NetJets Soars in 2011, Eyes China for Further Growth
“A few years ago NetJets was my number-one worry–its costs were far out of line with revenues, and cash was hemorrhaging,” Warren Buffett, chairman of NetJets and FlightSafety International parent company Berkshire Hathaway, wrote in his latest annual letter to shareholders, released on Saturday. “These problems are now behind us,” with NetJets delivering $227 million in pre-tax earnings last year, up $20 million from 2010.
Berkshire’s “other services” division–which includes FlightSafety and NetJets, among a handful of other non-aviation-related businesses–reported $7.9 billion in revenues last year, an 8-percent year-over-year increase, and a 6-percent rise in pre-tax earnings to $1.04 billion. Much of these gains were attributable to both NetJets and FSI, Buffett said. In fact, NetJets’s earnings increased 10 percent thanks to higher revenues and lower aircraft maintenance costs due to a 10-percent reduction in its aircraft fleet. According to the Berkshire report, over the past three years NetJets trimmed its aircraft fleet size by about 20 percent and lowered its operating cost structure.
Buffett said NetJets’ results were “particularly impressive” because aircraft share sales were slow during most of the year, though “there was an uptick” in December.
Meanwhile, NetJets appears poised for further expansion outside the U.S., with Buffett saying, “NetJets is proceeding on a plan to enter China with some first-class partners.” An announcement about NetJets China is expected next month at ABACE, though a NetJets spokeswoman could not yet confirm this.