30/05/2017 BBC Business Live


30/05/2017

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The no frills airline Ryanair has reported its latest set

:00:13.:00:19.

The budget airline reports record annual profits,

:00:20.:00:29.

despite tough competition and worries over Brexit.

:00:30.:00:31.

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

:00:32.:00:35.

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

:00:36.:00:38.

And how to stand out in a crowded market?

:00:39.:00:43.

We meet the firm that's using computer games

:00:44.:00:45.

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

:00:46.:00:53.

Do you want more frills, not no frills?

:00:54.:00:57.

Let us know, use the hashtag BBC BizLive.

:00:58.:01:08.

The no frills airline Ryanair has reported its latest set

:01:09.:01:13.

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

:01:14.:01:22.

jump in full year net profit to $1.46 billion.

:01:23.:01:27.

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

:01:28.:01:31.

are helping the business compete as overcapacity continues

:01:32.:01:33.

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

:01:34.:01:44.

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

:01:45.:01:54.

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

:01:55.:01:57.

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

:01:58.:02:02.

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

:02:03.:02:06.

scenario would be that they remaining open skies, meaning there

:02:07.:02:10.

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

:02:11.:02:13.

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

:02:14.:02:19.

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

:02:20.:02:28.

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

:02:29.:02:31.

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

:02:32.:02:32.

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

:02:33.:02:37.

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

:02:38.:02:40.

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

:02:41.:02:42.

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

:02:43.:02:57.

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

:02:58.:03:04.

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

:03:05.:03:09.

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

:03:10.:03:12.

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

:03:13.:03:16.

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

:03:17.:03:21.

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

:03:22.:03:26.

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

:03:27.:03:35.

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

:03:36.:03:41.

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

:03:42.:03:44.

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

:03:45.:03:49.

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

:03:50.:03:53.

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

:03:54.:03:57.

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

:03:58.:04:00.

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

:04:01.:04:07.

have Ryanair coming in very aggressively. The legacy carriers

:04:08.:04:12.

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

:04:13.:04:14.

very appealing to have Ryanair aircraft coming into your airport.

:04:15.:04:20.

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

:04:21.:04:24.

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

:04:25.:04:27.

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

:04:28.:04:30.

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

:04:31.:04:34.

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

:04:35.:04:38.

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

:04:39.:04:42.

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

:04:43.:04:46.

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

:04:47.:04:50.

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

:04:51.:04:54.

a very competitive market and Ryanair has the cheap costs to

:04:55.:04:59.

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

:05:00.:05:03.

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

:05:04.:05:08.

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

:05:09.:05:12.

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

:05:13.:05:19.

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

:05:20.:05:22.

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

:05:23.:05:26.

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

:05:27.:05:29.

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

:05:30.:05:38.

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

:05:39.:05:48.

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

:05:49.:05:49.

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

:05:50.:05:52.

British Airways says it will operate a normal

:05:53.:05:57.

schedule today after this

:05:58.:05:58.

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

:05:59.:06:02.

Many passengers are still without their luggage.

:06:03.:06:05.

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

:06:06.:06:09.

Retail sales in Japan rose more than 3% in April

:06:10.:06:11.

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

:06:12.:06:18.

after government data showed the economy grew faster

:06:19.:06:22.

than forecast in the first three months of the year.

:06:23.:06:25.

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

:06:26.:06:29.

New analysis suggests Chinese-speaking criminals may have

:06:30.:06:31.

been behind the WannaCry ransomware that affected thousands

:06:32.:06:33.

Researchers say the language used in the ransom notice indicates

:06:34.:06:41.

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

:06:42.:06:51.

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

:06:52.:06:54.

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

:06:55.:07:01.

investigations in at least six countries.

:07:02.:07:05.

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

:07:06.:07:17.

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

:07:18.:07:21.

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

:07:22.:07:24.

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

:07:25.:07:32.

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

:07:33.:07:35.

attention when the Wall Street Journal reported four years ago that

:07:36.:07:40.

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

:07:41.:07:45.

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

:07:46.:07:49.

triggered investigations in at least half a dozen countries including

:07:50.:07:55.

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

:07:56.:08:00.

imposed financial penalties over $20 million and this morning announced

:08:01.:08:04.

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

:08:05.:08:08.

markets. The FTSE was closed yesterday

:08:09.:08:26.

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

:08:27.:08:37.

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

:08:38.:08:39.

the end of the long weekend. And Michelle Fleury has

:08:40.:08:42.

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

:08:43.:08:44.

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

:08:45.:08:49.

interest rates in June. US markets were closed on Monday

:08:50.:08:54.

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

:08:55.:08:56.

to put away the barbecue and get back to work,

:08:57.:09:02.

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

:09:03.:09:04.

department is expected to report that consumer spending increased

:09:05.:09:11.

0.4% in April. That's after being

:09:12.:09:14.

unchanged in March. The Federal Reserve's favourite

:09:15.:09:18.

measure of inflation, the core PCE price index,

:09:19.:09:25.

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

:09:26.:09:28.

will raise the prospect of a faster rate hike schedule,

:09:29.:09:31.

something that Wall Street Economists are currently

:09:32.:09:35.

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

:09:36.:09:40.

2% inflation target. Joining us is Justin

:09:41.:09:47.

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

:09:48.:09:50.

Management. Let's start with the markets. Those

:09:51.:10:04.

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

:10:05.:10:10.

Greece again and Italy with a potential election there. Piling

:10:11.:10:14.

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

:10:15.:10:19.

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

:10:20.:10:22.

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

:10:23.:10:27.

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

:10:28.:10:30.

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

:10:31.:10:36.

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

:10:37.:10:39.

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

:10:40.:10:42.

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

:10:43.:10:48.

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

:10:49.:10:55.

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

:10:56.:10:57.

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

:10:58.:11:00.

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

:11:01.:11:04.

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

:11:05.:11:09.

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

:11:10.:11:13.

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

:11:14.:11:20.

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

:11:21.:11:24.

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

:11:25.:11:27.

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

:11:28.:11:31.

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

:11:32.:11:35.

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

:11:36.:11:44.

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

:11:45.:11:48.

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

:11:49.:11:51.

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

:11:52.:11:57.

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

:11:58.:11:59.

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

:12:00.:12:04.

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

:12:05.:12:08.

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

:12:09.:12:13.

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

:12:14.:12:17.

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

:12:18.:12:20.

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

:12:21.:12:24.

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

:12:25.:12:27.

radical changes with regards to taxation and fundraising and being

:12:28.:12:31.

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

:12:32.:12:40.

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

:12:41.:12:51.

regional investment. The northern powerhouse should really have a

:12:52.:12:55.

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

:12:56.:12:57.

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

:12:58.:13:03.

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

:13:04.:13:07.

says it can cut through the advertising clutter -

:13:08.:13:09.

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

:13:10.:13:11.

Live from BBC News. On one hand you might think

:13:12.:13:23.

the two are unrelated, but a new report says consumers

:13:24.:13:31.

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

:13:32.:13:36.

given the uncertainty. Chris Bosworth is Directory

:13:37.:13:38.

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

:13:39.:13:51.

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

:13:52.:13:58.

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

:13:59.:14:03.

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

:14:04.:14:07.

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

:14:08.:14:11.

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

:14:12.:14:15.

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

:14:16.:14:19.

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

:14:20.:14:23.

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

:14:24.:14:31.

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

:14:32.:14:38.

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

:14:39.:14:43.

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

:14:44.:14:48.

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

:14:49.:14:51.

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

:14:52.:14:53.

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

:14:54.:15:04.

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

:15:05.:15:09.

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

:15:10.:15:16.

1.66, so already the manufacturers are investing less in UK

:15:17.:15:20.

manufacturing debility. That is pretty dramatic. Are people that

:15:21.:15:25.

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

:15:26.:15:31.

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

:15:32.:15:37.

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

:15:38.:15:44.

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

:15:45.:15:52.

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

:15:53.:15:56.

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

:15:57.:15:58.

disturbances on the website. Our top story, the no

:15:59.:16:04.

frills airline Ryanair has reported its latest set

:16:05.:16:08.

of financial results. Europe's biggest carrier

:16:09.:16:10.

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

:16:11.:16:14.

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

:16:15.:16:18.

that its cost-cutting measures are helping the business compete

:16:19.:16:21.

as overcapacity continues Full details of that on the website.

:16:22.:16:23.

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

:16:24.:16:37.

our laptops, and even finding their way

:16:38.:16:40.

onto movie screens. They seem

:16:41.:16:41.

to be almost everywhere. But one company is taking

:16:42.:16:43.

things even further - to purchase goods by playing games

:16:44.:16:45.

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

:16:46.:16:49.

startup which has established a network of gaming kiosks

:16:50.:16:52.

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

:16:53.:17:01.

with games featuring global brands like Coca-Cola,

:17:02.:17:05.

Colgate and Heineken - The company says it now reaches more

:17:06.:17:07.

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

:17:08.:17:18.

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

:17:19.:17:28.

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

:17:29.:17:34.

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

:17:35.:17:37.

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

:17:38.:17:42.

business development today is predominantly out of Asia and

:17:43.:17:46.

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

:17:47.:17:51.

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

:17:52.:17:55.

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

:17:56.:18:00.

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

:18:01.:18:05.

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

:18:06.:18:10.

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

:18:11.:18:16.

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

:18:17.:18:22.

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

:18:23.:18:30.

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

:18:31.:18:33.

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

:18:34.:18:39.

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

:18:40.:18:45.

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

:18:46.:18:49.

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

:18:50.:18:53.

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

:18:54.:18:59.

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

:19:00.:19:02.

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

:19:03.:19:08.

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

:19:09.:19:15.

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

:19:16.:19:19.

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

:19:20.:19:21.

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

:19:22.:19:25.

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

:19:26.:19:31.

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

:19:32.:19:35.

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

:19:36.:19:40.

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

:19:41.:19:45.

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

:19:46.:19:51.

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

:19:52.:19:56.

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

:19:57.:20:00.

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

:20:01.:20:08.

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

:20:09.:20:12.

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

:20:13.:20:17.

behind playful learning to facilitate and develop that. We are

:20:18.:20:21.

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

:20:22.:20:26.

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

:20:27.:20:31.

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

:20:32.:20:35.

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

:20:36.:20:39.

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

:20:40.:20:46.

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

:20:47.:20:51.

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

:20:52.:20:55.

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

:20:56.:21:02.

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

:21:03.:21:10.

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

:21:11.:21:15.

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

:21:16.:21:22.

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

:21:23.:21:25.

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

:21:26.:21:32.

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

:21:33.:21:36.

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

:21:37.:21:48.

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

:21:49.:21:59.

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

:22:00.:22:06.

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

:22:07.:22:09.

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

:22:10.:22:13.

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

:22:14.:22:22.

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

:22:23.:22:28.

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

:22:29.:22:33.

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

:22:34.:22:40.

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

:22:41.:22:44.

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

:22:45.:22:51.

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

:22:52.:22:57.

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

:22:58.:23:01.

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

:23:02.:23:05.

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

:23:06.:23:12.

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

:23:13.:23:17.

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

:23:18.:23:23.

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

:23:24.:23:28.

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

:23:29.:23:32.

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

:23:33.:23:34.

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

:23:35.:23:54.

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

:23:55.:24:00.

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

:24:01.:24:03.

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

:24:04.:24:10.

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

:24:11.:24:16.

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

:24:17.:24:21.

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

:24:22.:24:29.

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

:24:30.:24:36.

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

:24:37.:24:41.

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

:24:42.:24:44.

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

:24:45.:24:55.

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

:24:56.:24:58.

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

:24:59.:25:05.

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

:25:06.:25:12.

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

:25:13.:25:15.

out all the stuff without paying for it.

:25:16.:25:20.

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

:25:21.:25:27.

webpage and on World Business Report.

:25:28.:25:30.

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