10/05/2016 BBC Business Live


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This is Business Live from BBC News with Sally Bundock and Ben Thompson.


EasyJet slips into the red, with terrorist attacks in Paris,


Egypt and Brussels changing where and how we travel.


Live from London, that's our top story today, Tuesday 10th May.


Not so easy for EasyJet - the budget airline makes a loss


as terrorist attacks and foreign exchange rates hit


We will be talking to the boss to give you the long haul view.


Also in the programme: Bruised Japan - one of the country's biggest


And the trading day has begun in the European markets, all headed higher,


we will explain why. We sit down with the boss of Toms


to discuss why their 'one-for-one' campaign to donate shoes


to children in need is setting And as EasyJet tips into a loss,


we want to know have security fears Let us know, just use


the hashtag #BBCBizLive. Budget airline EasyJet made a loss


in the six months to April after passengers decided to stay


away because of fears over possible terrorist attacks


on European capitals. The airline made a loss


of over ?24 million, that's around $34 million,


in the period compared with a profit of ?7 million,


or $11 million, last year. Carolyn McCall, the chief executive


of EasyJet, joins me now Good to have you on the programme. I


know that normally in this period of the financial year for an airline it


is normal to make a loss. Last year making a profit was unusual. Still,


a lot has happened in that time and it has changed the way we travel and


where we go to, so talk us through it. Can I just say all airlines


actually do make a loss in the first half of the year, especially the


winter, and we are no exception. In the last decade, last year was the


first time we went into profit. But if it wasn't for the foreign


exchange movements against us, the pound softening against the euro, we


would have made a ?5 million profit. Last year was a ?7 million profit,


so despite those extremely difficult and tragic external events that you


referred to, and we would include Sharm el-Sheikh in that because we


are the only budget airline to fly their, which we do not do any more


because we are not allowed to because of what happened there, and


that followed by Paris and Brussels, despite all of that passengers have


come back. Our load factor in the first half of the year, the number


of people we fly on the plane, is 90%, exactly the same as last year,


89.7%, so the volumes have come back. It is the pricing that remains


under pressure. So, the consumers, this is a fantastic time to fly


because everybody's pricing has come down because we are stimulating


demand as a result of people perhaps taking longer to books and thinking,


do I need to do that, particularly city to city. That happens for a few


weeks after a tragic event, what we have seen in Paris and Brussels,


regardless of the fact that Paris was city based, not an airline or


airport event. It still has an effect on people where they just


stop doing normal things for a period of time, and then it comes


back. That is what we seeing. Just to talk about where we are going now


and when we are going, as you said, we are booking our holidays, we are


still travelling, but going to different places. It is fiercely


competitive between you and your rivals as to where we are going and


is there an issue of, is there the capacity, and argue virtually going


to give seats away because some are said you have overcapacity to places


like Spain? No, I don't think that is true. I think what is happening


is that there is a shifting in terms of holidays, the capacity


environment is better, nothing to do with the events we have talked


about, it is the local environment. Even airlines that are not in great


health long-term, legacy airlines, they will still keep a bit of


capacity and the people driving that capacity are the low fares airlines


like EasyJet. We are growing at 8% this year, that is a lot of growth.


Our capacity is increasing and we are doing that because absolutely we


can do that proper debate and give good returns to our shareholders. We


have put our dividend up to 50% and we would not be doing that if we


have looked to the future and did not see with confidence that we


could continue to grow profitably. This summer, certainly, the shifts


have been that people are more cautious about certain destinations,


there is a big shift towards the destiny at macro Mediterranean,


Italy, Spain, Greece -- a big shift towards the Mediterranean. Another


example, our ski season this year was the best we have ever had, 40%


of ski, amazing. OK, unfortunately we are out of time but we appreciate


your presence, thank you for coming on the programme.


With me now is Martin Alcock, director of the Travel


Let's pick up on what we heard there, what struck the issue said it


is about stimulating demand, airlines are stimulating demand. She


said it is a fantastic time to book, but ultimately that means it is


cheaper and its stuff is cheaper it is not good news for the firm is


trying to make a profit from it. Absolutely right, big component of


that is we are living through an unprecedented low fuel price


environment at the moment and EasyJet have talked around ?50


million worth of their fuel bill in the last six months, recycled into


those lower fares to stimulate demand, so aeroplanes will always


fly with that occupancy level, it is what price you have to charge to get


people on that. And she was making the point that airlines tend not to


do well in winter and rely on the summer season. But what evidence is


there that people are changing their travel plans? Sally touched on this,


we are still travelling but maybe going to destinations closer to


home? Across the tourism sector you definitely see that, huge


retrenching to mainland Spain, the Balearics, and fortunately for


EasyJet they are strong in those areas already but it is competitive


out there, the low-cost airlines all have planes they need to fill, they


don't lose money when the planes are in the air so they are all looking


to build to those destinations which means a huge capacity going in


there. Some concerns about dynamics generally. Who is most vulnerable in


the airline industry? Is it the budget side, people going away for a


weekend, maybe for a city break, I imagine, correct me if I'm wrong,


the legacy carriers, the likes of BA, Iberia, they have a lot of


business class travel, you have got to go there for work, is it just


discretionary travel that suppers? EasyJet have made a big play for a


chunk of the business market, different dynamics in that.


Traditionally EasyJet would have a lower cost base, more flexibility to


move their roots, which is one good thing they have been able to come


out of the north Aberdeen destinations, for example. EasyJet


have a very strong balance sheet, lots of cash, they can afford a long


period of competitive tension in that sector to fund some of the low


prices for a period and some of the other airlines maybe don't have


that. And the key is how long they can afford to do that.


Lovely to see you. Very interesting, lots more on that story online.


Tata Steel says seven potential buyers have come forward


The firm, which put up its UK business for sale in March,


says it is in talks with the interested parties.


Tata and others within the European industry blame cheap Chinese imports


for a collapse in steel prices that's threatening thousands of jobs


The chief executive of the Saudi Arabian oil giant has had 500,000


new jobs will be created in the next decade. The company will play a big


role in developing industrial project as Saudi Arabia tries to


diversify its economy beyond its reliance on oil.


The chief executive of the search company Baidu has called on


employees to put values before profits.


This comes after the scandal that resulted in the death of a student


who was thought to have tried an experimental cancer treatment.


A terrible story and clearly one that tech giants have to get a grip


on and work out who is advertising on their site through the search


results? That is right, certainly the story


is being reported widely on Chinese media, counting the tragic fate of


the student, the 21-year-old. Before his death he criticised the failed


treatment he received from a hospital that was advertised on


Baidu. He also criticised Baidu, which controls about 80% of the


Chinese search market, for promoting false medical information. Naturally


this has caused a storm of controversy in China which may well


have prompted this letter that Baidu's chief executive has written


to his employees. He writes that if we lose the support of our users we


lose hold of our values and Baidu will go bankrupt within 30 days. He


is Inc using his employees of making compromises for the sake of


commercial interest and placing earnings growth above user


experience. We have seen this hit the company hard. Regulators this


week imposed curbs on Baidu's advertising because of this


controversy and this could potentially hit the company really


hard. It relies on revenue from advertising for the lion share of


its income. They continue to extend their losses today, down about 2.5%.


Thank you very much, that story dominating in Asia and elsewhere.


Japan's nikkei rose more than 2% after the country's finance minister


said it will intervene if the yen's "one-sided" rise persists.


It's the highest close for the Nikkei since April 28th.


A lot of the reasons for that is the weakness in the yen.


In Europe, we'll get the latest industrial production data


Likely to see some pickup on the falls seen in February.


In the UK the trade balance for March is expected


to narrow too - we'll talk about that in a moment,


but first let's get the lowdown on the day


Big names in entertainment and pharmaceuticals are likely to


command Investec tension on Tuesday. A drugmaker reports first-quarter


earnings, many expecting them to reveal disappointing sales and


profits but possibly the numbers will be of less interest than the


comments they might make about takeover deals in the drug sector.


It was managed to have merged with its rival by now but that deal got


scuppered by the US government so shareholders will want to know


what's next. Later in the day, media giant Walt Disney releases its


latest results. It is expected to show a healthy rise in earnings


driven in part by this stellar box office performance of its animated


film Zootopia. Also out on Thursday, details from the video games make


Electronic Arts. Joining us is Jeremy Stretch,


head of foreign exchange Let's talk about those figures from


France and Germany, it is important because it tells us what is going


on. It is one of the things that people watch closely, the rate of


growth in these sectors, especially in Germany, which is heavily driven


by industry or output and export growth, and we have seen sign that


French and German manufacturing output has been slowing, more


damaging the perhaps in France and Germany. That will be one of the


interesting variables to play out over the course of not just this


report but the coming months to see if the two economies are diverging,


which is important for Europe where those countries are the key


cornerstones of the European project. We have also mentioned some


companies out with earnings. In Japan, two big companies that have


been there almost forever, Mitsubishi and Mitsui coming out


with news that tells us the story of Japan right now? Indeed it does, and


one of the interesting thing relevant for Japan, you just touched


on it, is the strength of the yen. We have seen a significant


appreciation in the value in the last few weeks and months which has


had an impact in terms of the profitability of a number of


companies. They have also had investment in areas which has been


compromised in terms of the commodity sector but the strength of


the yen has been a key constituent and it is interesting, reporting


about the UK going up, that is at least in part because the yen has


weakened on the back of the comments from the Finance Minister, so it is


a direct relationship. Just to mention those two companies coming


out with losses, something they have not done so many, many years, the


interesting how that has changed. Thank you, Jeremy.


Still to come: Can capitalism ever be caring?


We sit down with the boss of Toms Shoes to discuss


why their 'one-for-one' campaign to donate shoes to children in need


is setting the bar for others to follow.


You're with Business Live from BBC News.


Is survey is suggesting the number of businesses that want Britain to


remain in the Union has gone down. Victoria is in the newsroom with the


details. Victoria, this is an interesting one because day by day


we get different indications, it is up, it is down, the polls suggest


one thing or another, what are they telling us today? Well, this is from


the British Chambers of Commerce. It does actually differ from a survey


we had earlier on from the Institute of Directors. It said effectively


the polls are narrowing when it comes to sentiment and voting


intention among business leaders. They say that as things stand, 37%


of members that they polled would like to leave the EU. That leaves


54% in favour of remaining. And that means 8% are completely undecided.


Now earlier I spoke to Adam Marshal the acting Director-General of the


BCC and I asked him whether he thought the people who have already


made up their minds, might be willing to change them and he said


actually, 90%, so the vast majority of people who have made up their


minds are not going to change. And the proportion of people who are


still undecided that's narrowing as days go on and we hear more and more


of the arguments on either side. The other thing he said, I thought that


was very interesting this morning. There is a real difference of


opinion when it comes to small and large businesses. If you talk to


large businesses and medium sized businesses, yes, they are talking


about the referendum. Yes, they are concerned about it. Yes, it may have


some impact on their investment spending. You talk to small


businesses, it is completely different. Their priorities is


what's going to happen in the next week and so the BCC are saying today


look, politicians, you have been having real tunnel vision when it


comes to the EU referendum and when it comes to the things that really


matter for businesses, whether that be a digital roll-out for example,


whether it be red tape, those are the issues that the BCC and its


members really want to get back on track after that June vote.


Victoria Fritz who is in our newsroom for us today.


A quick look at the live page. One story that caught our eye. Channel 4


escapes privatisation is the story. It is, of course, relates to the


Culture Secretary, John Whittingdale who will publish a white paper.


Plans for the BBC, but for Channel 4. The Telegraph says the options


for a State broadcaster is under consideration including a potential


sale to someone including BT. You're watching Business Live.


Our top story: EasyJet makes a loss as the


terrorist attacks and foreign exchange rates hits the airline's


bottom line. Yes, some of it is changing where we travel to as a


result of that. Airlines typically make a loss over the winter months


and then make most of their money in the summer. So the boss of easyJet


has been keen to point out that to us this morning. She did! She did!


Now, you may have heard of Toms Shoes.


It's one of America's most well known footwear brands.


What you may not have heard of is its charitable mission.


When you buy a pair of Toms shoes, the company donates a pair


They call it their "One for One" programme.


Since the company was founded in 2006, they've donated over


50 million pairs of shoes to children all over the world.


This type of corporate altruism is increasingly popular and seen


by many as the caring, more responsible face of capitalism.


Toms Chief Executive and founder Blake Mycoskie told Alice Baxter


that he came up with the idea after travelling in Argentina,


and seeing so many children without shoes.


It was when I was in Argentina outside of Buenos Aires.


I was spending a lot of time outside the city because I was learning


actually to play polo of all things and when I was out there,


I saw many children on the streets with no shoes and I asked some


questions about that and I quickly learned that many of the kids,


the reason they weren't in school was because it was required for them


to have a pair of shoes to go to school.


They had to have the uniform and the clothes and black shoes


and to me that was crazy that kids who really wanted to be in school


and who needed to be in school weren't there


just because they didn't have a pair of shoes.


So I wanted to do something to help and you know many people see


something in the world that they don't feel is just or fair


and they want to do something and my idea kind of coming


from my entrepreneurial background, instead of starting a charity


to donate shoes, what if we started a business where every time we sold


a pair of shoes we could then fund giving a pair of shoes away and it


started as a really small project on a farm on Argentina and it has


Is Toms a business or is it a charity?


Toms is a business and that's one of the things I'm most proud


of and over the last ten years years we've had this impact.


When I started Toms I very purposefully did not want to be


a charity because as a charity, my fear was I would be dependant


on people's donations and so maybe we would get donation


from a wonderful group of people this year and we give the shoes


to the kids that need them for school and then we get donations


again, but what happens if the donations stop?


I felt like I had more control over the giving if it was actually built


In an interview you gave back in 2013, you said you wanted to roll


out the one for one time philosophy to five other different products r


product areas. Are we at five products yet? No, I think we're at


four and maybe we will stop at four and pause and breathe for a little


bit! It has been a lot of work to go from just being a footwear company


to truly a one for one company and introducing things like I wear to


help cataract surgery and clean water projects. We have four


businesses that we're in right now and really right now and I would say


for the next couple of years we're going to focus on those four. Tell


me how you began this. You didn't follow a typically orthodox path


into business. You didn't go to college, I don't think, you didn't


go to business school. How did you become a serial entrepreneur? Well,


I think it really started when I was 12 and I was a really competitive


tennis player. Now, when I was a soft man in college in my second


year I had an injury to my Achilles tendon and had to give up tennis for


a year. During that time, I was so bored because I was playing tennis


like ten hours a day and now I had nothing to do... Start a business.


That's how the first business which was a laundry business got started.


The business was fun and we were making money and it was interesting


all the employees and stuff. By the time my leg healed up, I realised


I'm probably not going to be the next Andy Roddick. Maybe it is


better to focus on this intrapresenter stuff and that's kind


of what I've been doing ever since. That was the founder of Toms shoes,


Blake Mycoskie. He is putting his foot in it really!


How long have you been thinking of that? Too long.


Jeremy is back with us. Before the threshold and the watershed and


everything! Let's talk Greece. The story that refuses to die. It is


good for us in terms of having stories. The two, that are


dominating in the UK Brexit being one and Greece. These two are


married together this this article. It is in the Times. Indeed, there is


a potential - Greece go through another round of negotiations. The


Greek State has to make hefty repayment options in the month of


July. So they need to put further structural reforms in place which of


course are leading to extra strikes or additional strikes. So that's an


ongoing issue as we go through into the summer. Yet again the Greek


story and the Greek crisis is ongoing, for the populace in the UK,


we are seeing a mass of debate and political discussion regarding a


member of the eurozone being potentially expelled, that doesn't


bode well. Really putting two themes together into the vote. It reminds


financial markets of the uncertainties out there. Greece


being one and the UK referendum result being another. It is hard to


predict? Indeed. That's the thing the financial markets hate most.


Uncertainty. Things their able to predict, you can manage and you can


plan for. In the context of these two particular issues, yes, you


would hope best case scenario, we don't see inherent uncertainty, you


could get a great deal of uncertainty. Financial markets could


be dislocated and that will be a question put to Mark Carney, the


Bank of England governor on Thursday. It makes a huge difference


and when you are talking about changing the cost of pricing on


goods or the prices change by a small amount, it affects foreign


exchange levels and impact the bottom line. Sterling will be


moving? It will. Speaking of moving. Just when you thought selfies


couldn't get anymore annoying. There is a selfie drone. It flies in front


of your face and it takes a selfie and flying in your face... Photo


bombers could hit them. You could imagine going to an event and


everyone is trying to launch their drones. It is like bumper cars in


the sky! Why would you want something with propellers flying in


front of your face? You may want a load of selfies. Jeremy, thank you.


We're droning on again! Thank you for your company. We will see you


soon. Hello there. Another stunny day in


Scotland. Clear blue


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