Mega Merger Rumor

[gunfyter]

Where does it say a profit was made on operations. Or that the losses were from operations. There is no indication of cashflow.

The huge losses were paper losses from the falling values of airplanes.

The debt was largely from buying back airplanes people cashed in when their stocks went down and margin called. As you know a loss is not recorded when a plane is bought back... it is recorded when the plane loses half its appraised value.

If the planes people cashed in went up in value instead of down... NJ would have recorded a profit ... even while accumulating the $1.9 billion in debt!

 

[imacdog]

You know what they say about assumptions, Sir!

I wish the pilots of AA good luck, but a gag order issued to employees and management stonewalling of people that actually own the airplanes while no flight operations are taking place for weeks is typically not the precurser of something good.

 

[imacdog]

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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Don't forget the epilogue where Sokol was fired from BH for unethical practices. Gunfyter did an excellent job explaining what the last two paragraphs actually mean.

 

[gret]

A discussion of ?Generally Accepted Accounting Principles? (GAAP) is probably not warranted. However, you do record a loss when you buyback an a/c if the purchase is due to a contractual obligation and the consideration exceeds the value of the airplane. You don?t write the asset up if increases in value later, only when it is sold?which is a moot point as I can?t think of any a/c type that has gone up in value the past 5 years.

The losses generated from the write downs are real, they just haven?t been ?realized?. An example would be if the a/c has a book value of $2 million and a fair value of $1.5?a loss of $500K is recognized in the current period. If the a/c is sold a year later for $1.5 million, nothing more hits the income statement (i.e. earrings). If it is sold for $1.25 million, an additional loss of $250K is recorded. If it is sold for $1.75 million, a $250K gain is reported.

The debt balance doesn?t have any direct correlation with the write down of aircraft. It was used to fund operations and contractual obligations to acquire aircraft.

The fact is we don?t know the details of the losses generated and can only speculate the amount attributable to write downs, restructuring charges, and operations.

 

[justreading]

You know what they say about assumptions, Sir!

I'm guessing you were an employee. Please realize the owners didn't want this. I am sorry that you are out of a job and wish you the best.

 

[AftCG182]

I'm guessing you were an employee. Please realize the owners didn't want this. I am sorry that you are out of a job and wish you the best.

Employee? Yep, 6 year Captain. We (the pilots) loved the Owners. (I think you were an Owner, so thanks for your support) The thieves that ran this Company into the ground... Grrrr... I'm so angry right now... I just need to go back to drinking beer and watching MMA.

I'm (arguably) the most positive person in our Company, but right now all I can think of is pure anger and aggression.

If anyone has any hot tips on employment, I could sure use 'em.

 

[justreading]

You and all the pilots should reach out to Piaggio Aero USA, as well as the groups on Contoller selling P180s. It should make it easier to sell a plane when you can provide pilots experienced in flying it.

 

[NJAowner]

If the bankruptcy is true, how this sorts out (with the fractional ownership of the jets, many owners who do not know each other and have no connection other than ownership of a shared asset, possession and management of their asset) will be crucial to the long term health of the fractional industry as a whole. It the owners get really burned it may affect all providers in the future in a negative manner.

 

[NoJoy]

You and all the pilots should reach out to Piaggio Aero USA, as well as the groups on Contoller selling P180s. It should make it easier to sell a plane when you can provide pilots experienced in flying it.

These owners-some of them who own the whole plane, still need qualified pilots to fly their plane. I am not sure at this time what options they have. One is to go to a managment company, and have them manage their plane for them providing pilots and mechanics. If they could reach out to most of the pilot group right now, they would not have a problem finding pilots to fly their plane. But with paper work to finish and maintenance, things are still in the air-just a thought.

 

[BornAgainPagan]

then i heard netjets is gonna buy it all up and staple all the pilots to the bottom of NJ list.

Flops is unionized. I doubt that their contract would let 'em get stapled.