NetJets and FlightSafety report profits for 2004

[Hogprint]

I also disagree that there is no more wear & tear on the airframes. I think Marquis card holders have surpassed actual owners or getting very close


Marquis does not add anymore wear and tear to an airplane than any other owner. I keep trying to explain this concept here and noone is getting it.

I am an owner, I let my brother in law fly 1/2 of my hours, my aunt susie fly 1/4 of my hours and I fly 1/8 and my son flies 1/8. This equals one share.

Marquis is the same concept. No more hours than any other owner. No more wear and tear.

I agree with your airframe breakdown, but I was talking about overall volume.

They are pushing over 100 marquis cards a month if the marquis sales guy is to be believed. We are selling off 25-30% flights every day?! Over half my flights now are Marquis.

I see the common denominator here as the big M. Bring me back to the fold FacFriend if I've strayed.

 

[El Chupacabra]

That is how it is supposed to work but... my CONSPIRACY THEORY is...

The shares sold as cards are not new airplanes purchased but that is how we sold off the Core Fleet and resold the Buybacks in used airplanes. The increase in flying is GREATER than the increase in airplanes.

Also it is absolutely correct what I think Dispatcher said.... The more the shares are broken up into smaller pieces... there are more folks wanting to fly on the peak periods. this compounds the PERCEPTION of the situation

 

[FAcFriend]

but I was talking about overall volume.

Not sure what this means, hoggie. But the overall volume does not change the problem comes (see El's next post) on peak days when everyone wants to fly at the same time.

This has been changed. Marquis cards only last a maximum of 12 months. So with the new marquis rules some of the problems with this growth will be short lived.

The good part of the program is it offers a great opportunity for growth. Gets NJ into markets they would never be in otherwise. Really it was a genious idea and has been duplicated in yachts already.

El- I believe you are correct that NJ sold off the core fleet as demand rose. Now NJ has a new core fleet on order. The choice was- cease selling to new customers for awhile or sell off the core fleet.

What would you have done?

 

[El Chupacabra]

What would you have done?

I would have given the pilots a raise.

But besides that I would not take the ludicris position that business is so good we are losing money on selloffs and we can't afford pilot raises... because we sold more than we can deliver.

 

[FamilyGuy]

Not sure what this means, hoggie. But the overall volume does not change the problem comes (see El's next post) on peak days when everyone wants to fly at the same time.

This has been changed. Marquis cards only last a maximum of 12 months. So with the new marquis rules some of the problems with this growth will be short lived.

Friend - I hope the new marquis rules will help with the capacity problems. The increased peak period days is a good start, but you still have the fundamental problem that 1 half share owner = 16 marquis card holders. Odds are that when that 1 half share owner wants to fly over thanksgiving weekend, 8-12 of the marquis owners will also want to fly.....that's where the strain on the system becomes evident. Bottom line is that a 12 month limit doesnt eliminate this problem....increased peak period days helps, but it remains to be seen how much.

The good part of the program is it offers a great opportunity for growth. Gets NJ into markets they would never be in otherwise. Really it was a genious idea and has been duplicated in yachts already.

Agreed. The program is revolutionary, and was a boon to us during the slow period from 2002-2003 and the first half of 2004. But in a period of high demand - last half of 2004 - I think it caught us flat-footed.....

Even though its popular on this board to expect management to be omniscient, in all fairness I think it really is hard to manage inventory in this market segment.....think about it...you have to order planes 2-3 years out, yet your demand can turn on or off in a couple of months....add in the fact that your basic product costs tens of millions of dollars, and it gets really scary to order hundreds of planes at a time and hope that demand will materialize....

El- I believe you are correct that NJ sold off the core fleet as demand rose. Now NJ has a new core fleet on order. The choice was- cease selling to new customers for awhile or sell off the core fleet.

What would you have done?

There's the other problem....as a company we've never learned to tie sales to the aircraft deliveries.....its always been sell as fast as you can. Now we are in a situation (like 1999-2000) where demand exceeds supply.

It is hard to say no to a sale....in 99-00 we didnt have Marquis and were able to overcome the negative impressions from increased sell-offs because we had a 5 year contract to make things up to an owner....with Marquis, owners are forming their opinion in 25 hours and deciding based on that experience whether they want to renew or not.....

 

[FamilyGuy]

I would have given the pilots a raise.

But besides that I would not take the ludicris position that business is so good we are losing money on selloffs and we can't afford pilot raises... because we sold more than we can deliver.

El - When did the company take the 'ludicrous position' that they couldnt afford raises?

We all know that the company has already offered raises...the debate is over the size of the raises....

while your response plays to the populist opinions on this board it doesnt address the original question and problem - should NetJets cease selling to new customers for awhile or sell off the core fleet in the face of increased demand?

 

[Diesel]

actually a 105k with no bennies, 401k, yada yada means a DECREASE in pay.

 

[FAcFriend]

I would have given the pilots a raise.

Lol...good darn answer....when all else fails give the pilots a raise.

Now I say that somewhat tongue in cheek and somewhat seriously.

Ever try to get some work done at the house? Want the gardener to go above and beyond the call of duty- want a few extra bennies? Want them to work harder and get the job done no matter what the wife and kiddos are saying?

Pay them more.

You have made your point- well done.

 

[FAcFriend]

actually a 105k with no bennies, 401k, yada yada means a DECREASE in pay. Diesel


good point- your current total compensation package is over 6 figures. This is a good comparison point when looking at other positions.

a book- Passages at 100k plus- John Lucht. Good book for negotiating at these compensation levels.

BTW-
This is personal opinion only -
small point- but mngt would not do away with 401k for pilots at any salary comp level. They may alter the co. match (some cos. offer no match) but it makes no sense that they would not offer the program at all...federal rules offer too many bennies to mgt. for this program. Read the book.

I am sure it was just a negotiation point that never had a chance to come up.