:00:06. > :00:16.through some challenging issues. Those are the latest headlines.
:00:16. > :00:26.
:00:26. > :00:30.Now it is World Business Report. Shake-up at International Airlines
:00:30. > :00:36.Group. It is the owner of British Airways and Iberia. It is expected
:00:36. > :00:43.to announce thousands of job cuts at the loss-making Spanish carrier.
:00:43. > :00:49.As China's Communist leaders meet to choose its next set of leaders,
:00:49. > :00:59.inflation figures have eased, giving an additional room.
:00:59. > :01:07.
:01:07. > :01:12.Joining the eurozone's bail out club.
:01:12. > :01:16.In a few hours' time, International Airlines Group, known as IAG, is
:01:16. > :01:21.expected to announce up to 7,000 job losses at the Spanish carrier
:01:21. > :01:25.Iberia. The group, which also owns British Airways, knees to shed
:01:26. > :01:32.hundreds of millions of dollars have costs at Iberia, to make it
:01:32. > :01:38.profitable. But on top of this, IAG is offering money for the full
:01:38. > :01:44.takeover of Spanish -- Spain's second largest carrier.
:01:44. > :01:54.The two companies that IAG Owens, British Airways and Iberia, are the
:01:54. > :01:54.
:01:55. > :02:01.odd couple. British Airways is profitable, Iberia is not. The pair
:02:02. > :02:08.combined are expected to NBC $130 million in the red, which is why
:02:09. > :02:13.IAG is determined to strip out Iberia's excess costs. Iberia faces
:02:13. > :02:18.a very difficult external trading environment, rising airport charges
:02:18. > :02:27.and a week's Spanish economy, but internally, it does not come into
:02:27. > :02:33.the modern age. It has a large number of routes. IAG started a
:02:33. > :02:40.budget carrier, Iberia Express, to take on Iberia's short routes, but
:02:40. > :02:44.pilots are having to take pay cuts. Now the dispute has gone to
:02:44. > :02:53.arbitration. While IAG battles with the problem of how to get Iberia
:02:53. > :03:02.Express off the ground, there is already an existing career in Spain
:03:02. > :03:09.which is both profitable and long run -- well run. IAG says it would
:03:09. > :03:16.like to acquire the whole career. $144 million have been bid for the
:03:16. > :03:20.remaining shares. Iberia express has got off to a promising start.
:03:20. > :03:25.But IAG has not been able to build it up as fast as it would like,
:03:25. > :03:35.because it has led into legal wrangles with the unions. The other
:03:35. > :03:38.carrier offers a way of stepping around that. IAG's vision is for
:03:38. > :03:44.Iberia to concentrate on higher- margin writs between Spain and
:03:44. > :03:50.Latin America. But current prospects are bleak. There is a
:03:50. > :03:53.slump in demand for air travel in Spain, a prolonged legal dispute
:03:53. > :04:02.with the pilots, and strikes summer Iberia staff that will soon be
:04:02. > :04:06.facing the sack. -- among. As the Communist Party meets to
:04:06. > :04:09.choose its leaders for the next decade, there is growing evidence
:04:10. > :04:16.in the turnaround in the economy after more than two years of
:04:16. > :04:26.flagging growth. Things seem to be getting better we
:04:26. > :04:27.
:04:27. > :04:35.had the inflation of up -- figure for October at a three-year low.
:04:35. > :04:41.That is right. In the month of September, we saw some signs of
:04:41. > :04:46.stabilising economic growth on the mainland. Fresh numbers revealed
:04:46. > :04:52.that the consumer if inflation Easter to its lowest level in three
:04:52. > :05:02.years in the month of October. -- East. It is policy makers some
:05:02. > :05:03.
:05:03. > :05:07.further scope. Apart from inflation, the numbers to watch are the
:05:07. > :05:13.industrial production and this access -- asset investments numbers,
:05:13. > :05:18.which are forecast to come in at 9.4% and 25% respectively bus stop
:05:18. > :05:22.they will be coming out any time now. If they do come out with these
:05:22. > :05:30.kind of numbers, it will point to a recovery from its low as period of
:05:30. > :05:34.growth since early 2009. -- from its lowest. Policy makers may have
:05:34. > :05:39.done enough to kick-start the economy. If that is the case, they
:05:39. > :05:42.did not expect any easing in monetary policy tool of the year's
:05:42. > :05:52.end, because it will be are necessary as the economy is
:05:52. > :05:59.
:05:59. > :06:03.There is still a bit? As we head into 2013, about the eurozone
:06:04. > :06:07.crisis, and the so-called US fiscal cliff.
:06:07. > :06:12.Good numbers from China is good news for the rest of us around the
:06:12. > :06:16.world. Let's talk about the eurozone, and in particular Spain.
:06:16. > :06:21.The club that had bailed out eurozone nations is about to get
:06:21. > :06:25.beat, that is because officials from the EU and the IMF are on the
:06:26. > :06:32.ground in Cyprus, for talks on a financial rescue deal for the
:06:32. > :06:35.island. They applied for a bail out in June, after its biggest lenders
:06:35. > :06:42.could not meet new capital requirements because of the huge
:06:42. > :06:52.losses they had. Cyprus has also been unable to borrow for
:06:52. > :06:52.
:06:52. > :07:01.international markets for more than a year. Before we talk about a bail
:07:01. > :07:08.out, talk to us about the Cypriot economy. In the last year, its head
:07:08. > :07:13.has been held above water by Russian money. But it is a mess.
:07:13. > :07:17.Increasing unemployment, the service sector is taking a
:07:17. > :07:27.battering, and Cypriot banks are highly approach -- exposed to greet
:07:27. > :07:29.
:07:29. > :07:33.sovereign debt. They first -- they need a capital injection. They
:07:33. > :07:39.cannot turn to the government because they had been on a spending
:07:39. > :07:45.path for too long. That is why they had turned into the EU. It is a
:07:45. > :07:52.similar story to the likes of Spain. The bank problem, that is the
:07:52. > :07:56.result wise bus -- Cyprus needs a bail out. Any bail out from the EU
:07:56. > :08:01.comes with very strict measures and conditions. If the government
:08:01. > :08:06.accepts the money, they have to follow those. But the Cypriot
:08:06. > :08:11.government and do not want to take on the terms. I guess the question
:08:11. > :08:18.is, I can beggars be choosers? have been dragging their feet since
:08:18. > :08:23.June. The main reason for that, the political reasons for avoiding a
:08:23. > :08:27.bail out are strong. They do not have a parliamentary majority.
:08:27. > :08:32.There are elections in February, the government is widely tipped to
:08:32. > :08:35.lose. The incentive to avoid a bail out and pass it on to the
:08:35. > :08:40.opposition are strong. But they could be forced to sign a now,
:08:40. > :08:46.because fiscal revenues are very low. If they cannot ride it out
:08:46. > :08:51.until February, they will be forced to. The people on the ground, we
:08:51. > :08:59.are seeing austerity measures, can we expect similar pictures that we
:08:59. > :09:03.have seen in Greece, industrial action, strikes? Definitely. In the
:09:03. > :09:08.short-term, the events that have happened in Greece will be merit in
:09:08. > :09:14.Cyprus. You have got strong unions, some of them up quite militant. In
:09:14. > :09:21.the medium to long-term, Cyprus is a bit different. It has come across
:09:21. > :09:31.natural gas deposits. We estimate it will be monetise between 2018,
:09:31. > :09:32.
:09:32. > :09:39.and 2019. That is the big advantage that Cyprus has over Greece. In the
:09:39. > :09:46.long-term, Cyprus has a natural gas bounty.