14/08/2014 Asia Business Report

Now on BBC News, all the latest business news, live from Singapore.

Soaring profits. Cathay Pacific outperforms many of its rivals but

warns of challenges ahead. And the chief of one of Malaysia's biggest

companies explains why they are stating family run.

Welcome to Asia Business Report. I'm Rico Hizon.

They are one of this region's most prestigious carriers and have turned

in half`year profits 15 times greater than in the same period last

year. Cathay Pacific, based in Hong Kong, made $45 million, US, and is

predicting better performances for the rest of the year.

Cathay Pacific flies more international passengers than any

other airline in Asia. Even so it has been affected by a slump in

travel, especially in business and first class. To compensate, it has

been adding more flights to cities in America and heavily advertising

discounts to those locations. The strategy has clearly worked. Airline

passengers are starting to come back but aren't paying the sorts of fares

they were before, which is really hitting airline yields. As we saw

with the results today, they have added a number of flights but have

had to discount fares to fill up the seats. This has worked at OK for

them, they have raised their earnings, what it has meant they

will have to book to raise those fares in the future. The airline

says it expects business to improve even further in the second half of

the year. With rising competition from Asian rivals like air China and

Singapore airlines, it is difficult to make more profit. One way is by

cutting cost. Fuel is the airline's number`1 expense and costs have

jumped by 5% compared to last year. In response, they Pacific has

purchased five, newer, more fuel`efficient planes and plans to

retire at about a dozen of its ageing aircraft in three years. All

in an effort to read up earnings. For more details about the

competition for full`fledged carriers, we crossed to our

correspondent. We have seen so many distressing airline disasters but

the reality is that air travel has become a very commoditised business,

where even premium airlines, known for their safety, are able to

command prices they used to. Here in Hong Kong, Cathay Pacific, relative

to other cities in Asia, is relatively protected from budget

carriers because at the moment there is really only one other that is

based in the city, Jetstar, the Australian group. It is starting to

`` trying to start Jetstar Hong Kong but hasn't received approval yet. It

appears Cathay Pacific is aware of the regional rivalries heating up

and are looking to make their name in long haul, which is why they have

been adding so many flights to US cities in the last few months. They

are flying five times a day to New York, four times too late, adding

another flight to Chicago `` to Adelaide. They are counting on

travel booming between China and the US. `` LA. Briefly, tell us about

their new plane orders. And how it will help earnings going forward.

That's right. It has announced that it is purchasing, or has ordered, 90

aircraft for a total of $27 billion, US, and they will be taking delivery

of those planes over the next few years. It is mainly to boost their

long`haul flight and improve fuel efficiency. Staying with earnings

news, the world's largest PC maker saw profits jump by 23% because of

higher smartphone sales. It grew to $214 million. Revenue rose by 80%,

gains coming from Europe, the Middle East, Africa and the Americas.

South`east Asia's largest phone company has posted a 70% fall in

profit because of currency fluctuations. The Singaporean

company earned about $700 million in the three months until June, which

is below expectation. Revenue for the `` fell by more than 3% and

overseas units like Optus in Australia faced stiffer competition.

South Korea's central bank cut interest rates for the first time in

15 months, a move widely expected by analysts. The bank of Korea lowered

its key rate by .25% to try to stimulate more spending in the

economy. In Japan, missionary orders rose in June, showing spending by

businesses could be recovering. Orders rose 88% in June, below

forecast, but it was still an improvement from a record 19.5% drop

in the month of May. The jury is still out on China's

growth prospects. Economic reports released on Wednesday paints a mixed

picture, despite recent attempts by the government to stimulate the

economy. Retail sales for July did rise by 12.2% from one year ago but

still came in below analysts' forecasts. Our Shanghai

correspondent went to the shops to tell us more.

As always, with China, the economic data looks impressive but the big

question of cause is whether it is impressive enough. The July figures,

in particular the retail sales, increased by 12.2% year`on`year and

the fixed asset investment up 70%. They look like bumper numbers but

analysts suggest they are lower than expected.

We would like to cross over to Korea and the arrival of Pope Francis in

Seoul.