Berkshire 3rd Qtr Results

[gret]

For the third quarter and first nine months of 2010, NetJets’ revenues increased 17% over each of the comparable 2009 periods. These increases were due to an increase in worldwide flight revenue hours and increased fuel cost recoveries, partially offset by lower management fees due to fewer aircraft in the NetJets program. NetJets generated pre-tax earnings of $158 million in the first nine months of 2010 compared to a pre-tax loss of $531 million in 2009, which included $436 million of asset writedowns and other downsizing costs, including $181 million in the third quarter. Such costs in the first nine months of 2010 were relatively minor. On January 1, 2010, Berkshire began charging NetJets a guarantee fee related to the level of its outstanding commercial paper and other borrowings. For the first nine months of 2010, the guarantee fee was $27 million and was charged against NetJets’ earnings. A corresponding credit was included as a component of "Other" earnings in the table on page 21. Had a similar fee been charged in 2009, NetJets’ pre-tax loss of $531 million would have increased by $58 million. The improvement in earnings was due to the increase in revenues and to an overall reduction in flight operations and administrative costs, partially offset by higher fuel costs. NetJets continues to own more aircraft than is required for present operations and we expect to continue to dispose selected aircraft over time. NetJets’ operating cost structure has been reduced to better match customer demand, and we believe that NetJets will continue to operate profitably in the future.

 

[glasspilot]

So NetJets goes from losing 500'ish million to making 150'ish million in a nine month period. That like a Billion Dollars a year difference.

How'd they do it? What changed to add up to a Billion more dollars a year? Getting rid of 500 pilots can't have saved 2 million each...even WITH crew meals.


I'm just saying that's a huge difference and hard to believe such GREAT news when the same statement still talks of having too many aircraft for current operations and now having to pay fees to Berkshire.

 

[gutshotdraw]

Did you read the report? $436 million was asset write-down. A $40 million dollar G-450 in 2008 was worth $25 million in 2009. Those write-downs are generally one-time things. Operating loss or gain was the important number here. Sad as it was to see, laying off 500 pilots and 300 support staff (and firing a couple dozen Vice Presidents of Paper Clips) really can make a big dent in operating margins.

The thing to see here is that the business model may have turned a corner. I want to see NEXT year's mid-year statement before I believe the turnaround is sustainable.

 

[gunfyter]

So NetJets goes from losing 500'ish million to making 150'ish million in a nine month period. That like a Billion Dollars a year difference.

How'd they do it? What changed to add up to a Billion more dollars a year? Getting rid of 500 pilots can't have saved 2 million each...even WITH crew meals.


I'm just saying that's a huge difference and hard to believe such GREAT news when the same statement still talks of having too many aircraft for current operations and now having to pay fees to Berkshire.

Glass,

Asset write-downs... Paper losses (little actual cash involved)

I went from losing $120K (Damn real estate fund) to making $40K in my 401K in the same period. Its close to the same ratio.

Somehow they report that as income and loss ... but you and I do not.

 

[G200_PILOT]

Did you read the report? $436 million was asset write-down. A $40 million dollar G-450 in 2008 was worth $25 million in 2009. Those write-downs are generally one-time things. Operating loss or gain was the important number here. Sad as it was to see, laying off 500 pilots and 300 support staff (and firing a couple dozen Vice Presidents of Paper Clips) really can make a big dent in operating margins.

The thing to see here is that the business model may have turned a corner. I want to see NEXT year's mid-year statement before I believe the turnaround is sustainable.

Over 600 fine folks were shown the door on September 11, 2009, not 300. I know it doesn't make a huge difference but I had a lot of friends in that group so the accurate number deserves to be stated.

 

[gutshotdraw]

You're right G it was 600. Memory lapse on my part (all too frequent these days).

 

[NJdispatcher]

Thanks G200

As one of the many support staff let go...nice to see we are still remembered...Good Luck with the new changes and hope the economy allows the company to recover to bring back the ones that may want or be offered to come back.

 

[glasspilot]

Yup, the write downs. It was stated and I missed it. Sorry.

 

[rajflyboy]

So...

Losing this money (or write offs) was the previous CEO's fault??

What am i missing here?

 

[Pervis]

So...

Losing this money (or write offs) was the previous CEO's fault??

What am i missing here?

The previous CEO relied almost exclusively on sales. He completely ignored operational costs, and as sales were pouring in, money was flowing out the door. Word is we paid one million as a consultant fee to the moron who invented the hamburgerler paint scheme. Or the square pegs for round holes (fiji), or the Netjets specific "food tools", wipes, etc.

In other words, the write offs were an inevidible result of the unforeseen economic melt down, but we were in no position to absorb the slightest tic, much less what really happened.

RTS is a great entrepeneur, no question. What is in question is his ability to maintain the business once it's created. Personally, I believe he simply relied on delegating corporate duties, like WB, but did so with incompetent people, unlike WB.