Netjets Announces Aircraft Order

[imacdog]

True. The difference is that we prospered through a superior product, combined with an efficient, publically traded, transparent business model. We didn't bully our way to domination thanks to the bottomless pockets of a financial backer.

Is your internal D-bag filter MEL'd or something?

 

[RP170]

The phrase "out of left field" comes to mind... As in "what the heck are you talking about"? I'm fairly certain RP has worked at NJA

Yeah I'm confused there as well since I did work for NJA.

 

[jtf]

Any word on how many airframes get turned into Bombardier/Cessna for each new aircraft delivered?

No word on that or if there are no compete clauses or owner swaps or anything else. As far as turn ins goes, they never really announced the whole agreements with Embraer or Bombardier on the Phenom or Global orders. All we know for sure is that Embraer has taken 25 Ultras and Bombardier has taken ownership of 20 Hawker 800s, 10 Xs, some 2000 classics and probably some other airframes since the Global order. Nobody has said if the original agreements include taking more trade ins as the airframes come online.
Business details are guarded a lot more under the post Santulli regime. All I know is that the company plans on disposing of around 50 airframes a year and actual growth or shrinkage is supposed to be based on actual sales, not forecast sales. The new airplanes only get delivered once they are already sold. Getting rid of old airframes will be the driver of sales of new ones. The old ones just won't be resold to owners so if they want to stay with NJA, they will eventually have to buy new. These entire huge orders and any more in the future are so easy to delay or cancel that they in no way imply growth. They can allow growth, but they aren't dependent on it. NetJets can take every option spread out over time and the various divisions and still be smaller than today.

 

[jetlag7]

disregard...

 

[ultrarunner]

This order will insure a continued supply of roached out, high-time airframes on the used market, so definitely something for anyone out there...

 

[CE750Driver]

Yeah I'm confused there as well since I did work for NJA.

Wow. Read that one wrong. Apologies.

Can't find the edit button for some reason.

I feel really bad for the guys at Flex. This really does seem like the beginning of the end. I don't think any of us have the real plan.

 

[Coool Hand Luke]

That EMB 500 looks like a nice bird with the interesting FBW/sidesticks. But isn't it roughly the same size/performance as a CL300? How does the addition of the EMB 500 improve efficiency and reduce fleet complexity?

I received a close look at the 500 Legacy...at 19 million it will be a game changer in cost of operations.

 

[Downwind]

I received a close look at the 500 Legacy...at 19 million it will be a game changer in cost of operations.

How much is a Challenger 300?

 

[cldsfr79]

But what will the "fractional" business look like in a few years? It seems to be changing to more of a 135/managed model (i.e., like XOJet and Citation Air).... Will Netjets have to change its model to more of an XOJet model with fewer financial commitments from customers (i.e., must buy a 1/4 or 1/16th share to participate)? Morph to more of a Marquis Card model in the future?

It does appear that the market at this time is shifting to less risk and asset holding for a jet owner/user. We have companies such as EJM growing (hiring and obtaining more aircraft on their certificate) while genuine fractional ownership suffers. Even NJE has announced a management program and according to AIN magazine, NJ china looks to be a management style operation, at least at first.

But....

Once the economy recovers.....if it recovers....I think things will start to recover for the fractionals. While Citation Air is aggressively shifting it's model and Flex seems to be shifting too; NJA appears to stay on course as a fractional provider. Owners who have sold their shares to acquire a wholly owned plane and then manage it will soon realize that the cheap used plane they bought comes at a very high operating expense. Wait until they have to start buying engines, or get stuck in the middle of no-where. And owners who have down sized to flying charter and on cards will realize that owning a plane (a fraction) does have its cost advantages over renting. There will always be avantages to fractional ownership. Why buy a whole used citation X, and be responsible for maintenance, staffing, insurance, and asset devaluing, when you can own a 1/4 or 1/8 of a Falcon or G5 (now a challenger or Global) with less stress. You manage that fraction with a phone call and that's it.

 

[jonjuan]

I received a close look at the 500 Legacy...at 19 million it will be a game changer in cost of operations.

The Hawker 4000 is/was a game changer. Just saying.

 

[ultrarunner]

How much is a Challenger 300?

The same, if you're buying ONE!

NJA's press release indicates a 22.5M price tag per airframe copy. So, given that NJA is also throwing in larger airplanes in that order, all these airframes are heavily discounted with a ton of give-backs, such as spares, training, warranty, etc....

 

[Downwind]

The same, if you're buying ONE!

NJA's press release indicates a 22.5M price tag per airframe copy. So, given that NJA is also throwing in larger airplanes in that order, all these airframes are heavily discounted with a ton of give-backs, such as spares, training, warranty, etc....

What did we pay for the 680?

 

[NJAowner]

The economy will eventually recover but I would not expect fractional as an industry to ever be as large as it was in 2007. Fractional will always be around but its popularity probably peaked in 2007. Fractional ownership was and is a great idea. Fractional will not reach its prior peak not because it is bad but because someone is always “trying to build a better mousetrap”. For the most part NJA “built a better mousetrap” than traditional charter and grew the market for charter. Instead of running a capital intensive charter operation relying upon company owned planes, NJA got the “charter” customers to buy a piece of the plane and pay the fixed regardless of whether the owner actually used the plane. Great idea. Fractional ownership for NJA also eliminated the need and inconsistency of using managed planes on a charter certificate where the planes are all different types, ages and layouts, with differing degrees of safety and maintenance.

Fractional ownership for NJA seized upon the highly fragment and varied charter market. There was no “brand”, no reliability, no standardization, and a lack of confidence by customers and a lack of knowledge by customers. NJA created an industry and a brand which people who never chartered or who weren’t extremely happy with charter operations gained knowledge and became knowledgeable and comfortable with flying privately. It could have been done by buying many airplanes and running a standardized charter fleet but that was prohibitively expensive. So then came the brainstorm to have the customers be responsible for the acquisition and upkeep of the jets. For many years a potential owner had to wait many months to take delivery of his share. Absolutely brilliant. However, somewhere along the line as it became apparent that $$$ could be made buy buying the planes at wholesale prices and selling them in pieces at retail prices that NJA started to have inventory issues. Too many planes. Unfortunately, we know the rest of the story, and some of you know it all too well.

However, the market changed, and better mousetraps keep evolving. After many incarnations, XOJet has seized upon the idea of true “branded” charter, with all the attributes of a brand name. Others are going there as well. Many customers, such as myself, have reduced their shares and now use both fractional and “branded” charter. The advantage of fractional is I am guaranteed a plane when and where I need it. But actually, while it sounds good, I only need this guarantee for a few peak days of the year and some very irregular flights. When I have flexibility or time, I price out XOJet first – if the flight is less expensive than using my fractional share I fly XOJet. Quite frankly for most flights over approximately 2.5 hours XOJet is usually much less expensive. Branded charter can be less expensive (more efficient) because it has the ability to change prices or refuse flights for flights which are less desirable for it to fly (XOJet prices a 1.2 hour flight ridiculously expensive so it either gets a lot of $$$ for the flight or doesn’t fly it). Fractional does not have this ability. If the rental car business went fractional, Hertz would have to guarantee me a car when and where I needed it – it would need many more cars to serve all the owners – instead of just being able to say “sorry – all sold out that day”. Therefore, while “owners” may move a portion of their flights to branded charter (allowing these companies to “cherry pick” the most profitable flights of a fractional operator, while leaving the fractional provider with the very unprofitable Sandusky, Ohio to Ithaca, NY flight.

Fractional is here to stay. But I believe many flyers will have smaller fractions than they had in the past.

 

[NJAowner]

NJA was charging a $17.5MM for the 680 and $20.1 for the G200 a few years back. At the same time, Flex was charging slightly less for a new CL-300 than NJA was charging for the G-200.

 

[ultrarunner]

What did we pay for the 680?

What's a 680?