The President And The Democrats Appear To Have Not Brought Much Progress On Ending The Government Shutdown; Speaking On A Panel Alongside
<Show: QUEST MEANS BUSINESS>
<Date: January 4, 2019>
<Head: The President And The Democrats Appear To Have Not Brought Much
Progress On Ending The Government Shutdown; Speaking On A Panel Alongside
Two Of His Predecessors, The Fed Chair, Jerome Powell Says Policy Makers
Are Listening To The Market; German Lawmakers, The Phone Numbers And The
Credit Card Details, They Were Published On Twitter, Even Angela Merkel Is
Said To Be Affected By This; Three Former Credit Suisse Bankers Have Been
Charged For Their Alleged Role In The $2 Billion Fraud; Trump Calls Meeting
with Congressional Leaders “Productive”; Markets Soar After Fed Chair
Signals Patience on Rate Hikes; U.S. Man Detained in Russia is Also a
Canadian, U.K. and Irish National; Aviation Industry Remembers Herb
Kelleher; Herb Kelleher, Pioneer of Low-Cost Airlines Dies at 87; Dow Set
for Historic Daily Point Gain; A New Study Shows CEO Pay Already Tops U.K.
Average Salary in 2019; Kevin Hart Having Second Thoughts About Oscars Job.
Aired: 3-4p ET - Part 2>
<Sect: News; International>
<Byline: Richard Quest, Phil Mattingly, Alison Kosik, Nina dos Santos,
<Guest: David Drucker, McKay Coppins, Diane Swonk, Luke Hildyard>
<High: President Trump said he could not rule out the government staying
closed for months or even a year. The Fed, of course, is navigating
towards price stability and for employment. Personal data belonging to
hundreds of German lawmakers have been published on Twitter after a massive
hack. In Mozambique, $2 billion of worth of loans taken out between 2013
and 2014 by the former Finance Minister has two former Credit Suisse
bankers charged. Trump calls meeting with congressional leaders
“productive”. Markets soar after Fed chair signals patience on rate hikes.
U.S. man detained in Russia is also a Canadian, U.K. and Irish national.
Aviation industry remembers Herb Kelleher. Herb Kelleher, pioneer of low-
cost airlines dies at 87. Dow set for historic daily point gain. A new
study shows CEO pay already tops U.K. average salary in 2019. Kevin Hart
having second thoughts about Oscars job.>
<Spec: Shutdown, Democrats, Donald Trump, Border Wall, Immigration, Stocks,
Federal Reserve, Hack, Germany, Credit Suisse, Fraud, Mozambique; Stock
Markets; Paul Whelan; Herb Kelleher; Stock Market; U.K.; Kevin Hart>
GIOKOS: I will.
QUEST: And we look forward to having you back into the show.
GIOKOS: You should come soon. We should get you back into South Africa very soon.
QUEST: Thinking about it.
QUEST: Thinking about it. All right, as we continue on “Quest Means Business” tonight, we’re going to remember one of the greatest pioneers. If you are going away on holiday and you are flying on a low cost carrier, EasyJet, RyanAir, AirAsia, Jetstar - the list goes on and on. The man we are going to talk about is the man who created the industry.
[15:30:00] RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Hello, I’m Richard Quest, there’s a lot more QUEST MEANS BUSINESS in just a moment. But before we get to it, this is Cnn, and on this network, the facts always come first, that’s a big news.
President Trump said he had a productive meeting with congressional leaders on both sides of the U.S. political aisle. They were discussing the American government shutdown. President Trump also says he will be spending -- sending his top people to negotiate after failing to strike a deal with the Democrats over border wall funding so far.
A strong day on Wall Street with a rally on the market, strong reports and comments from the Federal Reserve Chairman Jerome Powell. He said the Fed will be flexible in its plans to hike interest rates. The markets got a big boost after China took steps to stimulate its slowing economy.
The U.S. man who Russia has arrested for alleged spying has citizenship in at least three other countries: Britain, Ireland and Canada, the country where Paul Whelan was born have already revealed his citizenship. Whelan’s lawyer in Russia has filed a complaint calling the detention excessive and has requested bail.
Herb Kelleher said that to understand how valuable something is, you would try to imagine himself without it. And today the aviation industry is without a true pioneer. The founder and long-time CEO of Southwest Airlines has passed away. He was 87.
In the 1970s, Kelleher took four planes and he had an idea when he built the largest airline in the United States. Indeed, one of the largest airlines in the world -- Southwest Airlines. For more on, for the principle was simple. Keep the fares low and keep the spirits high. It was the motto.
As for Kelleher himself, besides always perpetually smoking. He never -- he was -- you never saw him without a cigarette in his mouth, he was known for his big laugh and putting employees ahead of profits and never being afraid to act the fool to grow his own business.
(BEGIN VIDEO CLIP)
HERB KELLEHER, LATE FORMER CHIEF EXECUTIVE OFFICER, SOUTHWEST AIRLINES: At Southwest Airlines, we want our passengers to spend their time in the air not on the ground. That’s why we invented the ten-minute turn around, our planes pull into the jet way, board passengers and pull out again in ten minutes or less.
The way we look at it, the quicker you’re in the air, the quicker you get where you’re going. Kelleher here.
UNIDENTIFIED FEMALE: You’re going to love our Southwest spirit.
(END VIDEO CLIP)
QUEST: Southwest had cheap tickets and it didn’t assign seats until boarding. The whole plane was coach class, the object was to get as much use from the aircraft as you could, single destinations.
No inter-lining with other carriers. All the hallmarks of the low-cost carrier. There was also of course glitz in the cabin that helped grow the brand.
[15:35:00] (BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: Remember what it was like before there was somebody else up there who loved you? There was no such thing as executive class service to Dallas, Houston and San Antonio. With first class leg room, free cocktails for everyone and a schedule you could depend on. Remember.
(END VIDEO CLIP)
QUEST: Earlier, I spoke to Jerry Greenwald; the former chief executive of United; a fierce competitor of course. He told me that while many tried to replicate what Herb did in his day, nobody was able to succeed.
(BEGIN VIDEO CLIP)
JERRY GREENWALD, FORMER CHIEF EXECUTIVE OFFICER, UNITED AIRLINES: And there are few of us that belong to a club. You either have to make the planes or you have to fly them to be a member and it goes back to Eddie Rickenbacker.
And there we were having drinks, saying who are the pioneers and the great ones of our industry? And to a person we named three. One of whom was Herb Kelleher. And for an industry of this size to identify just three people as pioneers is quite amazing and a tribute to Herb.
QUEST: And many tried -- I mean, in your -- for example others followed Ryan Air with Michael O’Leary, Stelios with easyJet. In Asia, many followed, of course, Tony Fernandes with AirAsia. But in the United States for the legacy carriers like yourselves, competing against this new model gave you no end of headaches and troubles.
GREENWALD: Well, you’ve got it right. I would admit to you that I tried to compete head-to-head on the West Coast, up and down the West Coast of the United States, not management with Southwest and Herb to a point where I literally got volunteers among pilots and flight attendants and mechanics to go drink in bars and find out from Southwest employees how they really did it it.
And we figured it out. And yet, we still could not compete with them.
QUEST: Why was that? What was it -- I mean, forget necessarily legacy contracts and the like. What is it about that ethos that he was able to generate at Southwest that’s been many times tried to be replicated but can’t?
GREENWALD: Well, I would say though, you wanted to put aside legacy contracts, it’s not so much contracts. He was able to gain cooperation among his employees in ways that none of us could duplicate. And I mean, how did he do it?
I mean, he would do anything. He would -- I mean, he’d hide in a baggage area and jump out wearing a costume to make everybody laugh. From little things to big things, he gained cooperation from his employees. And I think none of the rest of us -- some got close, but no one ever duplicated.
(END VIDEO CLIP)
QUEST: What exactly was it that nobody was able to duplicate? Herb’s approach to aviation is credited with democratizing the skies, opening up the air travel to millions who couldn’t afford it before him. It became known as the Southwest effect.
I’ll show you how it worked. Southwest would enter a new market. It would do so increasing supply, but at the same time, it would offer ridiculously low prices, peanut prices, they only gave peanuts on the plane.
That would create other competition with other airlines. The other airlines would lower their fares to compete and it really was the virtuous circle -- the virtuous cycle. Demand for travel goes up, everybody benefits, sales rise. The rising tide lifts all boats.
I spoke to Jude Bricker; the chief executive of Sun Country Airlines; a low cost airline based in Minnesota. This principle that Herb Kelleher introduced many -- back in the 1970s and ’80s, it’s a low-cost philosophy that Southwest created.
(BEGIN VIDEO CLIP)
JUDE BRICKER, CHIEF EXECUTIVE OFFICER, SUN COUNTRY AIRLINES: Before Herb came along, I mean, air travel was basically for people that were wealthy, and there it was only a few of us. And now, it’s available to everybody. And the idea is to make your airline really efficient so that you can lower the cost and pass those costs on to customers and allow more people to fly.
It’s really that simple.
QUEST: Right --
BRICKER: And Herb really pioneered that and you know, with Southwest Airlines, 40 years ago.
QUEST: But doing what? I mean, is it by not offering food by charging for everything else? By -- I mean, what are the tricks of the trade of the low cost carrier --
BRICKER: Yes --
QUEST: That Herb started?
[15:40:00] BRICKER: Yes, I mean, I think it starts with making real efficient decisions with your aircraft. So you want to carry as many people every day with an airplane and he -- I think what Southwest Airlines operations should be credited with is that they got a lot more use out of their airplanes than any airline before them ever had.
But I think what’s really special about Herb is he created a culture that endures today, 40 years later of efficiency and focus on the customer. And Southwest Airlines is a real family, and I think that’s something that any business leader, whether they’re in the industry or outside should respect.
QUEST: At a time when the Southwest method or model has now been replicated many times in different versions --
BRICKER: Yes, true --
QUEST: In the United States, you’ve now gone to the ULC, the ultra-low --
BRICKER: Yes --
QUEST: Cost. Which is really the next stage of what he created. How -- what do you do to be ULC?
BRICKER: I wouldn’t spend too much effort in trying to distinguish between a ULCC and an LCC. I think the point is that airlines over time, their costs are going to go up, that’s happened here with Southwest. I think when Spirit and Allegiant and Frontier came along, they said, wow, we can be significantly lower cost than Southwest Airlines, and we’re going to do that and they’re going to call it a ULCC.
But the point is still the same, and it’s kind of the same thing that Herb did in the triangle between San Antonio, Houston and Dallas, which is let’s offer really low fares and get more people flying.
QUEST: As you grow Sun Country, does the legacy of these pioneers go with you?
BRICKER: Yes, I hope so.
I hope I’m worthy of that. I think that, you know, Herb is a hero for me, and you know, I grew up in Texas, and I’m an airline executive. So it’s no surprise that that’s the case. But, you know, I certainly would like to do a lot of the things that he did, there’s no doubt about it.
(END VIDEO CLIP)
QUEST: All right, the QUEST MEANS BUSINESS trading post, the Dow is on track for its fourth biggest points gain in history, and all the indices are up for the week so far. Look at that, 3 percent, 4 percent for the Nasdaq.
[15:45:00] Fred, I’m going to let you guess the color for our -- there we go -- well done -- or green, don’t worry, that wasn’t too tricky today. But -- well, thank you. Now, stock markets have that Friday feeling, in the U.K., it’s also been called Fat Cat Friday.
A new study says the average FTSE chief executive and Britain has already made more money so far this year than their average employee will make all year, and we’re already four days in. Apparently at 1:00 this afternoon, they made the crossover.
The study comes from Britain’s High Pay Center, its director Luke Hildyard joins me now. Luke, you would agree -- so this afternoon, the FTSE, the average FTSE 100 has now made as much money as the average employee for the whole year?
LUKE HILDYARD, DIRECTOR, HIGH PAY CENTER: Yes, it’s an incredibly stark finding, and I think it shows the extent to which we’re in the U.K., an economically divided country.
And I don’t think people are very comfortable with those divide, and I don’t think they reflect tremendously well on British --
QUEST: Right --
HILDYARD: Business. I think it’s -- you know, a little bit crass vulgar, to be taking such large sums of money out of your company when paying your workers, a relative pittance. And over 60 percent of the --
QUEST: So which --
HILDYARD: FTSE 100 companies are accredited as living wage employers.
QUEST: So which would you like to see, the top pay come down or the bottom pay come up?
HILDYARD: Obviously, the priority has to be raising low incomes. How do we do that? How have we done that historically? Well, it’s been through a mixture of things. Economic growth and innovation, but also --
QUEST: Yes --
HILDYARD: How the proceeds of growth are distributed. The size of the pie and how it’s divided --
QUEST: So --
HILDYARD: Up if you like.
QUEST: So what do you think is a fair and reasonable multiple of average workers’ pay to the CEO’s pay? You know, you’ve dealt with these arguments a million times, everything from the fact that the CEO bears responsibility for the company and can make decisions that affects everybody.
So what do you think is a legitimate multiple in your view?
HILDYARD: So people have talked about ratios of 20-1 in the public sector. Some of the political parties in the U.K. have called for a 10-1 ratio. We wouldn’t argue for a fixed multiple as a cap.
I think it’s more about giving people confidence that the pay-setting process is sufficiently rigorous and critical and challenging of these executives and incorporates a broad range of perspectives into the deliberations.
QUEST: But --
HILDYARD: It’s currently -- sorry.
QUEST: Why should part of the deliberation be the ratio to the average worker in the company versus are you going to run this company effectively, efficiently for all with care for all, CSR responsibility and make profits?
HILDYARD: Yes, and I think that doing things like giving workers representation on company boards and involving them in the pay-setting process would help to consider those factors you think about more deeply than they are being done --
QUEST: Right --
HILDYARD: At the moment, and would lead to a sort of fairer more proportionate pay levels. I don’t think you need to pay some, you know, pay somebody several million pounds to do a capable job of running the company. I think there’ll be much more focus on the kind of solidarity between the people at the top, in the middle and at the bottom.
Research has shown that --
QUEST: Right --
HILDYARD: Very high levels of CEO pay do demoralize staff and actually have a negative impact on the business.
QUEST: Good to see you, sir, this Friday, thank you very much for coming in and talking --
HILDYARD: Thank you --
QUEST: Very much, look forward to talking about this one again, it’s always a good talk up now. As we continue when we return, quality change of heart, the comedian Kevin Hart may try to get his job back as the host of the Oscars with little help from day time host Ellen DeGeneres.
Then we’ll be talking about this and to come out here and join me as we continue. We’ll find a seat for you.
[15:50:00] (COMMERCIAL BREAK)
QUEST: Welcome back. Kevin Hart is having second thoughts after barring out of hosting this year’s Academy Awards. Remember, he pulled out after homophobic comments he made on Twitter several years ago, nine, ten years ago resurfaced online.
Hart’s chances are being reinstated and being given a big boost by the day time host Ellen DeGeneres; a prominent advocate for gay rights. Chloe Melas looks into all these sort of matters is with me.
Well, I -- you know, you take it.
CHLOE MELAS, CNN ENTERTAINMENT REPORTER: Well, so first of all, to have Ellen DeGeneres come out and endorse you, and say, you know what? You are absolved, you should host the Oscars, it doesn’t get much bigger than that.
And worst, it’s Oprah Winfrey, OK, when it comes to Hollywood. But here is the thing. Although these tweets and the stuff that he said in his comedy routine are pretty much between 2009 and 2011, I’m pretty sure that we all knew in 2009 that it wasn’t OK to call people homos, it wasn’t OK to call people an f-a-g, I’m not going to say the word.
He also said that if he could do anything -- I even heard him in his standup routine say, if he could do anything to prevent his son from being gay, he will do it. And if he saw his son playing with his daughter’s dollhouse, he would beat him up.
QUEST: When -- OK. Assuming all of that is right, when do you think the statute of limitations on comments made in youthful ignorance or irresponsibility is?
MELAS: OK, well, he wasn’t a teenager. I mean, he’s still an adult, right? Making these comments, nine, ten years ago. But what I will say, though, is that I do think he makes a great Oscars host. He’s a really funny guy.
Even GLAD came out and said, the organization for gay lesbian rights, they said, look, he shouldn’t step down, he should step up. A lot of people have an issue with the fact that he has never --
QUEST: So --
MELAS: Truly apologized and sounded contrite.
QUEST: Would it be stronger if he was to do it and make that positive statement there?
MELAS: Yes, to use that platform back stage, on that large night to be the Oscar’s host and to make things right. He does have that opportunity to do it, and I bet you, he will. There is no doubt that he will. I’m already hearing behind the scenes that GLAD supports him coming back to host --
QUEST: So, he’s going to do it?
MELAS: I think he is, and the Academy hasn’t said one word since he stepped down. I think that they’ve been trying behind the scenes ever since --
QUEST: Oh, what a mess --
MELAS: To --
QUEST: What a mess --
MELAS: To have him come back.
QUEST: All right, completely unfair question, totally and absolutely unfair question. Which film is going to win the Oscars?
MELAS: Oh, maybe if “Vice”, it’s about Dick Cheney and it stars Christian Bale and it’s leading the way --
QUEST: Right --
MELAS: With six nominations.
QUEST: It’s new year -- oh, look at that.
MELAS: I’m ready.
QUEST: No, but how do you know I was going to take it over there. You are ready, go on.
[15:55:00] Happy new year. We’ll leave you for a moment, going to the markets. Verizon is still the only one in the red at the bottom, Intel is at the top, Boeing is strong, Apple having lost 8 percent, 9 percent yesterday, has gained 3.5 percent of it back.
Even Goldman Sachs is up 3 percent. The market overall, with 707 coming today, we are off the top and the best of the gains. The market opens up strongly, but the big -- I left my pen here, but this is the bit where Jerome Powell speaks and makes those comments about being flexible.
And the market -- the market builds on that with the questions of China trade and how things are moving forward on that front. The best of the day was just over 800 points. Now, we’re off about -- we’re going to go to about 732. A remarkable performance when you think of yesterday’s 700- point drop that closes off 660.
And the number of days where we’ve had point moves in the five or 600s. Again, leave you with this particular lot as we wait for the closing bell. We’ll have a profitable moment after the break -- poor old Verizon.
QUEST: Tonight’s profitable moment. It is jobs day, it is Fat Cat Friday in the U.K. and it is also the day Herb Kelleher passes away, and it is appropriate to pull all of those aspects together. Because if there is one thing about Herb Kelleher, he built his airlines because of his employees, not in spite of them.
The way he treated the workers at Southwest meant they were and are still today the best ambassadors. I met Herb Kelleher a few times, and he was always the same, it was always how are the workers doing? Who -- my employees? My pilots, my flight attendants, what are they doing? What can - - more can we do for them?
Look, he wasn’t a pushover, don’t get me wrong. When tough decisions had to be made, he would take them. But he would let the employees understand why that was being taken. How different it is from so many managements today.
You want to know why Southwest was such a success, not because of an economic model that was part of it, but because the CEO actually cared about the people who made the planes fly. And that’s QUEST MEANS BUSINESS for tonight, I am Richard Quest in New York.
Whatever you’re up to in the hours ahead, today definitely, it is profitable. Up 700 points, 3.3 percent, the bell is ringing, the day is done! Over!
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