NetJets Unrest Puts Warren Buffett in a Rare Pinch

[Diesel]

Agreed.




You are off base on this point. NetJets gets huge discounts on pretty much everything it buys. Some of that has been screwed up recently by Jordan's ego and outrageous demands of the vendors. TEB is a good example....just take a look at Jordan's failed lawsuit against the major FBO chains in his ill advised attempt to force the FBOs to let NetJets sell fuel to third parties under the NJ contracts. That will tell you why the FBOs are charging such high rates in TEB, and why the chains are raising prices to NJ.




No argument here. Jordan has no vision, creativity, or passion for aviation. He's simply managing by the numbers. Similar to someone doing a paint by numbers and thinking they will get a masterpiece.

I agree with the most part but I know for a fact Fsi doesn't give us s discount. I can't explain how I know because it would put a friends job in jeopardy.

You think with 3000 pilots we would at least get a 50 dollar off coupon.

We have ruined every relationship we have with every single vendor. We strong armed them when they needed us the most. Now we need them the most and they are laughing. All the way from Gulfstream to the mom and pop place that shoved it so far up us last week and broke it off.

People are just going through the motions. With no vision and a culture of raise your hand you get your head blown off nobody wants to bring anything new and exciting to the table. Everyone from the president to the guy that mops the floors is beaten down by the matrix.

I remember a couple of years ago the ip's were all exited when they walked in holding a letter saying how the company acknowledged the pendulum has swung to far. They were giving us more authority. I started laughing and saying we are screwed now because this is just the start now you guys are believing it. Fast forward 2 years and I'm getting nasty grams on cell phone usage because I was on hold for 40 minutes in the desert and they pay some astronomical fee for phone usage while my own verizon phone has free minutes and a cheap international plan. Where is this discount we are talking about?

We will get a new contract I'm not worried about that. What worries me is there is no fire anymore. There is no excitement in creating and exceeding the brand. The exclusiveness, the ego that comes with saying I own a NetJets share.

I live above and within 3 of the most expensive restaurants in the world. They are constantly striving for more. They don't just have a eh they will come attitude. The service. The quality. The exclusiveness. It's all there. It's why you'll pay a couple of thousand dollars for a dinner. On top of that you'll feel great about doing it. I see a lot of our owners in these restaurants and they don't have the same smile on their face when they finish dinner as when they show up to their plane. That feeling isn't there.

 

[Diesel]

I hope you aren't whistling past the graveyard...

At least I'll be doing something.

What will you actually be doing?

 

[gutshotdraw]

I remember a couple of years ago the ip's were all exited when they walked in holding a letter saying how the company acknowledged the pendulum has swung to far. They were giving us more authority. I started laughing and saying we are screwed now because this is just the start now you guys are believing it.

I had the EXACT same experience with a training FA at recurrent about 18 months ago (you know the one Diesel). He started waiving EL's letter around and talking about how great things were going to be now. I laughed and said, "you don't get out on the road much, do you?"

Kool-aid drinkers like him, and unfortunately my bud G4, are the ones whistling past the graveyard. Diesel is exactly right with his post. It isn't the pilot and FA unions and more costly labor contracts that could destroy this company. It is the nickel and dime, short term, bottom feeder mentality oozing from the ivory tower in CMH and OMA that denigrates the brand, drives away customers, suppliers, AND talented employees that may destroy the company.

It will never happen but PLEASE, PLEASE, PLEASE Uncle Warren, SELL us to an entrepreneur with VISION.

 

[FamilyGuy]

What worries me is there is no fire anymore. There is no excitement in creating and exceeding the brand. The exclusiveness, the ego that comes with saying I own a NetJets share.

I live above and within 3 of the most expensive restaurants in the world. They are constantly striving for more. They don't just have a eh they will come attitude. The service. The quality. The exclusiveness. It's all there. It's why you'll pay a couple of thousand dollars for a dinner. On top of that you'll feel great about doing it. I see a lot of our owners in these restaurants and they don't have the same smile on their face when they finish dinner as when they show up to their plane. That feeling isn't there.

That's my main concern as well. NetJets used to have cachet and everyone wanted to be associated with it. People wanted to buy shares, the vendors wanted to count NetJets as one of their accounts. Employees used to be proud to say they worked for NetJets. Now there is no pride, buzz, excitement, whatever you want to call it.

Employees don't want to say they work for NetJets, vendors coined the term "LAN" for Life after NetJets, and could care less if they get our business or not. It's not that they don't want the revenue, but they've come to the realization that we are more trouble than we are worth. It's just a matter of time before the owners realize that it doesn't matter if NetJets lowers the price or not - its not worth it.

The recent consolidation in the fractional space has helped NetJets for now by reducing competition, but I think NJ is leaving the door open for a new premium provider at some point. Particularly in the large cabin space.

 

[NJAowner]

I live above and within 3 of the most expensive restaurants in the world. They are constantly striving for more. They don't just have a eh they will come attitude. The service. The quality. The exclusiveness. It's all there. It's why you'll pay a couple of thousand dollars for a dinner. On top of that you'll feel great about doing it. I see a lot of our owners in these restaurants and they don't have the same smile on their face when they finish dinner as when they show up to their plane. That feeling isn't there. BINGO! (or as others on the board like to say "Winner, Winner, Chicken Dinner".

Except it was an intentional, thoughtful and conscious decision by BH to remove the "cachet" and turn private jet service into a service commodity. This did not happen against the will of BH, in secret, and against instructions and authorization. A "plan" was created, a "plan" was refined, a "plan" was approved, a "plan" was implemented and a "plan" has gotten results which could be reasonably expected and intended. Therefore, I do not expect much of a change or an effect from "embarrassment". BH owns the company and can do with it as it pleases. Just because many owners don't like the plan and employees don't like the "plan", doesn't mean that BH doesn't like the results.

I think many of the assumptions about BH in this process have been wrong: (1) BH doesn't like embarrassment, (2) BH doesn't like failure and ego stands in the way (Sorry Diesel -- I usually agree with you but BH has had many big losers over the years, but the winners far exceed the losers so I don't think ego is important here), (3) BH is unhappy with the financial results of the company (I think they are quite happy with the whole integrated result).

 

[X-rated]

Except it was an intentional, thoughtful and conscious decision by BH to remove the "cachet" and turn private jet service into a service commodity. This did not happen against the will of BH, in secret, and against instructions and authorization. A "plan" was created, a "plan" was refined, a "plan" was approved, a "plan" was implemented and a "plan" has gotten results which could be reasonably expected and intended. Therefore, I do not expect much of a change or an effect from "embarrassment". BH owns the company and can do with it as it pleases. Just because many owners don't like the plan and employees don't like the "plan", doesn't mean that BH doesn't like the results.

I think many of the assumptions about BH in this process have been wrong: (1) BH doesn't like embarrassment, (2) BH doesn't like failure and ego stands in the way (Sorry Diesel -- I usually agree with you but BH has had many big losers over the years, but the winners far exceed the losers so I don't think ego is important here), (3) BH is unhappy with the financial results of the company (I think they are quite happy with the whole integrated result).

Absolutely spot on in all regards. NetJets is too large to give boutique best in class service and they certainly can't do it in a cost effective manner. Besides, BRK's interest is and should be in maximizing ROI. I'd also argue truely high end service is not what the typical NetJets client wants anyway. Their clients want the flexibility and comfort private aviation affords, but they want it a the reduced cost intrinsic to the fractional industry. There are plenty of VERY wealthy folks who want and are willing to pay for truly top notch service. But those people don't own shares in ratty run down planes they share with hundreds of other people. They buy the best planes, keep them in climate controlled hangars and don't give a rip that they're underutilized or not cost effective. Their planes are configured to their personal standards and are stocked with their own personal things. Their crews remain with them, know exactly what's is important to them and how to best serve them. Don't get me wrong. There are plenty of extremely wealthy people who don't care enough to spend the extra money, but that just further proves my point.

The title and premise of this thread makes me giggle every time I read it. WB is 85 years old, is revered in a cult like manner throughout the financial industry and beyond, and he is the second or third wealthiest man on the planet depending on the day. His success and financial results will likely never again be replicated. It takes a remarkably healthy ego to think a couple scripted message adds by a union during negotiations and a few guys walking in circles are putting WB or BRK in any kind of "pinch". That's just laughable.

NetJet's pilots have a long and well known reputation for having irrational and unjustifiably oversized egos. This thread adds nicely to the legend. It also proves pilots understand very little about what motivates investors.

 

[pilotyip]

NetJet's pilots have a long and well known reputation for having irrational and unjustifiably oversized egos. This thread adds nicely to the legend. It also proves pilots understand very little about what motivates investors.

Oh Oh, Can you say that on pilot centered board?

 

[imacdog]

Sure it can be said, but it doesn't make it entirely correct. This thread is about not putting up with pay and benefit cuts while a company is doing very well financially. If that is a sign of irrationality and ego then I'd love to hear what X thinks would be proper for the NJA pilot group.

 

[T-1GUY]

Crickets...

 

[ghostrider64]

NJAOwner may be right, but these "results" may be shortsighted. Today I had in in depth conversation with a large share holder. He was really disappointed with the interior of the C350, with the exception of the galley. Ultimately he's saying goodbye to his large cabin share (he loves Gulfstream products and was reading the FT bombardier article today), and keeping is XL share for short hops.

Which aircraft actually contribute more to the bottom line again? Guess BRK should look at the results again and perhaps they'd see that the reduction injecting owner expectations will ultimately hurt their "current" bottom line numbers.