Flight Options has completed its merger with Raytheon Travel Air, forming the second largest business-aircraft fractional ownership programme in the USA. The combined operation, owned 50.1% by Flight Options and 49.9% by Raytheon, has confirmed a five-year, $900 million contract for a minimum of 115 Raytheon aircraft.

The merger promises to reduce operating costs in a business with notoriously slim margins. Fractional market leader NetJets sold a record number of aircraft last year and increased service revenues almost 22%, but operated at a small loss, compared with a small profit in 2000, says its owner, US investment firm Berkshire Hathaway.

"We believe the other participants, in aggregate, lost significant money," says chairman Warren Buffet in the firm's annual report. He says NetJets "experienced a spurt of orders shortly after 11 September, but its sales pace has since returned to normal".

The enlarged Flight Options has more than 1,600 share owners and a fleet of 200 new and used aircraft. The firm is expanding its Cleveland, Ohio, operations centre, which will be able to handle a fleet of more than 500 aircraft by the third quarter of 2003. Flight Options says it will place $1.7 billion in new aircraft orders, including the Raytheon deal and the $760 million order for 25 Fairchild Dornier Envoy 7s announced in 1999.

Source: Flight International