13/11/2013 World Business Report


13/11/2013

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criticism that aid is not getting to victims. Much more on the BBC

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website. Those are the latest headlines from BBC World News. Now

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for the latest financial news with Sally and World Business Report.

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Struggling Italian airline Alitalia poised to announce massive job cuts

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in a bid to trim costs and make the flag carrier more profitable.

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Starbucks is forced to cough up nearly $3 billion to settle a

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dispute with Kraft over the distribution of its bags of coffee.

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Welcome to World Business Report. I'm Sally Bundock. Also in the

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programme, we discuss the performance of China's largest

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internet company, Tencent. First, troubled Italian airline Alitalia

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has called a board meeting to discuss a revised industrial plan

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that could include heavy job losses. Recently, the loss`making carrier

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avoided bankruptcy after its shareholders agreed to raise fresh

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funds. But in exchange for its support, the government has demanded

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a radical new business plan. Alitalia has rarely made a profit in

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its 67 year history. The airline needs another significant cash

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injection from its shareholders to keep flying. So, the board agreed to

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a 500 million euro rescue package, in which shareholders will

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contribute 300 million euros, but the government said there would be a

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major overhaul of the business. It's estimated several thousand jobs

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could be cut as a result of this revised plan, but any proposal would

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need approval from trade unions. Shareholders now have until midnight

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on Thursday to decide whether to participate in Alitalia's cash call,

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with all eyes on top shareholder Air France`KLM, which has yet to decide

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whether to participate. Norman Gage from New Generation Consultancy

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joins me now. Give us your take on this new,

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revised plan for Alitalia. For years I have been talking about a radical

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overhaul of this company, that never seems to be getting back on its

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financial feet. I think you are quite right. We went through this

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about five years ago, when there was a major cash call, it eventually got

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stamped out by the government of the day. That's not always easy in this

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day and age, with regulations. It does seem to be a Cinderella

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airline. Stuck in Italy, where the major northern European airlines

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managed to work themselves a good local market and a good

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interconnecting market through their local hubs. Is there a reason to

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keep Alitalia going? The company that's not really been making

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profits for long time. Is it about national pride? Does it serve as

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areas of Italy that no other airline service? It as you said. It's about

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national pride. All airports in Italy could be easily serviced by

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other airlines. Quite a lot of it is already done by other airlines. It

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does come down to national pride. Every country gains its independence

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or national flag and one of their first things are to invent their own

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airline. Unemployment is very high in Italy. The economy is having a

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tough time. You believe there are unions involved. Yes. It is a

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difficult process, isn't it? It's a big decision for the government to

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take. It's a country that is struggling to get itself on its

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feet. They don't want to suddenly have a 14,000 workforce join in the

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dole queues. The airline can make a profit. The plane you talked about

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has been worked on now for a couple of months. This isn't just something

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they are presenting tomorrow as a rescue plan. Have been working hard

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behind the scenes to try to a plan that will position it for the

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future. All right. We will keep and I on it. Thank you. Norman Gage

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from New Generation Consultancy. We will keep you up`to`date on the news

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for Alitalia. It's a very critical few days. Other business stories,

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American coffee giant Starbucks has just been hit with a damages bill

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worth nearly $3 billion. The company is being forced to compensate Kraft

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Foods to settle a rift over a deal to distribute its coffee in grocery

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stores. Kraft blames Starbucks for ending the distribution agreement

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three years too early. The charge is equal to Starbucks entire net income

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since the start of 2012. Intercontinental Exchange Inc, or

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ICE, has completed its takeover of NYSE Euronext, and shares in the

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combined company will begin trading today. The group now has control of

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the New York Stock Exchange and Europe's second biggest derivatives

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market, Liffe, after striking a $10 billion deal last December. It's

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expected that ICE will announce over the next few days which parts of the

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NYSE it plans to keep, and which parts it will divest.

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First and foremost it's a humanitarian disaster. Let's turn

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out attention to the Philippines. But Typhoon Haiyan which has ravaged

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parts of the country will have huge economic consequences, so it's

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important to evaluate the long`term damage the disaster will do to the

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country's economy, in order to properly co`ordinate the aid effort

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now. People have lost their livelihoods and the effects of that

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will be felt for years to come. According to disaster modelling firm

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Kinetic, the total economic impact of the Typhoon could reach as high

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as $14 billion. But only a tiny fraction of this is expected to be

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insured. Joining me is Charles Watson, director of research and

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development at Kinetic Analysis. Thanks for being on the programme.

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That figure is a big number and they always come out when these events

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take base. How do you measure the economic impact of a disaster of

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this magnitude? It's quite difficult and it involves computer modelling.

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Because we don't have good estimates from the area, in terms of damage

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surveys, there would be done for days. Humanitarian aid needs to get

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in. That first 72 hours, 3`5 days after, it is so critical to get

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particularly clean water and fresh food into the area. That's where the

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focus should be. But the economics matters and it matters quite a bit,

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Vidic Italy as we start to get into the weeks and months after the

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event. `` particularly as wheat. We use computer models and we have a

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world wide database of where all the infrastructure and population is

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around the world and we run computer models of typhoons, earthquakes,

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whatever disaster is in a particular area, to calculate the effects on

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structures and people. That's what's used as the basis for the estimates.

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Our correspondence in the worst hit areas are telling us that in many

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places very little aid is even writing yet, although we hear that

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some water systems are getting through to Tacloban, for example.

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But the co`ordination of all of this, obviously there are many

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non`government organisations involved, big organisations like the

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United Nations getting involved as well, is there a co`ordination of it

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all to make sure that what happens now benefits them in the weeks and

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months to come as well? That there is a long`term view on aid and

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relief? Unfortunately, most of the disasters that we have worked on

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show there isn't a long`term view. What happens is there is a rush of

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eight and it isn't well co`ordinated. `` aid. In the US, we

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have a national agency but we have these non`government organisations,

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which are often better at getting aid into areas faster than

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government and military organisations. But in the long`term,

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the aid tends to focus on the big projects, the big infrastructure.

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Rebuilding roads and hospitals and things like that, just cause are

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important. But in terms of getting aid to individuals, a lot of times

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it's a `` there is a bad gap in the system, Gillooly for people who are

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perhaps at the lower end of the economic spectrum, say farmers. ``

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particularly for people. They tend not to get aid at all in these kinds

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of events. We appreciate your perspective on the situation.

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Internet companies in China have been in the spotlight recently ahead

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of Ali Barber's upcoming flotation. Tencent is China's Egypt online

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firm. It has a market cap of $100 billion. Later today, it is tipped

:09:36.:09:45.

to have profit expectations. It is behind WeChat and is trying to

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expand into international market, I getting consumers to play on their

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mobile phones. Juliana Liu is in Hong Kong with more details. Some

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believe it could overtake Facebook? That's right. Some are saying that.

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Tencent is not very well`known outside China but here it is

:10:08.:10:12.

household name. It burst onto the scene about ten years ago with a

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popular instant messaging system, which replaced e`mail for many

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people. Now it is much better known for another app. At the end of

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August, it was estimated to have over 200 million users. That is of

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course more than the population of many countries. Of course that a

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free app but the company is now leveraging it to make money. It

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introducing a number of popular online games, through this out, and

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the way it makes money is by charging users to send gifts or

:10:49.:10:52.

other virtual items, as people generally don't like to pay for the

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software it sell. We will get a sense later today of exactly how

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well that service is doing. And of course it's on international

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campaigns. It has paid $200 million to the FC Barcelona player Lionel

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Messi to make its name outside of China. We will keep an eye on it.

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Thank you. That's World Business Report. See you for the papers soon.

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Urgent and emergency care must be transformed in England, it is to

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become sustainable, according to an NHS review. There will be a

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fundamental shift to many services outside of hospitals and outside the

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home. The AMD Department at this hospital

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is one of the busiest in the country. `` A Many patients are

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old and frail. Now, and it is England has acknowledged the

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departments are under enormous stress. They were set up in his

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current configuration

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