NJE....A solution?
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NJE....A solution?
It is no secret how badly NJE are hurting and for sure the men from Berkshire Hathaway would look favourably at a deal to relieve them of the problem.
With the losses they are posting thie business must be in negative equity and getting worse by the day. Here is a simple proposal:
1. A new company buys NJE for $1
2. NJE continues for 3 months to pay all fixed costs, salaries etc and during that time the entire workforce is restructured and those no longer required laid off. NJE to be responsible for all redundancy payments etc.
3. The new company is made up of many existing employees whose role is vital and they become an integral part of the company. In other words a management buy out or rescue if you prefer.
4. BH to make a suitable loan to the new company with repayment over 5 years.
5. BH to have 2 non executive directors on the board of the new company.
6. Any aircraft that totally belong to NJE not part of the deal and to be disposed of in whatever way NJE see fit.
Now this might seem absolutely crazy but I am sure BH could cope with a known loss situation and may prefer to put themselves in a position where they know what the bottom line will be rather than continue to bleed many millions of dollars with no effective way of contolling the flow. It is called damage limitation.
I am convinced that with a good team there is still a future in selected parts of the market. I am not sure BH are really interested long term in NJE and any way to be rid of the liability and embarassment could prove attractive. On the other hand one could take the view that whatever the management, business model etc this is a business to steer well clear of.
I personally feel there is a future but it needs a very special person to broker the right deal and put the right team together. If something is to be done, now could be the time.
With the losses they are posting thie business must be in negative equity and getting worse by the day. Here is a simple proposal:
1. A new company buys NJE for $1
2. NJE continues for 3 months to pay all fixed costs, salaries etc and during that time the entire workforce is restructured and those no longer required laid off. NJE to be responsible for all redundancy payments etc.
3. The new company is made up of many existing employees whose role is vital and they become an integral part of the company. In other words a management buy out or rescue if you prefer.
4. BH to make a suitable loan to the new company with repayment over 5 years.
5. BH to have 2 non executive directors on the board of the new company.
6. Any aircraft that totally belong to NJE not part of the deal and to be disposed of in whatever way NJE see fit.
Now this might seem absolutely crazy but I am sure BH could cope with a known loss situation and may prefer to put themselves in a position where they know what the bottom line will be rather than continue to bleed many millions of dollars with no effective way of contolling the flow. It is called damage limitation.
I am convinced that with a good team there is still a future in selected parts of the market. I am not sure BH are really interested long term in NJE and any way to be rid of the liability and embarassment could prove attractive. On the other hand one could take the view that whatever the management, business model etc this is a business to steer well clear of.
I personally feel there is a future but it needs a very special person to broker the right deal and put the right team together. If something is to be done, now could be the time.
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Perry, you sound like someone who knows something about business and as someone who knows nothing about anything, it sounds like a good idea.
Could the operation continue to run in Lisbon as it is now, or would the Ops office need to move for your idea to work?
What would be the collateral put up by the group buying NJE for 1 Dollar as protection for BH to make such a loan?
Could the operation continue to run in Lisbon as it is now, or would the Ops office need to move for your idea to work?
What would be the collateral put up by the group buying NJE for 1 Dollar as protection for BH to make such a loan?
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Lisbon would still be a good base. There are many good people still there and whatever the current situation much good work HAS been done in the past. They were in profit in 2007.
As regards collateral it would be up to negotiation but if BH were to believe in the new structure there would be a way of giving them some protection. The difficulty is keeping a good thing for the new company and not showing someone else how it could be done for free and then watch them turn it round with someone elses ideas..
As regards collateral it would be up to negotiation but if BH were to believe in the new structure there would be a way of giving them some protection. The difficulty is keeping a good thing for the new company and not showing someone else how it could be done for free and then watch them turn it round with someone elses ideas..
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Hmmmm....for the princely sum of $1 you too could lose a kazillion dollars.
Assuming NJ lose a kazillion plus a few salaries.
I reccon BH would be pretty keen, not sure if there would be many investors with pockets deep enough to fund the operation back to profit - except uhmmm .... Berkshire Hathaway!
Obviously my business brain is not what it used to be, I just can't see the buck these days.
Assuming NJ lose a kazillion plus a few salaries.
I reccon BH would be pretty keen, not sure if there would be many investors with pockets deep enough to fund the operation back to profit - except uhmmm .... Berkshire Hathaway!
Obviously my business brain is not what it used to be, I just can't see the buck these days.
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PerryP:
And NJ Middle East ?, noway BH wants to give up the family (US, Eur, Middle East). The potential synenergy from true worldwide operations will be very valuable in the future.
The solution for NJE, and for the whole NJ family btw:
The markets which are attractive are now at the high end (G5) to maybe just above midsize (h800). Especially on the lower end of the spectrum to much competition and new startups in the future.
So for NJE, get rid of bravo, h400, maybe excel. Same for US. NJ middle east seems to ok for now aming at the higher end of the market anyway.
The biggest problem will be the card program, they need to get it fixed by lowering the costs (be it airplane, operating or overhead costs) on the midsize fleet.
Then managers with vision, and go for it.
Once again, for us it will mean a downsizing of the company which is unheard of. Think NJE ending with 120-130 aircraft, and US with 370-380...
And NJ Middle East ?, noway BH wants to give up the family (US, Eur, Middle East). The potential synenergy from true worldwide operations will be very valuable in the future.
The solution for NJE, and for the whole NJ family btw:
The markets which are attractive are now at the high end (G5) to maybe just above midsize (h800). Especially on the lower end of the spectrum to much competition and new startups in the future.
So for NJE, get rid of bravo, h400, maybe excel. Same for US. NJ middle east seems to ok for now aming at the higher end of the market anyway.
The biggest problem will be the card program, they need to get it fixed by lowering the costs (be it airplane, operating or overhead costs) on the midsize fleet.
Then managers with vision, and go for it.
Once again, for us it will mean a downsizing of the company which is unheard of. Think NJE ending with 120-130 aircraft, and US with 370-380...
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NJ is full of good people and still has great potential. With the non-contributors out and a scaled down fleet it could be quite viable in a returning market in 2011 or 2012.
I think it got distracted by size; surely it’s speciality is the DA2000 and larger fleet? Scalability downwards hasn’t been effective for them, probably because the HQ and sales structure costs disproportionately too much for each new sale, and I doubt anyone can ever make money from cards as the users are getting too smart as to how to abuse the system.
But first it has to overcome the ownership of the fleet. If sharers continue to exit at this rate then Barkshire Hathaway will have to end up owning the core fleet, and we’ll have to give up on our marketing of ‘youngest’ fleet, then make the bigger fleet sweat for the best clients where we can make money.
First the new management have to cut all the extravagance out of the business and we all know where that lies. Too many fat cats feeding off the hard work of all others.
I think it got distracted by size; surely it’s speciality is the DA2000 and larger fleet? Scalability downwards hasn’t been effective for them, probably because the HQ and sales structure costs disproportionately too much for each new sale, and I doubt anyone can ever make money from cards as the users are getting too smart as to how to abuse the system.
But first it has to overcome the ownership of the fleet. If sharers continue to exit at this rate then Barkshire Hathaway will have to end up owning the core fleet, and we’ll have to give up on our marketing of ‘youngest’ fleet, then make the bigger fleet sweat for the best clients where we can make money.
First the new management have to cut all the extravagance out of the business and we all know where that lies. Too many fat cats feeding off the hard work of all others.
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Thanks Holyman.
Makes sense. I always thought the card programme was a good way of generating cash up front as holders took about a year to use the hours all paid for in advance. No good though if it is too cheap with Bravos idle waiting for holders to use hours. All the up front cash is soon frittered away.
I think the real competition for the card programme will be the likes of Jetbird who seem to doing a Ryanair operation with the VLJ market. No frills and just A to B in private jet at a sensible price. The recession has probably helped them with exising users looking for cheaper options. I also believe Jetbird intend to earn much of their return on the add ons such as ground transport, hotels, catering etc much like Ryanair and Easyjet.
Interesting times and not for the faint hearted.
Makes sense. I always thought the card programme was a good way of generating cash up front as holders took about a year to use the hours all paid for in advance. No good though if it is too cheap with Bravos idle waiting for holders to use hours. All the up front cash is soon frittered away.
I think the real competition for the card programme will be the likes of Jetbird who seem to doing a Ryanair operation with the VLJ market. No frills and just A to B in private jet at a sensible price. The recession has probably helped them with exising users looking for cheaper options. I also believe Jetbird intend to earn much of their return on the add ons such as ground transport, hotels, catering etc much like Ryanair and Easyjet.
Interesting times and not for the faint hearted.
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PerryP,
we are getting somewhere. Cards are the problem because instead of 16 owners for an airplane you have 80 owners when you sell 10 hour block cards...
one can easy see the problems attached, 80 owners are 80 specialities, more difficulties on peakdays, 5 fold increase in administration costs etc
a good charter outfit will allways be cheaper than netjets because they use older airplanes and cheaper labour.
so you need to fix the cards...I have a solution but will not post it here. They can pay me for the answer.....
and they need to be a loyal and top notch fractional provider on the super midsize to large airplanes. that means that they need to shift to different airplane makes (did you now santulli and his brother were personally involved with all the acquisition of new toys for the boys, and there vision was largely obscured by personal vendettas against certain airplanes..)
ciao
we are getting somewhere. Cards are the problem because instead of 16 owners for an airplane you have 80 owners when you sell 10 hour block cards...
one can easy see the problems attached, 80 owners are 80 specialities, more difficulties on peakdays, 5 fold increase in administration costs etc
a good charter outfit will allways be cheaper than netjets because they use older airplanes and cheaper labour.
so you need to fix the cards...I have a solution but will not post it here. They can pay me for the answer.....
and they need to be a loyal and top notch fractional provider on the super midsize to large airplanes. that means that they need to shift to different airplane makes (did you now santulli and his brother were personally involved with all the acquisition of new toys for the boys, and there vision was largely obscured by personal vendettas against certain airplanes..)
ciao
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The Santullis vow to never buy Lear/Bombardier is no secret. They snubbed RS many years ago and he took an emotional (in my opinion) decision never to buy their products. Not really something you might expect from a hard-headed businessman and I've always wondered why he denied the company that option.
NJE missed their (second) chance at improved streamlining and efficiency when they began taking on their first large cabin aircraft. I've discussed this several times with a number of management, past and present, all of whom admit that choosing Portugal as a base was a mistake. DM may have been rabidly anti-Portuguese and it might be unfashionable of me to say so but there was a kernel of truth to his opinions.
They should have taken a leaf out of their parent company's book and set up an equivalent of NJI in northern europe. Yes, this would undoubtedly have annoyed their parasites at INAC but it would certainly have given them a lifeboat AOC into which they could transfer the medium/small cabin aircraft. They missed this chance.
Now of course they would have had the option of offloading the (more) loss-making, smaller aircraft, piecemeal or as a whole company (let's call it NJE 1), while hanging on to a leaner and more efficient operation (NJE 2) with the Gulfstreams and Falcons somewhere north of the Iberian Peninsula.
All academic now of course but something that was mooted a long time ago yet rejected for fear of incurring the wrath of INAC who often acted...........favourably in connection with certain matters. Explaining to the workforce in Lisbon why a parallel operation was being set up elsewhere might have taken some fancy footwork but let's be honest NJE management have a history of bulldozing through any changes and the shadow of an NJE 2 might have focussed a few peoples attention.
NJE missed their (second) chance at improved streamlining and efficiency when they began taking on their first large cabin aircraft. I've discussed this several times with a number of management, past and present, all of whom admit that choosing Portugal as a base was a mistake. DM may have been rabidly anti-Portuguese and it might be unfashionable of me to say so but there was a kernel of truth to his opinions.
They should have taken a leaf out of their parent company's book and set up an equivalent of NJI in northern europe. Yes, this would undoubtedly have annoyed their parasites at INAC but it would certainly have given them a lifeboat AOC into which they could transfer the medium/small cabin aircraft. They missed this chance.
Now of course they would have had the option of offloading the (more) loss-making, smaller aircraft, piecemeal or as a whole company (let's call it NJE 1), while hanging on to a leaner and more efficient operation (NJE 2) with the Gulfstreams and Falcons somewhere north of the Iberian Peninsula.
All academic now of course but something that was mooted a long time ago yet rejected for fear of incurring the wrath of INAC who often acted...........favourably in connection with certain matters. Explaining to the workforce in Lisbon why a parallel operation was being set up elsewhere might have taken some fancy footwork but let's be honest NJE management have a history of bulldozing through any changes and the shadow of an NJE 2 might have focussed a few peoples attention.
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Holyman
"a good charter outfit will allways be cheaper than netjets because they use older airplanes and cheaper labour."
Not quite sure your meaning of the above statement. Are you suggesting charter operators under pay their staff, or are you suggesting NJE have been wasting money? Newer aircraft? I can see that changing in the very near future if true. I think your statement has the stench of arrogance.
FYI some charter operators look after their crews at lot better than NJE, by paying them better and keeping them employed for starters. There are many private owners of aircraft who pay and look after their crews better than charter operators.
I would have thought the indoctrinations would have worn off a little by now but seems not with some people.
"a good charter outfit will allways be cheaper than netjets because they use older airplanes and cheaper labour."
Not quite sure your meaning of the above statement. Are you suggesting charter operators under pay their staff, or are you suggesting NJE have been wasting money? Newer aircraft? I can see that changing in the very near future if true. I think your statement has the stench of arrogance.
FYI some charter operators look after their crews at lot better than NJE, by paying them better and keeping them employed for starters. There are many private owners of aircraft who pay and look after their crews better than charter operators.
I would have thought the indoctrinations would have worn off a little by now but seems not with some people.
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Doubleu:
appologies if I offended you. charter outfits in general have older aircraft, take a look at some statistics from the nbaa if you want.
cheaper labour translates in low hour copilots not earning that much, cheap office staff, and so on.
although in your opinion on the brink of arrogance, yes in general they are cheaper than netjets to operate. the same nbaa and some articles on ain give comparisons between hourly rates from charter outfits against the rest (fractionals, fully owned etc)
offcourse there are some good people out there, but my point was that netjets will allways loose out against the charters on a cost comparative base. so they need to shift to the part of the market where they do have a cost advantage (owning an aircraft vs leasing of fractional owning it)
my post was surely not intended to make charter outfits look bad, some of them are making netjets look like a fool.......
appologies if I offended you. charter outfits in general have older aircraft, take a look at some statistics from the nbaa if you want.
cheaper labour translates in low hour copilots not earning that much, cheap office staff, and so on.
although in your opinion on the brink of arrogance, yes in general they are cheaper than netjets to operate. the same nbaa and some articles on ain give comparisons between hourly rates from charter outfits against the rest (fractionals, fully owned etc)
offcourse there are some good people out there, but my point was that netjets will allways loose out against the charters on a cost comparative base. so they need to shift to the part of the market where they do have a cost advantage (owning an aircraft vs leasing of fractional owning it)
my post was surely not intended to make charter outfits look bad, some of them are making netjets look like a fool.......
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So PerryP, why do you decide to ventilate your superior businessplan on the web? I am sure that your golden tip would be best off on Uncle Warren's desk rather than here.
Aside from the fact that the company would come to a screeching halt if your idea were to be put in reality, I see no real change in what has been the first result of actions taken already by inteterim management. Perhaps your motives on 'proposing' ideas, lay not in the interest of NJE but elsewhere.
Aside from the fact that the company would come to a screeching halt if your idea were to be put in reality, I see no real change in what has been the first result of actions taken already by inteterim management. Perhaps your motives on 'proposing' ideas, lay not in the interest of NJE but elsewhere.
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Ever tried getting NJ management to listen to you? I spent years sending feedback at the end of each tour. At first it was merely ignored, eventually it got me into trouble. They're in the big office because they know what they're doing, they have the 'beeg peecture' and those on the line know nothing.
Even if perryportugal were to try selling his idea I can tell you now how far he'd get.
Ever tried getting NJ management to listen to you? I spent years sending feedback at the end of each tour. At first it was merely ignored, eventually it got me into trouble. They're in the big office because they know what they're doing, they have the 'beeg peecture' and those on the line know nothing.
Even if perryportugal were to try selling his idea I can tell you now how far he'd get.
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get NJ's to set up an ad hoc department, not many people want to pay for a card at the moment but will pay on a trip by trip bases. (if the price is good).
maybe worth a go to start with to get some money coming in.
get in with the big brokers and get some deals going.
maybe worth a go to start with to get some money coming in.
get in with the big brokers and get some deals going.
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"DM rabidly anti-portuguese","kernel of truth to DM opinions", sheesh flinty, even I, a standard bearer for sitting on the sidelines, get a little upset by your most recent comments...
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Upset? Why? At the person in question yes, but please don't think I'm endorsing his sentiments.
He made no secret of the fact that he disliked the place and people. Hardly the nicest thing to do but surely that's his problem, not mine?
As for the 'kernel' would you agree that NJE is hardly the most efficient operation? Nobody can deny the manana attitude in the earlier years. If they do, they simply weren't there. Even now there are still the crewing, travel and scheduling cock-ups. Again, I'm just repeating what everyone knows.
He made no secret of the fact that he disliked the place and people. Hardly the nicest thing to do but surely that's his problem, not mine?
As for the 'kernel' would you agree that NJE is hardly the most efficient operation? Nobody can deny the manana attitude in the earlier years. If they do, they simply weren't there. Even now there are still the crewing, travel and scheduling cock-ups. Again, I'm just repeating what everyone knows.
Last edited by Flintstone; 7th Oct 2009 at 11:33.
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Flintstone
Maybe my ignorance is larger than my knowledge, I have no evidence to proof otherwise. Recent announcements from the interim US chief, make me believe that it isn't NJE management that is in charge in Lisbon, or London for that matter.
Launching suggestions is not a bad thing but assuming to know it better than newly appointed leaders with a background in business management going further than my lifespan, seems demeaning and arrogant to me. But hey I am a sensitive guy
so could as well be my wrong interpretation that triggered my reaction.
Cheers.
Launching suggestions is not a bad thing but assuming to know it better than newly appointed leaders with a background in business management going further than my lifespan, seems demeaning and arrogant to me. But hey I am a sensitive guy
so could as well be my wrong interpretation that triggered my reaction.Cheers.
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I think 'Call Sign Maverick' has hit the nail on the head. I proposed a similar concept to the Mgt at NJE a few months ago but was told it would 'cheapen' the product......................I would rather be cheap than unemployed chaps!!!!!
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I mentioned this also to them at a meeting in london back in June, as was told they didnt need the extra money.
surley they need the money now?? and lets be truthfull any moeny at the moment is good money.
Take the business/ money now and then when it picks up go back to the card only option in a few years.
surley they need the money now?? and lets be truthfull any moeny at the moment is good money.
Take the business/ money now and then when it picks up go back to the card only option in a few years.