:00:00. > :00:00.Those are the latest headlines from BBC World News. Now for the latest
:00:00. > :00:19.financial news with Alice Baxter and World Business Report. Malaysia
:00:20. > :00:25.Airlines set to announce a major shake`up as it struggles for
:00:26. > :00:33.survival. As many as 6000 jobs could go. Plus ` QE or not QE? The spectre
:00:34. > :00:36.of deflation stalks the Eurozone ` will it mean more stimulus measures
:00:37. > :00:46.from the European Central Bank? Welcome to World Business Report.
:00:47. > :00:49.I'm Alice Baxter. In a moment, a raft of disappointing data from
:00:50. > :00:56.Japan casts doubt on the country's economic recovery. But first: We are
:00:57. > :00:58.awaiting news this Friday of a major shake`up at Malaysia Airlines. The
:00:59. > :01:01.carrier has been struggling financially for some time amid
:01:02. > :01:04.fierce competition. But this year of course it has been hit by twin
:01:05. > :01:07.disasters ` the disappearance of flight MH370 over the Indian Ocean,
:01:08. > :01:10.and the shooting down of flight MH17 over Ukraine. Losses are mounting,
:01:11. > :01:13.and the company has warned of more to come. Since the second tragedy
:01:14. > :01:16.bookings have plunged by a third, pushing the company to the brink of
:01:17. > :01:19.collapse. So what are we expecting it to do? Malaysia Airlines employs
:01:20. > :01:32.almost 20,000 staff. At least a quarter of those, as many as 6000,
:01:33. > :01:33.could lose their jobs. Some international routes could be
:01:34. > :01:49.abandoned, and new management brought in. Ashleigh Nghiem reports
:01:50. > :01:52.from Singapore. Prayers for the victims of the two extraordinary
:01:53. > :01:57.aviation disasters that happened to one airline. Like his company,
:01:58. > :02:03.Malaysia Airlines Chief Executive Ahmad Jauhari Yahya is under
:02:04. > :02:14.enormous pressure. The losses announced this week underline the
:02:15. > :02:17.challenge the airline must meet. Mr Yahya says after MH370 disappeared,
:02:18. > :02:20.the airline tried to rebuild but tragically, just as we were
:02:21. > :02:23.beginning to see signs of recovery in all regions, we were dealt a blow
:02:24. > :02:32.with MH17. The full financial impact of the tragedies will be seen in the
:02:33. > :02:36.next set of results. They will need some fresh energy to come in and to
:02:37. > :02:39.make some very tough decisions that will probably be unpopular at a
:02:40. > :02:42.political level but they are things they will need to do in order for
:02:43. > :02:45.the airline to survive. That serious work is now the task of the state
:02:46. > :02:48.investment fund, Khazanah, which plans to take ownership of the
:02:49. > :02:53.company and implement a radical restructure. For staff, it is an
:02:54. > :03:04.anxious wait. TRANSLATION: I am anxious but I hope for success. The
:03:05. > :03:08.other carrier has lost two passenger planes in the space of less than six
:03:09. > :03:13.months. For the airline, fixing the finances is just beginning. The
:03:14. > :03:18.restructure will only go some way towards gaining the confidence of
:03:19. > :03:23.passengers. Now the queues at this check`in counter aren't exactly
:03:24. > :03:28.long. And some planes are flying with rows of empty seats. But the
:03:29. > :03:31.passengers aren't the only ones who are spooked. Nearly 200 cabin crew
:03:32. > :03:35.have resigned in the past six months, much more than normal
:03:36. > :03:39.turnover. So the real challenge for Malaysia Airlines and its owners
:03:40. > :03:42.will be to get people flying again. From Malaysia to Europe now, and
:03:43. > :03:45.growing concerns about the state of the region's economy. Later today we
:03:46. > :03:48.get inflation data for the 18 countries that use the euro
:03:49. > :03:50.currency. It is expected to show the area slipping further towards
:03:51. > :03:53.deflation, or falling prices. That can lead to the sort of stagnation
:03:54. > :03:56.Japan experienced for more than a decade, as people put off buying
:03:57. > :03:59.things because they got cheaper every month. Let's take a quick look
:04:00. > :04:08.at the numbers. The European Central Bank's target for healthy inflation
:04:09. > :04:17.is around 2% a year. It sees anything below 1% as the danger
:04:18. > :04:21.zone. In July the annual rate dropped to just 0.4%. Figures for
:04:22. > :04:24.August could show a further fall, to 0.3%. That would put pressure on the
:04:25. > :04:34.ECB to do more to stimulate the economy when it meets next week.
:04:35. > :04:43.Christian Schulz of Berenberg Bank is here. We were just talking
:04:44. > :04:47.through some of the numbers. What are you expecting to come out later
:04:48. > :04:51.today? Will we see the eurozone slipping further into this danger
:04:52. > :04:55.zone? Whether it does this time or maybe a month later doesn't really
:04:56. > :05:00.matter. Today, actually, the risk or chance is that the inflation figure
:05:01. > :05:06.might be slightly as or higher, if you like, than what markets expect.
:05:07. > :05:10.We have already had German inflation yesterday that was stable, with some
:05:11. > :05:14.slight tendency of actually inching up a little bit on temporary
:05:15. > :05:18.factors. The Spanish inflation declined less than expected. So
:05:19. > :05:22.there is a chance that the days are today may not be as headline making
:05:23. > :05:25.or bad as expected. What if it doesn't this time, the crisis in the
:05:26. > :05:28.Ukraine, the slowdown in the European economy, I think will
:05:29. > :05:37.provoke further declines in inflation `` data. So we might inch
:05:38. > :05:43.further towards deflation. What would you say the underlying factors
:05:44. > :05:47.are, driving this downward movement we are seeing in terms of inflation,
:05:48. > :05:51.across the eurozone? Well I think one important thing to note is that
:05:52. > :05:57.this is different to 2012, when we were at the heyday of the eurozone
:05:58. > :06:02.crisis. We had bond market pensions, the risk that countries would have
:06:03. > :06:05.to default, leave the eurozone. And particularly countries like Spain,
:06:06. > :06:09.Portugal, Greece, Ireland, which were in crisis. They were the ones
:06:10. > :06:14.driving the economic decline. This time it is entirely different set
:06:15. > :06:17.up. This time it is Germany, the core of the eurozone, which has
:06:18. > :06:22.slowed significantly. So this has nothing to do with the good old Euro
:06:23. > :06:26.crisis. It comes from abroad, it comes from Ukraine. It hits the
:06:27. > :06:30.country most exposed to Russia and Ukraine, and that is Germany via
:06:31. > :06:37.trade, energy links. Confidence is plunging. So the chorus affected
:06:38. > :06:40.this time, which makes it easier, actually, for the ECB to stimulate
:06:41. > :06:45.the economy, because it was the Germans who were so far against the
:06:46. > :06:51.ECB doing more. So what happens next? What will be at ECB decide
:06:52. > :06:55.when they meet on September four for their next policy meeting? Today's
:06:56. > :07:01.figure really matters. If it is worse than expected it is possible
:07:02. > :07:05.ECB will take immediate action. Maybe not outright QE like the
:07:06. > :07:09.Americans did, but a smaller programme might be announced next
:07:10. > :07:12.week. If the figures today do not disappoint or are better than
:07:13. > :07:17.expected then they have a bit more time left for discussions. But there
:07:18. > :07:21.will be all sorts of warnings next week about the ECB doing more
:07:22. > :07:27.signalling to market that they are ready to fight this. OK, so we are
:07:28. > :07:33.still in that wait and see mode. All eyes on the ECB. We mentioned
:07:34. > :07:36.Japan's battle to escape the spiral of deflation. Some disappointing
:07:37. > :07:43.news this morning on that economy. Rico Hizon is following this story
:07:44. > :07:54.for us in Singapore. What do you have on this? Well, a lot of numbers
:07:55. > :07:58.which came out from Japan today, and mostly they are disappointing
:07:59. > :08:02.economic numbers. If household spending `` you have household
:08:03. > :08:07.spending falling by almost 6%. Inflation is still well below that
:08:08. > :08:13.2% inflation target of the government at 1.3%. Household
:08:14. > :08:20.spending fell as the higher sales tax, which was raised on April the
:08:21. > :08:24.1st from five to 8%, and the bad weather conditions, kept consumers
:08:25. > :08:30.at home instead of going out to shop. As for factory output, week
:08:31. > :08:34.exports left companies with a huge pile of infantry, forcing them
:08:35. > :08:41.continue cutting back on production `` inventories. Overall the vital
:08:42. > :08:48.signs remain weak for the Japanese economy, signalling continuing
:08:49. > :08:56.weakness in the world's third`largest economy. And extra
:08:57. > :09:00.stimulus spending is recommended to counter the effect of the tax hikes.
:09:01. > :09:03.They want the government to push ahead with structural reforms to
:09:04. > :09:07.help industries regain their competitiveness and counter the
:09:08. > :09:11.effect of the rapid ageing and shrinking of the population. Not
:09:12. > :09:22.great news coming out of Japan. Thank you for keeping us across
:09:23. > :09:25.those numbers. In other news: Google says it is developing airborne
:09:26. > :09:27.drones capable of flying on their own and delivering everything from
:09:28. > :09:31.candy to medicine. The so called "Project Wing" is the latest move by
:09:32. > :09:34.the web giant to expand its reach into the real world, with the likes
:09:35. > :09:36.of self`driving cars and solar`powered balloons. Rival Amazon
:09:37. > :09:39.announced its own plans last year for a delivery drone service called
:09:40. > :09:42."Prime Air." Europe's Energy Commissioner is in Moscow this
:09:43. > :09:44.Friday for talks over securing gas supplies this winter. About a third
:09:45. > :09:48.of Europe's gas for industry and domestic heating comes from Russia,
:09:49. > :09:50.some of it via Ukraine. On Wednesday Ukraine warned Europe that Russia
:09:51. > :09:53.could cut off gas to the continent this winter, but Moscow said the
:09:54. > :09:55.supplies would continue regardless of the political situation. Budget
:09:56. > :09:58.airline Germanwings has cancelled 116 flights planned for Friday
:09:59. > :10:01.morning, equivalent to 70% of its flights, because of a six`hour
:10:02. > :10:04.strike by pilots. They are in dispute with parent company
:10:05. > :10:06.Lufthansa over plans to end an early retirement scheme. About 15,000
:10:07. > :10:10.passengers, many of whom are travelling at the end of the summer
:10:11. > :10:13.holiday period, will be affected. Asian shares slumped in early
:10:14. > :10:15.trading on Friday, after flaring Ukraine tensions ruined investors'
:10:16. > :10:31.appetite for risk and bolstered the safe`haven yen.
:10:32. > :10:35.appetite for risk and bolstered the safe`haven We will of course keep a
:10:36. > :10:39.close eye on those throughout the session, and if you would like to
:10:40. > :10:43.get in touch with me or any of the team I am on Twitter. We always love
:10:44. > :10:48.to hear from you. Stay with us at UBC World News. I will be back in
:10:49. > :10:55.just a moment. `` BBC World News.