Warren Buffett: NetJets Now ‘Solidly Profitable’

 - March 1, 2011, 10:15 AM

Revenues at Berkshire Hathaway’s “other services” segment–which includes fractional jet provider NetJets and flight-training company FlightSafety International–climbed by $770 million (up 12 percent year-over-year), to $7.4 billion, according to the company’s 2010 financial results, released on Saturday. Pre-tax profits at the division soared to $984 million, versus a $91 million loss in 2009. “The improved results were significantly driven by improved operating results of NetJets,” Berkshire said. Last year, NetJets’ revenues increased 7 percent over 2009’s figures, while its pre-tax profits totaled $207 million versus a $711 loss in 2009. In his annual letter to shareholders, Berkshire chairman Warren Buffett praised NetJets CEO David Sokol, who took the helm at the fractional provider in August 2009. “Even though NetJets was consistently a runaway winner with customers, our financial results, since its acquisition in 1998, were a failure,” Buffett wrote. “In the 11 years through 2009, the company reported an aggregate pre-tax loss of $157 million, a figure that was far understated since borrowing costs at NetJets were heavily subsidized by its free use of Berkshire’s credit…Dave’s quick restructuring of management and the company’s rationalization of its purchasing and spending policies has ended the hemorrhaging of cash and turned what was Berkshire’s only major business problem into a solidly profitable operation.”