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Monday, 1 October, 2012
INTERVIEW: HUSEYIN CEPNI, GENERAL MANAGER TURKISH AIRLINES IN PAKISTAN
Let’s savor the Turkish delight
Turkish Airlines awaits official nod to start daily flights to Pakistan KARACHI
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ISMAIL DILAWAR
URkISH Airlines (TA), ranked the best airline of Europe for second consecutive year in 2012 by the Skytrax World Airline Awards, wishes to enhance the frequency of its flights to Pakistan to daily basis, Huseyin Cepni, the Airline’s general manager in Pakistan, told Pakistan Today in an exclusive interview here at his office. Talks in this respect are underway on the government level and the management of the Airlines, which has the world’s 7th largest flight network and has not done away with the idea to further increase its strength in this area, has conveyed its desire to the authorities concerned in Pakistan. “We want daily flights to Pakistan and if you ask for a reason. There is none. We just want it,” said Cepni who is based here since his transfer in April 2011 from Barcelona where he served the Airline as a regional commercial chief for a couple of years. He said his Airline was flying four times and thrice in a week to karachi and Islamabad, respectively. This number, however, does not set well with Cepni and his higher ups who, as the manager said, wanted TA’s daily flights to various destinations in Pakistan, a potential market for the Airline “Pakistan is a huge country and is growing fast. karachi has a 65 percent control (in terms of revenue generation) over the economy. All travel agents are based here,” he said while talking about TA’s operation in Pakistan. Cepni said his firm was operating in the country for last 30 years. A directors
level talks, Cepni said, had taken place between the Turkish and their Pakistani counterparts regarding the TA’s flight frequency. “It is between the governments of the two countries,” he said. “We are still pending but hope the Pakistani side would respond shortly,” said he adding “They have to respond. We are still waiting. I hope they would help us”. For TA, Pakistan stands to be a country of huge potential. According to Cepni, TA’s income from Pakistani passengers was posting an annual growth of 20 to 25 percent with challenges standing next to zero in the business-friendly country. Cepni says there are no problems at all for the airline industry in Pakistan. “There are opportunities and facilities instead. And that is why you see many European companies working here,” the TA official argued. Cepni sees Pakistan as a great market for the airline industry which weighs a country in terms of the number of its air travelers. The TA manager says Pakistan having the world’s best textile, leather, cotton and carpet industry provides his side with a remarkable number of business passengers. “There is business here. You can find business passengers here. Even the families travel to and from Uk, Canada and other international destinations three to four times a year for business or education purposes,” Cepni said. He said the increasing opportunities of education in England and Turkey had sound bearing on his business in Pakistan. Cepni responded in negative when asked if the ongoing global recessionary climate and the resultant economic slowdown had casted a shadow on the Airline’s revenues, especially in Pakistan. “Our net-
work is so big that it offset any negative impact. If you fly to more than 2000 destinations you are not impacted that much. We even got enough passengers in Pakistan because they did not stop travelling,” he said adding “the businesses in Pakistan have been booming so Pakistani businessmen kept traveling to and from Europe, the US, Germany, Italy, Spain and other destinations.” Pakistan, Cepni said, constitutes around 40 percent market share for the Turkish Airline given the airline’s flight network linking the Asian country to the Uk, the US and Canada. About Pakistan and its people Cepni jubilantly says that: “Pakistani people are so friendly and hospitable that I feel at home here.” Cepni said one of his major objectives was to bring Turkey and Pakistan closer through promoting each other’s culture in the two brotherly countries. To this effect, he said his side had planned events like “Darvesh Ceremony” and “Turkish Food Festival” to be held in Turkey in November this year. Exhibitions displaying Turkish culture would be organized in Pakistan while delegates from Pakistan comprising journalists and other stakeholders would be invited to turkey to increase and strengthen people-to-people contact. About Turkish Airlines, Cepni said having started some 79 years ago from the scratch his company today was running the world’s 7th largest flight network through its 186-unit fleet, 180 passenger and six basic cargo aircrafts. Based on the Association of European Airlines, Turkish Cargo is considered to be the best in Europe in terms of average increases in cargo carriage from Europe to and from the
world to the region. For last two consecutive years, 2011 and 2012, Turkish Airlines hasbeen the winner of the Europe’s Best Airline and World’s Best Premium Economy Class Seats title conferred upon it by the Skytrax World Airline Awards, said Cepeni. The Award is determined on the basis of a survey of more than 18 million air travelers. Besides being the official partner of the soccer giants Manchester United and FC Barcelona, TA, in collaboration with Turkish Gold Federation, has for the first time sponsored a professional mega golf event, titled “Turkish Airlines World Golf Final”, scheduled to be held at Turkey’s Antalya Gold Club during October 9-12. World’s renowned golfers like Tiger Woods, Charl Schwartzel, Lee West-
WALL STREET WEEK AHEAd
Stock bulls eye Spain, Bernanke and jobs Wall Street will open October with a busy week, highlighted by low expectations for global manufacturing data and the U.S. jobs report, but that could set the stage for positive surprises that help lift the market
NEW YORK AGENCIES
The S&P 500 .INX.SPX finished its third positive quarter in the last four on Friday, despite suffering its largest weekly percentage decline since June. For the past three months, the S&P 500 gained 5.9 percent - its best third quarter since 2010. In contrast, the index was down 1.3 percent for the week. The benchmark S&P 500 earlier this month reached its highest level since late 2007. Yet uncertainty remains over whether stocks can hold their gains against the headwinds of a struggling economy. That explains, in part, the retreat over the last several days. The S&P 500 hit a high of 1,474.51 in mid-September before pulling back by a bit more than 2 percent. A run at 1,500 seems possible, but the flurry of economic and world events ahead probably will prevent a major advance in the coming week. Bulls are betting this week’s Spanish budget proposals will be a preamble to a bailout request by Mariano Rajoy’s government. The move would be seen as a first step to get the finances of the euro zone’s fourth-largest economy in order and would clear some of the market uncertainty regarding the euro zone crisis. Monetary policy is also on the list of market catalysts next week. Federal Reserve Chairman Ben Bernanke is scheduled to speak on Monday and the minutes of the latest FOMC meeting are set for release later in the week. The week’s agenda includes meetings of the
European Central Bank, the Bank of England and the Bank of Japan. “I think we could see a rebound next week if we get some of the stars aligning and have Spain ask for a bailout, the ECB announcing favorable terms for that bailout, and if we see the Bank of Japan announce further monetary intervention,” said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin. “If Spain and the ECB don’t deliver, we could set ourselves up for a further lateral move in the markets. A negative would be if Rajoy flat-out denies that they need a bailout.” The ECB and BOJ are set to meet on Thursday, with the Bank of Japan’s meeting extending until Friday. FACTORIES, JOBS AND THE DEBATES: Chinese factory and business conditions data will kick off a numbers-heavy calendar for markets. Manufacturing PMI, due on Monday, is expected to show a second straight month of contraction. A snapshot of U.S. manufacturing activity will be provided on Monday when the Institute for Supply Management releases its September index. The September ISM reading is expected to show another month of contraction, but at a slightly slower pace than in August. On Wednesday, the ISM will release its U.S. services-sector Purchasing Managers’ Index, which could show a slight deceleration in the pace of growth in the non-manufacturing sector. “We have Chinese economic data over the weekend, and we’ll see how markets react on Monday,” said Wasif Latif, vice president of equity investments at San Antonio, Texas-based USAA Investment Management. “It seems like the market is bracing for bad numbers, meaning if they’re not as bad, it could be market-positive,” Latif said. Non-farm payrolls for September, due on Friday, are seen up 115,000, while the U.S. unemployment rate is seen ticking up 0.1 percent from August to 8.2 percent in September. The jobs data will come on the heels of the first of three U.S. presidential debates, scheduled for Wednesday night. Recent poll numbers point to a strengthening lead by President Barack Obama, but a weak payrolls reading could give some hope to Republican challenger Mitt Romney. “If Romney doesn’t turn the ship with a very strong (debate)performance, the president is going to win,” said Jack de Gan, chief investment officer at Harbor Advisory Corp in Portsmouth, New Hampshire. He said the trend in the polls has taken away some of the market uncertainty regarding the presidential election. He added that an ECB- or Spain-related headline out of Europe on Thursday could overcome almost anything that would happen Wednesday night during the debate. “I think the market is coming to terms with the fact the president is ahead, and unless something significant changes, (he) will prevail.”
wood, Rory McIlroy, Hunter Mahan, Matt kucher, Justin Rose and Webb Simpson are participating in the tournament. The Airlines expects the global airline industry swelling beyond $ 800 billion over the next decade as during the last decade the number of passengers had doubled to 2.2 billion globally. The Airline calls it its fundamental aim to make the most of this potential of the airline industry and carry its flag all over the globe as one of the world’s best airlines. Finding Istanbul having become a “connecting point” in the world’s air traffic, the Airline, this year alone, increased the number of its passenger transfers by 47 percent to cater its passengers travelling between America, Europe, Africa and Asia.
Samsung wins reconsideration of Galaxy Tab sales ban A US appeals court ruled that a lower court should reconsider a sales ban against Samsung’s Galaxy Tab 10.1 won by Apple in a patent dispute with the South Korean electronics maker
SAN FRANCISCO AGENCIES
The injunction was put in place ahead of a month-long trial that pitted iPhone maker Apple Inc against Samsung Electronics Co Ltd in a closely watched legal battle that ended with a resounding victory for Apple last month on many of its patent violation claims. However, the jury found that Samsung had not violated the patent that was the basis for the tablet injunction and Samsung argued the sales ban should be lifted. U.S. District Judge Lucy koh said she could not act because Samsung had already appealed. In its ruling on Friday, the Federal U.S. Circuit Court of Appeals in Washington said koh could now consider the issue. The decision comes just a month before the South korean corporation is expected to unveil the second generation of one of its most successful devices, the stylus-equipped Note. The Galaxy 10.1 is an older model, but the ban still hurts Samsung in the run-up to the pivotal holiday shopping season. The world’s top two smartphone makers are locked in patent disputes in 10 countries as they vie to dominate the lucrative market, which is growing rapidly. A U.S. jury found during the just-concluded trial that Samsung had copied critical features of the iPhone and iPad and awarded Apple $1.05 billion in damages.
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Spain debt rises on aid to banks, regions Spain’s debt level and borrowing needs are set to rise next year, piling pressure on the government to apply for international aid, as it pours funds in to cash-strapped regions and an ailing banking system, its budget showed on Saturday MADRID
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PAIN’S debt as a ratio of gross domestic product will reach 90.5 percent by end 2013, according to the document presented to Parliament for approval, almost three times that registered before the property bubble burst in 2008. The budget aims to make savings of around 13 billion euros ($16.72 billion) next year by cutting spending by the public ministries, education, health and infrastructure investments and freezing public workers’ wages. “This is an austerity budget, but will serve to help us get over this long economic crisis and once again show that Spain is a trustworthy partner within Europe,” Treasury Minister Cristobal Mon-
Greece sure to get next aid tranche: German magazines Greece will receive its next tranche of international aid despite budget shortfalls and slow progress on reforms because the euro zone does not want the country to leave the common currency, two German magazines reported BERLIN AGENCIES
Athens will resume talks with the ‘troika’ of international lenders next week on a tranche worth 31 billion euros ($39.88 billion) needed to avert bankruptcy and a possible euro zone exit. The Greek government needs a deal so it can push an austerity package through parliament before the next meeting of Eurogroup finance ministers on October 8. “The Greeks will receive a list of reforms which must be approved by their parliament by a fixed date. The money will be released as soon as lawmakers have voted,” a Eurogroup source told the Wirtschaftswoche business weekly. It did not say what new reforms would be proposed but said the euro zone was now focused on avoiding a Greek exit. “The fear of a ‘domino effect’ in the euro zone is too great (not to release the funds),” a senior EU official told the weekly, referring to possible contagion to other heavily indebted states such as Spain if Greece were to default. A second report in the Focus magazine, citing sources in the European Parliament, also said Greece would receive its tranche. “The report being drawn up by the ‘troika’ will turn out in such a way that the money can be paid out,” it said. The troika comprises the International Monetary Fund, the European Commission and the European Central Bank. Asked to comment on the reports, a German finance ministry spokesman said there had been no change in the situation and that the Berlin government was still awaiting the troika report on Greece. Germany, Europe’s biggest economy and paymaster, has long criticized Greece’s failure to sort out its public finances and restructure its economy, but Chancellor Angela Merkel and senior members of her center-right coalition have recently started to stress the dangers of pushing Athens out of the euro zone. Greece, in its fifth year of recession, wants a two-year extension of its bailout plan, something its finance minister has said would cost up to 15 billion euros of extra funding.
toro told journalists after delivering the budget. Spain is at the center of the euro zone debt crisis as nervous investors demand ever higher premiums to hold Spanish debt on concerns the government cannot control its finances in the midst of a deepening recession. Calls by wealthy northeastern region Catalonia for independence and the rising number of demonstrations on the streets of major cities have fuelled doubts Spain can fix its problems without help. Prime Minister Mariano Rajoy has delayed any plea for aid, which would kickstart a European Central Bank plan to buy debt and ease financing costs, though this week has passed reforms and the budget plan in what many see is an effort to preempt the likely terms of a bailout. RISING BORROWING NEEDS: The budget details spending cuts of 3.1 percent in health, 14.4 percent in education
and 6.3 percent in unemployment benefits, as the recession, which began in the first quarter, drags on. The government would also have to increase its reliance on international markets for funding next year, with gross debt issuance requirements of 207.2 billion euros after budgeting in 2012 for gross issuance of 186.1 billion euros. Spain faces debt redemptions worth 159.2 billion euros in 2013, up slightly from 153.2 billion euros in 2012, the document showed. The increase in the debt-to-GDP ratio was due to a greater debt on the back of the economic crisis and the effect of state instruments on public accounts, the Treasury said in the document. The instruments include the power deficit bond program, FADE, the service provider fund for regional governments, Spain’s part in aid granted to Ireland,
Greece and Portugal and the recapitalization loan for the country’s banks, it said. Brussels on Thursday said the budget was a large step in the right direction. But many economists expressed doubt that Spain’s conservatives would be able to raise the cash the budget demanded as pension and debt-servicing costs rise. “My general view is that this is an optimistic budget, in the sense that predictions for the contraction in 2013 are very optimistic,” said Xavier Vives, economist at business school IESE, adding that he expected the plans to be revised as with every other budget over the last four years. DEFICIT JUMP: Spain will meet its 2012 public deficit target as dictated by European guidelines, Montoro said, but the shortfall will jump by more than one percentage point if aid to its struggling banks were taken in to account. The Spanish deficit this year would be
6.3 percent of GDP, not including these payments to its banks, he said, but would rise to 9.4 percent of GDP last year and 7.4 percent of GDP this year if the aid was considered. “Everything within the deficit derived from financial operations aren’t included ... they’re considered one-offs,” Montoro said. Spain has asked for up to 100 billion euros for its crisis-hit banks, though the debate among Spain’s European partners rages over whether that money would go directly to its lenders or first via public coffers. On Friday, an independent report showed Spanish banks will need up to 59.3 billion euros in extra capital to ride out the economic downturn. The budget details on Saturday showed Spain’s debt ratio included 30 billion euros of the planned 100-billioneuro aid request for the country’s banks.
Qatar ‘worried about value of dollar, euro’ Wealthy Qatar, a major investor in US and European assets, worries that haphazard attempts by countries to shore up their economies could weaken the dollar and the euro, its prime minister said RIYADH AGENCIES
“What should happen is we should have a full package with a full strategy to solve the problems,” Sheikh Hamad bin Jassim al-Thani, who also heads the country’s sovereign wealth fund, Qatar Investment Authority (QIA), told U.S. financial broadcaster CNBC in an interview aired on Friday. This month the U.S. Federal Reserve announced a program of heavy purchases of mortgage-backed securities in an effort to boost employment, but the U.S. government has so far failed to reassure financial markets that it has an effective plan to cut its budget deficit and boost economic growth. The European Central Bank has also said it will buy bonds to protect economies from the euro zone debt crisis, but governments of weak countries such as Greece and Spain have not persuaded investors their debts can be cut to safe levels. Sheikh Hamad said the central banks were right to act to prevent worse crises, but added: “With more printing money, without having a strategy, I believe the value of the money will go down very soon.” He did not give details of the economic measures
which he believed Western countries should be taking, but said the risk of further volatility in markets was making investors such as Qatar cautious. Analysts have estimated the size of Qatar’s sovereign wealth fund at around $100 billion. “There are some questions with no answer up to now,” he told CNBC. However, Sheikh Hamad added that Qatar would retain holdings of strategic stocks and buy when prices dropped, and that it would continue to make new investments in promising assets. He said he was optimistic about the longer-term future of the banking industry, since better regulation and capital-raising would strengthen banks after some years. He noted that QIA had a strategic stake in Credit Suisse CSGNNY.UL, and owned about 1 percent of Bank of America (BAC.N) and 5 percent of Santander Brasil (SANB11.SA) among other banks. The gas-rich Gulf state has bought more than $5 billion or $6 billion of real estate assets over the last four to five months, mostly in the United States and Europe, Sheikh Hamad said. “If there is some good opportunity, why not,” he said of investing in crisis-hit Europe. XSTRATA BID: Qatar, which owns just over 12 percent of Xstrata (XTA.L), will help to determine the suc-
cess or failure of Glencore’s (GLEN.L) $32 billion offer for the miner. Glencore was forced earlier this month to raise its bid price, offering 3.05 new shares for every Xstrata share instead of 2.8, after Qatari pressure. As a condition, however, Glencore imposed its own chief executive and largest single shareholder, Ivan Glasenberg, at the head of the combined group. Xstrata’s directors face a Monday deadline to decide their position on Glencore’s higher offer. Sheikh Hamad told CNBC: “We have no problem with the new price,” but added, “Other aspects (of the proposed deal) have to be studied.” He declined to elaborate. AUX: Earlier this week Reuters quoted banking sources as saying Qatar Holding, one of the country’s investment vehicles, was in advanced talks to buy a 49percent stake in Brazilian billionaire Eike Batista’s gold firm AUX for about $2 billion. Qatar Holding subsequently issued a statement denying that such talks had taken place. However, asked about Qatar’s intentions towards AUX, Sheikh Hamad told CNBC: “We’re studying it. Still there is no commitment from our side.” Details of the proposal need to be presented to the board, he added without elaborating.
Stage three for the euro crisis? J BRADFORD DELONg The first two components of the euro crisis – a banking crisis that resulted from excessive leverage in both the public and private sectors, followed by a sharp fall in confidence in eurozone governments – have been addressed successfully, or at least partly so. But that leaves the third, longest-term, and most dangerous factor underlying the crisis: the structural imbalance between the eurozone’s north and south. First, the good news: The fear that Europe’s banks could collapse, with panicked investors’ flight to safety producing a European Great Depression, now seems to have passed. Likewise, the fear, fueled entirely by the European Union’s dysfunctional politics, that eurozone governments might default – thereby causing the same dire consequences – has begun to dissipate. Whether Europe would avoid a deep depression hinged on whether it dealt properly with these two aspects of the crisis. But whether Europe as a whole avoids lost decades of economic growth still hangs in the balance, and depends on whether southern European governments can rapidly restore competitiveness. The process by which southern Europe became uncompetitive in the first place was driven by market price signals – by the incentives those signals created for entrepreneurs, and by how entrepreneurs’ individually rational responses played out in macroeconomic terms. Northern Europeans with money to invest were willing to lend on extraordinarily easy terms to those in the south who wanted to spend, and ample pre-2007 spending made employers there willing to raise wages rapidly. As a result, southern Europe adopted an economic configuration in which its wage, price, and productivity levels made sense only so long as it spent €13 for every €12 that it earned, with northern Europe financing the missing euro. Northern Europe, meanwhile, adopted wage and productivity levels that made sense only as long as it spent less than one euro for every euro that it earned. Now, if, as appears to be the case, Europe does not want its south to spend more than it earns and its north to spend less, wages, prices, and productivity must shift. If we are not to look back in a generation and bemoan “lost” decades, southern European productivity levels need to rise relative to the north, and wage and price levels need to
fall by roughly 30%, so that the south can pay its way with exports and northern Europe can spend its earnings on those products. If the euro is to be preserved, and if stagnation is to be avoided, five policy measures could be attempted: Northern Europe could tolerate higher inflation – an extra two percentage points for five years would take care of one-third of the total north-south adjustment; 8 Northern Europe could expand social democracy by making its welfare states more lavish; 8 Southern Europe could shrink its taxes and social services substantially; 8 Southern Europe could reconfigure its enterprises to become engines of productivity; 8 Southern Europe could enforce deflation. The fifth option is perhaps the least wise, for it implies the lost decades and EU collapse that Europe is trying to avoid. The fourth option would be wonderful; but, if anyone knew how to bring southern Europe’s enterprises up to the productivity levels of the north, it would have happened already. So we are left with a combination of the first three options, also known as “policies to restore European growth” – a phrase that appears in every international communiqué. But the communiqués never get more specific. Europe’s technocrats understand what adoption of “policies to restore European growth” means. So do some of Europe’s politicians. But European voters do not, because politicians fear that spelling it out would be a career-limiting move. But if Europe does not adopt some combination of the first three options as policy goals over the next five years, it will face a stark choice: either lost decades for southern Europe (and perhaps northern Europe as well), or continued northsouth payment imbalances that will have to be financed through fiscal transfers – that is, by taxing the north. Northern Europe’s politicians should become more explicit about what “policies to restore European growth” actually mean. Otherwise, ten years from now, they will be forced to confess that today’s dithering imposed enormous additional tax liabilities on northern Europe. That might turn out to be the ultimate career bummer. Courtesy: Project Syndicate
CORPORATE CORNER Shareholders show concern over Non Production Days KARACHI: “Non-Production Days (NPDs) at Indus Motor Company’s plants are due to the huge influx of imported used cars which affected the demand of locally produced cars negatively,” stated Indus Motor Company (IMC), Chairman, Ali S. Habib while answering the shareholders’ concerns on NPDs during the 23rd Annual General Meeting (AGM) of Indus Motor Company Ltd. held yesterday.
Peek Freans Sooper, Pakistan’s leading biscuit brand has over the past month been advertising a consumer promotion to watch T-20 Cricket World Cup Live in Sri Lanka & Support Team Pakistan. On 28th lucky draw ceremony of Super Cricket Sooper Pakistan offer was held at EBM Head Office in the presence of EBM top management. 50 lucky participants were selected through draw who will be send to Sri Lanka to cheer Team Pakistan.
Monday, 1 October, 2012