NetJets gets customers back; orders take off
May 7, 2013
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  • The NetJets of today looks different from the one that existed just a few years ago and is growing, said CEO Jordan Hansell, coming off the annual meeting of Berkshire Hathaway, the private-jet company’s parent.

    Columbus-based NetJets has placed more than $17.6 billion in new orders for up to 670 new aircraft, and has launched aircraft-management businesses in Europe and China. The China operations are scheduled to start next year.

    Hansell also said that the number of new companies and individuals who have purchased fractional ownership of NetJets aircraft or flight hours as part of its Marquis Jet Card is up about 50 percent for the first quarter of this year.

    About 120 customers who left NetJets during the recession returned in 2012, and 34 more have done so this year.

    “I think the economy is coming back in the United States, and people are coming back to the private aviation market,” he said.

    The economy is going in the other direction in Europe, he said, adding that about 25 percent of NetJets’ business comes from this region.

    “I see strong, but not explosive growth at NetJets,” said Michael Boyd of the Boyd Group in Evergreen, Colo. “I think the stigma of business jets is starting to wear off.”

    Some of these accomplishments were discussed on Saturday, as 30,000 Berkshire Hathaway shareholders gathered in Omaha, Neb., at the company’s annual meeting, and yesterday as Hansell joined Berkshire Hathaway CEO Warren Buffett for a portion of his three-hour appearance on CNBC’s Squawk Box.

    NetJets is one of the many companies owned by Buffett and Berkshire Hathaway.

    Buffett said NetJets has a 60 percent market share in the United States for fractional-jet ownership and is confident the company will maintain its position at the top.

    “It’s all part of our long-term plan,” Hansell said of all the recent moves, adding that one of the best things about being the CEO of a company owned by Buffett is the importance put on the long term.

    “One of the most-important lessons I’ve learned from Warren is he always wants us to think about our businesses over long periods of time,” Hansell said. “Surprisingly, this is very uncommon, especially in publicly traded companies.”

    Hansell said NetJets earnings were about the same in 2012 as they were in 2011, when Buffett reported that earnings were $227 million.

    The “Oracle of Omaha” has not yet released official 2012 earnings for the companies owned by Berkshire Hathaway.

    The biggest issue for NetJets and other business-aircraft companies, Boyd said, will be “the overarching issues from Washington, D.C., and what the Obama administration will do about taxes. This is an administration that is not friendly to aviation, particularly business aviation.”

    Boyd also sees Europe mired in economic issues for several years to come and believes the next growth markets for business aviation are in China and India.

    The NetJets plane-buying spree began in 2010 when the company announced it would purchase up to 125 of the seven-passenger Embraer Phenom 300 jets for at least$1 billion.

    The company ordered up to 120 large-cabin Bombardier Global jets for $6.7 billion in March 2011; and as many as 425 new planes from Bombardier and Cessna in June for$9.6 billion.

    NetJets took delivery of its first Global in November and its first Phenom last week, as part of the long-term overhaul of its fleet of 750 aircraft.

    “Our customers are very excited about the new products,” Hansell said. “We think they will further increase the number of new owners we attract.”