The Financial Times has reported that a rival of Berkshire Hathaway’s NetJets subsidiary will expand its presence in the global private jet market. Switzerland based VistaJet has hired Robert Hersov, a former executive from NetJets Europe. The company also announced a partnership with Bombardier’s FlexJet subsidiary which will help to expand VistaJet’s presence in the United States market.
VistaJet is still a relatively small player with a fleet of only 26 jets compared to 160 aircraft in the NetJets Europe fleet. However, VistaJet plans to expand to between 50 and 60 aircraft over the next three years.
The NetJets executive who has joined VistaJet brings significant experience in the fractional ownership industry according to the FT article:
Mr Hersov, whose family established one of the biggest mining and industrial empires in South Africa, founded his own executive jet company, Marquis Jet Europe, before selling it to NetJets Europe in 2004, where he was vice-chairman until 2008 and a member of the group’s advisory board until last month. Formerly an investment banker and media executive, Mr Hersov said he aimed to put VistaJet “in front of the right kinds of people” in his new role.
Thomas Flohr, the founder of VistaJet, is quoted making some bullish statements on prospects for private aviation as the economy recovers:
Deliveries of private jets soared to more than 1,000 in a single year for the first time in 2007 and rose again in 2008 on the back of record backlogs built up by swelling orders. But deliveries fell this year after the global financial crisis and recession, and are expected to drop below 700 in 2010. “It’s been a very tough two years,” said Mr Flohr, but he predicted it would grow again once a strong economic recovery resumed.
VistaJet’s 2009 revenues were reported to be 20 percent higher than the prior year, although no figures on profitability were provided by the privately owned company.
As we discussed in December, NetJets has been undergoing changes that will hopefully result in a return to profitability this year after a difficult 2009. In a November interview, NetJets Chairman and CEO David Sokol predicted better performance in 2010 with at least break-even results.
Given the large losses incurred at NetJets through the third quarter of 2009, break-even results this year would be a welcome development for Berkshire Hathaway shareholders and should remove a cloud over aggregate operating earnings for Berkshire subsidiaries.
The author owns shares of Berkshire Hathaway.