Boeing and Lyft in the Spotlight

Weekly Report - 02/04/2019

Boeing's Failure

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Boeing will have shelled out a lot of cash to compensate the victims. The fix to the software is already out. The firm is wealthy and well capitalized. It carries insurance to indemnify itself against just such risks. Still, the price has suffered. It is possible that the price will recover its pre-accident value and continue it long march to high profitability. There is also the possibility that Airbus will exploit the disadvantage Boeing currently suffers to capture market share from its arch rival.

Boeing miscalculates


In an effort to continue the 40 plus yearlong production run for the vaunted 737 airliner Boeing wanted to exploit the move to efficient twin engines favored by airlines for their cost advantages. Problem was that the 737 fuselage was a bit low to accommodate the larger twin engines so they moved the engines forward on the wing pylons to raise them off the ground enough to be able to taxi without scraping the engines. This refit caused the center of gravity of the aircraft to shift forward. To compensate for this Boeing altered its flight software to compensate for the rejigged aerodynamics. The second failure of the system took place two weeks ago and sent the stock price, not to mention the passengers on the doomed flight, plummeting. When the dust settles on this disaster,

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Lyft launches


Initial Public Offerings (IPOs) are notoriously fickle. They rarely perform as expected and disappoint as often as they enrich. Lyft, the ride hailing service sold some of itself to the public on Friday last. The price did “pop” very shortly after trading in the asset began, meaning those who bought it for the initial offering price quickly turned around to sell it to the next buyer at a higher price that those who bought it “initially” paid for it. Well and good, but the price fell back. These are early days for the firm as they are to the commoditized hack industry generally. The significance of Lyft is its foreshadowing for the upcoming IPO of the real gorilla in the global hack industry; Uber. These two offerings portend the end to automobile ownership as we have become accustomed to. For several years now, the world’s auto manufacturers have understood that individual car ownership is dying fast. The cost of owning such an expensive asset that stood ide about 96% of its useful life has long been deemed a luxury. When maintenance, insurance, and fuel are added to the purchase cost, the cost per kilometer traveled becomes very high. No need for this expenditure, as “renting” a car for no more than your journey has become the model of choice around the world and is the one auto manufacturers are gearing themselves to serve. Uber and Lyft are to personal vehicular travel what Netflix is to entertainment; a revolution in the way humans gets around.

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