NetJets loses $1M a day in 2009
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NetJets loses $1M a day in 2009
From The Guardian (and others): Berkshire Hathaway's first quarter results (january to march 2009) quotes:
"The economy also led to a drop in business travel, causing Berkshire's NetJets unit, which provides private jet services to executives, to lose $96 million before taxes."
"The economy also led to a drop in business travel, causing Berkshire's NetJets unit, which provides private jet services to executives, to lose $96 million before taxes."
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Not to sure how that happens with the business model they have. If most of their shares (in the aircraft) are sold, then they should be sitting fairly even, as the customer pays a management fee and hourly rate, which are designed to cover the monthly costs and flight costs. I understand that values go up and down, and when you come to think of it $96 mill. is only one and a half GV's in a very very big fleet.
I wouldn't write them off to soon.
I wouldn't write them off to soon.
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B200Drvr I think you may find that many of the NJ fleet aircraft do not have owners behind them. I hear that it has been thin pickings indeed for the sales people recently. Isn't this why they've switched to selling lease agreements where the residual value (or lack of it) is firmly with NJ?
So if you can not sell fractions, and the card members are leaving in droves or at best flying less and as a result you're having to mothball but continue to fund aircraft units that you had to buy to support the card programme in the first place and all the while paying pilots to sit at home, then $1 million a day actually sounds quite a small number when you really think about it.
I'm not saying that NJ's won't stick around, I'm just suggesting that the business model looks a little dodgy. Perhaps it's time for another plan....
So if you can not sell fractions, and the card members are leaving in droves or at best flying less and as a result you're having to mothball but continue to fund aircraft units that you had to buy to support the card programme in the first place and all the while paying pilots to sit at home, then $1 million a day actually sounds quite a small number when you really think about it.
I'm not saying that NJ's won't stick around, I'm just suggesting that the business model looks a little dodgy. Perhaps it's time for another plan....
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@ CyberDragon
No denying it's tough going and having too high a proportion of card holders has got to hurt, but I don't think the model is fundamentally flawed.
Move things on 12 months and consider propective owners. Would I buy my own aircraft and hope to offset costs by chartering the hours I won't use? Or would I look at all the people who have just been very badly burned and opt for a fractional ownership deal?
I think Netjets will be a very appealing option when individuals/companies put a toe back in the water. Far easier to justify on the public relations front as well. Wonder which option Ford/General Motors will opt for when things calm down. In the cold light of day it will still make business sense and be a valuable enabler, but with less risk.
No denying it's tough going and having too high a proportion of card holders has got to hurt, but I don't think the model is fundamentally flawed.
Move things on 12 months and consider propective owners. Would I buy my own aircraft and hope to offset costs by chartering the hours I won't use? Or would I look at all the people who have just been very badly burned and opt for a fractional ownership deal?
I think Netjets will be a very appealing option when individuals/companies put a toe back in the water. Far easier to justify on the public relations front as well. Wonder which option Ford/General Motors will opt for when things calm down. In the cold light of day it will still make business sense and be a valuable enabler, but with less risk.
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You could be right - fractional ownership could be all the rage in 12 months but I just can't envisage that easily.
My guess is that cards sales will be the way forward. I'll bet that even Ford could justify such a purchase to their stake holders (although motor companies and private jets go together like Coke and Pepsi right now...)
Anyway if cards are the future, you wouldn't want to keep funding a core fleet to fulfill the lift. The model will not support the cost of finance and depreciation. It really wont!
but what do I know
My guess is that cards sales will be the way forward. I'll bet that even Ford could justify such a purchase to their stake holders (although motor companies and private jets go together like Coke and Pepsi right now...)
Anyway if cards are the future, you wouldn't want to keep funding a core fleet to fulfill the lift. The model will not support the cost of finance and depreciation. It really wont!
but what do I know
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From the 2009 Q1 report:
"Revenues of NetJets in 2009 as compared to 2008 declined significantly as a result of an 80% decline in aircraft sales as well as lower flight
revenue hours. The decrease in revenues and pre-tax earnings reflects the negative impact of the global recession on
substantially all of Berkshire’s other service businesses and in particular, NetJets’ fractional ownership business which reported
a pre-tax loss of $96 million (includes writedowns of aircraft of approximately $55 million) as compared to pre-tax earnings of
$45 million in 2008. "
Tophe: Your remark that it only encompasses certain parts of NetJets businesses is incorrect, in the report from uncle Warren all NetJets activities are included in the same number....
Every NetJets entity is trying to save money at the moment. For NJE it means they have roughly 300 pilots too much and a cadet scheme (althoug no new entries in the programme anymore) in place while no pilots are needed.
Future will tell which people wil be held accountable for this situation....hope it is not the pilots, but rather Santa Claus at NJE or so.....
"Revenues of NetJets in 2009 as compared to 2008 declined significantly as a result of an 80% decline in aircraft sales as well as lower flight
revenue hours. The decrease in revenues and pre-tax earnings reflects the negative impact of the global recession on
substantially all of Berkshire’s other service businesses and in particular, NetJets’ fractional ownership business which reported
a pre-tax loss of $96 million (includes writedowns of aircraft of approximately $55 million) as compared to pre-tax earnings of
$45 million in 2008. "
Tophe: Your remark that it only encompasses certain parts of NetJets businesses is incorrect, in the report from uncle Warren all NetJets activities are included in the same number....
Every NetJets entity is trying to save money at the moment. For NJE it means they have roughly 300 pilots too much and a cadet scheme (althoug no new entries in the programme anymore) in place while no pilots are needed.
Future will tell which people wil be held accountable for this situation....hope it is not the pilots, but rather Santa Claus at NJE or so.....
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When people start to get laid off then you can say Netjets situation is only as bad as many airlines. As for a flawed business model, time will tell. At the moment the only model that has increasing load factors is the low cost model. How much money that model is making depends on who you believe!
As for accounting losses, they are an accountants tool to limit losses and tax reduction measures in the real world.
I really think Netjets will do well come the upturn, the rich do like a day out.
D and F
As for accounting losses, they are an accountants tool to limit losses and tax reduction measures in the real world.
I really think Netjets will do well come the upturn, the rich do like a day out.
D and F
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"The global recession has also hit the values of used aircraft, which Weston argues is persuading people to renew their fractional contracts or risk losing substantial sums on the sale of their business jets. "
Roughly translates as: "now we've got you in, you can't get out"
Roughly translates as: "now we've got you in, you can't get out"
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Aussie, every recession aviation hits lasts historically 3 years, the first year is gone so 2 more to go before we start growing again, maybe bizzjet will recover some months earlier but I doubt it....
So they will have to figure out something.......(10 hour block cards?)
So they will have to figure out something.......(10 hour block cards?)
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NetJets Loosing money
All of us in aviation are feeling the pinch, just got back from EBACE this week and it appears that lisbon team are spending money as normal at the dinners each night and the stand.
We all need to save money, ditch the blackberrys does every manager need one, get rid of the company car, profit sharing?
How many managers do they actually need? lets get back to basics and provide the customers what they want at a fair price.
Repainting the AC in a 1960 design was a real winner with everyone, for example GV to be painted $140K DA2000 $90K
10 AC painted to new scheme has to be in the region of 1 Million, what a waste in critical times.
We all need to save money, ditch the blackberrys does every manager need one, get rid of the company car, profit sharing?
How many managers do they actually need? lets get back to basics and provide the customers what they want at a fair price.
Repainting the AC in a 1960 design was a real winner with everyone, for example GV to be painted $140K DA2000 $90K
10 AC painted to new scheme has to be in the region of 1 Million, what a waste in critical times.
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Repainting the AC in a 1960 design was a real winner with everyone, for example GV to be painted $140K DA2000 $90K
10 AC painted to new scheme has to be in the region of 1 Million, what a waste in critical times.
10 AC painted to new scheme has to be in the region of 1 Million, what a waste in critical times.
BBerry...the only way to go for the time being...do you wanna use your personal phone ?
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Being among the "bottom 300" I am keeping various parts of my anatomy furiously crossed and hoping for the best. My fleet is actually quite busy and I am flying every tour however if LIFO applies (legal or otherwise) then quite a few of us are screwed. Quite how NJ will save money by laying one lot of trained pilots off then retraining others to do the same job at vast expense and time is another question BUT having been here three times previously I am with great reluctance brushing the CV up and expecting the worst. God help us.
Best of luck to all. Aviation, a great job but the worst career going.
Should have listened to dear old dad and been a doctor.
Best of luck to all. Aviation, a great job but the worst career going.
Should have listened to dear old dad and been a doctor.
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Cyberdragon
Just for your information:
the business model is not seen as a problem at Netjets, In the Beckershire hattaway financial report publication of aviation service 2008, we can read that the profit before tax of the aviation service department ( netjets US EU, FSI, ITT) is 970 M usd almost identical of 2007 except that in 2007 the majority of the money was made by NJE/NJA/NJI and in 2008 by ITT...
Netjets NTA lost 258 owners and signed 270 this year the balance is still a growth !
list of new customers are waiting as they cannot sell their own AC on the actual market, before to sign with NJE... so the business model is very appealing at the moment , the big problem Netjets have to face is the 258 pilots they have hired to crew the 32 aircraft that are not coming anymore , delivery have been postponed for 2 to 3 years to 5 to 10 ac / year that s why they are going to offer soon like in the US volontary paid leave of absence with benefits for 3 years then take the guys back once airplane delivery restart.
Just for your information:
the business model is not seen as a problem at Netjets, In the Beckershire hattaway financial report publication of aviation service 2008, we can read that the profit before tax of the aviation service department ( netjets US EU, FSI, ITT) is 970 M usd almost identical of 2007 except that in 2007 the majority of the money was made by NJE/NJA/NJI and in 2008 by ITT...
Netjets NTA lost 258 owners and signed 270 this year the balance is still a growth !
list of new customers are waiting as they cannot sell their own AC on the actual market, before to sign with NJE... so the business model is very appealing at the moment , the big problem Netjets have to face is the 258 pilots they have hired to crew the 32 aircraft that are not coming anymore , delivery have been postponed for 2 to 3 years to 5 to 10 ac / year that s why they are going to offer soon like in the US volontary paid leave of absence with benefits for 3 years then take the guys back once airplane delivery restart.
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Falconbis:
you keep dreaming, and believe everything the salesguys want you to believe...
the 300 pilots too much are not because we are not getting the equipment. But a mistake from management dating back to late 2006 when they thought the French would walk away from the new contract. So Santa Claus ordered the cadetscheme and extra intake of pilots....
the French did not walk away (nowhere to go)....and the company was 300 pilots too many, luckily the sales was going nicely and management, beeing great visioneers, looked ahead 3 years and forecasted we needed the pilots anyway.
linetraining periods on certain aircraft taking more than 1 year, and sales slowing down from may 2008 did not change their great vision.
now we have too many, with no union, and a management that was wrong in the past and will be wrong in the future. we all loose money this year, and some their jobs....
the total fee management received last year is public available via the uk yearly reports......(you want to save 25 million? I know a place where to look).....
anyways, we keep on loosing money this year, and since the usa side already have the contigency plan in place I think NTA will bleed a little more.....
you keep dreaming, and believe everything the salesguys want you to believe...
the 300 pilots too much are not because we are not getting the equipment. But a mistake from management dating back to late 2006 when they thought the French would walk away from the new contract. So Santa Claus ordered the cadetscheme and extra intake of pilots....
the French did not walk away (nowhere to go)....and the company was 300 pilots too many, luckily the sales was going nicely and management, beeing great visioneers, looked ahead 3 years and forecasted we needed the pilots anyway.
linetraining periods on certain aircraft taking more than 1 year, and sales slowing down from may 2008 did not change their great vision.
now we have too many, with no union, and a management that was wrong in the past and will be wrong in the future. we all loose money this year, and some their jobs....
the total fee management received last year is public available via the uk yearly reports......(you want to save 25 million? I know a place where to look).....
anyways, we keep on loosing money this year, and since the usa side already have the contigency plan in place I think NTA will bleed a little more.....
