NetJets not in profit??

[V12]

Am I the only one to be surprised by a little remark in Flight International’s editorial this week stating that NetJets lost money this year?

“….NetJets, by far the largest fractional programme, produced a small operating loss last year following a small operating profit in 2000…...”

Purported to be the jewel in aviation’s crown, the company has a global fleet of 421 aircraft, with 588 more on order (more airframes than almost all the world’s airlines) and after 15+ years of pioneering the fractional market, surely combined should have allowed them to have won the volume race by now?

Insiders from rival program operators suggests that NetJets mark-up per airframe divided and sold (the sum of the selling prices of each fraction, less the net buy price at the manufacturers heavily discounted rate) varies from around $1m on light jets, $2-4m on heavies, and rumours of $10+m on BBJ’s). That suggests NetJets have cleared somewhere around $750m in earnings from the airframes currently in service, less the cost of marketing the fractions, with probably the same again due on new aircraft on order.

If one takes the Hawker 800XP as the average size of aircraft they operate (the smallest are the Citations II and V, and the largest are the G5 and BBJ’s) one could estimate the annual income NetJets have coming in as follows:

Each XP generates $7000 pcm per 1/8th sharer = $0.67m pa
421 aircraft multiplied by $0.67m generates $283m pa just in management fees

Each 1/8th sharer is entitled to 75 flight hrs paying $1800 /hr, so each XP generates $1.1m; hence 421 aircraft generate something like $455m pa

That’s almost $750m in annual revenues.

Then there’s incidental earnings in a whole host of other areas where today’s massive flying program makes the original business plan figures over-estimated: discounted, fuel, catering, limos, resale of old shares, disposals, charter, reducing deadheads with volume, interest (sharers pay mgmt fees in advance) all making each day a little rosier.

So, someone who knows, please tell stupid old me why this company isn’t now making and declaring a very healthy profit every year? Warren Buffett’s certainly not stupid.

[non sched]

One area of cost that you overlooked is leased in aircraft to cover for them when they don't have airframes available. Several part 135 operators are getting fat living on the scraps cast off by the fractional operators. However, I'm not suggesting this is the entire answer, just a part of the bigger picture.;)

[Fakawi]

The operational word here is OPERATIONAL profit.
that means just that. Operational, not selling planes or buying them discounted.
Also if you as a company claim to have an operational loss just as the union is trying to up salaries.........

[Muchheavierthanair]

Just tracked down a couple of posts about NetJets to a remote outpost of this website where few of us go. They were moved there (to the bizjets forum, a small shed at the end of the Pprune garden) by a moderator with time on his hands.

NetJets has 450 aircraft and 500 on order. It is bigger than all of the airlines currently being discussed on this main forum. (It is an airline and sees itself as such)

And by the way, according to a friend of mine who's been there almost from the start, NetJets here in Europe has a lot more problems than not making money (the topic currently hidden from view in the above-mentioned desolate forum).

They apparently, for example, suffer from management who fire pilots on the spot without giving a credible reason, or using trial by simulator (dozens in the past 2 years in various way like these), and who fine them a week/two weeks pay for crimes like, for example, telling a passenger truthfully why the aircraft couldn't land at the requested destination (Chambery) which happened to be the fractional owner/passenger's home.( The reason: NJE hadn't got the approval to use the lower minima and can only go in in very good weather...the passenger didn't know this and had understood something rather different... )

Apparently there is a section in the NJE contract (which you're not allowed to see till you join) saying expressly that you can be fired at any time without any reason being given.

It appears there is an unhappy and nervous pilot force there and ......er, not all that good management. I was told that other possible topics which might well be raised by someone at some stage: um, less than total honesty by management to pilots during recruitment and after, ....non-reporting of defects until a suitable airport is reached almost as a policy (the fleet manager will give instructions), ....ignoring emails, letters and phone messages from their pilots, sometimes for months...and so on.

Please keep topics in the main forum which are of interest to a lot of pilots like this one.

[733driver]

MHTA,

I agree: NetJets is a very large operator. They are neither some corporate flight departement nor your typical executive jet charter company. So, I too believe, what´s going on there might be interesting for lot´s of pilots who dont´t usually visit the bizjet forum.

I just recently read an article in "flying" magazine, where one top level executive at NetJets was asked: "Would you say NetJets is the worlds safest airline?" His answer: "We operate to that standard. Anything less than the worlds safest would be unacceptable."

I am currently flying for an airline but have been thinking for a while that NetJets might be an interesting alternative.

It allways seemed to be a very professional and safety-minded operation.

I cannot believe things like that going on there on a regular basis. I am not doubting what has been said, I am just very surprised to say the least.

Could any NetJets Europe pilot please comment! Any insight would be much appreciated!

Thanks!

[jerseymilkman]

I think you'll be very lucky to get a NetJets pilot to comment - the bosses all look at this site too!!!

[Flintstone]

Ah well. There's always one to prove you wrong, eh jersey;)

I've worked for Netjets for two years and have never been asked/enticed/ordered to carry a defect to a more 'suitable' destination and I have never been asked to compromise on safety. Quite the opposite in fact.

We go to the sim every six months which doesn't sound too bad to me. I know of several pilots who have needed some extra time in the sim on recurrent or intial courses and the company agreed to pay for it without question.

Yes, I have also heard of some pilots being fired but I don't know the facts (never believe Rumour Control) and so will not comment despite the 'R' in PPRuNe.

Unreturned phone calls and e-mail? Show me a company who doesn't have trouble with admin once in a while. Netjets is growing at an incredible rate, hiring a lot of new staff and some of them might take some time to find their feet. Instead of bitching at them I prefer to try and help them out. I'll need a favour myself one day.

I have no grounds for complaint. They've treated me well. Sure, I'd love a pay rise, company car, more holidays and all that but the way I look at it is this. I work six days on, five off. I get tremendous variety in my flying on modern machinery and meet nice, well mannered, people. I might not have the biggest paypacket in the world but I'll certainly not die of stress. In short, I value my quality of life.

I'm not saying I'll stay for ever either but for the foreseeable future this does me nicely, thank you.

No. I'm not management and no, I'm not trying to butter them up. With any luck they still don't know who I am ;)

[733driver]

Hi Flintstone,

thanks for that info! Glad to hear you still enjoy your job.

To be honest, I was hoping you´d say that.

Oh, and by the way. Last time I tried they were very quick to answer my email (same day).

Anybody else flying for NetJets willing to share their views...?

Cheers