Latest / What the Flux / Qantas and Virgin cut flights | Uber invests $10bn into robotaxis | Allbirds pivots to AI Birds

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Qantas and Virgin cut flights | Uber invests $10bn into robotaxis | Allbirds pivots to AI Birds · What the Flux

• 0:05
  Speaker 1: This is what the Flux.
• 0:06
  Speaker 2: I'm Brett and I'm Justin and it's Friday's seventeenth of
• 0:09
  Speaker 2: April does Bay.
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  Speaker 1: The International Monetary Fund, aka the big dog monitoring global economics,
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  Speaker 1: has just dropped their latest outlook and it's a bit
• 0:16
  Speaker 1: of a mood killer. In a worst case scenario, I'm
• 0:18
  Speaker 1: af reckons that global growth could slow to just two
• 0:21
  Speaker 1: percent in twenty twenty six, and as for Australia, we
• 0:24
  Speaker 1: might be facing some of the highest inflation in the
• 0:26
  Speaker 1: developed world. Talk about a buzz.
• 0:28
  Speaker 2: Killington great way to start my Friday. See what is
• 0:31
  Speaker 2: a good way to start your Friday? Though quick six
• 0:33
  Speaker 2: in the Flux app. It's the game where you can
• 0:35
  Speaker 2: win fifty dollars just by answering three business or finance
• 0:38
  Speaker 2: questions correctly. We'll drop a notification at a random time
• 0:41
  Speaker 2: today and if you the first to answer correctly, the
• 0:43
  Speaker 2: money is all yours. To make sure to download the
• 0:45
  Speaker 2: Flux app and turn your notifications on to win.
• 0:47
  Speaker 1: Big three Mammoth stories today. Josie Boy, let's do it
• 0:50
  Speaker 1: for our first. Quantus and Virgin Australia are cutting their
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  Speaker 1: lower demand flights because fuel prices continue to bite that
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  Speaker 1: bottom line of airs.
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  Speaker 2: Corny and the big V in a world of pain.
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  Speaker 2: So tell me what's going on here?
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  Speaker 1: So we know that Quantus it's budget little brother, Jetstar
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  Speaker 1: and Virgin Australia are the biggest domestic airlines in Australia
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  Speaker 1: and the.
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  Speaker 2: Only domestic airlines apart from Rex on the regional routes.
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  Speaker 1: In fact, Quantas, Jetty and Virgin Australia control about ninety
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  Speaker 1: percent of the domestic airline industry.
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  Speaker 2: Wow, but now Virgin Australia is slashing more flights on
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  Speaker 2: its less popular routes in May and June.
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  Speaker 1: That is on top of the increase to fares they've
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  Speaker 1: already flat go on, Well it does a boy. With
• 1:27
  Speaker 1: fuel price hikes expected to add about forty million bucks
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  Speaker 1: to virgins operating costs, it really needs to respond to
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  Speaker 1: these turbulent times.
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  Speaker 2: Yep and quonie. They've also announced a five percent cut
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  Speaker 2: to domestic flights after they warned of an eight hundred
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  Speaker 2: million dollar increase in its fuel bill.
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  Speaker 1: For example, one of the routes being cut is Mount
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  Speaker 1: Gambia to Adelaide, your favorite. Some of those flights were
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  Speaker 1: operating at a less than twenty percent capacity.
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  Speaker 2: And these cuts are needed to ensure that the airlines
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  Speaker 2: RASK stacks up.
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  Speaker 1: Ooh, so what's the key learning here?
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  Speaker 2: Airlines measure whether a route is worth flying using something
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  Speaker 2: called RASK revenue per available each kilometer.
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  Speaker 1: YEP and basically how much money each seat generates per
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  Speaker 1: kilometer flown.
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  Speaker 2: When fuel costs spike, the costs of flying those seats
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  Speaker 2: goes up, meaning airlines need even more passengers paying high
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  Speaker 2: affairs just to break even.
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  Speaker 1: Even a full flight on a thin regional route might
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  Speaker 1: not cover its costs anymore.
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  Speaker 2: And Virgins already spent five hundred and forty four million
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  Speaker 2: bucks on fuel in the first half of this financial year,
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  Speaker 2: which is twenty one percent of their total operating expenses.
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  Speaker 2: And when fuel prices explode, it doesn't take long for
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  Speaker 2: a thin regional route to start losing dollary dues. So
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  Speaker 2: airlines cut the roots that don't make sense to keep,
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  Speaker 2: and as the fuel situation keeps shifting, that break even
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  Speaker 2: line keeps moving, and every time it moves, another route
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  Speaker 2: falls below it.
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  Speaker 1: For our second story, Uber is driving away from the
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  Speaker 1: ging economy and pulling into the robotaxi lane. With a
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  Speaker 1: ten billion dollar investment.
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  Speaker 2: The robots are taking over. Help me will be man?
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  Speaker 1: Okay. So Uber is the rideshare app that's been used
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  Speaker 1: by more than one hundred and fifty six million people globally,
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  Speaker 1: including seven point four million Aussies.
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  Speaker 2: And Uber has basically built its business model on connecting
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  Speaker 2: riders to drivers pirates app. But now Uber is going
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  Speaker 2: all in on autonomous vehicles.
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  Speaker 1: Yep. It's reportedly planned to spend ten billion US dollars
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  Speaker 1: to launch robotaxis in around fifteen cities this year.
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  Speaker 2: We're talking billion with a B.
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  Speaker 1: I must say it's a pretty big u turn from
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  Speaker 1: its old marketplace model that shook up the taxi industry.
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  Speaker 2: Initially, they men, haven't we been here before?
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  Speaker 1: We have. Uber actually sold its in house autonomous vehicle
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  Speaker 1: ARM back in twenty twenty for four billion US dollars, But.
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  Speaker 2: Now Uber spending more than twice that by partnering with Rivian,
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  Speaker 2: Elucid and bay Do.
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  Speaker 1: Car Bramps clearly doesyboy. Uber does not want to be
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  Speaker 1: left behind Waimo and Tesla, who are racing towards autonomous vehicle.
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  Speaker 2: But I must say it's a pretty big shift from
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  Speaker 2: their asset light model to an asset heavy one.
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  Speaker 1: So what is the key learning here.
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  Speaker 2: An asset light business model is where a company operates
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  Speaker 2: without owning significant physical assets.
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  Speaker 1: Instead, it relies on partnerships and platforms to deliver it service.
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  Speaker 1: Uber's one of the most famous examples of this. It
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  Speaker 1: doesn't own cars, but connects riders with drivers who do.
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  Speaker 1: Compare that to the asset heavy model, where a company
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  Speaker 1: owns the infrastructure like cars or warehouses or airplanes.
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  Speaker 2: It requires a huge upfront investment.
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  Speaker 1: And Jesi boy. Typically, asset light businesses have higher ebit
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  Speaker 1: DAR margins like Adobe or Microsoft or Netflix, who all
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  Speaker 1: sit at more than forty percent margins.
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  Speaker 2: Whereas manufacturing or airlines they typically have EBITDAR margins between
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  Speaker 2: two and fifteen percent.
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  Speaker 1: So Uber's announcement of investing up to ten billion US
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  Speaker 1: dollars into a Robotaxi is shifting its business from asset
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  Speaker 1: light to asset medium to heavy.
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  Speaker 2: Because in the driver's future they want to own or
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  Speaker 2: control the fleet, which may be critical to staying competitive.
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  Speaker 1: For our third and final story, All Birds, the New
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  Speaker 1: Zealand founded shoe company, has seen it shares sore over
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  Speaker 1: five hundred percent. I'm just saying goodbye to sneakers and
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  Speaker 1: Hello to AI.
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  Speaker 2: This could be one of the biggest pivots I've ever seen,
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  Speaker 2: So tell me more.
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  Speaker 1: Yes So. All Birds is the eco friendly footwear and
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  Speaker 1: clothing company founded by a former New Zealand soccer player,
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  Speaker 1: Tim White yep.
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  Speaker 2: They were known for their comfy, wooly runners, but also
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  Speaker 2: famous for being worn by celebs like Jalo, Matthew mcconnie
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  Speaker 2: Beneffleck back in the day.
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  Speaker 1: Back in twenty twenty one, All Birds listen on the
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  Speaker 1: nasdeck to the ticker bird and be Man.
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  Speaker 2: The demand for shares became even more than shoes, with
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  Speaker 2: their market value flying up to four billion US dollars,
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  Speaker 2: But not long after things started to unravel. Struggled with
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  Speaker 2: growth after expanding globally, couldn't make its stores profitable, and
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  Speaker 2: earlier this year, Albirds sold the business for just thirty
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  Speaker 2: nine million dollars yes million.
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  Speaker 1: Which is approximately a three point nine seven billion dollars
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  Speaker 1: less than its peak market value.
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  Speaker 2: That ain't just a haircut, that is a full shear.
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  Speaker 1: And now the new owner has announced All Birds is
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  Speaker 1: rebranding to New Bird AI YEP.
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  Speaker 2: This is in April folds. The plan is to buy
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  Speaker 2: high powered GPUs and rent out computing power to AI startups.
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  Speaker 1: And this new Bird AI is also dropping all Birds
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  Speaker 1: sustainability mission entirely and be Man.
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  Speaker 2: Investors actually ate it up. All Birds shares jumped over
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  Speaker 2: six hundred percent in a single day.
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  Speaker 1: Keeping in mind that the overall company is still worth
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  Speaker 1: under one hundred and fifty million bucks.
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  Speaker 2: So what is the key learning here?
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  Speaker 1: Market hype is when investors drive up the price of
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  Speaker 1: an asset based more on excitement and speculation then on
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  Speaker 1: its actual fundamental.
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  Speaker 2: And this typically happens when the companies leaned into an
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  Speaker 2: emerging trend where the future potential feels massive.
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  Speaker 1: And does it wait. In these moments, companies can see
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  Speaker 1: huge spikes in valuation just by associating themselves with the trend.
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  Speaker 2: Yeah, and every cycle has its buzzword. Remember in the
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  Speaker 2: early two thousands it was dot com.
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  Speaker 1: YEP, and of course twenty seventeen, blockchain and crypto were
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  Speaker 1: the buzzwords. By twenty twenty one it was the metaverse
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  Speaker 1: and now of course AI and the Man. Many companies
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  Speaker 1: have rebranded during these booms to ride the investor hip.
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  Speaker 1: Remember when Kodak launched kodak Coin back in twenty nineteen
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  Speaker 1: as a crypto for photographs I Do It.
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  Speaker 2: Shares jumped one hundred and nineteen percent right after the
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  Speaker 2: announcement and.
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  Speaker 1: Then shortly after the project fizzled, so.
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  Speaker 2: The jury is still out whether this pivot for All
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  Speaker 2: Birds is a genuine reinvention or just another case of
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  Speaker 2: writing the hypeways flock. Same. If you've been listening to
• 6:46
  Speaker 2: the pod this week and you've been following all the
• 6:48
  Speaker 2: business news and finance, you are a red hot chance
• 6:51
  Speaker 2: to win quick six today. To make sure to download
• 6:52
  Speaker 2: the Flux app to win.
• 6:53
  Speaker 1: Thanks for listening and we'll see you on Monday.