Tag: NetJets

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NetJets’ ongoing labor issues took a big step forward as the International Brotherhood of Teamsters Local 284 and NetJets Aviation reached a tentative agreement on a new contract for the 278 flight attendants represented by the union.

The agreement is being hailed as containing “substantial” pay increases and is being called “mutually beneficial.” The union said the terms include:

• A $2.8 million ratification bonus that will equal approximately $80 per month of service for all flight attendants.
• Substantial pay increases for all flight attendants at all seniority levels.
• New 18-year pay scales, increasing from prior 10-year scales.
• The ability to use sick days as personal days.
• New schedule choices.
• Increased flight attendant basing opportunities.

Work on a final agreement will begin during the week of October 12.

Change in Leadership Brings Progress

On June 1, 2015, Berkshire Hathaway, the owner of NetJets, dismissed NetJets CEO and chairman Jordan Hansell, replacing him with Adam Johnson, who had spent 22 years at NetJets. At the time, there was hope of a breakthrough with NJASAP, the labor union representing the approximately 2,700 pilots employed by NetJets.

While some progress was made during a 90-day summer ceasefire that included an expedited bargaining schedule with the intent of reaching a tentative agreement, the two sides were still at loggerheads over wages, retirement and health care benefits. NJASAP resumed its picketing, noting that the union and management were still far apart.

In September, 800 pilots and their family members picketed at seven picket sites across the country.

Now, with the breakthrough agreement with the flight attendants’ union, there is at least a glimmer of hope that NetJets might settle its contract dispute with its pilots. NetJets and NJASAP have been engaged in contract negotiations since June 2013, and, in early May 2015, began bargaining with the assistance of a National Mediation Board-appointed mediator.

Berkshire Hathaway purchased NetJets, the leader in fractional jet ownership, in 1998 for $725 million.
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© 2015 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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With the twists and turns of a political thriller, changes in NetJets’s management may just lead to a breakthrough in its labor dispute between its pilots and management.

The ongoing dispute has been a familiar sight to anyone attending Berkshire’s annual meeting the past few years, as hundreds of pilots from the NetJets Association of Shared Aircraft Pilots Union have picketed in “informational protests” that laid out a host of grievances, including working without a contract for two years.

“It’s human nature to sometimes have differences about how people get paid,” Berkshire chairman Warren Buffett said when questioned about the dispute at the annual meeting.

Pedro Leroux, president of the pilots’ union, has said that NetJets has demanded that pilots and other unionized employees concede to wage and health care concessions despite the luxury jet fractional ownership business having revived from near bankruptcy levels during the 2009 recession.

Berkshire credited its 9.5% increase in 2014 revenue in its service businesses to NetJets and aviation training company FlightSafety International.

Leroux also noted that the pilots had lost trust in NetJets’s chief executive and chairman, Jordan Hansell.

Now, in an odd twist, Hansell is out the door after four years at the helm, and Adam Johnson has been appointed CEO and chairman.

Letters to Buffett

After almost 22 years at NetJets, where Johnson had risen to number 2 in the management hierarchy, Adam Johnson left the company on May 1, ostensibly to take a job outside of the aviation industry. According to reports, it was clear that Johnson and Bill Noe, who had also resigned, were dissatisfied with Hansell’s leadership, and The New York Post wrote that Johnson had sent a letter to Berkshire chairman Warren Buffett questioning “the direction of the company.” They also reported that Johnson had sent a similar letter back in 2009 that lead to the ouster of NetJets founder Richard Santulli.

With Johnson back as the new chairman, Noe has also returned and moved up the ladder as president and chief operating officer.

Now the pressure is on Johnson and Noe to resolve a dispute that Hansell had no luck with. He apparently had avoided meeting with Leroux over the two years since the contract had expired, something that Johnson and Noe promptly remedied after just a few days back on the job.

No word yet if the talks were fruitful, but its clearly time that NetJets resolves the conflict, as a shortage of pilots has given the pilots union increased leverage.

© 2015 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.