:00:00. > :00:00.next month's referendum on Scottish independence. Now on BBC News, all
:00:00. > :00:16.the latest business news, live from Singapore.
:00:17. > :00:27.Soaring profits ` Cathay Pacific outperforms many of its rivals but
:00:28. > :00:29.warns of challenges ahead. And the chief of one of YDL,
:00:30. > :00:33.Malaysia's biggest companies, explains why they are stating family
:00:34. > :00:36.run. `` staying.
:00:37. > :00:45.Welcome to Asia Business Report. I'm Rico Hizon. They are one of this
:00:46. > :00:48.region's most prestigious carriers and have turned in half`year profits
:00:49. > :00:51.15 times greater than in the same period last year. Cathay Pacific,
:00:52. > :00:53.based in Hong Kong, made $45 million and is predicting better
:00:54. > :00:59.performances for the rest of the year.
:01:00. > :01:05.Cathay Pacific flies more international passengers than any
:01:06. > :01:08.other airline in Asia. Even so, it has been affected by a slump in
:01:09. > :01:14.travel, especially in business and first class. To compensate, it has
:01:15. > :01:17.been adding more flights to cities in America and heavily advertising
:01:18. > :01:24.discounts to those locations. The strategy has clearly worked. Airline
:01:25. > :01:27.passengers are starting to come back but aren't paying the sorts of fares
:01:28. > :01:33.they were before, which is really hitting airline yields. As we saw
:01:34. > :01:37.with the results today, they have added a number of flights but have
:01:38. > :01:40.had to discount fares to fill up the seats. This has worked at OK for
:01:41. > :01:43.them, they have raised their earnings, but what it has meant is
:01:44. > :01:46.that they will have to look to raise those fares in the future.
:01:47. > :01:55.The airline says it expects business to improve even further in the
:01:56. > :01:57.second half of the year. But with rising competition from Asian rivals
:01:58. > :02:00.like Air China and Singapore Airlines, it is difficult to make
:02:01. > :02:05.more profit. One way is by cutting cost. Fuel is the airline's
:02:06. > :02:10.number`one expense and costs have jumped by 5% compared to last year.
:02:11. > :02:12.In response, Cathay Pacific has purchased five newer and more
:02:13. > :02:15.fuel`efficient planes and plans to retire at about a dozen of its
:02:16. > :02:27.ageing aircraft in three years, all in an effort to bring up earnings.
:02:28. > :02:35.Earlier, I asked our correspondent about the competition airlines like
:02:36. > :02:44.Cathay Pacific face from budget carriers. We have seen so many
:02:45. > :02:46.distressing airline disasters but the reality is that air travel has
:02:47. > :02:49.become a very commoditised business where even premium airlines, known
:02:50. > :02:52.for their safety, are unable to command prices they used to. Here in
:02:53. > :02:55.Hong Kong, Cathay Pacific, relative to other cities in Asia, is
:02:56. > :02:58.relatively protected from budget carriers because at the moment there
:02:59. > :03:01.is really only one other that is based in the city, Jetstar, the
:03:02. > :03:11.Australian group. It is trying to start Jetstar Hong Kong but hasn't
:03:12. > :03:14.received approval yet. It appears Cathay Pacific is aware of the
:03:15. > :03:17.regional rivalries heating up and are looking to make their name in
:03:18. > :03:21.long haul, which is why they have been adding so many flights to US
:03:22. > :03:25.cities in the last few months. They are flying five times a day to New
:03:26. > :03:31.York, four times to LA, and are adding another flight to Chicago.
:03:32. > :03:48.They are really counting on travel booming between China and the US.
:03:49. > :03:51.Briefly, tell us about their new plane orders and how it will help
:03:52. > :04:01.boost fuel efficiency and earnings going forward.
:04:02. > :04:04.That's right. It has announced that it is purchasing, or has ordered, 90
:04:05. > :04:07.aircraft for a total of $27 billion and they will be taking delivery of
:04:08. > :04:10.those planes over the next few years. It is mainly to boost their
:04:11. > :04:18.long`haul flights and improve fuel efficiency. Staying with earnings
:04:19. > :04:21.news, the world's largest PC maker Lenovo saw profits jump by 23%
:04:22. > :04:26.because of higher smartphone sales. It grew to $214 million. Revenue
:04:27. > :04:34.rose by 80%, with gains coming from Europe, the Middle East, Africa and
:04:35. > :04:37.the Americas. South`east Asia's largest phone company has posted a
:04:38. > :04:44.17% fall in profit because of currency fluctuations. SingTel
:04:45. > :04:51.earned about $700 million in the three months until June, which is
:04:52. > :04:54.below expectation. Revenue fell by more than 3% as its overseas units
:04:55. > :04:58.like Optus in Australia faced stiffer competition.
:04:59. > :05:01.South Korea's central bank cut interest rates for the first time in
:05:02. > :05:10.15 months, a move widely expected by analysts. The Bank of Korea lowered
:05:11. > :05:19.its key rate by 0.25% to try to stimulate more spending in the
:05:20. > :05:21.economy. In Japan, core machinery orders rose in June, showing that
:05:22. > :05:28.spending by businesses could be recovering. Orders rose 8.8% in
:05:29. > :05:32.June, below forecast, but it was still an improvement from a record
:05:33. > :05:35.19.5% drop in the month of May. The jury is still out on China's growth
:05:36. > :05:37.prospects. Economic reports released on
:05:38. > :05:44.Wednesday paint a mixed picture, despite recent attempts by the
:05:45. > :05:48.government to stimulate the economy. Retail sales for July did rise by
:05:49. > :05:57.12.2% from one year ago but still came in below analysts' forecasts.
:05:58. > :06:01.Our Shanghai correspondent Johhn Sudworth went to the shops to tell
:06:02. > :06:04.us more. As always with China, the economic data looks impressive but
:06:05. > :06:18.the big question is whether it is impressive enough. The July figures,
:06:19. > :06:21.in particular the retail sales, increase of 12.2% year`on`year and
:06:22. > :06:23.the fixed asset investment up 17%, look like bumper numbers but
:06:24. > :06:29.analysts suggest they are lower than expected. They are therefore a sign
:06:30. > :06:40.of a weakening in this economy and raise concerns about meeting the
:06:41. > :06:48.7.5% growth target for this year. Further stimulus is exactly the
:06:49. > :06:51.opposite of what China wants. It wants to get away from investment
:06:52. > :06:58.led growth to this kind of growth, consumer led spending and growth.
:06:59. > :07:05.Much talked about, of course, but much harder to achieve in reality.
:07:06. > :07:09.If you took the train from Kuala Lumpur airport to the city, checked
:07:10. > :07:13.into a hotel and went shopping in the biggest shopping mall, chances
:07:14. > :07:21.are many of the services you used would have been owned or controlled
:07:22. > :07:26.by one single family. Malaysia's YTL, once a small company, is now a
:07:27. > :07:33.conglomerate worth several billion dollars. We spoke with the managing
:07:34. > :07:39.director and his strategy for the next generations. Trains, planes,
:07:40. > :07:47.infrastructure construction. I would love to see a role construction
:07:48. > :07:51.site, that tower crane will stop there is something raw and beautiful
:07:52. > :07:58.about it. Construction and infrastructure. I like to see it
:07:59. > :08:01.being made and I like to see it finished and when it is finished, I
:08:02. > :08:12.like to see how it has changed people. Taking on the company was
:08:13. > :08:19.never be difficult idea. My father was very smart. We would always test
:08:20. > :08:23.a deal. He has a sense of wisdom and experience and common sense that is
:08:24. > :08:29.uncanny. He wears his power very lightly and he is a gentle leader,
:08:30. > :08:34.who delegates very early as a patriarch. In a similar manner, when
:08:35. > :08:41.my brothers and sisters came back, I delegated to them and decided not to
:08:42. > :08:47.hold power tightly. In my time, I have had six other siblings. There
:08:48. > :08:52.are seven of us. So, in my time, I was really wanting them to come back
:08:53. > :08:55.from college quickly and help me. There was so much business to do and
:08:56. > :08:59.so few people that I could really count on to do them, so my brother
:09:00. > :09:09.and sisters were very much welcome. In our studies, most of the
:09:10. > :09:13.companies that collapse do so at the point when they grow exponentially
:09:14. > :09:20.larger. We want to make sure that we do not suffer the same fate. Many
:09:21. > :09:24.family companies do not survive because they cannot survive this
:09:25. > :09:29.next generation. So, we have put together a legal trust that reminds
:09:30. > :09:34.them of how we made it, what to do, what not to do, succession of
:09:35. > :09:40.leadership, what to look for, and the principles of morality. All of
:09:41. > :09:46.that is very strongly put in the institution. We put quite a lot of
:09:47. > :09:50.our tangible barriers up to make sure that they never forget where we
:09:51. > :09:59.came from. Future generations, I hope, will be able to sustain and
:10:00. > :10:06.continue this creativity and will continue to be a force for good for
:10:07. > :10:11.many generations to come. Before we go, a quick look at the markets.
:10:12. > :10:16.Asian stocks are mostly in positive territory, rising in mid`morning
:10:17. > :10:23.Thursday trade after US share prices gained overnight. This is despite
:10:24. > :10:41.disappointing retail sales data in the US. Thank you for joining us.
:10:42. > :10:45.Goodbye for now. This is BBC News. The headlines: The
:10:46. > :10:47.Pentagon is saying that a rescue mission in northern Iraq is now far
:10:48. > :10:48.less