Thu. August 06, 2009; Posted: 04:37 PM
Aug 06, 2009 (The Columbus Dispatch - McClatchy-Tribune Information Services via COMTEX) -- BRK/A | Quote | Chart | News | PowerRating -- After Richard Santulli's surprise resignation Tuesday as chairman and chief executive officer of NetJets Inc., parent company Berkshire Hathaway took steps to shore up the company's leadership.
Those actions had observers musing about what that might mean for the future of Warren Buffett's company and for the business-jet company that has its operational headquarters in central Ohio.
Until Santulli is permanently replaced, NetJets will be led by Richard Sokol, current chairman of Berkshire Hathaway's Iowa-based utility company, MidAmerican Energy Holdings Co. He moved quickly yesterday to appoint Ben Murray as NetJets' first chief operating officer in five years.
Murray is a 10-year employee of NetJets and CEO of its Cincinnati charter unit, Executive Jet Management.
State development officials say the $200 million NetJets expansion is moving ahead as planned, although the company has said little about it since last year.
For Columbus, the departure of Santulli could mean a change in the company's headquarters location, which currently is in Woodbridge, N.J. Santulli and a small staff have been based there since he acquired the company, then known as Executive Jet, in 1984.
For Berkshire Hathaway, the choice of Sokol as Santulli's interim successor is seen by some as a hint that Buffett has tapped him as his successor, or at least one of them. Berkshire will split Buffett's job into three parts -- chief executive officer, chief investment officer and chairman.
Analyst Justin Fuller said yesterday he thinks Sokol has the edge.
"In my mind, it continues to make him -- if I were to handicap it -- the front runner to take over the operating side of Berkshire at some point," said Fuller, who works with Midway Capital Research & Management in Chicago and writes about Berkshire online at www.buffettologist.com.
NetJets, which sells fractional ownership of business jets, has been hit hard by the recession. In Berkshire's first-quarter report, NetJets reported a $96 million loss. Second-quarter results are expected this week.
Former NetJets workers had high praise yesterday for Santulli, who is known for his hands-on management style and for referring to employees as "family."
"Twenty years ago, business aviation was a little cottage industry. (Santulli) turned it into a big, booming, vital industry," said Scott Liston, who worked for NetJets from 1985 to 2000.
"He put everything he had into the business. He was stubborn and he was committed. He was incredibly well-liked and respected by the people there ... and for Richard, it was a dream come true to be able to work closely with Mr. Buffett and earn his high regard."
Despite the company's losses, NetJets hasn't announced layoffs. It recently said that it was able to avoid laying off pilots by working with the pilots' union on voluntary measures.
Mike Riegel, an industry veteran and founder of Nevada-based consulting firm Fractional Insider, said he wouldn't be surprised if Buffett, faced with those losses, had decided to make a change at NetJets.
"It's by far the toughest time the industry has seen," Riegel said. "It's unprecedented."
Information from the Associated Press was included in this story.
mrose@dispatch.com
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