23/02/2018 BBC Business Live

Profits surge for the owner of

British airwaves. That is the top

story.

-- British Airways.

IAG profits are up by nearly

a fifth, but investors

were expecting more,

shares have started

in the red in early trade.

Also in the programme:

the parent company behind Snapchat

saw over a billion dollars wiped

off its market value

when Kylie Jenner tweeted

that she was "soo over" the app.

Can it recover?

We'll get an expert view.

Mixed bag as markets open.

Following a busy week

for the banks and mining giants,

we'll be delving into the numbers

with our economics

guru Andrew Walker.

Following the news about Snapchat

and Kylie Jenner, we want to know

whether you are influenced by the

influencers? Get in touch using the

hashtag BBCBizLive.

International Airlines Group,

which owns British Airways, Iberia,

Vueling and Aer Lingus,

has posted a 19% rise

in annual profit.

The firm's been benifiting

from a shake-up amongst European

carriers and rising fares.

Its boss has been upbeat

in what's been a turbulent

period for airlines.

Last year, Monarch became the third

European carrier to collapse,

following Air Berlin

and Alitalia's bankruptcy.

It's one of the factors helping IAG,

along with improving fares

after a spell which saw low fuel

prices force airlines to flood

the market with cheaper tickets.

Peter Morris is chief economist at

flight global and joins us now. What

is it that IAG is doing so right

right now?

Three elements, overall

regulatory framework which is

common, economic geography coverage

of the region they are in and a

flexibility of business model and

what IAG is doing very well at at

the moment is that ability of

business model across the whole

spectrum of markets.

Do you mean

from cheap right up to the luxury

end of the market?

Leisure to

business end of the market and also

reflecting the demand in north-west

Europe and south-west Europe as

well.

There are some gaps in that,

they have some gaps they could fill

in terms of the market?

Looking at

Central Europe and Eastern Europe,

the coverage connecting through

London and Madrid is quite weak. So

I think that is something that was

indicated about their interests, for

instance in Nicky, to fill the gaps.

When we talk about IAG we often

think about British Airways because

it is the big lump within this body

of companies but obviously, their

main hub remains Heathrow,

discussion about a third runway, how

important or otherwise is that for

British Airways in terms of looking

to the future.

They win either way,

if there is constrained song

capacity at Heathrow, as the major

player, they will be the ones who

will benefit from it. If something

is built, they do not want it to be

priced at a level that will make

them non-competitive.

They have

benefited from the lull oil-price,

with that price expected to rise

over the next year, do you think it

really will hit the bottom line?

I

think they have benefited by having

Euro accounts in so far as the euro

against the dollar has appreciated,

fuel has not gone up as much as

expected. The question is, what fuel

is going to do, and on the other

hand, you want to be better than the

other guy, you are running away from

the gorilla, you want to make sure

you are in front of The Other Guys!

So it is competitive against the

other players in the market.

1.3 billion dollars has been knocked

off Snap's stock market value

after reality TV star Kylie Jenner

tweeted that she no longer

used its messaging app.

Kim Kardashian's half-sister posted:

"does anyone else not

open Snapchat anymore?

Or is it just me...".

Royal Bank of Scotland is back in

the black for the first time in a

decade, the bank, still

majority-owned by the UK taxpayer,

made an annual profit of just over

$1 billion, compared with the $9.7

billion loss the year before.

The troubled Japanese firm Takata

has reached a settlement

with 44 states in the US

over claims it concealed dangerous

defects in its exploding airbags.

Takata's airbags have been linked

to more than a dozen deaths and over

100 injuries worldwide.

Chinese regulators say they're

taking over Anbang Insurance for a

year - and that its former chairman

will face prosecution. Chinese

regulators say they're taking over

Anbang Insurance for a year - and

that its former chairman will face

prosecution. -- 300 billion. The

BBC's Tim McDonald has been

following the story from Singapore.

This is a bit unusual, the company

is in the hands of the Chinese

regulators who have taken it over

and will hold onto it for a year,

and there are former chairman has

been charged with what is described

as economic crimes. The overseas

spending sprees are something that

the Chinese regulators are concerned

about, they say that foreign

purchases, first violate insurance

regulation and secondly severely

impair the ability of Anbang

Insurance to pay back debts, they

have a whopping 316 billion of

assets, in addition to trophy

assets, such as overseas insurers,

hotels, retirement homes... It made

a bid on star would, the hotel

chain, and the Chinese Gottman is

worried about the amount of money

heading offshore. -- the Chinese

government. -- Starwood. And worries

about servicing the debt on the

assets. Authorities cracking down.

Other big names are subject to this,

they have come in for closer

scrutiny, we are likely to see quite

a bit more of this going forward.

Looking at the markets, fluctuating

widely, as investors have fretted

about how fast the Federal Reserve,

the US central bank, might raise

rates in the wake of data showing a

pick-up in the US economy. So shares

have rebounded somewhat as comments

from a Fed official seem to indicate

a bit of a slower approach.

Investors dipping their toes back

into riskier assets. That has

spilled over into Europe as well.

With the Dax in frankfurt higher But

the FTSe 100 has slipped. Shares in

RBS have been down around 4%,

despite the bank announcing the

first set of profits in a decade.

And Yogita Limaye has the details

about what's ahead on Wall Street

Today.

More than ever, stock markets here

are on fed watch, each signal from

the famed At The Races central bank

about monetary policy development

seems to be setting the course of

the market.

At least

until the next signal appears, so

Friday could be another busy day.

The Fed will release its semiannual

report on monetary policy. -- each

signal from the Fed. If the report

contains a definitive answer to

questions it will be something of a

first, but it will not stop

investors from poring over every

last clue they can find. Then, at a

conference in New York, senior

policymakers from the Fed including

the New York Fred president, William

Dudley, will speak about how the Fed

is forming its response to the

challenges of inflation and new

government spending.

Joining us is

Richard Hunter, Head of Markets at

Interactive Investor. Good to see

you here, I want to start on

Snapchat, cold snap for Snapchat,

big hits to the share price, pinning

it on Kylie Jenne, lots of other

possible reasons, the redesign has

gone down terribly, CEO is earning

more money than almost any other CEO

ever, there are quite a few reasons

to vote against it.

And what we will

see, going forward, it's a lot more

focus on the big technology

companies because whilst there is an

element of companies trying to get

income from other sources, who knows

whether Facebook will still be as

popular as it is now in ten years'

time. Already rumours that

potentially, it is going towards an

older audience rather than a young

audience. When you get fads and

fashions like that, certainly, the

share price reaction has probably

given Kylie Jenne more credence than

perhaps that particular message...

The day-to-day show that it was when

her tweet came out that the stock

really did start to plummet. -- the

data does show. It seems investors

are using algorithms much more, they

picked up on tweets.

Yes, and the

trend is changing, if that is the

thin end of the wedge, that

particular message, then you can

understand why there is a lot of

caution and worry in terms of stock

prices.

Talking about the markets

here, it has been driven by Kylie

Jenne, possibly, influencer, yes,

but you might think, OK, influence

over social behaviour, but this is

over the hard nuts and bolts of

business.

Yes it is, and that is

going to continue, as I say, the

interesting thing around social

media in general, trends and

fashions.

As we have seen with

President Trump.

Another one, he

moves markets on a daily basis, some

of his tweets have been retracted

but for the most part, clearly

shooting from the hip and the market

tends to react as well.

Kylie Jenne

and Donald Trump in the same

sentence!

Still to come.

Following a busy week

for the banks and mining giants,

we'll be delving into

the numbers with our economics

guru Andrew Walker.

You're with Business

Live from BBC News.

Banking giant RBS reports first

full-year profit in 10 years,

since being bailed out by taxpayers

during financial crisis.

Last year, it made an annual

profit of £752 million,

compared with a £6.95 billion loss

the year before.

Our economics editor

Kamal Ahmed has been speaking

to the chief executive of RBS,

Ross McEwan.

First off, ten years of losses, this

is symbolic, not just for colleagues

at work but also for the UK, who put

a lot of money into the bank. We

have been restructuring, taking

losses, finding a prophet like this,

it shows how good this bank can be.

Not through all of the issues, we

still have one very large one, but

the fundamental value of the

business is starting to show through

great brands, this year, the income

was up, costs were down, the capital

position, important for the

stability of the bank, has been up

as well, pretty good set of results,

lots of work to do.

Is it

sustainable, we still see you have

big fines ahead, had eagerly from

America, because you of your

involvement in the sub-prime

mortgage crisis. Is this a one off?

I think the underlying profitability

of the business was really good,

adjusted operating profit was up

31%, it is over 4 billion now, that

shows the underlying value of the

business. One very large issue to

deal with, mortgage-backed

securities in the US for the

department of justice, no news on

that, we would like to have tidied

that up in 2017 but that is not the

case. It just shows that this bank,

having been brought back to the UK

and the Republic of Ireland, that

strategy is starting to work.

Do you

think the culture of banks has

changed, we have had an incredibly

critical report of you and how you

have dealt with your business

customers, the DRG unit, as it was

called, showing how you were still

putting bankers first, your

interests first, above your

customers. Can the public really

trust that the culture in RBS has

actually changed? -- the GRG unit.

That report was hard reading for us,

it did bring out the worst of the

organisation between that time, and

I believe that this organisation is

changing dramatically, focusing

heavily on customers, for example,

in the personal business banking,

there are no bonus is paid for any

sales whatsoever, no bonuses, it is

focus on customer, do the thing. --

do the right thing.

You're watching Business Live.

Our top story:

International Airlines Group,

which owns British Airways, Iberia,

Vueling and Aer Lingus,

has posted a 19% rise

in annual profit.

The firm's been benifiting

from a shake-up amongst European

carriers and rising fares.

It's been a busy week

for corporate earnings.

Some of the world's biggest

companies reported an interesting

set of results including Barclays

and the mining giant Glencore.

Let's get more on this

with our economics

correspondent Andrew Walker.

Starting with Barclays Bank, because

it has been, really, there has been

a backlash after profits were hit

with a string of charges.

Indeed,

they made an operating profit but

they had a number of special things

they needed to make provisions for

in their accounts. There was this

familiar thing that we have with the

banks of conduct problems from the

past, particularly associated in the

case of Barclays Bank with payment

protection insurance. That accounted

for more than half of a £1.2 billion

amount they have to set aside in

their accounts. You also have to

think about the investigation into

the capital raising exercise they

have with Qatar.

Some of the senior chief executives

have been charged with various

offences associated with that. There

has been a big provision Barclays

had to make for getting out of their

Africa operation. Other British

banks have got their own issues with

conduct, RBS has made a full year

profit, sighs of relief all round

for that I suppose, but they still

have to worry about what will happen

to them in the United States in

relation to the investigation into

the selling of mortgage-backed

securities, then there is the stuff

we have been talking about on the

BBC Biz Live twig about the way they

have treated some of their small

business customers.

A varied picture

from the banks. As for the miners of

the world, more promising for them?

A more consistent picture, not to

say there are not some issues there.

We have had metal prices rising

dramatically over the last two years

and, surprise surprise, so have

profits of mining companies and

their share prices, just to take

some striking examples in the case

of Anglo-American the share price

has increased sixfold over that last

period, Glencore is up by something

like four fold from early 2016, so

inevitably they have been making

profit as prices have risen but also

doing a lot by way of selling off

assets that have not been performing

so well, and this improvement in

their performance has enabled them

to pay down their debt al-ite. One

incidental point that came up from

Glencore's chief executive was

talking about kobold in particular,

not something we talk about very

often but it is important for car

batteries and he sees this as very

much something that is going to be

in heavy demand in coming years as

electric cars become a much bigger

part of the transport world, and

there is cobalt out there but one of

the challenging aspect of it is that

a lot of it is in the Democratic

Republic of Congo, not an easy place

for miners to work.

Briefly, BHP

Billington's share price fell after

is results were out, prices seem to

be rising across the industry?

There

are some issues with cost, BHP

Billington has particular concern

about its US shale operations with

it wants to sell so that has been a

disappointment for investors,

absolutely.

Another crypto currency

on the horizon, am I overstating it?

On the horizon is the right way of

putting it. Venezuela has been

conducting what it calls a presale

of a new currency to be called the

Petro, which it says is backed by

its oil reserves. There is a lot of

scepticism out there amongst

professionals, some people are very

sceptical about the figure of $700

million, they say they have raised

by this, there is also the US

sanctions issue. One of the appeals

for the Venezuelan is that it might

be a way of getting around

sanctions, and the US Treasury has

warned US nationals getting involved

might be exposing themselves to risk

because they say it appears to be an

extension of credit to the

Venezuelan Government and Americans

are not supposed to do that.

A very

quick example, the sense of the

scale of the economic crisis for

Venezuelan now...

It is

extraordinary, an IMF official

talking a few weeks ago that by the

end of this year we could be looking

at a contraction in the Venezuelan

economy of 50% over the course of

the last six years or thereabouts,

and inflation could be heating a

level of 13,000%.

Which is why a

crypto currency, many people say it

is a great idea in such an economy?

It is one of the appeals but I don't

think it.

The problems. It is linked

to the natural resources and oil so

that is a problem?

It is one of the

potential appeals but at the same

time, how would you feel about your

prospects of cashing in your bowels

of Venezuelan oil if it really came

to it if you needed to? Not an easy

thing to do, lots of international

companies have founded a hard place

to work.

Andrew, thank you very much

indeed.

Airbnb is moving to target wealthy

travellers these days as it goes

after the luxury end of the market.

The accommodation site says it will

offer a dedicated section for

boutique hotels, bed and breakfasts,

and unusual locations like tree

houses and boats.

Do you think the philosophy of the

company has changed from Budget

travellers to people who are much

more affluent?

I think it was wrong

to pigeonhole us as just Budget. We

have a strong value proposition and

low price points but it was never

our mission that that was all ever

going to have.

We actually have, for a long time, a

set of contractors the photography

per Airbnb, so you claim as

photographers and to do home

inspections, questions like is the

kitchen fully equipped, the comfort

of the bed, the speed of the Wi-Fi,

so they work down all these things

so that you, as a guest, have

certainty.

True, a lot of homes have been

removed, most of bones were not

active on the site, though, so when

you look at the number of guest in

San Francisco that has not been a

dramatic change. But, in general,

there is progress going forward, we

had 300 agreements with different

Government and we believe those,

regardless of some of the nuanced

compromises, have opened the door to

long-term growth.

Airbnb is making the business pages.

We have been looking through them

today, Richard has come back to

discuss this, thank you very much.

What do you make about this gear

change, Airbnb Delhi after the

wealthy customer?

It is interesting,

like it is reinventing its business

model. You would have to question

which hotels would be comfortable

letting Airbnb in, and just where

Airbnb can now progress from here

because it is an absolute

StepChange, an interesting one as

well.

An interesting remark, their

fear was that the top and were not

interested in Airbnb at all yet, if

I am honest, the rare occasions I

have used Airbnb, I have looked at

matching the amount I paid for the

hotel with something that is really

rather nice in Airbnb...

You want something quirky as well,

something more personal?

There was a perception in the early

days that this was almost for the

backpackers, the really cheap end of

the market.

Because it started with

air beds, I interviewed the

co-founder, he said he pumped up an

air bed and put it in the spare room

and thought, I can make a business

out of it!

So apart from the Hotel

business they are obviously looking

to raise perception of themselves as

a brand as well.

I would say they

have a good chance we have been

acting about celebrities and

inferences after seeing what Kylie

Jenneker do to Snap's share price.

Are you influenced by these mega-

influences? We have got some tweets

for you. I will start with the Baron

says, if, by celebrity, this is an

age thing I suspect, if by celebrity

you mean Stephen Hawking or

Professor Brian Cox for example,

then fine, yes but if you need a no

mock reality star, then no.

Tim says, don't care.

Yoda says, who?! You have got a

couple?

One says, who is she,

seriously? That might be another age

thing!

But Ian says, Snap is no

different from MySpace, once the

initial hype dies, there was no new

material. The next Apple not provide

paid promoters like the next Jenner

clone. Is this a problem with social

media sites and crazy is that the

younger generation will just go onto

the next big thing?

Absolutely, and

there are two aspect, whether the

site will fall out of fashion in due

course, let alone the individuals

who are currently perhaps carrying a

bit more weight than perhaps they

need to be or should be.

I want to

move on to this story about taxes

for tech companies which could

include Snap of course, this has

gone from the US Treasury, planning

to possibly target companies like

Facebook, taxing revenue not

profits, which is pretty

significant?

Yes, it could be. These

companies on doing anything wrong,

the stories come up every month or

so, there is nothing wrong with tax

avoidance, evasion is another thing,

but they are simply playing the

current rules. The problem we've got

is that the tax rules need changing

and the even bigger problem is when

you are talking across

multi-jurisdictional, getting each

country to synergise those tax

regimes is the real challenge, and

until that happens there will always

be ways to avoid the tax in any

given country.

As you say, just a proposal at this

time. Thank you very much, Richard.

And thank you for joining us here on

Business Live today.

There will of course be much more

business news throughout the day on

the web page. Goodbye for now.