XOJET business model?

[Huggyu2]

Sorry 'bout that. Feeling a bit cynical tonight.

 

[johnsonrod]

I am not sure how they are making money. However, the CEO seems like a bright guy who obviously made a lot of money doing something else. He has an intelligent team and his advisors must know something we don't... I really doubt they would have ordered 80+ airplanes if they didn't have a model that worked at some point... The lenders would have scoured any plan with a fine-toothed comb to protect themselves...

I am betting that aircraft depreciation/tax benefits play a big role (accelerated depreciation) and we are not privy to the details. These airplanes are basically serving as mobile tax shelters.... But that is also one reason why Netjets owners buy shares in aircraft - to reduce their taxable income via asset depreciation.

I am not certain about technical tax details (I ain't no tax lawyer), but let's say that a Citation X costs $20M. Depreciation could run on a 5-year perceived useful life for the aircraft. Therefore, the owner could get $4M in depreciation expense every year for five years to apply against their net income (which could be substantial for a high-networth individual or company). And then you have the residual value of the aircraft (value after 5 years is still pretty high) when you decide to replace it - XOJet will likely sell the Citation Xs after the "useful" life of those aircraft have been reached. So, that $4M in net income reduction actually helps to pay for the aircraft for that year. We're talking big tax benefits for owners when we spread this out among 80-100 airplanes.

Everyone knows it is expensive to operate a Citation X nowadays with high fuel, etc. but the tax benefits must play a significant role...

 

[NETFLIER]

How are they making money?....

someone with insight step up and answer this please.

is it that nobody knows? are they leasing aircraft?

do the pilots sit alot just waiting for the next leg after they do a cal to NY flight?

here at net, pilots do minimum 600 hours a year in the X. We have 40% of the time is deadhead, but its not 40% of hour total hours flown. we may revenue cal to ny(teb) reposition to ewr then revenue to pbi. that show 33% deadhead but only equal about 2% of the total flight in the airplane. So the numbers they quote above are bogus.

 

[On Your Six]

Sounds like the people who do buy fractional shares buy bigger shares than the "average" Netjets owner (probably 1/2 share or more - they just don't want the typical ownership hassles). So, they may have fewer total owners per aircraft (less need for frequent repositioning). That said, the charter aspect might then necessitate deadheading in some cases. I wonder what percentage of their flying is 135 related (including repositioning)? Perhaps XOJet makes money when selling shares to owners (slight margin when buying aircraft in bulk at heavy discount?

I agree with the theory that tax benefits play a big role in this business. A lot of the share owners are trying to shield their incomes from the IRS - but this is common among aircraft owners in general.

 

[X-rated]

How are they making money?....

someone with insight step up and answer this please.

is it that nobody knows? are they leasing aircraft?

do the pilots sit alot just waiting for the next leg after they do a cal to NY flight?

here at net, pilots do minimum 600 hours a year in the X. We have 40% of the time is deadhead, but its not 40% of hour total hours flown. we may revenue cal to ny(teb) reposition to ewr then revenue to pbi. that show 33% deadhead but only equal about 2% of the total flight in the airplane. So the numbers they quote above are bogus.

I don't know which add your talking about, so it is hard to respond intelligently. However, according to this add you have to buy a whole or half airplane to get the $3031 direct opperating cost per hour, and you get a maximum of 400 or 800 hours. Charter rates are significantly higher.

http://www.controller.com/listings/...m?guid=102BDCCF0459444592A5C3D9036CBF96&dlr=1


3% deadheads probably mean unpaid, not empty. That is the benefit of backfilling with charter.

 

[X-rated]

Netjets was using them to offset but then the dumbaz pilots were trying to sales pitch our owners so cut them off we did. Ofcourse we are really the dumbazz for using them in the first place.

Consider your source. I have no way of knowing if it ever happened, but pilots were all instructed not to make sales pitches. At the time we offered nothing less than half share ownership. So, why would we pitch XOJet to 16th and 1/4 share owners? Our boss PT met with RTS and they both agreed we were not competitors. We didn't start offering smaller hour block programs until we stopped flying for NJA.

 

[NETFLIER]

xojet is:

a management service that sells airplanes. Not a fractional provider.

tis all:beer:

 

[X-rated]

Fractional?

xojet is:

a management service that sells airplanes. Not a fractional provider.

tis all:beer:

OK, if you say so...

This is not flame and I'm not necessarily disagreeing with you, but can you please tell me what the difference is other than the size of the shares?