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NetJets

Berkshire Hathaway’s NetJets Moves Forward with Embraer Jet Orders

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Berkshire Hathaway’s NetJets has begun converting its options to purchase up to 250 Praetor 500 business jets from Embraer into firm orders. This year, NetJets converted the first five options into orders, with deliveries scheduled to start in 2025, according to Alvadi Serpa Junior, the market and product intelligence director of Embraer’s executive jets unit.

“As we move forward, we should expect to see more of these orders,” said Serpa Junior.

Berkshire’s NetJets, the leader in shared ownership of private business jets, initially signed the deal with Embraer last year. Valued at over $5 billion, the deal marked the third collaboration between the two companies but the first involving the Praetor 500, a midsize business jet. Previously, NetJets had purchased the smaller Phenom 300 jets from Embraer.

Despite this significant deal, the full value is not reflected in Embraer’s executive jets backlog, which reached $4.6 billion at the end of the first quarter, marking a $300 million increase from the previous quarter. Only firm orders are included in this backlog.

© 2024 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell a stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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NetJets

NetJets and Pilots’ Union Clash Over Safety Concerns Amid New Lawsuit

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Just weeks after ratifying their labor agreement, Berkshire Hathaway’s NetJets and its pilots’ union are in a new dispute. On June 3, the NetJets Association of Shared Aircraft Pilots (NJASAP) reported that NetJets filed a surprise lawsuit in the Franklin County Court of Common Pleas.

The lawsuit alleges that the union defamed the company with statements about safety, maintenance, and pilot training concerns over the past year. NJASAP, representing over 3,400 NetJets pilots, asserts that these concerns have intensified recently.

NJASAP President Capt. Pedro Leroux emphasized the union’s stance, stating, “We view the lawsuit as an attempt to silence us. However, NJASAP has a federally protected right and an organizational and moral responsibility to our members – the NetJets pilots – and to our customers to raise safety issues, and we will continue to do just that.”

The union has been vocal about its commitment to addressing safety, training, and maintenance issues with management. Despite their efforts to collaborate, Leroux noted that management has chosen legal action over dialogue. “Management’s retaliatory course of action will not compel us to abandon our mission: NJASAP will not be intimidated into silence by anyone or anything, including a lawsuit,” he said.

This legal battle highlights ongoing tensions between NetJets and its pilots that despite increased pay have yet to be resolved.

© 2024 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell a stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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NetJets

NetJets Pilots Overwhelmingly Approve New Labor Agreement

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In a significant development for the private aviation industry, pilots belonging to the NetJets Association of Shared Aircraft Pilots (NJASAP) have voted to ratify a tentative labor agreement with Berkshire Hathaway’s NetJets. The vote, with an overwhelming majority of 78.31% in favor, signifies a positive step forward in the relationship between the pilots and the company after several years of acrimony.

The newly ratified labor agreement brings about substantial changes, chief among them being a notable increase in compensation for NetJets’ pilots. With a resounding vote of confidence, pilots have agreed to a remarkable 52.5% rise in compensation until the agreement’s culmination in 2029.

NetJets, with roughly 3,100 pilots, is the leader in fractional (shared) ownership with over double the number of flight hours as its nearest competitor, Flexjet.

© 2024 David Mazor

David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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NetJets

Private Jet Travel Soars: NetJets Reports Strong Revenue Growth

While the COVID-19 pandemic dealt a significant blow to commercial airlines with a sharp decline in travel, it unexpectedly ushered in a private jet travel boom for those with the means to indulge. Surprisingly, this trend continues to flourish, even as commercial jet travel makes a comeback. Berkshire Hathaway’s NetJets, a prominent player in the private aviation industry, has reported impressive revenue growth, with an 8.3% increase in the third quarter and an 11.5% rise in the first nine months of 2023 compared to the same period in 2022.

The surge in revenues can be attributed to several factors, including the expansion of shared aircraft ownership programs and a year-to-date surge in flight hours across NetJets’ diverse programs, all accompanied by higher average rates.

Notably, NetJets has been actively expanding its capacity, aiming to capitalize on the booming demand for private jet travel. In a significant move, the company joined forces with Textron Aviation in September, signing a record-breaking fleet agreement. This agreement grants NetJets the option to purchase up to 1,500 additional Cessna Citation business jets over the next 15 years. It extends NetJets’ existing fleet agreement and includes provisions for an increasing number of aircraft each year.

The surge in NetJets’ revenues paints a clear picture of the growing popularity of private jet travel. As travelers seek the flexibility, privacy, and safety that private aviation offers, companies like NetJets are poised for continued success. Even as commercial airlines make their comeback, the private jet industry is flying high, proving that luxury and convenience are increasingly becoming a top priority for those who can afford it.

© 2023 David Mazor

David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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NetJets

Netjets Agrees to Purchase up to 1,500 Business Jets From Textron Aviation

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Berkshire Hathaway’s NetJets and Textron Aviation have announced a record-breaking fleet agreement for the option for NetJets to purchase up to 1,500 additional Cessna Citation business jets over the next 15 years.

The agreement extends NetJets’ existing fleet agreement, and includes options for an increasing number of aircraft each year, enabling NetJets to expand its fleet with Cessna Citation Ascend, Citation Latitude and Citation Longitude aircraft. Equally exciting is the announcement that NetJets has been named the fleet launch customer for Textron Aviation’s newest jet — the Citation Ascend. Deliveries of the Citation Ascend are expected to begin in 2025 when the aircraft, currently under development, is expected to enter into service.

“NetJets customers around the world continually select Citations as their aircraft of choice. We’re honored to be the largest provider of industry-leading aircraft to NetJets and look forward to continuing to work together to design and deliver the best aviation experience based on customer feedback,” said Ron Draper, president and CEO, Textron Aviation. “Expanding and adding the Citation Ascend to the NetJets fleet will provide its global customers with even more versatility and flexibility to accomplish their missions, building upon the exceptional performance and popularity of the Latitude and Longitude.”

Since the inception of the more than 40-year relationship between the companies, NetJets has taken delivery of more than 800 aircraft from Textron Aviation, including exercising over 300 options for Citation Latitudes and Longitudes during the past eight years. This enduring relationship equips discerning customers with class-leading, safe, and reliable aviation travel experiences worldwide. Through the years, NetJets has owned and operated industry-leading Citations including the Citation SII, V, Excel/XLS, Sovereign, X, Latitude and Longitude models.

“As a long-time, trusted ally who shares our commitment to safety and service, Textron Aviation is the ideal partner to help us expand our offerings to NetJets Owners with the introduction of the new Ascend to our midsize jet class, as well as by growing our overall fleet,” said Doug Henneberry, NetJets Executive Vice President, Aircraft Asset Management. “Based on past demand for the popular Citation Latitude and Longitude, the new Ascend and all our new Citations will undoubtedly be well received by our Owners, particularly those who depend on NetJets to help them do more and miss less.”

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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NetJets

NetJets Competitor Struggles to Stay in Business

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Berkshire Hathaway’s NetJets, the world’s largest private jet operator, may end up with one less competitor as Wheels Up, a membership model private aviation provider, struggles to stay in business.

Wheels Up has given notice to the Securities and Exchange Commission that “there is substantial doubt about its ability to continue as a going concern for any meaningful period of time.”

Wheels Up recently received a cash infusion from its 20% equity partner Delta Air Lines, but that looks to be insufficient to sustain the company long term.

Wheels Up is third behind NetJets and Flexjet in the private aviation market.

Wheels Up also signed a non-binding letter of intent sell its aircraft management business to Airshare, which is currently ninth in the private aviation market.

© 2023 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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NetJets

NetJets Opens New Maintence facility in Paris

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Berkshire Hathaway’s NetJets, the world’s largest private jet operator, has recently unveiled its state-of-the-art Maintenance Service Hub at Paris Airport-Le Bourget. This new facility aims to provide round-the-clock maintenance services for all NetJets aircraft operating in Europe, catering to the growing demand in the region.

In collaboration with JetSupport, the Le Bourget Maintenance Service Hub offers a comprehensive 24/7/365 MRO (maintenance, repairs, and operations) service. With this strategic expansion, NetJets seeks to ensure the smooth functioning of its impressive annual tally of 450,000 global flights. In addition to the new Paris hub, NetJets also operates a maintenance hub at London Luton Airport.

Spanning an area of 4,014 square meters, the Le Bourget service hub hangar boasts an additional 11,329 square meters of ramp space. This extensive facility can comfortably accommodate NetJets’ largest aircraft models, such as the Bombardier Global 6000 and Bombardier Challenger 650. By providing ample capacity, the company aims to maximize aircraft availability and minimize downtime.

Christian Luwisch, the executive director of NetJets Europe, expressed his delight in officially inaugurating the Maintenance Service Hub at Le Bourget. With NetJets’ continued fleet expansion in Europe, Luwisch emphasized the importance of scaling up operational capabilities to ensure uninterrupted service for aircraft owners. Safety remains the company’s utmost priority, and the strategic locations of both Le Bourget and Luton hubs play a crucial role in delivering seamless and proactive servicing.

NetJets’ new Maintenance Service Hub at Paris Airport-Le Bourget is a testament to the company’s commitment to excellence in aircraft maintenance and customer satisfaction. By establishing this 24-hour facility, NetJets reinforces its position as a leader in the private aviation industry, providing reliable and efficient services to its discerning clientele.

© 2023 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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NetJets

NetJets to Add Fleet of Embraer Praetor 500s

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Berkshire Hathaway’s NetJets, the world’s largest private jet operator, has signed a new deal with Embraer for up to 250 Praetor 500 jet options. This partnership also includes a comprehensive services and support agreement, making the deal valued at over US $5 billion. The deliveries for this aircraft are expected to begin in 2025.

The Praetor 500 jet will be a new addition to NetJets’ fleet, which for over a decade has operated Embraer’s Phenom 300 series, one of the company’s most requested aircraft. This partnership between Embraer and NetJets began in 2010 when NetJets signed a purchase agreement for 50 Phenom 300 aircraft, with up to 75 additional options. In 2021, the companies signed a continuing deal for up to 100 additional Phenom 300/E jets, valued at over $1.2 billion, after Embraer successfully delivered over 100 aircraft.

NetJets’ commitment to creating an enhanced customer experience and its trust in Embraer’s industry-leading portfolio and top-ranked support has made this deal possible. NetJets is averaging over 1,200 worldwide flights per day.

“We are eager to add the Embraer Praetor 500, one of today’s most state-of-the-art business jets, to our midsize fleet,” said Doug Henneberry, Executive Vice President of NetJets Aircraft Asset Management. “This historic fleet agreement is another way that we are growing our fleet for the benefit of our loyal customers. By adding up to 250 aircraft to our fleet, we will continue providing NetJets Owners with exceptional service and seamless access to all corners of the globe.”

The Praetor 500 is the world’s most disruptive and technologically advanced midsize business jet. It has an impressive best-in-class range, enabling U.S. coast-to-coast capability, industry-leading speed, and unparalleled runway performance. It’s the only aircraft in its category with full fly-by-wire flight controls.

The Praetor 500 also offers exceptional comfort in its cabin. It features the lowest cabin altitude in its class, as well as the tallest and widest cross-section in the segment. Additionally, it offers a flat-floor cabin, stone flooring, a vacuum lavatory, and ample baggage space, including a fully enclosed internal baggage compartment.

“Since 2010, Embraer has enjoyed NetJets’ ongoing commitment to our industry-leading aircraft, which is a true testament to the value of our brand and our ability to deliver the ultimate experience in business aviation,” said Michael Amalfitano, President and CEO of Embraer Executive Jets. “Our strategic partnership has been an integral part of our business growth, with NetJets taking all aircraft delivery options that have been ordered with Embraer since inception. After building this successful foundation with the Phenom 300 series, it’s our pleasure to have now signed this monumental deal for the Praetor 500 midsize jet, and we look forward to an even more exciting future ahead.”

© 2023 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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NetJets

NetJets Revenues Soaring

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Berkshire Hathaway’s Aviation businesses, NetJets and FlightSafety, have taken off. In the first quarter of 2023, their revenues saw an impressive 18.8 percent year-over-year growth. This is a testament to the strong performance and demand for these aviation services.

Berkshire Hathaway’s overall operating earnings for Q1 2023 hit a remarkable $8.065 billion. This is a significant increase from the first quarter of 2022, which recorded earnings of $7.160 billion.

“The revenue increase was primarily due to increases in the number of aircraft in shared aircraft ownership programs and in flight hours across NetJets’ various programs, as well as higher average rates,” the company stated in its Form 10-Q.

© 2023 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell a stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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NetJets

NetJets Once Again Facing Labor Troubles From Pilots’ Union

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NetJets, a subsidiary of Berkshire Hathaway, is facing a major challenge in the marketplace as the pilot shortage continues to tighten its grip.

NetJet’s Executive Management Team is yet to take proactive steps to attract and retain increasingly scarce pilot talent, claims the NetJets Association of Shared Aircraft Pilots (NJASAP).

“We are watching management teams across the industry – from legacy carriers to ultra-low-cost carriers – take bold steps to reinforce their competitive footing for top pilot talent,” NJASAP President Capt. Pedro Leroux said. “We fear NetJets’s intransigence on this industry-shaping moment will have very serious consequences for the brand’s ability to deliver the unparalleled safety and service product for which our customers pay a premium.”

The shortage of pilots is a critical issue across the aviation industry, with legacy carriers and ultra-low-cost carriers taking steps to reinforce their competitive footing for top pilot talent.

NetJets and its pilots union had a decade of often contentious relations. However, in 2021, they reached a new agreement without any of the past drama. The relationship between the two parties had hit rock bottom in 2015, with angry pilots conducting picketing at the Berkshire Hathaway annual meeting in Omaha.

Earlier this week, NJASAP filed a complaint against the luxury jet carrier in the United States District Court for the Southern District of Ohio. The lawsuit accuses NetJets of attempting to suppress union-related pilot speech in violation of federal labor law. NJASAP filed the lawsuit after NetJets threatened to discipline pilots for referring customers to the Union’s website.

© 2023 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell a stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.