http://www.cnbc.com/id/41877271/page/3/
Yesterday's Warren Buffetr transcript on Squawk Box:
I give Joe Kernan credit for asking this, if you watch the clip live you can see that it visably bothered Buffet to have someone come out publicly and say that Netjet was "anti-American". I wonder how many big corporations will like doing business with a company that no longer has any US made Jets?
BECKY: OK. Joe, you have a question, too?
JOE: Yeah, I do. And a--I should say I probably have a follow-up, too, because I'm going to get to where I'm going, but it always takes a while. I know that. Warren, we think about jobs in the country and how to get jobs. And then we also think about how to run businesses. And that huge--or that jet acquisition you made from Bombardier, you could have bought Gulfstream. Do you--do you ever think about social responsibility in terms of where the jobs will be--will be generated? That could have gone to Gulfstream, but it didn't, it went to Bombardier, right?
BUFFETT: Yeah, we think about what will be the best deal for our customers in terms of what they're going to want in terms of a wide cabin, long-range plane. And in the end the customer drives every decision we make on something of that sort.
JOE: That's a global--are you're buying--is that plane you're talking about?
BUFFETT: It's a series of four planes over the next decade or so. Eventually they'll bring in a 7,000 and an 8,000, so there's--and incidentally Gulfstream will be bringing in new planes over the next decade, too. But we evaluated the options just as we did in the small cabin planes, tried to decide what, in terms of the demands of our owners, what they want in terms of range, in terms of cabin width, in terms of all kinds of things, cost, and made that decision, because in the end we can buy planes, but we also have to sell planes, and the customer's going to make that decision.
JOE: We--I guess this indicates that both business travel, which I figure use the big cabin ones, and also--you bought--you bought in Marquis jet, right? That goes more to, what?
BUFFETT: Right.
JOE: Pleasure? How's that acquisition going, and are we seeing then, you're saying, a bounce in both business travel and individuals?
BUFFETT: Yeah. And we bought Marquis late last year, and Kenny Dichter, who runs that operation, is doing a terrific job for us. Our sales of Marquis cards in the month since we bought it are appreciably ahead of the same months a year ago, and it made sense for us to buy Marquis and I'm glad we own it. We're seeing--we're seeing increases in both personal use and in business use. And sometimes it's hard to tell. Sometimes in small businesses an owner will have $100 or something, and we don't really know whether he's using it for personal or business use.
But we have seen--we have not seen a surge in demand at all. We have seen our present customers using more hours per month by a considerable margin than they were two years ago. They're usage right after Lehman fell off dramatically. They were still paying us the monthly management fee and all of it. They had the right to the same number of hours, but they weren't using them. It was amazing to me, because you had these very wealthy people and they had homes and, you know, that they went to at Christmas or Thanksgiving. But maybe they started going to them by bus. But our usage really fell off there significantly in the six months following Lehman. It's come back quite a ways. Our sales have picked up, but they're not remotely like they were four or five years ago when everybody was feeling flush. JOE: Well, you're making a huge bet on the future of this. And, you know, you--sometimes you lessen investments like Washington Post or something, that it looks like even though NetJets has never--has it been a big moneymaker for you? You're going in, you know, full bore at this point.
BUFFETT:
Yeah. Well, Net, since we bought it, we made a couple hundred million dollars last year and that brought it--brought us back to where for the full 11 years we more or less broke even.
JOE: Right.
BUFFETT: So it has not been a satisfactory investment financially. It's been--it's been a significant winner in the marketplace. We have five times the market share of our leading competitor. Nobody's gained market share on us, nobody gets the customer satisfaction reports that we get. But we have not--we have not made money. We were spending more money than we were taking in, which catches up with you eventually. Under Dave Sokol, it's now doing very well. But it is now--we have not gone back to a period like 2005 and '06 and '07 when the hedge fund operators and everybody were signing up hand over fist. We're selling more than we were a year ago and are using more than a year ago, but it's not dramatic.
JOE: Well, it looks like you're expecting it to be.
Say good by to Cessna at Netjets
http://www.businessweek.com/news/2010-10-18/berkshire-s-netjets-to-buy-up-to-125-embraer-planes.html
