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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