Sokol Restores NetJets to Profitability But Not Without Controversy

It is rare to read about boardroom drama and controversy within the diverse group of Berkshire Hathaway subsidiaries. Warren Buffett routinely makes a point of his preference to purchase businesses that are already well run and to then leave management alone to continue running the business. Acquisitions almost always meet expectations, but no one bats 1.000 and mistakes are sometimes made. This was certainly the case with Berkshire’s 1998 purchase of NetJets in a $725 million stock and cash transaction. At the time, there were high hopes for the long term profitability of the business. The business ran into headwinds in 2009 and would have gone out of business without Berkshire Hathaway’s backing. David Sokol is credited with the turnaround, but he has his critics. Read this article for more details.

NetJets Continues Restructuring with Office Consolidation

The Island Packet, a newspaper serving the Beaufort and Hilton Head region of South Carolina, has reported that NetJets will close a regional office in Okatie, South Carolina and move most of the operation’s eighty jobs to the company’s headquarters in Columbus, Ohio. NetJets is a subsidiary of Berkshire Hathaway and has been in the process of restructuring the business following massive losses that were incurred during the recession.

NetJets Posts a Profit in First Quarter

NetJets Posts a Profit in First Quarter

Warren Buffett referred to NetJets as “the major problem for Berkshire” in 2009 when reporting yearly results in his annual letter to shareholders. NetJets posted a $711 million loss in 2009 and posted aggregate pre-tax losses of $157 million during Berkshire’s eleven years of ownership. David Sokol became CEO of NetJets in August 2009 and took steps to cut costs and reduce debt. Read this article for more details.

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