Netjets and 200/barrel oil

[RideandDrive]

USAir is the whore of air fares lately. I've seen many last minute tickets go for under $200 with tax. Revenue management airways seems to be staffed by crew scheduling.

 

[captain dad]

What happens when oil hits $200?

Our very wealthy owners pay for it.

Yes, it is that simple.

 

[CA1900]

No, it really isn't....

As other said, $200/bbl oil will put serious brakes on many sectors of the economy, including those that supply our owners with that wealth.

We're not affected too much directly by the oil price, but don't think for a minute that it can't affect our overall business.

 

[Mach92]

200-250/bbl and gas at the pump of $6.00 to $10.00 you better believe it will affect us. I predict we will slow down a lot in the next few years IF things don't get better around the world. I see a 10 year upgrade at NetJets not that far off.

 

[rydog]

200-250/bbl and gas at the pump of $6.00 to $10.00 you better believe it will affect us. I predict we will slow down a lot in the next few years IF things don't get better around the world. I see a 10 year upgrade at NetJets not that far off.

SWEET! I just left a 10 year upgrade for NJA!!!!! WTF.

Not a prob though 1st year pay here is better than 10 capt. Pay on reserve where I left.

 

[Mach92]

SWEET! I just left a 10 year upgrade for NJA!!!!! WTF.

Not a prob though 1st year pay here is better than 10 capt. Pay on reserve where I left.

Lets hope I wrong. I am so sick of watching all these so called "experts" on CNN CNBC FOX Business about oil will NEVER hit 100 it did. NEVER hit 115 it did. Never hit 125 it did. I am convinced nobody knows how high it might go.

NJA will be OK IMHO but like I said things will slow unless the economy picks back up and soon.

 

[learflyer]

anyone see that show last night about running out of "gas?" some scary stuff. 24 hr news and the internet is the worst thing to happen to this world. Even though i'm an FI junky.

 

[CALRepublic]

What happens when oil hits $200?

Our very wealthy owners pay for it.

Yes, it is that simple.

I wish it was that simple.

I fly for NJ, I think and hope NJ will be around for many, many years. But to think this won't affect Netjets or the frax is plain ridicoulus.

As far as the 10 year upgrade at NJ, give it a couple of years.....

 

[johnboy99]

What happens when oil hits $200?

Our very wealthy owners pay for it.

Yes, it is that simple.

And I guess you still believe in Santa Claus, the Easter bunny and even more importantly the tooth fairy. NJA is a great place but don't think for a minute your owners will continue to pay whatever the price increase is forever. Some owners still have to justify spending money to the shareholders. If money is not coming in like it used to something must go. It is like the food chain, if there is nothing coming in on the bottom it doesn't matter how big you are at the top you could get hungry. It is that simple Cap Daddy.

 

[RCA]

And I guess you still believe in Santa Claus, the Easter bunny and even more importantly the tooth fairy. NJA is a great place but don't think for a minute your owners will continue to pay whatever the price increase is forever. Some owners still have to justify spending money to the shareholders. If money is not coming in like it used to something must go. It is like the food chain, if there is nothing coming in on the bottom it doesn't matter how big you are at the top you could get hungry. It is that simple Cap Daddy.

One could also say more companys will need to buy fractional shares to increase productivity.

Another consideration, companys that may have a tought time justifying whole airplane ownership may trade down to a fraction of an airplane.

The individual owner is paying $5,000/hr+ for this luxury. I doubt adding another 1,000 or so dollars will cause people to return to airline travel.

While the fractional model is not unbreakable it's very solid.

 

[HA25]

Just curiuos if anyone has any thoughts on how this oil situation will effect the fractionals. I'm considering applying, as I no longer feel that there is a future at Blue. I have thought about NetJets for a long time, but had a hard time giving up the Airline thing. I don't like the slow upgrade at NetJets, but still think it might be worth it. With oil going up and up, I am wondering what the higher ups over there are predicting.

The rich get richer and the rest of us get poorer.. The people riding on the NetJets fleet couldn't care less what they pay for fuel.

Why do you think that while the rest of this industry is in turmoil and airlines are failing left and right, NetJets, FO and XOJet are still growing like gangbusters?

Take the job... if security is what you're worried about.. but be prepared to do the "Ass Kissing and Bag Totten" that they'll demand from you. This isn't the A320 anymore my friend.

 

[CastofThousands]

Make no mistake about it, flying at all fractional companies and by and large nearly all charter companies is down significantly in 2008 vs 2006 and 2007.

Analysis shows a 15% to 20% decrease in private aircraft revenue movements in 2008 vs 2006 and 2007. This is a result of the economy, decreased [individual or corporate] cash flow, and higher variable costs. The financial markets have dried up and the major institutions are extremely reluctant to loan money to operators in our segment of the industry. XO Jet had to go to the Middle East for additional high risk leveraging where in fact the investors bet against XO Jets success through super accelerated depreciation – in hopes they would recapture assets worth far more than the residual balance owed by XO Jet.

At $200 a barrel it only gets worse for everyone… Nobody is invincible and the notion that NetJets is invincible is naiveté. NetJets is simply more durable than the others (economy of scale and financial backing). At $200 a barrel BOHICA (Bend Over Here It Comes Again) and buckle up it's going to be a bumpy (ups and downs) five (or so) years.

The healthiest and most viable company with the strongest customer/brand loyalty will gain market share in a down market. NetJets must improve to assure it's standing or it will loose ground to the competition. The healthiest company is then positioned to capitalize [the most] on the upside.

IMHO,

 

[fly4ever]

Make no mistake about it, flying at all fractional companies and by and large nearly all charter companies is down significantly in 2008 vs 2006 and 2007.

Analysis shows a 15% to 20% decrease in private aircraft revenue movements in 2008 vs 2006 and 2007

Source please?

 

[captain dad]

I respect everyone's opinion to the fuel price question, as opposed to some. I actually had a conversation with a major CEO owner prior to taking him to the BH shareholder's meeting. I posed this very question. He said he couldn't care less about fuel fees. He wanted access to the large fleet and premium benefits that NJA provides. Will it effect some? Sure. Will it drastically effect NJA? I doubt it, but we will see that's a given.

 

[CastofThousands]

Make no mistake about it, flying at all fractional companies and by and large nearly all charter companies is down significantly in 2008 vs 2006 and 2007.

Analysis shows a 15% to 20% decrease in private aircraft revenue movements in 2008 vs 2006 and 2007

Source please?

Just remember what I wrote above and do a look back in 5 years (2012). The market is changing as is owner/cardholder flying patterns.

2008:
Flex - Near breakeven (at the pilot group's expense) with no growth.
CS - Another $30 to $40 million loss with marginal to no [net new] growth.
FO - New HGI aquisition cooked books with more than $50 million (real money) in losses. *Could have* made positive numbers with a fair labor agreement.
NJA - Will make between 2006 and 2007 numbers with approx. 75 net new planes.

2009 and 2010:
Go back to 2003 and 2004 new owner sales and retention data...

5 year industry segmant cycle with NJA hitting 800 planes and just over 4,000 pilots [best case] year end 2012. If NJA doesn't have 800 planes and just over 4,000 pilots by year end 2012, the industry segment will be down to 3 [true] industry segmant competitors. NetJets owner/card retention will be base on product delivery and customer service (brand loyalty). Fine print: acts of God, war, terrorism, and/or a major a/c accident make the WAG null and void.

Other major concerns: 1) will private jet travel become the next Hummer enviro negative stigma (cost of carbon off sets per EU), 2) [growing] State by State private (fractional) jet taxation (per CA), 3) FAA funding and how private jets are assessed/taxed (User Fees), 4) ATC Next Gen and potential slots (per EU), 5) foreign ownership (does Lufthansa [as one exmple a la Jet Blue] buy or startup a fractional provider in the US with a major cash infusion and compete with existing fractional providers [Virgin maybe]?).

I could go on - the economy, fixed and variable operating costs, public perception for public companies, and competitive market are different than we have ever seen over the past 10 and 20 years. Add to the list above, if the economy turns around, [more] Private Equity parts supply chain, infrastruction (FBO), and OEM acquisitions.

It's all about brand loyalty (safety, product delivery, and service)!!!

That's my [very] educated forecast.