Wednesday, March 21, 2007

NetJets is confident of new orders and profits

NetJets Europe is expecting a fresh round of aircraft orders this year and is confident it will remain profitable, having reached this milestone for the first time last year - a decade after it began.
Warren Buffett, chairman of NetJets parent company Berkshire Hathaway, said in his annual letter to shareholders that a "much improved situation is emerging at NetJets".
The 1996 move into Europe was "particularly expensive" and after five years of operation "we had acquired only 80 customers", he says. "By mid-year 2006, our cumulative pre-tax loss had risen to $212 million."
Now demand in Europe is soaring, "with the company adding 589 customers in 2005 and 2006", bringing the total to 1,300 customers - 600 fractional owners and 700 charter card holders.
"We have spent the last 10 years building the infrastructure that has allowed us to secure both the brand and the success we have today," says NetJets Europe business development manager Robert Dranitze. This year NetJets Europe is investing $30 million on improved remuneration for its cabin crew and will add 24 business jets to its 115-strong fleet.
"We are very bullish about the European market. It is huge and we have barely scratched the surface," says Dranitze.
NetJets' US operation also had a good year, with the company generating earnings of $143 million compared with a loss of $80 million in 2005, primarily because of the need to charter to meet "unusually high owner demand", adds Buffett.

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