Hawkered said:Family Guy
Your accounting of the core-fleet disposal is one that concerns me greatly. I know that you have to "hail to the chief", but clearly it is time for somebody to speak up before the emperor shows up without any clothes.
We have spoken before about the validity of higher utilisation of all of the aircraft types with the Marquis Jet Partners option effectively dividing possession of the aircraft into 1/32, or between any one of 32 parties. This is a far cry from the original "Quarter Share" marketing of our fractional founder.
Leveraged aviation purchases at airlines don't work, because the return on investment does not make the interest payment attractive over either the short or long term. Thats why we now have two completely "paper" airlines in this country consiting of JetBlue and Airtran. They have no real assets except the cash on hand to show that they can...go out and lease more aircraft. Much like Budget did just before they went bankrupt in the '80s..but that's another story.
Netjets is such a dynamically different operation than a business model that serves the same two dozen city pairs. With over 5,000 airports domestically in the United States alone, you have really screwed up any chance of recovering flights after an interruption in reliability. A Citation X broken down in Butte, Montana is going to sit there for three days if it breaks on a Friday evening. This problem is not the same as an A-320 in Long Beach or JFK for JetBlue being cared for by in-house line maintenance with a factory rep' looking over their shoulders.
What you have failed to realize is that by simply showing a reduction in a long-term lien against a core fleet aircraft, or for that matter, one that is owned but fully depreciated, you have cost us that expense multiplied by ten or fifteen flights over the weekend that our broken down Citation X in Butte could not cover. The short term costs have been astronomical.
I don't know if you guys did this to lower the staffing required for Part 91K, to drag out negotiations, or because you simply didn't know any better!
Leadership 101: When you screw up, admit it, ask for forgiveness and move on!!
Dixon Cider
I feel your pain man, but you're coming off as a real whack job, not somebody whose professional respect is based upon dignified behavior.
Hawkered - I dont think the selling of the core fleet is attributable to anything as sinister as what you alluded to at the end of your message.
For me, it appears to be a repeat of the problems we saw in 99-00. If you'll think back we go through these cycles every 4-5 years where demand skyrockets and we cant get the planes fast enough from the manufacturers. This causes our core fleet to shrink down to unacceptable levels and the sell offs to increase, and yes, to levels that are astronomical and unsustainable.
The flip side of this is that during the slow years the planes are coming in from the manufacturers at a much faster rate than we are selling them...something that is also unsustainable. You have to balance the supply and demand out....which as I pointed out earlier, is very difficult when supply has a 2-3 year lead time and demand changes in a matter of weeks or months.
I dont know why it is so hard to balance these two....but we do have to get better at it. I personally think we havent learned as a company to manage our sales. We've always been sell, sell, sell.....and then we have to try and find a way to support it. Shortsighted? yes. Should we be managing the sales to match aircraft supply? yes. but it is a good problem to have.
Your point on not selling the core because it is fully depreciated is way off base though. Think about our model....we buy aircraft and keep them for 10 years max, and then we are selling them and moving into newer aircraft fleets. look at the SII's, and now the Hawkers and Ultras.
The point is that you arent going to fully depreciate an aircraft over 10 years and it is not realistic for us to keep older, fully depreciated aircraft as the core fleet for the owners....they wouldnt accept them. We have to keep selling shares in the aircraft fleets and steadily moving the core to the newer fleets.