Tuesday, November 10, 2009, 12:50pm EST
Business First of Columbus - by Matt Burns
The parent company of NetJets Inc. expects the fractional aircraft business will be mildly profitable in 2010 after losing more than $500 million over the first nine months of this year.
Omaha, Neb.-based Berkshire Hathaway Inc. (NYSE:BRK), which owns the corporate jet operator based at Port Columbus International Airport, said in a regulatory filing this week that NetJets lost $183 million in the third quarter, bringing the subsidiary’s pretax loss through September to $531 million. The red ink came even as Berkshire Hathaway, headed by billionaire Warren Buffett, tripled its third-quarter profit to $3.35 billion.
The recession, which has battered the private aircraft trade, played a role in NetJets absorbing more than $400 million in asset write-downs and downsizings through September, according to the filing. The company in September cut 350 largely administrative jobs, most of them in Ohio, and last week disclosed it will furlough 495 of its 3,200 pilots beginning in January, a move that will push out of work fewer than 100 pilots based at Port Columbus.
On the heels of the furlough announcement, Berkshire Hathaway cautioned in a Securities and Exchange Commission filing that “NetJets owns more planes than is required for its present level of operations and further downsizing costs will be incurred in the fourth quarter.”
Expectations for next year are markedly different.
“Management believes that NetJets is likely to operate at a modest profit in 2010,” the company wrote in the SEC filing.
That projection, however, comes with two caveats: A modest profit, Berkshire Hathaway told investors, is likely “absent any further deterioration in the U.S. economy or negative actions directed at the ownership of private aircraft.”
A profitable 2010 would come after a year of tumult at NetJets, which began in 1964 as the first business jet charter and aircraft management provider. It now sells fractional interests in aircraft to businesses and executives who don’t fly enough to warrant the purchase of an airplane.
NetJets founder and CEO Richard Santulli stepped down without warning in August and was replaced by David Sokol, chairman of Berkshire Hathaway’s MidAmerican Energy Holdings Co. The executive shuffle came days before the company made public its plans to move its headquarters to Columbus from Woodbridge, N.J. The home office shift was another gain for Columbus a year after NetJets outlined plans for a $200 million expansion at the airport expected to add 800 jobs to its Central Ohio payroll of about 2,000.
Weeks later, NetJets disclosed its U.S. work-force reduction plans and put its Columbus expansion program on hold.
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