Feb. 29--A few years ago, billionaire businessman Warren Buffett's biggest concern was NetJets, the Columbus-based private-jet operator that is part of his company's vast business holdings.
But now, "these problems are behind us," the Berkshire Hathaway CEO wrote in his letter accompanying his company's recently released annual report.
NetJets had pretax earnings of $227 million in 2011, a solid gain from $207 million in pretax earnings in 2010 and a huge leap from a loss of $711 million in 2009.
Berkshire Hathaway is a publicly owned investment-management company with holdings valued at more than $100 billion.
"NetJets was my No. 1 worry," Buffett wrote in the letter, adding that without help from Berkshire Hathaway, the local aviation company would have "gone broke."
Costs were "far out of line with revenues, and cash was hemorrhaging," he said.
Buffett gave credit for the turnaround to NetJets CEO Jordan Hansell, who took over in April from David Sokol, who left amid concern about possible insider stock trading.
Under Sokol and now Hansell, who was traveling yesterday and unavailable to comment, NetJets increased revenue, decreased aircraft-maintenance costs, and reduced the size of the company's fleet by 10 percent, according to the annual report.
The company's worldwide fleet totals about 750 aircraft.
A year ago, NetJets announced an agreement with aircraft manufacturer Bombardier to buy as many as 120 of its large-cabin jets for $6.7 billion. The agreement included a firm order for 50 jets, with an option for 70 more.
The number of flight hours during which NetJets earned revenue was about the same in 2011 as the previous year, with "slight increases in rates," according to the annual report.
The company's recovery would have been stronger, Hansell said in January, if not for Europe's ongoing economic problems.
NetJets also is poised to enter the Chinese market through partnerships.
Copyright 2012 - The Columbus Dispatch, Ohio
