I've discovered Netjets 10 year plan!

[mtnrunner]

So easy a caveman...

My opinion, which should be quite visible to any objective person at this point in time, is that WEB has all but abandoned ship. WEB and Berkshire could install a visionary growth oriented chief exec, disciplined management team, and invest the capital needed to rebuild 'NetJets' back to the quality 'Only NetJets' it once was; almost as simply as WEB could order a Cherry Coke and Dilly Bar...

WEB and Berkshire can attract great talent and have nearly endless resources. Yet, WEB and Berkshire are leaving a nobody chief exec and lackluster management team to "manage" one of Berkshire's most difficult operating businesses. And, they are refusing to reinvest any new or real capital after DLS did significant damage to a once great company.

That's all you need to know about WEB and Berkshire's 10 year plan. The NetJets management team's 10 year plan is not the real plan and is truly scary if you understand the business model. A 40 year old 'business virgin' with a only a law degree wouldn't know any better.

At the end of the day WEB stuck-out; STRIKE 1) RTS tells WEB 'good luck with DLS', STRIKE 2) DLS bamboozled WEB, and STRIKE 3) the 40 year old business virgin. That's what's truly hurting NetJets. And WEB clearly isn't willing to admit it or correct it. Under current ownership and leadership NetJets best days are well behind it.

At this point the Berkshire-NetJets 10 year plan is so easy a caveman can do it! Shrink it. The only question is who's willing to admit it?

 

[imacdog]

A whole new operations building and orders for hundreds of aircraft doesn't count as "reinvest any new or real capital after DLS did significant damage to a once great company."?

 

[mtnrunner]

Looking for real talent and capital...

A whole new operations building and orders for hundreds of aircraft doesn't count as "reinvest any new or real capital after DLS did significant damage to a once great company."?

Public reports and disclosures make it clear the new CMH airport building is a simply a lease agreement with escape clauses and is a cheaper lease than the existing location. The new building is paid for and being built by a local developer.

Also, public reports and disclosures make it clear the airplane "orders" are for all intents and purposes simply pricing, configuration, and service agreements. Not fixed purchase agreements with progress payments and delivery schedules set in an OEM's backlog (shareholder sales disclosure for future revenues and earnings). Berkshire has refused to allocate any real, new, or fixed capital and agreements for new aircraft. Remember public and shareholder disclosure is critical to the OEM's investor relations. And, all the NetJets aircraft agreements have inexpensive escape clauses. I don't consider $10 mill incremental cash-flow commitments or escape clauses real capital to the scale a $3 bill, $4 bill, or $5 bill enterprise. An enterprise that scale needs a number of true billion dollar commitments simply for sustainability.

Therefore, Berkshire has not made any real capital commitments. I'm not saying it's bad business for Berkshire. I'm saying Berkshire clearly isn't reinvesting in NetJets. In otherwords, Berkshire is no longer as committed to NetJets as it once was.

Ask yourself one or two simple questions. Would Berkshire buy a company with NetJets existing chief exec and management team? My opinion, not a chance! And, does anyone really think OEM's are banking on JH and team to sell a lot of airplanes (like they did RTS)? Again, not a chance! Planes will sell, but never again like before.

If ownership won't invest in leadership or capital they aren't serious (confident) in the business.

But this is just one person's opinion.

 

[FLYLOW22]

Never knew we were loved so much. Haha.

 

[Pervis]

But this is just one person's opinion.

This is the only thing you said I will agree with.

 

[jonjuan]

Public reports and disclosures make it clear the new CMH airport building is a simply a lease agreement with escape clauses and is a cheaper lease than the existing location. The new building is paid for and being built by a local developer.

Also, public reports and disclosures make it clear the airplane "orders" are for all intents and purposes simply pricing, configuration, and service agreements. Not fixed purchase agreements with progress payments and delivery schedules set in an OEM's backlog (shareholder sales disclosure for future revenues and earnings). Berkshire has refused to allocate any real, new, or fixed capital and agreements for new aircraft. Remember public and shareholder disclosure is critical to the OEM's investor relations. And, all the NetJets aircraft agreements have inexpensive escape clauses. I don't consider $10 mill incremental cash-flow commitments or escape clauses real capital to the scale a $3 bill, $4 bill, or $5 bill enterprise. An enterprise that scale needs a number of true billion dollar commitments simply for sustainability.

Therefore, Berkshire has not made any real capital commitments. I'm not saying it's bad business for Berkshire. I'm saying Berkshire clearly isn't reinvesting in NetJets. In otherwords, Berkshire is no longer as committed to NetJets as it once was.

Ask yourself one or two simple questions. Would Berkshire buy a company with NetJets existing chief exec and management team? My opinion, not a chance! And, does anyone really think OEM's are banking on JH and team to sell a lot of airplanes (like they did RTS)? Again, not a chance! Planes will sell, but never again like before.

If ownership won't invest in leadership or capital they aren't serious (confident) in the business.

But this is just one person's opinion.

Agreed-very astute.

 

[BentOver]

Public reports and disclosures make it clear the new CMH airport building is a simply a lease agreement with escape clauses and is a cheaper lease than the existing location. The new building is paid for and being built by a local developer.

Also, public reports and disclosures make it clear the airplane "orders" are for all intents and purposes simply pricing, configuration, and service agreements. Not fixed purchase agreements with progress payments and delivery schedules set in an OEM's backlog (shareholder sales disclosure for future revenues and earnings). Berkshire has refused to allocate any real, new, or fixed capital and agreements for new aircraft. Remember public and shareholder disclosure is critical to the OEM's investor relations. And, all the NetJets aircraft agreements have inexpensive escape clauses. I don't consider $10 mill incremental cash-flow commitments or escape clauses real capital to the scale a $3 bill, $4 bill, or $5 bill enterprise. An enterprise that scale needs a number of true billion dollar commitments simply for sustainability.

Therefore, Berkshire has not made any real capital commitments. I'm not saying it's bad business for Berkshire. I'm saying Berkshire clearly isn't reinvesting in NetJets. In otherwords, Berkshire is no longer as committed to NetJets as it once was.

Ask yourself one or two simple questions. Would Berkshire buy a company with NetJets existing chief exec and management team? My opinion, not a chance! And, does anyone really think OEM's are banking on JH and team to sell a lot of airplanes (like they did RTS)? Again, not a chance! Planes will sell, but never again like before.

If ownership won't invest in leadership or capital they aren't serious (confident) in the business.

But this is just one person's opinion.

So building new Globals sims (to be put in CMH), having a Phenom show up on propert for owners to admire early 2012, advertising Phenoms and Globals in the quarterly owner update, getting ready for a mid cabin announcement, having a building built right next door to the current HQ's, installing WiFi in 250+ a/c, going into a deal with Signature for a new terminal in PBI seperate from everyone else... All within a year....

These are not forward thinking moves, or capital expenditures? Man what's a company have to do??? Other than actually being able to sell a ton of shares, I'd have thought NJA was atleast making an effort......

Current management is obviously not ideal... But seriously, Eyer has been at NJI/NJA since 1993, others have been there for a very long time. Everyone except Hansell atleast has some pretty healthy aviation experience. And IMO Hansell is just a figurehead. What does he actually do operational or sales wise. He is just there to keep watch over everyone, but I don't think he's in the mix making important decisions about staffing, fleet planning etc...... He gets told the data, nods his head and reports to BHK what is going on......

Planes may not sell like before, but that's because alot of people learned a lesson, and hopefully there are less Bernie Madoffs than before. We don't need customers who are only rich becasue they scammed a lot of other people. We want customers who can really afford to fly NJA.

 

[BentOver]

"Business jet indicators, although mixed, are generally showing a positive trend.The May 2011 General Aviation Manufacturers Association (GAMA) shipment report clearly showed Bombardier Aerospace as the market leader in the business aircraft market categories in which it competes, in both revenues (40%) and units delivered (39%), during the first three months of calendar year 2011. The group continued to experience an increasing level of business aircraft orders with 77 net orders, including an order from NetJets Inc. for 50 aircraft of the Global family, for a value of $2.8 billion based on list prices, compared to 6 for the same period last fiscal year."



From the Bombardier 4/30/2011 first quarter IRS report....I know no a/c purchase is final until it shows up on property...but how much more does one need to realize that a company has ordered a product!!!


Even our union was/is skeptical about the order actually showing up.... But along with the order, sims are being designed and positioned in CMH, a static display put in at the BHK annual meeting in OMA..... And sometime next year there will have to be a bid and training set up many months prior to the first delivery. I guess then we'll know the true status of the deliveries?

 

[NJAowner]

Firstly, I must continue to disagree with JonJuan (we just can never agree with each other). Others do not provide the same service as NJ but at a lower cost -- (other than pilots), others now provide a better overall owner experience than NJA at a lower cost. I do not know everyone, but I do not know anyone who has become a new NJA owber in the past 12 months. I do know soe who are new to private aviation who have gone elsewhere. I know quite a few (some very long term) NJ owners who have left and several others who are in the process. I can tell you that even after owners have given notice to NJ, no attempt has been made by their sales contacts to keep them. IN the old days I am sure that a phone call would have been received within hours and the sales VP would be on the other side of the owner's desk within days. But in those days owner's drank the kool-aid as well and would not have even considered leaving.

It has been more than 1-2 rough recoveries -- stranded would be more like it. And a few rough recoveries on top of that -- on top of other large glitches.

All this seems to work quite well into the program to downsize/right size the company. That is my only guess as to why no (or extremely little) attempt is being made to retain owners wishing to exit the program.

 

[gunfyter]

You should have seen the work over I got from AT&T when I switched my TV to DirecTV....

FREE NFL Sunday Ticket from DirecTV ... I was not going to be retained.

 

[jonjuan]

You should have seen the work over I got from AT&T when I switched my TV to DirecTV....

FREE NFL Sunday Ticket from DirecTV ... I was not going to be retained.

Yes, but don't you work Sundays?

 

[OPECJet]

Reliable sources said RTS offered Buffett fair market value to buy Nyetjets back. Warren refused. If that is in fact true, Warren obviously has some interest in it.

Doesn't explain why the caddy is still running the show, but I'm sure his days are numbered.

 

[CA1900]

Doesn't explain why the caddy is still running the show...

:laugh:

 

[mtnrunner]

Ego, not shareholder interests...

What do you think FMV for NetJets is today? Any reasonable valuation would be less than WEB paid 13 years ago. If you know the debt, asset values, what the assets are valued at on the books, what FMV for those assets are in today's market (especially when you flood the market with used high time airframes), and the run rate on the strength of future earnings based on recent historical performance (such as net negative sales for 3 years running)... Some may say WEB would have to pay RTS to take.

Don't think for a minute RTS doesn't understand the DLS effect on NetJets. If anyone does, he does. Just an educated guess here, but, WEB would most likely need to pay RTS to take the problem of WEB's hands.

It would take a large capital infusion to right the ship. Anyone investing that sort of capital expects a return. WEB knows he's not getting a return on any new capital invested, so I highly doubt he'll be doubling down.

WEB is hanging on because of ego, not shareholder interests. Years ago WEB was a guy who would blast ceo's for such behavior. My how times have changed.

My point? Don't feel bad about what WEB has done. He let the company down, you didn't let him down. Do your job, take the check, and enjoy the ride. The losses are his doing and his alone.

 

[gunfyter]

Yes, but don't you work Sundays?

I got 3 weeks of jury duty in September and then a vacation in November.... This year I think I'll catch more than half the season with Sundays at home...:beer:

 

[gret]

What do you think FMV for NetJets is today? Any reasonable valuation would be less than WEB paid 13 years ago. If you know the debt, asset values, what the assets are valued at on the books, what FMV for those assets are in today's market (especially when you flood the market with used high time airframes), and the run rate on the strength of future earnings based on recent historical performance (such as net negative sales for 3 years running)... Some may say WEB would have to pay RTS to take.

Don't think for a minute RTS doesn't understand the DLS effect on NetJets. If anyone does, he does. Just an educated guess here, but, WEB would most likely need to pay RTS to take the problem of WEB's hands.

It would take a large capital infusion to right the ship. Anyone investing that sort of capital expects a return. WEB knows he's not getting a return on any new capital invested, so I highly doubt he'll be doubling down.

WEB is hanging on because of ego, not shareholder interests. Years ago WEB was a guy who would blast ceo's for such behavior. My how times have changed.

My point? Don't feel bad about what WEB has done. He let the company down, you didn't let him down. Do your job, take the check, and enjoy the ride. The losses are his doing and his alone.

You understand business and numbers.

BH would have to pay somebody to take over NJ. The major reasons are the liability to owners who want don't extend their contracts, the worthless fleet, unhappy customers (see NJAowner comments), and the need for major capital expenditures in a no growth business.

When they bought it in 1996 (?), it was a growth business and the core fleet had young legs so they were worth something. Not so much today.

It's cheaper to manage it down to a reasonable size and hope someday the market returns.

 

[mtnrunner]

You understand business and numbers.

BH would have to pay somebody to take over NJ. The major reasons are the liability to owners who want don't extend their contracts, the worthless fleet, unhappy customers (see NJAowner comments), and the need for major capital expenditures in a no growth business.

When they bought it in 1996 (?), it was a growth business and the core fleet had young legs so they were worth something. Not so much today.

It's cheaper to manage it down to a reasonable size and hope someday the market returns.

I agree. But I don't believe Berkshire wants NetJets anywhere near the size it once was. First, they simply don't have a strong enough management team. Second, with the aircraft returns Berkshire will always get stuck with significant exposure to residual values on the down side. Third, no future purchaser of NetJets could reasonably accept the potential billions of dollars in liabilities and risk exposure. Shrink it so WEB's successor can at least have the option to sell it later.

My bet is Berkshire wants 200-250 planes at EJM and 200-250 planes at NJA. In 2007 EJM managed approx 80 airplanes. Now the manage nearly 200. That is clearly where they are shifting a lot of the NJA pilots' work.

That's why management wants relief from Sect 1.5 (downsizing). Organizing EJM will eventually be part of the conversation.

 

[NJAowner]

I would not count on RTS's return. He has made commitments to his investors at Milestone and I assume he will honor those and not put his efforts to NJA. He is an entrepreneur and is looking forwards not backwards. Just my opinion.

 

[BentOver]

So which former exec are you and what have ya been up to since? And why is the General still there?

And isn't "recent historical performance" kind of an oxymoron? To be historical wouldn't it have to be part of history and not part of the present?

 

[mtnrunner]

So which former exec are you and what have ya been up to since? And why is the General still there?

And isn't "recent historical performance" kind of an oxymoron? To be historical wouldn't it have to be part of history and not part of the present?

Just a KD fan. He understands the biz and would have and could have done a lot of good.

And no, its not an oxymoron; its just recent history.

 

[rajflyboy]

I would not count on RTS's return. He has made commitments to his investors at Milestone and I assume he will honor those and not put his efforts to NJA. He is an entrepreneur and is looking forwards not backwards. Just my opinion.

You may very well be right but I'm praying that you are wrong.

 

[CE750Driver]

Firstly, I must continue to disagree with JonJuan (we just can never agree with each other). Others do not provide the same service as NJ but at a lower cost -- (other than pilots), others now provide a better overall owner experience than NJA at a lower cost. I do not know everyone, but I do not know anyone who has become a new NJA owber in the past 12 months. I do know soe who are new to private aviation who have gone elsewhere. I know quite a few (some very long term) NJ owners who have left and several others who are in the process. I can tell you that even after owners have given notice to NJ, no attempt has been made by their sales contacts to keep them. IN the old days I am sure that a phone call would have been received within hours and the sales VP would be on the other side of the owner's desk within days. But in those days owner's drank the kool-aid as well and would not have even considered leaving.

It has been more than 1-2 rough recoveries -- stranded would be more like it. And a few rough recoveries on top of that -- on top of other large glitches.

All this seems to work quite well into the program to downsize/right size the company. That is my only guess as to why no (or extremely little) attempt is being made to retain owners wishing to exit the program.

Have fun with that. Fact is, a recovery at NJA is much faster than anyone else can offer. The stranded thing, happens much more often with smaller companies also. Its a matter of size, more planes, better chance of recovery. Thats why even at NJs worst, the others have never beaten the recovery time. The grass is always greener. Go find out for yourself. Our recurrent is strife with stories of owners stranded in the Caribbean with a hurricane on the way, with the others unwilling to pick them up. Netjets to the rescue.

Have fun finding this out.

 

[jonjuan]

Have fun with that. Fact is, a recovery at NJA is much faster than anyone else can offer. The stranded thing, happens much more often with smaller companies also. Its a matter of size, more planes, better chance of recovery. Thats why even at NJs worst, the others have never beaten the recovery time.

Not sure where you get your stories, but you couldn't be more wrong. Fact is owners have been leaving for service related issues for years with very few returning. Who tells you these things?

 

[BentOver]

This is kinda like te people who have a flight delayed or get cancelled becasue of bad weather. Then blame the airline thinking that every other airline would have gotten them there. Not realizing that every other airline would have cancelled also.

I always love being in terminal when this stuff happens. " I'm never flying Delta again! My flight got cancelled into Atlanta. I'm flying United for now on!!"

Or the ever popular....My friend says the weathers great there, why did they they cancel?" I'm still waiting for a gate agent to respond with "See that big hurricane in between here and there you fu$$ing moron!"

 

[realityman]

Not sure where you get your stories, but you couldn't be more wrong. Fact is owners have been leaving for service related issues for years with very few returning. Who tells you these things?

I'm not too worried. As long as Delta and the other airlines continue with their "service", Netjets and the other fractionals will be around a while yet.
Mt heartfelt "THANKS!" to the airlines! We couldn't ask for better advertising.

 

[realityman]

I would not count on RTS's return. He has made commitments to his investors at Milestone and I assume he will honor those and not put his efforts to NJA. He is an entrepreneur and is looking forwards not backwards. Just my opinion.

Oh, let me tell you about how well RTS honors his commitments...........

Ah, never mind. Not worth it.

But I suspect you are right about one thing, he won't be back. Too much damage to 1) his ego and 2) the Netjets brand.

 

[jonjuan]

I'm not too worried. As long as Delta and the other airlines continue with their "service", Netjets and the other fractionals will be around a while yet.
Mt heartfelt "THANKS!" to the airlines! We couldn't ask for better advertising.

Oh, they'll be around for quite some time-no doubt. Just not nearly the size as in the past or present.

 

[LAZYB]

The "10 Year Plan"

is to talk about if for...




9 years and then panic. :smash:

 

[NJAowner]

Weather delays???

This is kinda like te people who have a flight delayed or get cancelled becasue of bad weather.

Bentover -- really -- I have been around long enough to know when it is a weather delay. And in fact in only 1 on my "strandings" did NJA claim it was a weather issue. So I asked my owner services team to connect me with meteorology (with whom I have spoken with many times). The NJA Meteorologist said "weather is perfect at departure, destination and all spots in between -- a great day to be flying", at which point I called "bull sh!t" and was given the real answer - the airplane which had been sitting there for several days did not have enough fuel and no one knew that until the crew ferried in and there was no fuel (nor has there ever been) at that airport. NJA had "hoped" to ferry the plane somewhere else but the crew ferrying in had duty time issues.

There is a reason FO, CA and Avantair are now growing -- and it is not from many new customers to private aviation. It is from owners leaving NJ.

 

[BentOver]

I was referring to how everyone always thinks a switch to a diffrernt carrier to the answer to their travel problems.... Not your situation.

The whole conversation about which fractional provides better service reminded me of that airline problem.