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Teachers’ allowance law signed

DEPED.GOV.PH

PRESIDENT Ferdinand R. Marcos, Jr. on Monday signed into law a bill increasing the teaching allowance for public schools teachers.

The Kabalikat sa Pagtuturo Act will increase the allowance for each public school teacher to P10,000 from P5,000 beginning School Year 2025-2026, according to a press release from the presidential palace.

The law exempts the teaching allowance from income tax, it added.

The initial amount for the law’s implementation will be charged against the current budget of the Department of Education.

The allowance would cover the purchase of teaching supplies and materials, the payment of incidental expenses, and the implementation or conduct of various learning delivery modalities, Senator Juan Edgardo M. Angara, one of the law’s authors, said in a statement.

Funds needed for the continued implementation will be included in the annual national budget, according to the law.

ACT-Teachers Party-list Rep. France L. Castro, who is a co-author, said the law provides a “significant relief to teachers who have long borne the burden of shouldering the cost of teaching supplies out of their own pockets.”

Education Secretary Sara Duterte-Carpio was not present at the signing ceremony for the law.

From 2010 to 2011, teaching supplies allowance for each teacher amounted to P700 annually. This went up to P1,000 from 2012 to 2014, and was increased further to P1,500 in 2015 and 2016, Mr. Angara noted.

Congress increased the amount to P2,500 in 2017 and to P3,500 in the following year up to 2020, he noted. — Kyle Aristophere T. Atienza

PHL, Indonesia set war games

PHILIPPINE STAR/KRIZ JOHN ROSALES

PREPARATIONS are underway for joint military drills between the Philippine Army’s 6th Infantry Division and the Indonesian National Military Land Force, which are set to take place at Camp Siongco in Maguindanao del Norte by the yearend.

Major Gen. Alex S. Rillera, commander of the 6th ID, announced Monday that an Indonesian delegation, led by Col. Yoki Malinton Kurniafari, recently toured the division’s training facilities as part of preparations for the Training Activity Phil-Indo Strike 2024.

Mr. Kurniafari, commander of the Indonesian Army’s 11th Infantry Brigade, participated in a three-day planning conference with 6th ID officers. “All was well in the planning conference related to the forthcoming activity,” said Mr. Rillera.

The exercises will focus on territorial defense and strategic planning. The Indonesian team was also briefed on the 6th ID’s peacebuilding programs, which support the Philippine government’s peace process with Moro communities.

Mr. Kurniafari and his subordinate Army officials were also briefed by their counterparts in the 6th ID on peacebuilding programs that complement Malacañang’s peace process with Moro communities in Central Mindanao provinces and cities that are covered by units of the division.

Indonesia helped broker the Philippine government’s separate peace compacts with the Moro National Liberation Front and the Moro Islamic Liberation Front. — John Felix M. Unson

COVID-19 testing package scored

PHILIPPINE STAR/ MICHAEL VARCAS

A PANEL of the House of Representatives scrutinized the Department of Health (DoH) and Philippine Health Insurance Corp. (PhilHealth) over the pricy coronavirus (COVID-19) testing package that cost as high as P8,150 at the height of the pandemic.

Lawmakers questioned the pricing method, suggesting the agencies may not have adhered to a “World Health Organization formula.”

Former DoH secretary Francisco T. Duque III defended the initial high cost, citing the limited supply of test kits early in the pandemic. He noted prices were adjusted as supplies stabilized.

PhilHealth president Emmanuel R. Ledesma Jr. confirmed the testing cost was reduced over time, reaching P2,450.

Iloilo Rep. Janette L. Garin criticized the initial pricing, suggesting it should have been between P2,000 to P2,500 to prevent profiteering and enable better tracking of the virus’ spread. “It was unfairly priced,” Ms. Garin told BusinessWorld on the sidelines of the hearing.

She said the government should’ve looked at making testing kits cheap to determine the extent of infected Filipinos, enabling health agencies to respond proportionately to COVID-19’s infectiousness.

“Testing is actually the manner by which… we will have eyes to see our enemy,” said Ms. Garin in mixed English and Filipino. — Kenneth Christiane L. Basilio

Sofitel workers demand retention

SOFITEL Philippine Plaza Hotel workers called on Philippine Plaza Holdings, Inc. (PPHI) to honor their collective bargaining rights by retaining their employment on the pretext that the hotel will be reopening.

“We are asking for very little: respect our collective bargaining agreement,” Nestor L. Cabada, National Union of Workers in Hotel, Restaurant & Allied Industries (NUWHRAIN) Philippine Plaza Chapter president, said in Filipino at a Monday press briefing. “The workers of Sofitel want no terminations; employment should be continuous without any loss of seniority rights and benefits.”

PPHI president Esteban G. Peña Sy told BusinessWorld in a Viber message that the management is uncertain about the hotel’s future and that union workers’ assumption that the 50-year-old hotel will be closing only to be rehabilitated is “totally wrong.”

“Since we do not own the land on which Sofitel Philippine Plaza is located, we are uncertain of the future of the hotel. We cannot make any commitment on something that we are not sure or in control of,” he said.

“Since it is the advice of experts that the 50-year-old hotel is not safe for its guests and employees, the owners have made the painful decision to close it down, even though the hotel is having its historical best business performance in its 48 years of operation since last year.”

During the press briefing, NUWHRAIN deputy secretary general Marco Aristeo J. Gojol said there are over 1,000 Sofitel employees, many of whom are contractual workers.

Union members accused the management of “union busting: for choosing to hire more contractual or casual laborers once it supposedly re-opens.

Mr. Cabada urged the management to rehire present employees rather than transfer them to other hotels. “Why terminate them? Why transfer them to another hotel if you are going to reopen? Why not rehire them to continue the excellent service provided by the hotel’s employees?” he said at the briefing.

Mr. Peña Sy said the accusation of union busting is untrue. “If the hotel wants to bust the unions, it should have done it during the pandemic time. During the COVID days, Sofitel did not fire any single employee but continued to give the workers all their benefits despite the fact that the hotel was losing money,” he said.

In May, Mr. Peña Sy told BusinessWorld that all Sofitel employees would be granted separation packages whether or not they are union members.

He said there are over 200 vacancies for employees in other hotels and that Sofitel employees will be offered employment in other Accor-managed properties and hotels ranging from junior to supervisor roles.

The hotel will close on July 1, 2024, but will continue to honor reservations made prior.

It was built in 1973 and opened in 1976. Four years later, it was purchased by Accor, joining the group’s hotel brands Novotel, Mercure, and Ibis. — Chloe Mari A. Hufana

Marcos cites need to upgrade naval defense capabilities

PHILIPPINE STAR/KRIZ JOHN ROSALES

PRESIDENT Ferdinand R. Marcos, Jr. on Monday led the Philippine Navy’s command conference  and stressed the need for “continuous improvement of defense capabilities to address evolving security challenges.”

The Navy said their second quarter conference focused on the Comprehensive Archipelagic Defense Concept (CADC), which was adopted by the Department of National Defense (DND) this year amid China’s increasing aggression within the Philippines’ exclusive economic zone in the South China Sea.

Modernization and capability enhancement are “vital components” of the CADC, the Navy said, citing its chief Toribio Adaci, Jr.

The archipelagic program also seeks to enhance the country’s maritime cooperation with other nations, the Navy said.

“The Philippine Navy will continue to fight until our nation realizes genuine freedom and security in our waters,” he said at the meeting.

In March, Defense Secretary Gilbert C. Teodoro, Jr. said the program, in plain language, means “we are developing our capability to protect and secure our entire territory and exclusive economic zone.” — Kyle Aristophere T. Atienza

Sheinbaum poised to be Mexico’s 1st female president

CLAUDIA SHEINBAUM, presidential candidate of the ruling MORENA party, speaks after voting at a polling station during the general election, in Mexico City, Mexico, June 2, 2024. — REUTERS

MEXICO CITY — Claudia Sheinbaum is set to win a landslide victory to become Mexico’s first female president, inheriting the project of her mentor and outgoing leader Andres Manuel Lopez Obrador whose popularity among the poor helped drive her triumph.

At least five exit polls showed Ms. Sheinbaum, a climate scientist and former mayor of Mexico City, winning the presidency, with pollster Parametria forecasting a landslide 56% of the vote for the ruling MORENA party candidate. Parametria forecast opposition candidate Xochitl Galvez taking 30% of the vote.

Provisional results are trickling in and show Ms. Sheinbaum leading with 59% of the vote, versus 29% for Ms. Galvez, with 5% of total votes counted. Galvez has not conceded and told her supporters to be patient for the official results.

Imminent victory for Ms. Sheinbaum is a major step for Mexico, a country known for its macho culture and home to the world’s second biggest Roman Catholic population, which for years pushed more traditional values and roles for women.

Ms. Sheinbaum would be the first woman to win a general election in the United States, Mexico or Canada.

“I never imagined that one day I would vote for a woman,” said 87-year-old Edelmira Montiel, a Sheinbaum supporter in Mexico’s smallest state Tlaxcala.

“Before we couldn’t even vote, and when you could, it was to vote for the person your husband told you to vote for. Thank God that has changed and I get to live it,” Edelmira Montiel added.

Ms. Sheinbaum has a complicated path ahead. She must balance promises to increase popular welfare policies while inheriting a hefty budget deficit and low economic growth.

She has vowed to improve security but has given few details and the election, the most violent in Mexico’s modern history with 38 candidates murdered, has reinforced massive security problems. Many analysts say organized crime groups expanded and deepened their influence during Mr. Lopez Obrador’s term.

Sunday’s vote was also marred by the killing of two people at polling stations in Puebla state. More people have been killed — over 185,000 — during the mandate of Mr. Lopez Obrador than during any other administration in Mexico’s modern history, although the homicide rate has been inching down.

“Unless she commits to making a game-changing level of investment in improving policing and reducing impunity, Sheinbaum will likely struggle to achieve a significant improvement in overall levels of security,” said Nathaniel Parish Flannery, an independent Latin America political risk analyst.

The ruling MORENA party has also declared its candidate the winner of the Mexico City mayorship race, one of the country’s most important posts, though the opposition has disputed that and claims its own nominee won the contest.

It also appears MORENA will have a simple majority in Congress, according to party head Mario Delgado, falling short of a two-thirds majority that would allow the party to push constitutional reforms without opposition support.

US RELATIONS
Among the new president’s challenges will be tense negotiations with the United States over the huge flows of US-bound migrants crossing Mexico and security cooperation over drug trafficking at a time when the US fentanyl epidemic rages.

Mexican officials expect these negotiations to be more difficult if the US presidency is won by Donald Trump in November. Mr. Trump has vowed to impose 100% tariffs on Chinese cars made in Mexico and said he would mobilize special forces to fight the cartels.

At home, the next president will be tasked with addressing electricity and water shortages and luring manufacturers to relocate as part of the nearshoring trend, in which companies move supply chains closer to their main markets.

The election winner also will have to wrestle with what to do with Pemex, the state oil giant that has seen production decline for two decades and is drowning in debt.

“It cannot just be that there is an endless pit where you put public money in and the company is never profitable,” said Alberto Ramos, chief Latin America economist at Goldman Sachs. “They have to rethink the business model of Pemex.”

Ms. Sheinbaum has promised to expand welfare programs, though Mexico has a large deficit this year and sluggish gross domestic product growth of just 1.5% expected by the central bank next year.

Mr. Lopez Obrador has loomed over the campaign, seeking to turn the vote into a referendum on his political agenda. Ms. Sheinbaum has rejected opposition claims that she would be a “puppet” of Mr. Lopez Obrador, though she has pledged to continue many of his policies including those that have helped Mexico’s poorest. Political analyst Viri Rios said she thought sexism was behind criticism that Ms. Sheinbaum was going to be a puppet.

“It’s unbelievable that people cannot believe she’s going to be making her own decisions, and I think that’s got a lot to do with the fact that she’s female,” she said. — Reuters

South Korea to suspend military agreement with North over trash balloons

A BALLOON believed to have been sent by North Korea, carrying various objects including what appeared to be trash, is pictured in Incheon, South Korea, June 2, 2024. — YONHAP VIA REUTERS

SEOUL — South Korea plans to suspend a military agreement signed with North Korea in 2018 aimed at easing tensions, the presidential office said on Monday, after Seoul warned of a strong response to balloons launched by Pyongyang carrying trash to the South.

North Korea has launched hundreds balloons carried by wind across the border that dropped trash throughout South Korea, which called it a provocation and rejected Pyongyang’s claim it was done to inconvenience its neighbor.

The National Security Council said it would raise the plan to suspend the military agreement for approval by the cabinet at a meeting on Tuesday.

Suspending the agreement will pave the way for the South to conduct training near the military border and take “sufficient and immediate measures” in response to North Korea’s provocation, the Council said in a statement.

It did not elaborate what those measures may be.

South Korea has previously said it would take “unendurable” measures against North Korea for sending the trash balloons over the border, which could include blaring propaganda from loudspeakers positioned at the border directed at the North.

North Korea has said the balloons were in retaliation for a propaganda campaign by North Korean defectors and activists in the South, who regularly send inflatables containing anti-Pyongyang leaflets with food, medicine, money and USB sticks loaded with K-pop music videos and dramas across the border.

North Korea has reacted angrily to the campaign because it is worried about the potential impact of the materials on the psychology of the people who read or listen to them and on the state’s control of the public, experts said. — Reuters

Heat wave killed at least 56 in India from March-May 

UNSPLASH

NEW DELHI — India saw nearly 25,000 cases of suspected heat stroke and 56 people lost their lives after several heat wave days across the country from March-May, local media reported, citing government data.

May has been a particularly bad month for the region, with temperature in capital Delhi and nearby state of Rajasthan touching 50 degrees Celsius (122 degrees Fahrenheit).

In a contrast, parts of eastern India have been reeling under the impact of cyclone Remal. Heavy rain in the northeastern state of Assam has killed 14 people since Tuesday.

In the island nation of Sri Lanka, at least 15 people have died due to flooding and landslides after heavy monsoon rain lashed the region, the country’s Disaster Management Centre (DMC) said on Sunday.

A confluence of factors has led to a very hot summer in South Asia, a trend scientists say has been worsened by human-driven climate change.

At least 33 people, including election officials on duty in India’s just-concluded general election, died of suspected heatstroke in the states of Uttar Pradesh and Bihar in the north, and Odisha in the east on Friday.

Data from the National Centre of Disease Control (NCDC)showed that the situation was worst in May, with 46 heat-related deaths and 19,189 suspected heat stroke cases, news website The Print reported.

Including suspected cases, the total number of deaths in India could be much higher at 80, newspaper The Hindu reported.

Over 5,000 cases of heatstroke were detected in the central state of Madhya Pradesh alone.

The weather office has predicted that heat wave conditions will be less severe till Wednesday and an early arrival of monsoon in the southern state of Kerala last week is expected to bring more relief. — Reuters

European election: EU struggles to counter Russian disinformation

REUTERS

BRUSSELS — The European Union’s (EU) disinformation-busting team last month debunked a Russian-language video on YouTube that said citizens were fleeing dictatorship in EU member Poland and seeking refuge in Belarus, a close ally of Moscow.

The story peddled recurring pro-Kremlin narratives of Warsaw holding aggressive militaristic intentions and of democratic failings in Poland and the wider EU, the team known as Stratcom said.

It was also part of what Stratcom says is a broader Russian disinformation campaign that Europe is widely seen as struggling to counter before an election to the European Parliament on June 6-9.

The video fitted a pattern: Russia-linked websites take pro-Kremlin content from state-controlled outlets or pro-Kremlin social media accounts, repackage it, including with translation, and spread it via new channels to target EU audiences, EU officials say.

Russia is widely accused of having waged disinformation campaigns targeting elections in the United States, Europe and Britain over the last decade although Moscow had denied it uses disinformation to influence public opinion.

A US intelligence assessment in 2023 found Moscow was using spies, social media and Russian state-run media to erode public faith in the integrity of elections worldwide.

European capitals have warned of a pre-election surge in disinformation, but its impact is hard to gauge.

“Influence operations by Russia, China and other actors, including domestic groups, have the potential to disrupt online conversations around the EU election,” said Jack Stubbs, chief intelligence officer at social network analysis firm Graphika.

“We’ve seen evidence to suggest that even the people conducting the operations can struggle to understand if they are having an impact.”

Russia’s foreign ministry did not respond to a request for comment. Moscow dismisses Western allegations that it is spreading disinformation.

Stratcom, a team of 40 that runs on a shoestring budget of 15 million euros ($16.3 million), is on the front line of Brussels’ battle against disinformation. But the 27-nation bloc is under-resourced for the fight, two EU officials said.

“We cannot stage an offensive from Brussels,” said Peter Stano, spokesperson for the European Commission’s diplomatic service, adding such action had to happen at member-state level.

Most, though not all, EU countries do wage their own fight against disinformation, but resources vary, and experts say the European effort is disjointed.

This has left mainstream parties vulnerable to disinformation campaigns that amplify grievances that are fueling voter discontent and underpinning support for nationalist parties in France, Germany and elsewhere.

According to the EU’s second annual disinformation report published this year, Poland and Germany were the most targeted nations inside the EU. France and non-EU member Serbia were also among the top targets.

FRAGMENTED RESPONSE
Moscow, whose relations with Western governments have sunk since its 2022 invasion of Ukraine, says the West is waging an information war involving fake claims aimed at destroying Russia’s reputation and casting it as an enemy.

Officials in Russia, which has suppressed dissent under President Vladimir Putin, say the West has become so intolerant that it refuses to accept any view that contradicts the prevailing dominant narrative.

France’s European affairs minister, Jean-Noel Barrot, told newspaper Ouest France in April that his country was “pounded” by Russian disinformation.

Attacks against France include the creation of a fake French government website alleging 200,000 citizens were being called up to fight in Ukraine and a Paris bed bug scare that was amplified by Kremlin-backed activities and went viral.

“Not a week goes by without France being the target of coordinated and deliberate maneuvers to disrupt public debate and interfere in the campaign for the European elections,” Mr. Barrot told the newspaper.

Tomasz Chlon, the Polish government’s international disinformation commissioner, told Reuters that blocking websites was like squeezing a balloon because they crop up elsewhere.

Efforts to fight disinformation vary across Europe.

France has tasked its Viginum foreign disinformation watchdog — which has a team of 42 and is growing — with monitoring Russia-linked social media accounts and uncovering influence operations. Spain has a dedicated taskforce that uses hardware designed by Europol to coordinate its state response.

Italy’s political opposition has drafted legislation that would create a unit dedicated to identifying acts of disinformation. Slovakia, whose government faces accusations of favouring Russia, has mostly gutted a unit it said was staffed by “activist clerks” in charge of ensuring “there is only one correct opinion.”

“The overall response is very fragmented,” said Valentin Chatelet, a researcher at the Atlantic Council’s Digital Forensics Lab.

In a sign of Europe’s intent to act more forcefully, EU nations last month suspended four Russian media entities, including Czech-registered website Voice of Europe, calling them Kremlin-linked propaganda networks.

The Kremlin said there would be repercussions for Western journalists in Moscow in retaliation.

The EU’s new Digital Services Act (DSA) requires Big Tech to do more to counter illegal and harmful content. Generative AI has made it faster and easier for foreign actors to spread misinformation, EU officials say.

“Before with trolls and bots, there was usually a person behind it. With AI, everything has multiplied,” Stano said. — Reuters

OPEC+ agrees to extend deep oil production cuts into 2025

LONDON/DUBAI — OPEC+ agreed on Sunday to extend most of its deep oil output cuts well into 2025 as the group seeks to shore up the market amid tepid demand growth, high interest rates and rising rival US production.

Brent crude oil prices have been trading near $80 per barrel in recent days, below what many OPEC+ members need to balance their budgets. Worries over slow demand growth in top oil importer China have weighed on prices alongside rising oil stocks in developed economies.

The Organization of the Petroleum Exporting Countries and allies led by Russia, together known as OPEC+, have made a series of deep output cuts since late 2022.

OPEC+ members are currently cutting output by a total of 5.86 million barrels per day (bpd), or about 5.7% of global demand.

Those include 3.66 million bpd of cuts, which were due to expire at the end of 2024, and voluntary cuts by eight members of 2.2 million bpd, expiring at the end of June 2024.

On Sunday, OPEC+ agreed to extend the cuts of 3.66 million bpd by a year until the end of 2025 and prolong the cuts of 2.2 million bpd by three months until the end of September 2024.

OPEC+ will gradually phase out the cuts of 2.2 million bpd over the course of a year from October 2024 to September 2025.

“We are waiting for interest rates to come down and a better trajectory when it comes to economic growth … not pockets of growth here and there,” Saudi Energy Minister Prince Abdulaziz bin Salman told reporters.

OPEC expects demand for OPEC+ crude to average 43.65 million bpd in the second half of 2024, implying a stocks drawdown of 2.63 million bpd if the group maintains output at April’s rate of 41.02 million bpd.

The drawdown will be less when OPEC+ starts phasing out the 2.2 million bpd voluntary cuts in October.

The International Energy Agency (IEA), which represents top global consumers, estimates that demand for OPEC+ oil plus stocks will average much lower levels of 41.9 million bpd in 2024. “The deal should allay market fears of OPEC+ adding back barrels at a time when demand concerns are still rife,” said Amrita Sen, co-founder of Energy Aspects think tank.

Prince Abdulaziz said OPEC+ could pause the unwinding of cuts or reverse them if demand wasn’t strong enough.

QUICK DEAL
Analysts had expected OPEC+ to prolong voluntary cuts by a few months due to falling oil prices and sluggish demand.

But many analysts had also predicted the group would struggle to set targets for 2025 as it had yet to agree individual capacity targets for each member, an issue that had previously created tensions.

The United Arab Emirates (UAE), for instance, has been pushing for a higher production quota, arguing its capacity figure had been long under-estimated.

But in a surprise development on Sunday, OPEC+ postponed the discussions on capacities until November 2025 from this year.

Instead, the group agreed a new output target for the UAE which will be allowed to gradually raise production by 0.3 million bpd, up from the current level of 2.9 million.

OPEC+ agreed that it would use independently assessed capacity figures as guidance for 2026 production instead of 2025 — postponing a potentially difficult discussion by one year.

Prince Abdulaziz said one of the reasons for the delay was difficulties for independent consultants to assess Russian data amid Western sanctions on Moscow for its war on Ukraine.

The meetings on Sunday lasted less than four hours — relatively short for such a complex deal.

OPEC+ sources said Prince Abdulaziz, the most influential minister in the OPEC group, had spent days preparing the deal behind the scenes.

He invited some key ministers — mostly those who contributed to the voluntary cuts — to come to the Saudi capital Riyadh on Sunday despite meetings being largely scheduled online.

The countries which have made voluntary cuts to output are Algeria, Iraq, Kazakhstan, Kuwait, Oman, Russia, Saudi Arabia and the United Arab Emirates.

“It should be seen as a huge victory of solidarity for the group and Prince Abdulaziz,” said Ms. Sen, adding the deal would ease fears of Saudi Arabia adding barrels back due to Aramco’s share listing.

Saudi Arabia’s government has filed papers to sell a new stake in state oil giant Aramco that could raise as much as $13.1 billion, a landmark deal to help fund Crown Prince Mohammed bin Salman’s plan to diversify the economy.

OPEC+ will hold its next meeting on Dec. 1, 2024. Reuters

Global airlines raise profit outlook for 2024

KEITH CHAN-UNSPLASH

DUBAI — Global airlines on Monday raised their profit forecast for 2024 and projected industry-wide revenues just shy of $1 trillion as a record number of travelers board flights.

The International Air Transport Association (IATA) said it expected the worldwide industry to generate $30.5 billion of profit this year, higher than an upwardly revised $27.4 billion in 2023 as carriers keep a lid on underlying labor costs despite recent strikes.

That comes just four years after the industry collapsed to a $140-billion loss in 2020 as a result of the pandemic.

“The environment is better than we had expected, particularly in Asia,” Director General Willie Walsh told Reuters on the sidelines of an annual meeting of IATA’s more than 300 members, which account for more than 80% of global air traffic.

However, the airline industry warned its ability to serve a strong rebound in travel demand is being hampered by disruption to global supply chains, including deliveries of its own fleets.

Passenger yields — or the average amount paid by a passenger to fly one mile —are expected to strengthen by 3.2% compared with 2023, IATA said in a twice-yearly economic outlook. In part, that is because capacity growth is constrained, driving up average fares.

By contrast, the corresponding figure for cargo is expected to fall 17.5% in 2024 as freight markets return towards normal patterns after booming during the pandemic.

Airline activity is widely seen as a litmus test for business or consumer confidence, as well as trade.

The industry has high fixed costs and regulations that discourage most cross-border mergers, meaning it remains fragmented.

“The margin remains wafer thin; we’re still looking at a margin of just over 3%,” Mr. Walsh said. “(That) performance is still well below where the industry needs to be.”

In Asia, IATA more than trebled its industry profit forecast for 2024 to $2.2 billion despite a sluggish recovery in international travel in China.

At $14.9 billion, unchanged from earlier forecasts, North America remains the most profitable region with “strong consumer spending despite cost-of-living pressure,” IATA said. 

IATA said airlines had been hit by unforeseen maintenance issues. That appeared to be a reference to repair bottlenecks for engines built by Pratt & Whitney, which are expected to leave hundreds of Airbus jets grounded this summer.

Industry sources said on Friday that Airbus, the world’s largest planemaker, was itself facing a new surge in supply problems, casting doubt on output plans for the second half. The planemaker has said it is sticking by full-year delivery goals.

Rival Boeing is producing far fewer of its best-selling 737 MAX jets than originally planned after a mid-air cabin panel blowout in January prompted US regulators to cap its production. Reuters

Zara expands its live shopping experiment to Europe and US after China

LONDON — Zara will expand its live shopping broadcasts to the United Kingdom (UK), Europe and the United States this year, testing a format that is already wildly popular in China but one with which Western shoppers are less familiar.

The fast-fashion brand, whose parent Inditex reports quarterly results on Wednesday, is investing in new ways to engage shoppers as analysts expect sales to grow less strongly after an extraordinary post-pandemic surge.

Five-hour long live shopping shows in China, broadcast weekly on Douyin, TikTok’s Chinese sister site, have helped boost Zara’s sales since they launched in November, according to retail analytics firm EDITED.

“We want to take this to the Western countries, where livestream is not as popular…but we think why not — from an entertainment perspective this is like an evolution,” said a Zara spokesperson for the initiative, which is expected to launch between August and October.

Shopping as entertainment isn’t new — TV shopping channels where viewers phoned in to buy featured products were popular for decades — but social media and e-commerce have triggered a new era of livestreaming, led by China where influencers sell everything from cosmetics to snacks at a frenetic pace.

Brands looking to create a more rarified experience have sought to do live shopping differently.

Zara’s show on Douyin features Chinese models wearing Zara dresses, trying on shoes and jewelry. It also includes catwalk sequences and “backstage” make-up shots, while its conversational, leisurely style is in contrast to the hard-sell livestreams that hosts like “Lipstick King” Li Jiaqi are famous for.

A team of 70 people works on the live show, which is streamed from a 1,000-square metre space in Shanghai, switching angles between seven cameras, Zara said. On average, it attracts around 800,000 unique viewers per show. “Zara’s livestream approach built significant brand awareness in China,” EDITED analyst Krista Corrigan said. Zara sold out of most sizes in 50% more products in China in the first three months of this year than in the same period of 2023, according to EDITED data.

The livestream also allows Zara to reach shoppers even as its physical presence in China has shrunk from 570 stores in 2019 to just 192 as of Jan. 31 this year. 

FRIENDLY, CASUAL AND FUN
In the UK, US and still to be announced European countries, Zara has chosen to host live shows on its app and website instead of a third-party social media platform to ensure control over aesthetics.

Alfonso Segura, who runs Barcelona-based fashion retail consultancy TFR, said this would also allow it to boost engagement and leverage its database of registered users.

The ad-hoc livestreams will highlight specific Zara Woman collections, and will be hosted by two “very well-known” fashion personalities, the brand said, without naming them.

Aiming for a “friendly, casual and fun” experience, the shows will be shorter than those on Douyin, lasting 45 minutes to an hour, but viewers will still be able to react in real time with questions, comments and emojis.

“We can’t always read across what has worked in China, to whether that’s going to work in western Europe or in the UK,” said JP Morgan analyst Georgina Johanan.

But, she added, Inditex’s investment in live shopping is an example of its momentum and ability to be at the forefront of experimenting with new formats.

“This is a business that, 10 years ago, most people were saying was behind in online, and here they are one of the first to trial this in the UK,” Ms. Johanan said.

Asos, L’Oréal and Puma are among brands to have launched on TikTok Shop in the UK in recent months, the platform said, while AliBaba platform AliExpress launched a UK livestream show in March called “It Girls” featuring influencers including Olivia Attwood.

Asos said its first order came within 30 minutes of launching, and new shoppers account for 57% of those buying its products via TikTok Shop.

Madrid-based Carmen Muley started out hosting AliExpress’ first livestream in China in 2016 and now advises brands on live shopping strategy through her company Paragon Social Commerce.

“Here in Europe, we don’t really like having someone selling something to us aggressively — of course the end goal of a live shopping event is to sell a product, but consumers don’t want to feel like they have the obligation to buy,” she said.

“Offering something the consumer would not normally find in stores is a good idea — you need to make the event special, otherwise why would they join?”

Inditex declined to say how much it is investing in the new format but the family-owned company is sitting on an 11 billion euro cash pile, giving it the firepower and a safety net to experiment with new ways of selling, even if success isn’t guaranteed. Reuters