Interesting read from this website. Seems kinda harsh on the possible cuts the analyst suggests.
The Fractional Market: Business Jet Traveler Online
Here is a snippet of the actual article:
In the case of NetJets, some of its problems can be linked to the fact that it “has tried to be all things to all people,” Riegel said. The company’s Marquis jet card program and the need to buy charter to fulfill fractional flight requests layered in additional costs, he noted, “and it’s not surprising they dived into the red. The only way to dig out is to try to make money by selling shares.” But for many fractional providers, share sales are virtually nonexistent.
Although NetJets’ Marquis jet card sales offset some of the shareowner departures, “card activity creates as many problems as it solves,” Riegel said. In the fractional industry, he explained, there is an average of nine to 10 owners per airplane, and each of those owners places demand on each airplane. Marquis jet card buyers, however, average about 20 per airplane. “The more card business you do, the more people can demand the airplane,” he said.
NetJets’ losses for the first six months of this year translate into nearly $700,000 per airplane. “Those are terrifying numbers,” Riegel said. “Almost anything they do [to fix the problem] is going to take years.”
There remains a need for the fractional concept, but major providers have to revise their business models. NetJets has too many airplanes to serve its customers and, in Riegel’s view, should cut its fleet to around 170 airplanes versus the 500 it has now.
NetJets is allowing some owners to idle their shares by stopping flying, letting them keep the shares without paying the monthly management fee. Riegel said he expects these aircraft–which he estimates number approximately 160–to sit idle for a few months before NetJets asks the owners to resume paying management fees or sell their shares. “Many will pull the plug,” he said of owners who have held their shares in the hope that used aircraft prices would recover. “[That would] worsen the problem for the fractionals.”
The Fractional Market: Business Jet Traveler Online
Here is a snippet of the actual article:
In the case of NetJets, some of its problems can be linked to the fact that it “has tried to be all things to all people,” Riegel said. The company’s Marquis jet card program and the need to buy charter to fulfill fractional flight requests layered in additional costs, he noted, “and it’s not surprising they dived into the red. The only way to dig out is to try to make money by selling shares.” But for many fractional providers, share sales are virtually nonexistent.
Although NetJets’ Marquis jet card sales offset some of the shareowner departures, “card activity creates as many problems as it solves,” Riegel said. In the fractional industry, he explained, there is an average of nine to 10 owners per airplane, and each of those owners places demand on each airplane. Marquis jet card buyers, however, average about 20 per airplane. “The more card business you do, the more people can demand the airplane,” he said.
NetJets’ losses for the first six months of this year translate into nearly $700,000 per airplane. “Those are terrifying numbers,” Riegel said. “Almost anything they do [to fix the problem] is going to take years.”
There remains a need for the fractional concept, but major providers have to revise their business models. NetJets has too many airplanes to serve its customers and, in Riegel’s view, should cut its fleet to around 170 airplanes versus the 500 it has now.
NetJets is allowing some owners to idle their shares by stopping flying, letting them keep the shares without paying the monthly management fee. Riegel said he expects these aircraft–which he estimates number approximately 160–to sit idle for a few months before NetJets asks the owners to resume paying management fees or sell their shares. “Many will pull the plug,” he said of owners who have held their shares in the hope that used aircraft prices would recover. “[That would] worsen the problem for the fractionals.”
More crap from a Netjets hater, and self proclaimed aviation expert
