NetJets Cuts Staff, Planned Aircraft Deliveries for 2020

 - April 28, 2020, 6:32 AM
NetJets Europe's fractional ownership services have seen a significant decline in demand due to the Covid-19 pandemic. [Photo: David McIntosh for AIN]

This story is part of AIN's continuing coverage of the impact of the coronavirus on aviation.

NetJets has confirmed reports of workforce reductions at its NetJets Europe (NJE) and Executive Jet Management (EJM) subsidiaries by 25 percent. The private aviation group also has reduced planned new aircraft deliveries for 2020, and these are expected to be down from around 60 to 25.

Portugal-based NJE provides fractional ownership programs, while Cincinnati, Ohio-based EJM is engaged in aircraft management and charter services. The group has not yet implemented any furloughs or workforce reductions in any other U.S.-based operations, including U.S. fractional arm NetJets Aviation (NJA). In a written statement, the company said that the cuts at NJE and EJM were made last week “to align with the current market and ensure sustainability for the future success of those businesses.”

In a letter obtained by AIN and sent to aircraft shareowners last week by NetJets chairman and CEO Adam Johnson, the company reported that, due to the Covid-19 pandemic, demand for trips had been “down significantly since mid-March.” While adding that the group is still conducting “hundreds of flights” each week, he said EJM has seen a dip in demand for its aircraft to provide subcontract support for the NJA fleet during busy periods.

In addition to the job cuts, NetJets also has offered unpaid leave with paid healthcare to both flight crew and corporate office staff. The company said it has not applied for loans and grants available under the U.S. CARES Act. Along with other operators, it has benefitted from the act’s relief from the 7.5 percent air transportation federal excise tax and said it has passed this saving on to its customers.

NetJets told owners it has restructured, deferred, or canceled planned new jet deliveries for this year. It did not specify which aircraft types will be affected by changes to its existing orders with several leading manufacturers, including Textron Aviation, Embraer Executive Jets, and Bombardier Business Aircraft.

“Daily, we see the distressing toll this is taking on private aviation,” Johnson said in his letter to shareowners. “Known brands with seemingly strong financial backing have already ceased operations. It is logical to assume that others are holding on while they await the approval of loans and grants available to them under the CARES Act.”

None of the other major private flight providers, including the VistaGlobal group, Flexjet, or Wheels Up have yet announced staff cuts or fleet groundings. On April 16, charter operator JetSuite grounded its 12-strong fleet of Embraer Phenom light jets and furloughed its staff.

NetJets has taken multiple steps to reduce the risk of Covid-19 infection to passengers and crew. These include treating cabin interiors with an antimicrobial product called ClearCabin and using its aircraft to move flight crew to departure points to avoid exposure by using airline service.

According to the most recent Global Market Tracker published by data analyst WingX, fractional ownership aircraft operations have shown slightly steeper traffic decline than aircraft management and branded charter services in recent weeks. The company also noted that business aviation traffic volumes in the U.S. have been higher than those in Europe.