisis. We've got low public debt, we've got solid growth, we've got solid consumption, we've got a strong investment pipeline, we've got contained inflation, and we've got lower interest rates. So, our economic fundamentals are in good shape.
DOS SANTOS: A Currency Conundrum for you out there, now. The US bank Chase is introducing more cash machines that will allow you to withdraw as little as one single dollar at a time. However, I must point out that the charge if you're not actually a Chase customer.
And that is our question today. How much is that charge? Could it be A, 24 cents? Could it be B, $1? Or three -- or C, $3? Well, just to remind you, we're talking about withdrawing as little as $1 at a time. We'll have the answer for this interesting Currency Conundrum later on in the show.
Well, speaking of currencies, the euro and the British pound are both falling against the American dollar in today's session. As we were telling you before, the yen continues to weaken at around about 90 yen to the dollar. All of this is coming in anticipation of more stimulus measures that are due out of the Bank of Japan next week.
DOS SANTOS: From tactical military advantage to vital defense for your mobile phone, P2i is now bringing its liquid repellant nano-coating technology to the masses. The project was born from a Ministry of Defense study in the UK, but it's now being put to civilian use. From phones to footwear, scientists say that they can just about waterproof anything.
We've all seen what happens to a newspaper when you put it inside a tub of water, as you can see there. This is the type of technology we're talking about. Here's Nick Glass with plenty more.
NICK GLASS, CNN INTERNATIONAL CORRESPONDENT (voice-over): No electronic device likes water. They corrode and seize up. But a new invention has come to the rescue, designed to repel water and pretty much any other liquid. And it looks as if it may well become standard issue in the mobile phone industry.
GLASS (on camera): Is there a term for what you've invented?
STEPHEN COULSON, INVENTOR, P2i TECHNOLOGY: The technology that we use is liquid repellant nano-coating technology.
GLASS (voice-over): This gives products an ultra-thin protective layer, both inside and out. It allows liquids to bead up and roll off. And this layer doesn't just protect electronics, but any solid object.
Dr. Stephen Coulson turns his doctoral thesis into a career. His crucial initial research is sponsored by Britain's Ministry of Defense.
COULSON: The actual project -- funded project was to be able to provide maximum protection to soldiers' uniforms so that they could repel liquids, not just rainwater, but also chemical nasties, like nerve agent.
We did about a year's worth of research and then found the technology, which I guess was the "eureka" moment, where we put certain drops of liquid onto fabrics, and rather than being absorbed into it, they beaded up and rolled off.
GLASS (on camera): So, there are soldiers now, British soldiers, wearing stuff that has been treated by your technology.
COULSON: That's correct.
GLASS (voice-over): Coulson first successfully tested his repellant technology on a piece of cotton, and it works just as graphically on newspaper. Water just rolls off in tiny droplets or beads.
Here's where the magic happens. A process at the molecular level, so small the naked eye can't see it. An object is placed inside the chamber. Air is pumped out to make a vacuum. A special gas or plasma activates the surface of the object.
A chemical is sprayed into the chamber, which coats the object inside and out. This coating is a thousand times thinner than a human hair.
GLASS (on camera): So, let's test my own phone. I'm going to risk my own phone and put it in the water and see whether the phone still rings when it's dunked.
COULSON: Yes, go for it.
GLASS: Gosh. Gosh, it actually does work.
GLASS (voice-over): Coulson's company, P2i, pioneered this technology with mobile phone giant Motorola. It's already coated more than 10 million phones. The company is now working with all of the top 10 mobile phone manufacturers in the world.
As well as electronics, the technology can be applied to clothes. Once treated, liquids just bounce off, repelled by an invisible barrier.
The key part of Coulson's strategy is targeting big brands, like Adidas and Nike. The aim is to get a P2i chamber installed as a standard part of every manufacturing assembly line.
GLASS (on camera): So, how do you see the future?
COULSON: We see the future with everything being treated by P2i's technology.
GLASS (voice-over): Turnover has been doubling every year. Their forecast for this year is $20 million.
GLASS (on camera): So far, it's mostly been mobile phones and running shoes that have been treated in these huge stainless steel vacuum chambers, but they've also experimented with tennis balls, surfboards, and the nose cones of Formula 1 racing cars. The fact is that any solid object can be treated in these chambers.
GLASS (voice-over): And this makes this technology a pretty watertight proposition for so many of the products we use every day.
DOS SANTOS: David Cameron may not have delivered his key speech on Europe today, but he certainly got his message across. Up next, why the UK prime minister thinks that Britain may be drifting towards a European exit.
DOS SANTOS: Hello and welcome back. I'm Nina Dos Santos, these are the main headlines.
Twelve hostages have been killed since Algerian special forces launched a ground offensive against militants on Thursday. That's according to the Algerian Press Service. It says 650 hostages were freed in that military operation. At present, it's unclear, though, how many more may still be hiding in a gas production complex, which has been under siege for three days.
The French Defense Ministry says that there are now 1800 of its troops in Mali. They're backing a Malian army offensive in its fight against Islamic insurgents in that reason, and they set up a forward operating base south of the city of Konna in central Mali.
Two journalists have been killed while reporting on the civil war in Syria. Belgian-born Yves Debay was working for a French magazine in Aleppo, Syria, and a sniper has also killed a reporter for Al Jazeera Arabic in Daraa province. Al Jazeera reports that Mohamed al-Horani was covering clashes in the town of Basra al-Harir.
Lance Armstrong has admitted to using performance-enhancing drugs to win all seven of his Tour de France titles, but critics say that the confession, which came in an interview with the US TV talk show host, Oprah Winfrey, didn't go far enough.
Britain is battling a winter storm that's causing severe disruption in some parts of the country. Thousands of schools are closed at present. Roads are treacherous across the country. And hundreds of flights have been canceled.
(END VIDEO CLIP)
DOS SANTOS: David Cameron warned that the European project is in danger of failure and of losing his country's membership. The British prime minister says he's concerned about a crisis of European competitiveness and also a lack of accountability across the region.
Now in his speech originally due to be delivered earlier on Friday in Amsterdam, he said this, "If we don't address these challenges, the danger is Europe will fail and the British people will drift towards the exit."
That speech was actually postponed as Mr. Cameron took time to deal with the ongoing situation in Algeria. But the issue was still raised in a phone call between Mr. Cameron and the U.S. president just on Thursday. Barack Obama told the U.K. prime minister that, quote, he "values a strong U.K. in a strong European Union."
Well, British politicians have argued for months over whether to hold a referendum on Britain's place within the union. And firmly in the yes corner is the U.K. Independence Party, otherwise known as UKIP.
This is the euro skeptic group which wants Britain to withdraw from the E.U. altogether. Earlier today I spoke to its leader, Nigel Farage, and I put it to him that Britain would lose quite a bit of its influence if it abandoned the European project.
(BEGIN VIDEO CLIP)
NIGEL FARAGE, LEADER, U.K. INDEPENDENCE PARTY: I could not disagree more with that assertion. Do you know, will the World Trade Organization meet to discuss global trade, Britain, the sixth biggest economy and the fifth biggest trading nation on the globe, is asked to leave the room? Out you go; you're British. You weren't invited here.
No, because we're representative of the WTO by an unelected bureaucrat from Brussels who attempts to represent the trading interests of 27 different countries.
DOS SANTOS: Well, might you -- the flip side of that is that Britain has been slipping in the rankings of world economies. My understanding is that last time we looked is that Brazil overtook Britain in the ranking of world economies.
So on its own, it wouldn't be in the same kind of position anyway.
FARAGE: Look, do you remember we used to have G-7 meetings, the big seven economies in the world? Do you know what it is now? It's G-20, all of which goes to show we are living increasingly in a global economy, an economy that is changing with lots of smaller emerging nations who now are serious players on the world stage.
And I'm very struck that little Switzerland has more trade deals around the world by doing its own thing that we do as part of a E.U. bloc. So I don't buy that argument at all. And the idea that we have some preferential trading deal in our neighbors because we're in the E.U. we can do that with a simple free trade agreement.
We don't need to be members of political union in order to do business with French and German companies.
DOS SANTOS: OK. So there are other options on the table outside of the E.U., even if David Cameron says that for the moment a referendum would be, he believes, damaging to the U.K. The EEA, which is something that Switzerland is involved in, the European Economic Area, we've also got the example of Norway and Turkey.
Would any of those three options outside of the E.U. but still with a link to the E.U. be palatable to people like UKIP party?
FARAGE: Yes. I mean, the Swiss have got a very favorable deal with the European Union. They've got the benefits of free trade. They haven't got (inaudible) on the rest of their economy, European legislation. Though, of course, if they're selling into Europe, they have to conform to European standards. I mean, just as they do if they're selling products into the U.S.A. or anywhere else.
So the Swiss have a good model. And my argument is that if a small economy like Switzerland -- and Norway too, for that matter, if they can get good deals that suit them, then a country of 62 million people that represents one of the biggest export markets in the world for the European Union can do even better.
(END VIDEO CLIP)
DOS SANTOS: Well, speaking of Norway and it being outside of the E.U., Norwegian Cruise Line shares are actually sailing past their IPO price in their trading debut today. Shares are currently up by more than 30 percent on the Nasdaq.
Norwegian Cruise Line is North America's third largest cruise ship operator. I spoke with the company's CEO, Kevin Sheehan, earlier about the prospects when it comes to the (inaudible) reception it's got from investors.
(BEGIN VIDEO CLIP)
KEVIN SHEEHAN, CEO, NORWEGIAN CRUISE LINE: The analysts and people that have followed our company see the momentum that this -- that this business has right now. And I think that plays a lot into the success of our road show and what you've seen here so far today.
DOS SANTOS: But those kind of analysts have still cautioned that Norwegian Cruise Line's (inaudible) 10 percent of the market. And you've got enormous companies out there such as, for instance, Royal Caribbean and Carnival that each own multiples of that.
Isn't the reality that they're going to be setting the price -- the pricing in cruising going forward? And you're just going to have to follow?
SHEEHAN: No. That's not correct at all. And if you look at the record over the last number of years, you'll see our industry leading pricing and industry leading on board revenues. So we're well positioned as a -- as a brand.
And I would suggest that when you look at the competitive landscape and you have to really peel down the Carnival corporation as 12 different brands there and Royal Caribbean, so when you're playing in that marketplace, you're really playing against the brands. You're not playing against a corporation.
And we believe strongly with our preferred proposition that we're positioned extremely well in the future and we're commanding the pricing that we deserve. But still a ways to go.
DOS SANTOS: Now if we talk about the timing of this IPO, it is rather unfortunate that it coincides with the one-year anniversary of the Costa Concordia disaster, which shook, some might say, people's confidence in the cruise industry.
Your thoughts on how things are going to go and are people still deciding to book in for cruises? How much have we learned from Costa Concordia?
SHEEHAN: Well, I think at the end of the day, the industry withstood that very well. The other cruise corporations have posted their results and profitable results. We've all continued to fill our ships. At Norwegian Cruise Line we have solid results every quarter in 2012.
And it's really a world that we operate in. We -- you know, we've confronted so many things in the five years since I joined the company from the economic downturn to oil prices the way they are, to tsunamis impacting our ship in Hawaii to earthquakes and volcanic ash and hurricanes that hit the northeast here with the trifecta in the 4th quarter.
And through everything that we've been dealt with, the company's continued to grow and prosper.
DOS SANTOS: Well, in some countries, it would only count as a dusting of snow. Here in the U.K., though, surprise, surprise. As usual, it's enough to trigger travel mayhem. Trains, planes and automobiles were all affected. We'll have a full update on the situation (inaudible) next.
(BEGIN VIDEO CLIP)
DOS SANTOS (voice-over): Time now for the answer to today's "Currency Conundrum." Earlier in the show we asked you how much does it cost for someone (inaudible) to (inaudible) one single dollar from one of their new ATMs?
Well, the answer is (inaudible) $3. The cash machines may be new but they're allowing you to take out single dollar bills. But the user fees are actually the same, meaning that the charge would be three times the amount that you could actually withdraw from it if you want, of course, to withdraw a single dollar bill.
(END VIDEO CLIP)
DOS SANTOS: Now snow (ph) in the U.K. is once again forced Heathrow Airport to cancel hundreds of flights. More than 100 -- 400, I should say, didn't actually take off (inaudible) winter weather here. The airport is not expecting many more cancellations, however, and it expects normal service to resume on Saturday morning.
Well, the travel problems are not just limited to Heathrow Airport of course. In the Midlands -- we're talking about the north of the country -- Birmingham International Airport has temporarily suspended all flights as it clears its runway while four Eurostar train services between London and Brussels were also canceled as a result.
Let's get an update on how things are looking. Meteorologically speaking, Jenny Harrison is standing by to tell us all. Jenny?
JENNY HARRISON, AMS METEOROLOGIST: Hey, Nina, bitterly cold across as well for you, which is one of the reasons that they had so many problems at the airports, because they're trying to de-ice the planes that they are managing to actually depart the airports. But certainly you can see in the last few hours just a huge swath (ph) of cloud (inaudible) unsettled picture of course all of Europe.
But across the U.K., there's been some pretty hefty totals of snow. Sennybridge in Wales (inaudible) 26 centimeters have come down Thursday to Friday. That is a huge amount of snow. At 5 cm in Coleshill. That's not far at all from Birmingham International Airport, which as you were saying has got all sorts of problems there as well.
London Heathrow, not as much, 2 centimeters. But that is enough of course to cause problems at some of these very, very busy airports, certainly one like Heathrow. But you can see in the last few hours, there's all that snow that's continuing to come through, the brighter white you can see that's the heavier bands of snow coming in.
And then a little bit of a break now and of course rain further to the far west across the waters. But there is more snow to come, it has to be said. So be prepared for that. We've been had -- we've had loads of pictures sent in to us. This one first of all sent in by my sister-in-law, yes. That's Camilla you can see there. And this is just where they live.
As you can see, the children, of course, many schools, thousands of schools were shut on Friday. But for most of them, it's not a bad thing. My two nieces there with their friends, Conor (ph) and Cody (ph) and just another one to show you, my two little nieces, there they are, Darcy (ph) and Blue (ph) and Florence in her other coat.
But as I say, they're certainly enjoying the weather. You can see in the last few hours it's been very widespread. We've got more pictures of people in London trying to deal with the snow. Never is nice in the big city, is it? It's miserable, it is cold, it is dirty, very soon with all the traffic.
So you can see here, some of the big landmarks in London, Palace of Westminster there, Big Ben and of course, everybody just trying to get about their daily business. There's Big Ben. And then we've got Piccadilly, I think, to show you as well, very, very busy area. But again, the snow is managing to settle on some of the pavements there.
But of course, on the roads it is staying pretty wet despite the fact we've got such very low temperatures. Now this snow is going to work its way across into western (inaudible). Let me show you the last few hours, it's already working its way into western France. We should see some pretty hefty totals there before it is all done.
But look at the temperatures now with the wind, -10 in Copenhagen, feels like -6 in London, -11 up in Glasgow, -9 there Birmingham Airport. And then this is the snow still to come, we could be seeing maybe another 8 cm in London, about the same across into Birmingham. But just quickly I have to show you what's coming into Paris because be prepared for this.
This is all in the next 48 hours. Look at the numbers just going up and up and up. There's a huge swath (ph) coming in there, maybe 19 cm. So Nina, I have a feeling when I'm in later and tomorrow I'll be talking about the problems in Paris Airport as well.
DOS SANTOS: Yes, (inaudible) not traveling anywhere this weekend.
HARRISON: Very good (inaudible).
DOS SANTOS: Jenny Harrison, thanks so much for that. You, too, Jenny. All the best.
Now speaking of snow on cue, it's time for me to remind you that QUEST MEANS BUSINESS will be coming to you live from Davos, Switzerland, in the World Economic Forum underway there next week. More than 2,500 participants are expected this year.
(BEGIN VIDEO CLIP)
DOS SANTOS (voice-over): Richard will be speaking with top business leaders asking which global region presents the greatest risk to economic growth worldwide. That's starting Monday here on QUEST MEANS BUSINESS.
And of course it's all part of CNN's complete coverage from Davos, including "GLOBAL EXCHANGE" with John Defterios and "WORLD BUSINESS TODAY." Ali Velshi will be joining us there from the Swiss Alps for that. Don't miss it.
And that's it for this edition of QUEST MEANS BUSINESS. Thanks for joining me. I'm Nina dos Santos. (Inaudible) what you're doing. And in the meantime, MARKETPLACE AFRICA is next.
ROBYN CURNOW, CNN HOST (voice-over): In this week's show, we go inside South Africa's booming private security industry.
UNIDENTIFIED MALE: The security (inaudible) is bigger than what it's ever been in South Africa.
CURNOW (voice-over): The government claims it's an industry that threatens national security.
UNIDENTIFIED FEMALE: A very dangerous situation arises if you have a security industry that outstrips both your peace and your army. And it is completely no regulation of that industry.
CURNOW (voice-over): So why is private security such big business here and just what do these companies do?
CURNOW (voice-over): A Thursday night in Johannesburg, a private security company, CSS Tactical, is patrolling the suburbs. The walls are high in the city. Dogs with gates, burglar alarms, all physical signs of fear. And companies like CSS, which has 850 security guards, are employed by local residents as a deterrent.
UNIDENTIFIED MALE: To be (inaudible) we need to be (inaudible). We need people to start holding this a very kind of tactical vehicle, tactical vehicles are bigger vehicles, more aggressive. That is a deterrent. So the first point is we want to deter crime as opposed to catch crime.
CURNOW (voice-over): If they have to fire, the security officers are well armed. They carry semi-automatic weapons and handguns and they train how and when to use them.
UNIDENTIFIED MALE: (Inaudible).
UNIDENTIFIED MALE: One of the most serious guys I've ever been involved in was about 14 (inaudible). And the only reason we won that battle was because we were trained.
UNIDENTIFIED MALE: How come I've never seen you here before?
CURNOW (voice-over): Only the police have the power of random stop and search in public places. But security companies also stop people they regard as suspicious.
UNIDENTIFIED MALE: (Inaudible)?
CURNOW (voice-over): A call comes through from the nearby control center. An alarm is going off at a nearby residence.
UNIDENTIFIED MALE: (Inaudible). We (inaudible) premises and made contact with a client (inaudible) everything's fine. She said she was -- she's just moved into the premises and she's not sure exactly how the alarm works. So (inaudible). Everything's safe. We're happy.
CURNOW (voice-over): But it's not always a false alarm. Coming home one night two years ago, Jung Beuter (ph), who runs a CCTV company didn't realize he was being followed. As he moved the cars on his driveway, two men appeared.
JUNG BEUTER (PH): Something trigger me just to look to my left. I look at my left and this moment I saw somebody and a person running with me with a gun in his hand, all I could hear is that shot, go through my legs and my legs just fell and I fell down on the ground.
The next moment, I saw them pushing open the gate, took my car and they left.
The committee (ph) was calling on the police for reaction to help. There was just no response back from them. There was no communication from the police and the police were in the process of changing shifts. So there was no vehicle or anybody available for any response.
CURNOW (voice-over): But that wasn't the end of the ordeal. Beuter (ph) says that while he was in hospital, a female police brigadier visited him and recommended a private investigator should take over his case. A week later, the investigator came to his house, demanding money.
BEUTER (PH): He says, the money's (inaudible)? I don't know. Is it something that the police and the (inaudible) working together? Say, yes, we're going to keep this guy and he going to charge you and maybe they share the money? I don't know.
CURNOW (voice-over): In response to these allegations, the South African police told CNN, "The brigadier's conduct was investigated and she was found guilty and sanctioned in a police departmental trial."
But she appealed and is still working for the South African police service.
BEUTER (PH): In light of what happened to me, I feel very negative about the police. I cannot trust them. I cannot rely on them. So this is the last people I'll go to for any assistance. If I have to, I'd rather go to a private security company.
CURNOW (voice-over): The police say they investigated the crime, but the perpetrators were never caught. The case has now been closed.
Rudolph Zinn is at South Africa's Institute for Security Studies.
RUDOLPH ZINN, INSTITUTE FOR SECURITY STUDIES: We only have the official crime statistics to go by. If you look at what the police would report annually in the September of every year, we see over the last three or four years that crime has leveled off.
The more concerning factor is the high percentage of so-called violent or contact crimes, which is about a third of all the crime reported to the South African police service.
CURNOW (voice-over): And that's what's fueled the growth of the private security industry. There are nearly 9,000 companies and 400,000 registered active private security guards. That's more than the police and army combined, according to South African police minister.
ZINN: I think that the growth of the industry is definitely attributed to the fact that (inaudible) weak policing or ineffective policing and it created this opportunity for private individuals to move into the market.
CURNOW (voice-over): Like Waal de Waal (ph), a key operating officer of the South African-owned Pretia Coin Group (ph). He spent 18 years in the special forces and military intelligence before joining the private security sector 10 years ago.
WAAL DE WAAL: We're going to do a routine patrol. We're going to stay in communication with the national controller. Once this incident, we'll be in the air and that will shorten our reaction time.
CURNOW (voice-over): This multimillion-dollar company employs 17,000 people. Part of its work is dealing with small-scale crime by recovering fuel stolen from a petrol station. Pretia Coin (ph) also provides security at many of South Africa's mines and has been kept busy by the recent strikes.
But what happens in private security companies take matters into their own hands?
UNIDENTIFIED FEMALE: I think the public can face -- can find itselves (ph) in situations where basically they are put at the mercy of private security companies who are unprofessional.
UNIDENTIFIED MALE: The role of private security companies are distinctively different to that of the police. We view our role as private security to really aid and support the police.
CURNOW (voice-over): But South African government says it's determined to tighten regulation of the security industry, thought to be the largest in the world.
CURNOW (voice-over): Crime in South Africa can be lucrative, never more so than when a business like this one is targeted. Here, G4S, the global private security company, collects and counts money from its customers before distributing to ATM machines and banks.
UNIDENTIFIED MALE: All the retail cash we collect from our (inaudible) about 800 vehicles. We collect in centers like this. At any one time, they would be about 2.5 billion rands (ph) on our fleet of 800 vehicles.
The cash in transit industry in South Africa does not have the highest incidence of cash in transit robberies globally. The U.K. has. But it has the most violent incidents of cash in transit robberies in the industry globally.
CURNOW (voice-over): G4S is why the U.K. lists its security company that could be affected by the government's planned reforms. One measure being considered, private security companies be majority owned by South Africans. Andy Baker (ph) is the president of Africa for G4S. The company claims to be one of the largest employees in Africa with over 100,000 staff in 30 countries.
CURNOW: There's no legislation that could be passed that will force foreign owned companies to hand over controlling stake to a South African company.
ANDY BAKER (PH), PRESIDENT, G4S AFRICA: Yes. Yes.
CURNOW: Is that helpful?
BAKER (PH): Is it helpful to us? No. No, of course, it's not. We are -- we're a wholly owned subsidiary of a London listed FTSE 100 business. The concern for me as an individual now, the concern for me as somebody who understands economics, is that this type of move is going to frighten away future foreign direct investment.
And I think that's a danger. Foreign direct investment in South Africa is already down substantially year-on-year. But this is a -- this is a worry from that perspective for me.
CURNOW (voice-over): And this is big business. First National Bank, one of South Africa's largest, told MARKETPLACE AFRICA that it spent $27 million on private security in 2012, up 12 percent on the previous year. Alistair Dooley (ph) works for a chain of hotels in South Africa. They are one of G4S' customers.
ALISTAIR DOOLEY (PH), HOTEL EMPLOYEE: It's an operating expense. It's the cost of doing business in South Africa that we have to pay for. I think it's an inevitable part of doing business in South Africa. If you -- if you do run a cash operation.
CURNOW (voice-over): As the criminal syndicates become more organized, so must the security companies.
DE WAAL: This is our information room. This is where we analyze our information. All the raw data comes in and we try and analyze it so we can get to the bottom of it, so we can try and identify the syndicate.
CURNOW (voice-over): The private security says the syndicates try to recruit employees of security firms.
UNIDENTIFIED MALE: I don't think that the problem we have is people slipping through the recruitment net. It's people being either coerced or influenced after they've been employed.
CURNOW (voice-over): Petrus Van Niekirk (ph) is the CEO of Pretia Coin (ph) Group.
PETRUS VAN NIEKERK (PH), CEO, PRETIA COIN (PH) GROUP: I don't think one can ever say that you do not employ criminals. If you employ somebody today, might have a clean record but is always the influence from the outside, greed, there's a lot of aspects that actually influence criminal intent.
Ultimately, we do our utmost best to secure the moment we employ people that they do not have any history or record of criminal involvement.
CURNOW (voice-over): But the conviction rate in South Africa means that many hardened criminals have no record.
ZINN: The success rate in dealing with (inaudible) violent crime is anywhere between 7 percent and 19 percent. What seems to be the true figure is around 11 percent conviction rate which (inaudible), meaning that about 90 percent of these crimes are never solved.
CURNOW (voice-over): Whatever regions the government eventually introduces, it seems unlikely the demand for private security companies will diminish. And employment remains high, poverty is widespread, industrial tensions are brewing.
How best to tackle crime and unrest is part of a wider political debate. Seems the government and the security industry in South Africa must set for a battle.