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NetJets to Order 50 Embraer Jets

Published Oct 23, 2010 on Pilot Jobs

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Business jet operator NetJets Inc. said on Monday it had signed an order for 50 new small business jets from Brazilian manufacturer Embraer, a sign that the company thinks the struggling business aircraft industry is poised for a rebound.


NetJets, a closely held unit of Berkshire Hathaway Inc., was hit hard by the recession when private jet travel suffered a major drop-off that began two years ago. The order for the 50 six-seat Phenom 300 jets includes an option for an additional 75. NetJets expects to take initial deliveries starting in 2013.

"We think the worst is behind us and the future is going to bring growth once again," David Sokol, NetJets' chairman and chief executive, said at a press conference announcing the order. "We have taken advantage of the down market period" to plan for future growth, he said.

At list prices, the value of the purchase could exceed $1 billion, according to NetJets. But customers typically receive hefty discounts from airplane manufacturers when placing large orders.

The deal, announced in Atlanta on the eve of the business aircraft industry's largest annual trade show, also provides a significant boost for Embraer, known officially as Empresa Brasileira de Aeronautica S.A., which recently introduced two small business jets into the ultra-competitive segment of the market.

Embraer has been fighting for market share for the past two years in the light business jet segment in the U.S. with established airplane-makers that include Textron Inc.'s Cessna Aircraft Co., Bombardier Inc.'s Learjet and Hawker Beechcraft Co.

The Phenom 300, with a list price of about $8 million, will join a NetJets fleet that includes a wide variety of planes from various manufacturers, though it will be the smallest plane the company offers. Embraer said it has agreed to certain in-cabin and other design modifications specifically for the NetJets order that will not be available to other customers.

NetJets, which grew rapidly in the past decade, was hit hard during the recession as it found that it had ordered and taken delivery of too many airplanes. When the downturn hit, many of the company's clients—who pay an upfront fee to buy an ownership portion of a plane, as well as an annual and per hour flight fee—were unable to make their financial commitments, putting the company in a bind.

In response, NetJets has significantly reduced its fleet, selling more than 75 aircraft this year. It has canceled more than 100 planes on order from a number of manufacturers, including Hawker Beechcraft and French plan-maker Dassault Aviation.

With the new Embraer order Mr. Sokol says the operator plans to replace some of its older small jets as the new Phenom jets come online.

The company has added new customers this year, he says, and has no plans to change its basic fractional ownership model. "We will complete the year substantially profitable," Mr. Sokol said.

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