30/05/2017 BBC Business Live


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The no frills airline Ryanair has reported its latest set


The budget airline reports record annual profits,


despite tough competition and worries over Brexit.


Ryanair slashes ticket prices by 13% as it reports soaring profits.


More bank fines in the wake of the 1MDB scandal-


And how to stand out in a crowded market?


We meet the firm that's using computer games


And as critics blame BA for too many cost cuts - we want to know -


Do you want more frills, not no frills?


Let us know, use the hashtag BBC BizLive.


The no frills airline Ryanair has reported its latest set


Europe's biggest carrier by passenger numbers announced a 6%


jump in full year net profit to $1.46 billion.


Ryanair's performance is a sign that its cost-cutting measures


are helping the business compete as overcapacity continues


Earlier, we spoke to Neil Sorahan, Ryanair's chief financial officer.


We saw our unit cost dropped by 11% last year. Excluding fuel, they were


down 5%. So we are seeing unit cost savings coming through on all lines.


There is a huge amount of uncertainty about Brexit. There is


no direction as to which way the UK will go on aviation. The best case


scenario would be that they remaining open skies, meaning there


is the change. But a hard Brexit is looking more likely, meaning


measures will have to be put in place. If things are not negotiated


by October 2018, they will not be ratified in time for the exit from


the EU on the 31st of March 2019. That could therefore be a distinct


possibility of no flights for a period of time in and out of the UK


and Europe. That could be days, and Europe. That could be days,


weeks or months, nobody knows. But it is a very real possibility.


With me is Victoria Moores, Bureau Chief and the European editor


So we heard from Ryanair there. The interesting thing is that they are


managing to fill their planes. They have cut prices, but they are still


filling the planes. Yeah. Ryanair has a strategy where they are load


factor passive, passenger active. That means we want to fill up as


much as the aircraft as we can by charging low efforts. That does not


mean we are desperate to fill them and we must cut the fares, it is


their actual strategy to fill the aircraft. Then load factor is 94%.


That means 94% of the seats on the aircraft on average are full. In old


terms, that would be called pile 'em high, sell them cheap. That makes


them very attractive to the airports, because they can get into


those airports right the way around the continent. You have to look at


the wider environment in aviation at the moment. The legacy carriers like


British Airways and Lufthansa and Air France are under a lot of


pressure both from the short-haul low-cost airlines like Ryanair, and


on long haul from carriers like Etihad and Emirates. So here, you


have Ryanair coming in very aggressively. The legacy carriers


are tending to cap back. Meanwhile, Ryanair is growing, so it makes it


very appealing to have Ryanair aircraft coming into your airport.


The things you are vulnerable to, whether you are a cheap upstart when


legacy carrier, are things like Brexit and terror attacks. We have


seen all the airlines suffer as a result of the terror attacks in


various parts of the world. Is there a way to mitigate against that?


Ryanair's approach has been typical Ryanair's approach has been typical


of Ryanair. If there is a terror attack or some kind of security


threat, they drop their fares again. That is to stimulate the market.


They can because they have the low cost base and at the moment, fuel is


very favourable. So it means they can stimulate the market, but it is


a very competitive market and Ryanair has the cheap costs to


support that. They say they want to become the Amazon of travel. What do


they mean by that? They mean that they want to really extend their


business. They have had a huge push into digital focus is part of their


new being nice strategy. So they have improved their app. Ryanair did


not have the best reputation for nice previously. They had a


reputation for cheap, and now they want to be cheap and nice, a bit


more like easyJet. Historically, easyJet has been more appealing to


the business traveller. Ryanair are going after that market share as


well by going into the herbs. -- the hubs. Cheap and nice. Sounds like


you, Ben! Victoria, thank you. Not cheap, but nice.


Let's take a look at some of the other stories making the news.


British Airways says it will operate a normal


schedule today after this


The airline's Chief Executive blamed a power surge for the computer


Many passengers are still without their luggage.


Some estimates say the problems could cost BA more than $150m.


Retail sales in Japan rose more than 3% in April


That's higher than economists had been expecting and comes just weeks


after government data showed the economy grew faster


than forecast in the first three months of the year.


That's its longest period of expansion in more than a decade.


New analysis suggests Chinese-speaking criminals may have


been behind the WannaCry ransomware that affected thousands


Researchers say the language used in the ransom notice indicates


the writer was "native or at least fluent" in Chinese.


Singapore has fined two banks over the 1MDB scandal following a two


Malaysia's 1MDB fund is at the centre of money-laundering


investigations in at least six countries.


We have talked about this a lot but this is just the latest episode,


isn't it? Indeed, we have been talking about 1MDB for several years


now. It is basically Malaysia's offer an world fund, set up in 2009


by the country's Prime Minister. It was meant to turn the capital Kuala


Lumpur into a financial hub, but instead it started to get negative


attention when the Wall Street Journal reported four years ago that


some $700 million were transferred from the 1MDB to the personal bank


account of the Prime Minister. He denies any wrongdoing, but that


triggered investigations in at least half a dozen countries including


Singapore. It has so far shutdown two Swiss-based private banks,


imposed financial penalties over $20 million and this morning announced


fines Credit Suisse. Thanks for that. Let's have a quick look at the


markets. The FTSE was closed yesterday


because of the bank holiday here in the UK, but it has opened and is


down two thirds, quite a sharp fall. We have had quite a sharp fall at


the end of the long weekend. And Michelle Fleury has


the details about what's ahead Economic data due out this week


could support or undermine the case for America's central bank to raise


interest rates in June. US markets were closed on Monday


for Memorial Day and the unofficial But it is time for investors


to put away the barbecue and get back to work,


because there is plenty of economic This Tuesday, the US commerce


department is expected to report that consumer spending increased


0.4% in April. That's after being


unchanged in March. The Federal Reserve's favourite


measure of inflation, the core PCE price index,


could well move the markets. Any pick-up in inflation


will raise the prospect of a faster rate hike schedule,


something that Wall Street Economists are currently


looking for a 1.5% yearly That is still well below the Fed's


2% inflation target. Joining us is Justin


Urquhart-Stewart, Co-Founder and Director of Seven Investment


Management. Let's start with the markets. Those


boards tell you all you need to know. There is some unease about


Greece again and Italy with a potential election there. Piling


more uncertainty on. We have to put this into perspective. Last year, we


had the oil price drop, feeding through into the global economy. Not


just because of Trump and things like that. We saw a lot of companies


come through with big figures. That has also been reflected in Europe,


so we have had a good nine months. Then we had the Trump effect. All


his promises in terms of tax, which didn't happen, and in terms of


infrastructure, which haven't happened and all the other ideas


which haven't happened. So the Trump pump has turned into the not so much


a dump, but it has faded away. But you are talking about macro


economics, the big picture. On a company basis, we are seeing good


numbers coming through. That is what is astonishing. You get the odd


basket case like dish airways and plugging itself, but the rest have


been showing good figures -- British Airways has been unplugging itself.


It is not a bad situation. But I am worried because it has all been so


good and we are now worrying about Greece again. Are you just being


contrary? No, here is an opportunity. When you start seeing


numbers like this with a bit of volatility coming into the market,


that is a time when a good investor can buy some assets quite cheaply.


During the summer, there is often a period of volatility triggered by


who knows what. Some build up some cash. So you are saying sell in May?


No, I want to buy. If you have got some cash, by during the summer. A


word on politics. I normally don't word on politics. I normally don't


like talking about politics, but last night in the UK we had


interviews with Theresa May, the Prime Minister and Jeremy Corbyn,


Leader of the Opposition here. We didn't learn a whole lot. It wasn't


particularly exciting. The markets looked at it and walked away. There


was nothing on finance there. I would like to see some radical


common-sense about your areas of funding, how we get more investment


coming in. The key thing with Brexit is to make sure we firstly protect


the crucible we have developed in the past few years in starting new


companies, which have we have been very effective at and secondly,


radical changes with regards to taxation and fundraising and being


able to have more investment funds. Not short-term funds, but longer


term ones. We have barely got one at the moment. We should go back to


regional investment. The northern powerhouse should really have a


northern investment mechanism to go with it. Let local people invest in


local businesses. Justin, thank you. Can a computer game persuade us


to buy more at the supermarket? We meet the firm that


says it can cut through the advertising clutter -


and it's got big business on board. You're with Business


Live from BBC News. On one hand you might think


the two are unrelated, but a new report says consumers


could put off making a big purchase, or buy a cheaper one,


given the uncertainty. Chris Bosworth is Directory


of Strategy for Close Brothers Motor Explain a bit more about why this


would happen. Why would people be put off by Brexit? It is about


certainty and uncertainty. That has been the theme of your programme


this morning. When people feel less certain, there is less consumer


confidence. It is quite a big investment, usually people's


second-biggest capital asset, their car. And they spend less when they


are not certain about the future of the economy. Brexit and the election


on the mind that certainty. What does that mean for retailers? We


have seen record car figures of late. What does it mean for those


retailers themselves? It depends where you fit in the ecosystem. The


Kadeena can turn it into a positive. They can sell more used cars or


different models to say to that new consumer appetite -- the car dealer


can turn it into a positive. For the car manufacturer it is more


difficult. At the moment, it is quite expensive for a customer who


is not sure about the future. Are you just projecting this is what


could happen? On the election it a bit too soon to tell but on Brexit


we saw capital investment into the motor industry ball last year to


1.66, so already the manufacturers are investing less in UK


manufacturing debility. That is pretty dramatic. Are people that


worried, do you think it will get worse in terms of investment? I am


not sure it can get much worse than the 2016 figure, I think that a


shock to the system. I think we saw the Nissan discussion with the


government, other companies with big facilities in the UK as well. Thank


you very much. Remember there is much more on that story and the


latest on events at Heathrow Airport as a result of the British Airways


disturbances on the website. Our top story, the no


frills airline Ryanair has reported its latest set


of financial results. Europe's biggest carrier


by passenger numbers announced a 6% jump in full year net


profit to $1.46 billion. Ryanair's performance is a sign


that its cost-cutting measures are helping the business compete


as overcapacity continues Full details of that on the website.


Turning our attention elsewhere now. Computer games are on our phone,


our laptops, and even finding their way


onto movie screens. They seem


to be almost everywhere. But one company is taking


things even further - to purchase goods by playing games


right in the shop or supermarket. Ksubaka is a Singapore based tech


startup which has established a network of gaming kiosks


in supermarket aisles across China, The aim is to tempt shoppers


with games featuring global brands like Coca-Cola,


Colgate and Heineken - The company says it now reaches more


than 15 million people per month. Joining us is Giles Corbett,


co-founder of Ksubaka. Good to see you, thank you for


coming in. Pleasure. You are based in Singapore but not from there. We


are based in London and Singapore, all of the engineering teams and the


guys who build the software to enable less are in London and the


business development today is predominantly out of Asia and


Singapore. We briefly ran through what it is, tell us how it works,


it's a kiosk which goes into a store and it is to try to tempt me to


maybe buy another can of Coca-Cola or tube of toothpaste by point


again? We are helping brands and retailers tell their stories to


shoppers in a way which engages them. And by do so when literally a


few feet away from the product, you are right, we do this on our fleet


of interactive advertising displays. We have some 8000 of them throughout


China in over 150 Chinese cities in a whole range of retailers. Shoppers


walk up to a kiosk, the display is incredibly attractive, this is using


the language of games to get people to go into it. As they touch the


screen they engage with what ever story the brand is keen to tell. On


average for over a minute time. You have brought one end so we can look


at it but it strikes me the last thing I would want to do going into


a supermarket is play a game, I want to be in there for the shortest


possible time. This one looks attractive, interesting graphics, I


would have a look but I would not start playing, I want to get in and


get out. And so many of us are in that situation but while you want to


go in and get out you are probably with a family member or friend who


is not in the same frame of mind of getting the milk and leaving. They


are looking for a distraction and those are the people who will engage


with it. It works in Asia, what makes you think it will work here,


will it be culturally different? Of course, and the content is adapted


to each market we are in. However the actual act of looking for a


playful distraction is universal. We have piloted this in Australia, we


get better results on some metrics. Take the Tube here in London and


observe how many people are playing games on the phone, people play


games the world over. I am looking at the consul now and it's going to


lots of different things, what there would me by, it's one thing to pass


time but how do you convert it into sales? Most advertising is putting a


message and a brand in the consumer 's mind and we are using the science


behind playful learning to facilitate and develop that. We are


taking any brand's story and decomposing it into one core message


and we will turn that message into a game, maybe a toothpaste you have a


special molecule which blocks micro-cavities, we will turn that


into a game, you can block the cavities and you have understood


this molecule will help. And does it work, does it make me buy more


toothpaste? It does! You have to say that! This is what retailers tell


us, this is all a big data plate and what we see through the analytics is


two things, we see how consumers preferences change over time and how


they change sustainably after using one of these experiences but we also


see the uplift themselves. You are going to know too much about me. We


are going to no amount the types of people in and an door. At times we


don't need to know your name or personal identifiers -- we are going


to know more about the type of people in a particular store. Thank


you for coming in, in a moment we will look at the business pages but


first a reminder in how to get in touch with us.


We want to hear from you, get involved on the BBC business live


web page. And on Twitter. And you can find us on Facebook. Business


live, on TV and online, whenever you need to know.


The BBC's Dominic O'Connell is with us.


We are going to talk through some of the papers stories. This is a


fascinating story, a big write-up in the FT, the debt pile up in the US


car market sparks sub-prime of the year. It has been talked about being


that, we associate it with housing loans which caused the 2008 crash,


the fear was that sub-prime had spread to car loans. People who


could not afford a car would take a cheap one. The big banks are pulling


right back on the car market. Wells Fargo said a third less auto loans


in the past quarter. The signs are all beer that the market has reached


the top, they have spotted it and are stopping but have they stopped


soon enough is the question? The car industry will suffer, car sales in


America are expected to slow down sharply because the lone figure is a


leading indicator of sales. Do we have an idea of how big it is? It's


a few trolley and rather than tens of trillions like the housing


market. They are not worried about consumer credit and people not being


able to afford loans it is because Ka values are falling, when you


repossess a car they sell it. Up until the last set of figures...


Done by some kind of consumer finance product which is the auto


loans we are talking about. What is driving that, the consumer saying


they need to update their card but cannot afford to take it on credit?


Cheap finance, and it is also used cars, about 40% of used car sales


done on finance. Interest rates, if they continue to go up, we think in


the next couple of months in the United States? Certainly everyone


thinks one is due. Another reason to steer clear of sub-prime. Brief word


on this story, check out free shopping, I like the idea of it but


it sounds... We read about this quite often, people scanning things


with their smartphones, Anna Zorn has just opened one -- Amazon has


opened one and it's based on tracking your movement around the


store, I am not sure how to reconcile it. I could buy a whole


lot of things I did not think I had. Or you could go into a normal shop


and what about all the stuff -- you could go into normal shop and what


out all the stuff without paying for it.


There will be more business news throughout the day on the BBC live


webpage and on World Business Report.


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