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Airline Operation Results 2017 & 2018

Wrote a little python… to extract the monthly operation results from airlines, and calculated load factor change, RPM change and ASM change.

  • RPM = Revenue passenger miles, and its percentage change year-over-year
  • ASM = Available seat miles, its percentage change year-over-year
  • Load factor = RPM / ASM, its change year-over-year
  • RPM_g = RPM(t) / RPM (t-12) – 1
  • ASM_g = ASM(t) / ASM (t-12) – 1

I did Alaska and Southwest tonight and will add more…

Data Download:

Alaska Air Group operation results

Southwest Airlines operation results

Current Anti-Aging Startups Roundup

Anti-aging is a centuries-long problem and we don’t have an answer.

Here is a summary of current notable efforts that might provide some sort of solution.

Biopharma/Therapeutics Approach

Unity Biotechnology – eliminate senescent cells
Source: Unity Cellular Senescence Investor & Analyst Presentation on Dec. 11, 2018
  • Lead candidate UBX0101, a first-in-class senolytic molecule
  • UBX1967
    • January 2019, completed license agreement with Ascentage Pharma, granting Unity the exclusive worldwide development and commercialization rights and non-exclusive manufacturing rights outside of Greater China (China, Hong Kong, Macau and Taiwan) for UBX1967 in all non-oncology indications. Inside Greater China, UNITY is obligated to commercialize UBX1967 through a joint venture with Ascentage Pharma. The UBX1967 License Agreement also grants UNITY the right to continue its preclinical development efforts with respect to another Ascentage Pharma-controlled Bcl-2 inhibitor compound that will serve as a back-up to UBX1967.
    • Per the 2016 pact, should Unity choose to license at least one more products, the Chinese biotech will gain a total of 1,333,338 shares
    • plans to file an IND application for UBX1967 in the second half of 2019
Calico – A previous google company
  • Founded in 2013, Calico started within Google (later Alphabet) and soon jump-started with huge fundings – a $1.5 billion initiative/collaboration in September 2014 with Abbvie. “AbbVie and Calico will each initially provide up to $250 million to fund the collaboration with the potential for both sides to contribute an additional $500 million.”
  • In June 2018, the collaboration was extended with another $1 billion. “AbbVie and Calico will each commit to contribute an additional $500 million to the collaboration.”
  • It was also cited that “since 2014, the collaboration between the two companies has produced more than two dozen early-stage programs addressing disease states across oncology and neuroscience and yielded new insights into the biology of aging.”
samumed
Napa Therapeutics

Data Approach

Juvenescence AI
  • A subsidiary of Juvenescence, a joint effort of Juvenescence + Insilico Medicine
  • Formed in July 2017
Human Longevity
  • Was valued at $1.6 billion in 2017 with fundings from Celgene, Illumina, GE Ventures, etc.
  • Declined to a valuation of $310 million according to a WSJ report

Portfolio Approach

Juvenescence
Life Biosciences
  • Jan. 2019 Series B of $50 million
  • co-founded in 2017 by David Sinclair and Tristan Edwards
  • 8 Subsidiaries
    • Prana Biotechnology (an initial $7.5 million investment in Jan.2019)
    • Lua, HIPAA-compliant medical technology platform (acquired in Oct. 2018)
    • Senolytic Therapeutics acquired at a very early stage
    • Jumpstart Fertility acquired at a very early stage
    • the other four were formed in-house (Selphagy Tx, Spotlight Biosciences, Continuum Biosciences, Animal Biosciences)

Somehow, reminded me of Theranos… also an area that might not be reguated by FDA… (Ageing is not a disease by FDA’s definition) and some are backed by non-traditional biotech VC firms… But most seemed to be more experienced and sophisticated in biology and medicine (than Theranos’ average).

Trees and Global Warming

Planting trees seems to be one of the most common and economic solution to reduce CO2 and is well-recognized around the globe. It is also one of the “negative-emissions technologies” to help meet Paris Agreement targets – afforestation and reforestation.

However, climate changes are not that simple and global temperature won’t be restored just by planting trees.

Clearly, we have omitted some “negative impacts” of trees since the beginning. More efforts are definitely needed to plant trees more effective.

One of the problems is “albedo effect”. Tree leaves absorb more sunlight than do other types of land cover. Forests can reduce Earth’s surface albedo, meaning that the planet reflects less incoming sunlight back into space, leading to warming. (Nature)

Also, trees themselves are emitting CH4 and N2O, greenhouse gases.

Source: Nature

The question, raised on New York Times with Prof. Unger at Yale in 2014, had previously attracted lots of debates.

I think it is more or less similar to companies’ earnings projection. Before launching a new product, earnings projection looks great. But it is often overestimated. Other cost items will appear, leaving the product a thinner margin.

Trees are the same. Simply planting trees probably won’t give us the estimated benefits. While I believe the “net effect” is good, we do need more sophisticated understanding and solutions regarding trees.

 

A Note on 5G & Its Slicing as a Real Estate Play

【推荐读物】Recommending this insightful and objective article by Benedict Evans from a16z – 5G: if you build it, we will fill it.

Below is an excerpt of his comments on slicing…

One of the cooler features of 5G is that it lets you split out dedicated capacity for particular use cases – so-called ‘network slicing’. Today (to simplify hugely), although network operators try to do traffic management, all traffic in the cell is fundamentally using the same capacity. 5G lets you create dedicated private capacity in the radios network with specific characteristics. So, you could sell a truck operator dedicated capacity on the two miles between a specific freeway exit and a specific warehouse. Or, you could offer an IoT operator (or alarm company) much lower bandwidth but over a wider area.

 

 

US Government Shutdown – an Incomplete List of Direct Effects in Business

On Jan 10, Fed Chair Jerome Powell commented at the Economic Club about government shutdown…

In the short term, if government shutdowns don’t last very long, they have typically not left much of a mark on the economy… A longer shutdown is something we haven’t had. If we have an extended shutdown, and I do think that that would show up in the data pretty clearly,… we would have a less clear picture into the economy if it were to go on much longer.

Here is an incomplete list of effects in business…

Saudi Arabia: Surplus to Deficits, Turnaround, Diversification

Saudi Arabia’s financial situation has been closely linked to oil prices.

Saudi Arabia Oil and Non-oil revenues 2012 to 2016 | Source: Saudi Arabia Ministry of Finance statement about the national budget for 2017

The majority of the revenue is from oil exports. Its oil revenue has decreased more than 50% due to the oil price slump in 2014.

Oil comprises 30-40 percent of the real GDP of Saudi Arabia.

Saudi understood the need to diversify decades ago. It became more serious after the 2014 oil price shock. But that means more expenditure and efforts to push for the economic reform.

A “Vision 2030” was announced in 2016. (original English copy)

While expenditure kept increasing, Saudi government has quickly generated its deficits since 2014. Deficit in 2015 is at a similar level of its surplus in 2012 – a SAR 740 billion difference in 3 years. And debts are accumulated quickly.

Saudi has planned to eliminate its deficit by 2023, which could be easily done if oil price maintains.

In Dec 2018, Saudi released its budget of 2019, which includes an expenditure of over SAR 1 trillion and a deficit of ​SAR 131 billion.

While the sixth straight deficit is not something to worry about, the real question is to what level Saudi can diversify its economy and becomes a sustainable nation even without oil. (the contribution of non-oil revenues to total revenues up from 12% in 2014 to 32% in 2018)

Lowered iPhone Sales Forecast and More

Since Apple announced that it would stop reporting the iPhone unit sales number during Q3 earnings call, things have not become easier.

iPhone Ban in China

The fight between Qualcomm and Apple has led to a sales ban on older iPhone models in China, ordered from a Chinese court (福州市中级人民法院). The case was filed against Apple in China in late 2017, saying the iPhone maker infringed patents on features related to resizing photographs and managing apps on a touch screen.

Apple said it planned a software update that would solve the issue; also, the ban would likely take time to enforce, according to Reuters.

iPhone Ban in German

In German, Apple will be pulling iPhone 7 and iPhone 8 models from its stores there following a win for Qualcomm in the District Court of Munich, which ruled that Apple’s devices were infringing on Qualcomm’s intellectual property related to power savings in smartphones. (The Verge)

Qualcomm said on Thursday (Jan.3) that it posted security bonds of 1.34 billion euros ($1.52 billion) to enforce the German court order.

Apple Outlook Cut Citing Weaker iPhone Demands in China

On Jan 2, a letter from Apple CEO Tim Cook to investors said sales will be about $84 billion in the quarter ended Dec. 29, down from earlier estimates of $89 billion to $93 billion. Apple posted sales of $88.3 billion in the fiscal first quarter a year earlier, so the new forecast would mean Apple is reporting a holiday quarter slowdown for the first time since Cook became CEO in 2011. (Bloomberg)

Apple shares fell 10% to $142.19, the biggest drop in almost six years, the next day.

In the letter, Cook said Apple’s gross margin will be approximately 38%. (also discussed in a previous post about Apple’s pricing strategy)

Chinese Phone Makers Gaining In Zero-growth Market

Although 2018 Q4 numbers are not yet available, Q3 numbers tell the same story. According to IDC Quarterly Mobile Phone Tracker on Nov 1.

Company 3Q18 Shipment Volumes (millions) 3Q18 Market Share 3Q17 Shipment Volumes (millions) 3Q17 Market Share 3Q18/3Q17 Change
Samsung 72.2 20.3% 83.3 22.1% -13.4%
Huawei 52.0 14.6% 39.1 10.4% 32.9%
Apple 46.9 13.2% 46.7 12.4% 0.5%
Xiaomi 34.3 9.7% 28.3 7.5% 21.2%
OPPO 29.9 8.4% 30.6 8.1% -2.1%
Others 119.9 33.8% 149.8 39.6% -19.9%
Total 355.2 100.0% 377.8 100.0% -6.0%

And in Gartner’s December report…

Vendor 3Q18 Units (thousands) 3Q18 Market Share (%) 3Q17 Units (thousands) 3Q17 Market Share (%)
Samsung 73,360.1 18.9 85,605.3 22.3
Huawei 52,218.4 13.4 36,501.8 9.5
Apple 45,746.6 11.8 45,441.9 11.8
Xiaomi 33,219.7 8.5 26,853.2 7.0
OPPO 30,563.4 7.9 29,449.2 7.7
Others 153,960.0 39.6 159,742.0 41.6
Total 389,068.2 100.0 383,593.4 100.0

What is good for Apple…

From Cook’s letter, we know Apple’s wearables sales grew by almost 50% year-over-year, as Apple Watch and AirPods were wildly popular among holiday shoppers.