The world leader in fractional ownership is coming to China, but fractional shares won’t be on its service menu here–at least for the time being. After years of looking to enter the Chinese private aviation market, here at the ABACE show yesterday NetJets finally confirmed plans for a new joint venture in the People’s Republic of China.
After years of looking to enter the Chinese private aviation market, NetJets finally confirmed plans for a new joint venture in the People’s Republic of China today at the Asian Business Aviation Conference & Exhibition (Abace) in Shanghai. Though NetJets is known as the company that pioneered the sale of aircraft fractional shares in the U.S. and Europe, its services in China “will begin only with managing and chartering aircraft that are wholly owned by customers” rather than fractional ownership.
After almost a decade of controversy, four years since the first complaint was filed and several postponements of the actual trial, the Bobigny Criminal Court (a French court near Paris Le Bourget Airport) decided on Tuesday to acquit NetJets Management Ltd and NetJets Transportes Aéreos (two companies trading as NetJets Europe) in a case where they were accused of employment practices contrary to French law. All civil plaintiffs’ claims were rejected.
“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.
Milestone Aviation Group (Booth No 7010), a helicopter financing company, made a splash at Heli-Expo this year, announcing a $480 million deal with Eurocopter (Booth No. 1917) for 16 EC225s, a contract with Sikorsky Aircraft (Booth No. 6148) for three S-92s (terms not disclosed), and a $125-135 million leasing agreement with major operator Bristow Group for five large helicopters.
NetJets Europe launched the first direct financing product for the fractional industry in Europe, providing new clients with an alternative financing method with rates comparable to those offered by major financial institutions.
Bombardier Aerospace and NetJets celebrated the rollout of the fractional provider’s first Global-series jet today, in this case a Global 6000 (neé XRS). Last March, NetJets placed an order for 50 Globals worth $2.8 billion, as well as options for an additional 70, breaking the fractional provider’s tradition of buying only Gulfstreams for its large-cabin jet fleets.
Lufthansa announced yesterday it will introduce its Lufthansa Private Jet service to the North American market on February 1 through an expanded relationship with fractional provider NetJets. The new service will build on the existing Lufthansa Private Jet service in Europe, which is done in conjunction with NetJets Europe.
The U.S. government claims that NetJets owes the Internal Revenue Service (IRS) nearly $643 million in federal excise taxes, assessed penalties and interest. The amount is just $125 million less than the $768 million in pre-tax earnings that NetJets parent Berkshire Hathaway reported in its last financial report for the “other” category of subsidiaries that includes NetJets, FlightSafety International and other businesses.
Four of NetJets’ subsidiaries–NetJets Aviation, NetJets International, NetJets Large Aircraft and Executive Jet Management (EJM)–are suing the U.S. government over a $642.7 million IRS tax bill for past federal excise taxes (aka “ticket tax”) and assessed penalties and interest.