Mega Merger Rumor

[CALRepublic]

This right here is usually what a thread turns into when someone starts a thread based on a Bull$**t rumor they mighta heard (or made up)

 

[X-rated]

Anyone remember when meeting in the middle was considered Statesmanship? Now it's selling out your radical base. The politicians aren't the problem. You all need to take hard look in the mirror to see what's gone wrong with American Politics. Turn off the propaganda news channels MSNBC and FOX. They'd both make the hard-liner's in the former USSR weep with envy.

 

[justreading]

Thoughts from the back seat.

I have flown most of the fractionals, as well as independent card operators. Two things are consistent, pilots are always nice and professional, and pricing is never capable of making a profit. Assuming Avantair goes bankrupt, I will be out over $150,000 for failed private aviation operators. These companies, including Netjets prior to about 2 years ago, are ponzi schemes. Use the new clients to pay the bills for the old clients. The model works until there is a hiccup, and there is always a hiccup. The only way out is to raise prices and then the clients leave for the next too good to be true option (XOJet, JetSuite). Look at the XOJET board on this site. They are furloughing pilots. They quoted me a round trip for two total hours on a 400xp at $14,000. That is more expensive then NetJets. The Super-mid pricing has also been equal to or more expensive then NetJets. The companies mentioned in the original post are all either owned by manufacturers or Private Equity companies. They all need an exit. There are no other buyers, and they certainly cannot go public. I wish all the pilots on here the best, but until the whole industry gets to full pricing, they will likely whipsaw pilots around and waste clients money.

 

[learflyer]

Thoughts from the back seat.

I have flown most of the fractionals, as well as independent card operators. Two things are consistent, pilots are always nice and professional, and pricing is never capable of making a profit. Assuming Avantair goes bankrupt, I will be out over $150,000 for failed private aviation operators. These companies, including Netjets prior to about 2 years ago, are ponzi schemes. Use the new clients to pay the bills for the old clients. The model works until there is a hiccup, and there is always a hiccup. The only way out is to raise prices and then the clients leave for the next too good to be true option (XOJet, JetSuite). Look at the XOJET board on this site. They are furloughing pilots. They quoted me a round trip for two total hours on a 400xp at $14,000. That is more expensive then NetJets. The Super-mid pricing has also been equal to or more expensive then NetJets. The companies mentioned in the original post are all either owned by manufacturers or Private Equity companies. They all need an exit. There are no other buyers, and they certainly cannot go public. I wish all the pilots on here the best, but until the whole industry gets to full pricing, they will likely whipsaw pilots around and waste clients money.

XOJET doesn't have 400xp's.

 

[flyzimex]

XOJET doesn't have 400xp's.

Most likely through the partnership with TMC.

 

[propsarebest]

The 400XP quote that you got was a brokered trip for TMC. XOJET gets a cut.

 

[AftCG182]

Thoughts from the back seat... Assuming Avantair goes bankrupt, I will be out over $150,000 for failed private aviation operators.

You know what they say about assumptions, Sir!

 

[justreading]

You know what they say about assumptions, Sir!

They have breached every clients contract over and over for six months. Owners have stopped paying management fees (i'm the idiot that prepaid).

Bankrupt or bought out.

 

[justreading]

The 400XP quote that you got was a brokered trip for TMC. XOJET gets a cut.

Doesn't matter to the client. Turns them into an expensive charter broker.

 

[X-rated]

justreading,

You make some good points, but you have me a little confused. On one hand you say say the operators don't charge enough to cover their costs, and on the other, you complain they charge too much.

XOJET is brokering an open market charter for you and charging you a fee for doing so. I hate to be the one to tell you, but they really don't want your business on that trip. You say it's a round trip with a total of 2 hours flying. Nobody can make money on a 1 hour leg in a jet at least not with average hourly pricing. You want them to do two of them plus some standby time. The only reason NJA's pricing is better is because they can't charge you more for that trip because they charge by the hour. So, effectively someone else would be subsidizing your flying on those short trips. That's not the case with charter companies. They can charge you enough to make it worth their while or encourage you to go somewhere else.

If you're smart, you'll use several providers and solutions to minimize the cost of your flying and get guaranteed availability when you need it. NJAowner seems to have figured how to do it very well. Maybe he can help you do the same. It's a terrible business, but if you take the time to educate yourself and learn how to play the game, you can pay far less than your share on every leg by taking advantage of the different ways companies price trips.

Good Luck

 

[justreading]

justreading,

You make some good points, but you have me a little confused. On one hand you say say the operators don't charge enough to cover their costs, and on the other, you complain they charge too much.

XOJET is brokering an open market charter for you and charging you a fee for doing so. I hate to be the one to tell you, but they really don't want your business on that trip. You say it's a round trip with a total of 2 hours flying. Nobody can make money on a 1 hour leg in a jet at least not with average hourly pricing. You want them to do two of them plus some standby time. The only reason NJA's pricing is better is because they can't charge you more for that trip because they charge by the hour. So, effectively someone else would be subsidizing your flying on those short trips. That's not the case with charter companies. They can charge you enough to make it worth their while or encourage you to go somewhere else.

If you're smart, you'll use several providers and solutions to minimize the cost of your flying and get guaranteed availability when you need it. NJAowner seems to have figured how to do it very well. Maybe he can help you do the same. It's a terrible business, but if you take the time to educate yourself and learn how to play the game, you can pay far less than your share on every leg by taking advantage of the different ways companies price trips.

Good Luck

Thanks.

I agree with you about best pricing is too work with serval groups and get the best pricing per flight. Sometimes I can be lazy and just want to book a trip quickly.

I hope the industry grows and creates more opportunities for the pilots in this forum. Direct interaction with pilots that love to fly is one of the benefits of private aviation that is rarely advertised. My kids love to watch you guys fly.

 

[NJAowner]

Fractional may not be a business model that makes a profit but it is not a Ponzi scheme. If you have time look up how a Ponzi scheme works.

 

[justreading]

Fractional may not be a business model that makes a profit but it is not a Ponzi scheme. If you have time look up how a Ponzi scheme works.

If you don't make a profit you are taking in new money to fly the previous hours promised. If new orders stop (see the current situation at Avantair), you can't fly the hours you just promised (see most recent Avantair lawsuit). Isn't that the definition of a ponzu scheme.

"A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors [new fractional, lease, or card holders], rather than from profit earned by the individual or organization running the operation. The Ponzi scheme usually entices new investors by offering higher returns [cheaper flight hours] than other investments[aircraft providers], in the form of short-term returns that are either abnormally high [low in the case of hourly rates] or unusually consistent. Perpetuation of the high returns [low houly rates] requires an ever-increasing flow of money from new investors to keep the scheme going."

 

[gunfyter]

Fractional may not be a business model that makes a profit but it is not a Ponzi scheme. If you have time look up how a Ponzi scheme works.

Both were started by Italian mathematicians though

To me it is like Fractional Reserve Banking...

On the busy days its like a run on the bank ... the Charter selloffs are like borrowing from the Fed. Core Fleet is like the Reserve.

 

[gret]

If you don't make a profit you are taking in new money to fly the previous hours promised. If new orders stop (see the current situation at Avantair), you can't fly the hours you just promised (see most recent Avantair lawsuit). Isn't that the definition of a ponzu scheme.

"A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors [new fractional, lease, or card holders], rather than from profit earned by the individual or organization running the operation. The Ponzi scheme usually entices new investors by offering higher returns [cheaper flight hours] than other investments[aircraft providers], in the form of short-term returns that are either abnormally high [low in the case of hourly rates] or unusually consistent. Perpetuation of the high returns [low houly rates] requires an ever-increasing flow of money from new investors to keep the scheme going."

I don't know what you call it, but it is a business model that befuddles most. The frac companies historically buy a/c at wholesale and then sell to the owners at retail plus. If a lot of new owners show up, you can generate some cash, if they don't, you are scrambling.

Operating the a/c doesn't normally make you money unless your name is Sokol. This guy was an absolute genius as he found a way to come in shortly after the Great Recession started and generated $200 million in operating profit for couple of years.with flight hours down 30%. Don't know how they define operating profit, but it sure sounds good. Heck, you can have $200 million in operating profit and lose $500 million on the bottom line and the loss is all due to restructuring charges.

Sokol was brilliant and still has people scratching their privates about how he could do something that nobody else achieved in over 16 years. He takes off due to some side deals in the stock market and the numbers aren't disclosed anymore so who knows what is going on.

 

[LAZYB]

David, is that you?

...Sokol was brilliant and still has people scratching their privates about how he could do something that nobody else achieved in over 16 years. He takes off due to some side deals in the stock market and the numbers aren't disclosed anymore so who knows what is going on.

 

[gunfyter]

Who said it was operating profit?


Losses to to devaluing aircraft ... then profits due to correcting the values upward is my guess.

" Nothing up my sleeve ... Presto!"

 

[jetlag7]

I think when management guys get furloughed they shave your head and give you a $ million per year pension ....

Now THAT is funny!!

 

[gutshotdraw]

Actually, NJI was operationally profitable every year of its existence except 2008. NOT including sales. It can be done. And it doesn't HAVE to be done Darth Sokol's way either.

 

[gret]

From BK's annual reports-

The reduction in combined "normal' pre-tax earnings from these businesses is due to reduced "normal" pre-tax earnings at FlightSafety of $34 million somewhat offset by improved results at NetJets where its pre-tax loss before write downs was $9 million in 2003 versus about $19 million in 2002.

NetJets, our fractional-ownership operation lost $41 million pre-tax in 2003.

NetJets earned a modest amount in the U.S. last year. But what we earned domestically was largely offset by losses in Europe. (2004)

NetJets' revenues in 2006 increased $759 million as compared to 2005 and pre-tax earnings in 2006 were $143 million compared to a pre-tax loss of $80 million in 2005.

"NetJets' business operation, however, has been another story. In the eleven years that we have owned the company, it has recorded an aggregate pre-tax loss of $157 million. Moreover, the company's debt has soared from $102 million at the time of purchase to $1.9 billion in April of last year. Without Berkshire?s guarantee of this debt, NetJets would have been out of business. It's clear that I failed you in letting NetJets descend into this condition. But, luckily, I have been bailed out.

Dave Sokol, the enormously talented builder and operator of MidAmerican Energy, became CEO of NetJets in August. His leadership has been transforming: Debt has already been reduced to $1.4 billion, and, after suffering a staggering loss of $711 million in 2009, the company is now solidly profitable." (2009)
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