By Cornelius Rahn
April 14, 2010, 10:45 AM EDT
April 14 (Bloomberg) -- Warren Buffett’s NetJets Inc., a private-aircraft leasing operator, said its European business will post an operating profit this year as cost-conscious companies opt for timeshares rather than buying their own jets.
“Business will be better than expected, although of course it’s still early in the year,” Mats Leander, executive director of the company’s European unit, said in an interview today in Germany. “It’s surprising to see how many corporate customers have been switching to us.”
The recession has cut corporate profits and government bailouts of some industries have discouraged companies from owning jets, hurting sales at planemakers including Providence, Rhode Island-based Textron Inc.’s Cessna unit. The NetJets system gives customers a set number of flying hours a year without the costs of ownership.
NetJets was able to maintain its customer base in Europe during a “difficult” 2009, and “things are getting better,” Leander told reporters today at a press event near Frankfurt. The company wants to expand in Germany over the next five to 10 years to between 800 and 1,000 clients from about 100 now.
NetJets, owned by Buffett’s Berkshire Hathaway Inc., last year bought Egelsbach airfield, 10 kilometers (6 miles) from Frankfurt’s main airport, to gain a base in central Europe. The company expects more acquisitions or cooperation deals with airports, Leander said.
NetJets plans to invest as much as 30 million euros ($41 million) over the next five years to enlarge the runway and improve systems at Egelsbach, European Chief Operating Officer Mark Wilson said at today’s event. The airfield will have three to four daily flights, compared with current traffic of up to three flights a week, he said in an interview.
Berkshire said in February that Columbus, Ohio-based NetJets is now “solidly profitable” after posting a $711 million loss in 2009. Dave Sokol took over as chief executive officer in August to turn NetJets around after the unit amassed $1.9 billion in debt since Buffett bought it in 1998, according to Berkshire.
Buffett, 79, built Berkshire into a $200 billion company over four decades by transforming a failing maker of men’s suit linings into an enterprise with businesses ranging from ice cream and underwear to power plants and rail transport.
NetJets currently has 165 aircraft under management and offers access to about 800 jets worldwide, ranging from the seven-seat Cessna Citation Bravo to the 14-seat G550 from General Dynamic Corp.’s Gulfstream unit, according to its European Web site.
--Editors: Jerrold Colten, Chris Jasper
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