10/09/2014 World Business Report

Those are the latest headlines from BBC News. Now for the latest

financial news with Sally Bundock and World Business Report.

Hundreds more flights are cancelled, as pilots strike again at Lufthansa.

Will the German carrier be able to bear the cost? And what is known as

the summer Davos gets under way in Tianjin, northern China, where

thousands of business and economic leaders are gathered. Welcome to

World Business Report. I'm Sally Bundock. Also in the programme, we

will have the market reaction to that big event in California, of

course, the Apple launch of new products. We will look at that. But

first: Pilots at Lufthansa will hold an eight`hour strike at Munich

airport today ` the third strike by the German airline's pilots within

two weeks. Lufthansa said about 110 flights will have to be cancelled,

affecting about 13,500 passengers. This fresh round of strike action

has left the airline counting the costs ` the previous strike, last

week, affected 25,000 passengers, and wiped millions of euros off its

profits. With me is Ben Kumar, analyst with Seven Investment

Management. It sounds like the pilots are being fairly effect. Last

week lots of passengers had to be put up in hotels, costing the

airline lost of money `` lots of money, lots of disruption. Your

thoughts? This is expected to cost around 5 million euros today, the

one last week cost tens of millions of euros, and a three`day one in

April wiped about 60 million euros of profit the airline. It is true to

say that this strike is having an impact. From the point of view of

Lufthansa, what is it doing about this? They do say they are in talks

with unions, but clearly at the moment they are not making any

headway. Interestingly, one of the Lufthansa representative said they

are not really negotiating at the moment, what they are doing is

trying to sort out the passengers who will be left stranded. So

clearly they are not really at the meeting table to talk about what the

unions want. What they are trying to do is to resolve the situation, and

wait until it goes away. This is all about the early retirement plan for

pilots at Lufthansa, what do the two sides want? The current situation at

Lufthansa is that the pilot can take early retirement at 55 on 60% of his

salary, recently the European Commission increased the age pilots

can work until to the age of 65, however this early retirement age

did not go up. The unions are saying they would like to remain at 55, but

Lufthansa saying that this is unfair, the gap is now wider than it

was, and we can't take the equivalent of paying 60% salaries

year after year after year after year, and we think the early

retirement age should rise. Briefly, can Lufthansa bear the cost of this?

It seems to be able to. Its profits this year are estimated at about 1

billion euros. Its share price fell from about 20 in April to about 13.5

billion euros today. It seems to be holding up fairly well, and it seems

like it could go all the way. Disruption at Frankfurt and other

airports. Apple has unveiled its first new product since the iPad

four years ago. The Apple Watch is a smart watch which runs apps, acts as

a health and fitness tracker, and communicates with the iPhone. The

technology giant also unveiled two larger iPhones. Our technology

correspondent, Rory Cellan`Jones was at the launch in California. An

Apple event is never knowingly underhyped, but this time, the

presence of figures from the fashion world and the likes of Rupert

Murdoch showed the company was setting out to prove it could

conquer new territory. This man, Tim Cook, has been in the shadow of

Steve Jobs, with whispers that Apple could no longer innovate after the

death of its founder. Today, we have some amazing products to share with

you. But he believes this is the answer to the critics. A watch, the

Apple Watch. Greeted with near hysteria by some in the audience,

the device is designed to bring some of the functions of the phone to the

wrist, while monitoring your daily activity. It is beautifully

designed, like every Apple product, and as well as telling the time,

Apple says it can do all kinds of things, like monitor your health and

fitness and allow you to check in with an airline or get into a hotel

room. But the big question is, just how big a demand is there for you to

run your world from your wrist? Apple is late to this market. Others

have already launched a whole host of smartwatches and fitness bands,

without so far convincing a sceptical public that wearable

gadgets are the future. Wearables is a huge area, and you've already seen

that with Android, with other manufactures getting on. The

reception so far has been quite lukewarm. Whether Apple have the

magic, as they always claim they have, to convince us ` they've done

it before with the iPad, they did it with the iPhone. Is it going to be

third time lucky? And we call it Apple Pay. Tim Cook also unveiled

something which could be much more lucrative than a watch. A system

called Apple Pay, to allow easy payment by phone or watch in a shop

or online. But the timing of this event, just after dozens of

celebrities saw their private photos hacked from Apple's iCloud, raises

questions about how much trust consumers still have in the company.

It is the iPhone, now coming in two bigger models, which still powers

Apple's profits. Don't expect the watch, when it goes on sale next

year, to change that in a hurry. And an interesting factoid for you: When

the original Apple phone debuted, Apple shares went up 8% on the day.

But since then the market reaction to the annual unveiling has been

mostly negative. In the last six years Apple stock has ended the day

down five times on the days of presentations. This is largely

because it has struggled to keep its new products under wraps, and by the

time the event rolls around, the stock price has already factored in

some of the news. Yesterday was no different. During Tim Cooks

presentation the shares climbed, but then fell 1% to close at $97.99.

Let's turn our attention to the city of Tianjin in China, which is

hosting the 2014 Summer Davos Forum. Thousands of business and government

leaders from around the world will be attending the forum, whose theme

this year is "Creating Value Through Innovation" The city is in the

spotlight not only for hosting the three`day event, but also the key

role it is expected to play in China's economic future. It is home

to more than 150 Fortune 500 companies, and the maritime

transport gateway for Beijing. And our very own Linda Yueh is there for

us. Are the great expectations `` are their great expect patients for

the event this year? I think the expect patients are whether or not

we will hear that China can innovate. As you have said, it is

the big theme of the conference and is likely to be the theme of the

Chinese Premier's speech later on today. He is expected to say why it

is that structural reforms like promoting innovation, encouraging

Chinese firms to go global, those are the reasons why the rest of the

world, and business leaders, it should give China sometime to make

those adjustments. And that could help explain away a slowing economy,

which I the IMF's projections, will miss the Chinese government's growth

target this year. That gives you the larger context as to why the

Premier's speech, which is always closely watched, is probably going

to be more closely watched this time. Will he bring the confidence

that he wants to? As you say, there is a lot of questions about China in

the future, and today the Chinese markets are lower. Hong Kong is

having a really tough day because of worries about growth in China.

Absolutely right. One of the key data points which has caused a bit

of worry is that loan growth, new loans being issued in China, are

actually pretty low. That has always been seen as a reliable indicator,

as opposed to some of the macro data. One announcement I think will

be processed by the markets to date is that the Chinese have announced

easier rules for Chinese companies to invest overseas, and by doing

that, they could allow the private firms the innovative firms, to go

into overseas markets and can be there, now that always seemed very

unusual to the rest of us. Mostly in the market economies, where

companies can move into markets when they have good enough stuff, but

that is not the case for China. So that I am pretty sure is one to

watch. I will certainly be watching that all day here in Tianjin, but

for now, act to you. We will speak to Linda again, as she is there

throughout the event. To the markets, Hong Kong is down nearly

2%. We have mentioned the issues of Chinese growth. A quick look at the

close in the US. Another poor day there as well. I will see you soon

as we talk through the papers. Stay with us. A new report says it often

costs people with dementia and their families more than ?20,000 a year to

look after their needs. This includes payments for help with

tasks such as washing and dressing, and unpaid care from family and

friends. The charity behind the research, the Alzheimer's Society,

says those involved are effectively paying a dementia tax. Our health

correspondent Adam Brimelow