And So It Begins

[jonjuan]

The contracts you have with the customers would make it very difficult for Buffet to pull the plug.

Didn't Cessna do so with shares? How many multi million dollar lawsuits there?

 

[doh]

Didn't Cessna do so with shares? How many multi million dollar lawsuits there?

It's not a plug pull. They simply close the sales department and fly out the contracts they have, retiring airplanes and laying off as contracts expire.

 

[jetwash]

Didn't Cessna do so with shares? How many multi million dollar lawsuits there?

Rumors around Flops is that DAC bought out the contracts from Citation Air and is flying their former owners until they expire with hopes of signing them to a Flops contract in the future.
Already a few Pax who were at CA mentioned that to our crews.
So the frax contracts can apparently be out sourced, the pax may not like it but as long as they are provided with a service I guess all is possible.

 

[gutshotdraw]

Didn't Cessna do so with shares? How many multi million dollar lawsuits there?

As mentioned, Shares was much smaller and was able to gradually spool down until DAC picked up the pieces.

Similar situation with Avantair. Niche player and there was no money left for a lawyer to chase.

NetJets, on the other hand, is too big to close overnight and Berkshire is HUGE with REALLY deep pockets. Lawyers LOVE deep pockets.

 

[luckydog]

Sounds very similar to the illusion of 'too big to fail'.

As mentioned, Shares was much smaller and was able to gradually spool down until DAC picked up the pieces.

Similar situation with Avantair. Niche player and there was no money left for a lawyer to chase.

NetJets, on the other hand, is too big to close overnight and Berkshire is HUGE with REALLY deep pockets. Lawyers LOVE deep pockets.

 

[BentOver]

Not saying it would happen....

But I'm pretty sure Warren Buffett and his lawyers, execs, CEO's etc etc, can pretty much do whatever they want...

Pilots are pretty smart, but I'm fairly certain the 3rd-4th richest man in the world is a bit smarter when it comes to business

 

[el raton]

Might I humbly beg that you guys push to make a 12 hour max duty day a new industry standard.

 

[BlueNose]

As mentioned, Shares was much smaller and was able to gradually spool down until DAC picked up the pieces.

Similar situation with Avantair. Niche player and there was no money left for a lawyer to chase.

NetJets, on the other hand, is too big to close overnight and Berkshire is HUGE with REALLY deep pockets. Lawyers LOVE deep pockets.

There's a fine line between confidence and hubris. Any company or division can be shut down. Sure there's risk to it, but it's quantifiable. If the ongoing operating risk becomes greater than the wind-down risk, don't think WB won't pull that trigger. BH is at heart an insurance company, so I think it's safe to say WB already has a detailed study of the risk ($) involved in winding down NJ. The future operating risk has a much greater degree of uncertainty, but ultimately comes down to projected costs vs projected revenues.


Employee future compensation isn't the only, and certainly not the biggest cost factor, but sure can become the tipping point if it's a finely balanced difference. You need to extract the max compensation without threatening the future viability of the business. Unfortunately, it's nearly impossible to tell what that is until several years after the contract is signed. But if you don't acknowledge that it could go either way, you might be in for a rude surprise. Good luck.

 

[gutshotdraw]

Oh, I absolutely agree a wind-down is possible at NetJets. I harbor no illusions that the company is "too big to fail."

But it would be exactly that: a wind-down. The current legal exposure for an "overnight" shutdown is far too great.

The bigger risk at the moment is that the management team seems to be actively DIScouraging share sales in favor of ENcouraging Marquis card sales. This presents a number of concerning issues.

1. It dilutes the "exclusive" service mentality that originally built the company and replaces it with a "block charter" concept that can be purchased at any number of reputable charter carriers.

2. Opens the door for the company to sell off trips more easily in the event of work slowdown or stoppage. It's easier to blow off a card holder than the folks that actually OWN the airplane.

3. Makes it MUCH easier (eventually) for Berkshire to cut bait if they do decide the business is no longer worth the opportunity cost of their investment dollars.

4. Reduces the legal exposure because the OWNER of a share can demonstrate much greater financial harm to a jury than can a card-holder that merely owns some time in a plane in the event of a shutdown.

Bottom line: A potential long-term threat to the leverage and career prospects of all NetJets pilots.

That's why we need to act relatively quickly to extract an improved but viable contract and push Hansell the HE11 out the door before he completely destroys the place.

 

[Some guy]

BH bought us for what, 800m? Last I heard we're valued at 2 billion? The debt is getting paid down quickly, possibly by the end of the year. Uncle Warren isn't getting any younger. What happens when he passes? Will the board see a no debt, 1.2b ROI get out now while the gettin's good and sell us off? I certainly hope not, but I don't know how businessmen think either.

On another note, while numerous contracts are in negotiation there is one difference I've noticed from the '05 '06 (or whatever the date was) talks. Last time the company was talking about how much money was being lost even though it wasn't necessarily true. (Company negotiating tactics?) Now they've continued speaking about profits. Does this mean the powers that be are negotiating a more fair game this time around? Sure they've asked for concessions, but isn't that what they're supposed to do? They ask for less, you ask for more, and then meet in the middle.

SG