The downturn in corporate aviation hit profits at NetJets and FlightSafety International last year, according to Warren Buffet, chief executive of holding company Berkshire Hathaway.
In his annual letter to shareholders, Buffett says FlightSafety's operating earnings last year dropped to $150 million, compared with $183 million the previous year, although the 2002 figure was inflated by the sale of FlightSafety's partnership interest in the former FlightSafety Boeing Training International.
NetJets' US operation recorded a "modest" operating profit in 2003 but overall the company lost $41 million before tax, says Buffett. NetJets was hit by falling prices for used aircraft inventory early in the year and continued losses within its European programme. The company wrote down $32 million in aircraft values last year. Buffet is sanguine about the long-term success of the Lisbon, Portugal-based operation, saying: "Any company that forsakes Europe, as our competitors have done, is destined for second-tier status." NetJets Europe added 77% in management and flying revenues last year, a figure typical for the past three years, he adds.
Buffet points to new initiatives such as the free medical repatriation service, in conjunction with the Scottsdale, Arizona-based Mayo Clinic, as methods of adding value for US customers.
Source: Flight International
