Flexjet Takes Aim at Buffett’s Netjets for International Fliers

Flexjet Goes Head-to-Head With Warren Buffett

Flexjet, the private aircraft flight-share company sold by Bombardier Inc. in 2013, is seeking to break the lock Warren Buffett’s Netjets has on international private flights.

Having just gotten its first Gulfstream G450s, and with G650s -- the longest-flying business jet -- to be delivered next year, Flexjet is doubling the number of planes by 2016 that have range to fly to Europe to more than 40, said Chairman Kenneth Ricci.

“This is all part of a plan of ours to really move Flexjet out of the domestic markets and into the international market,” Ricci said. “Right now, Netjets kind of has that space all to themselves.”

The opportunity for fractional operators overseas is large, Ricci said. There are about 110 fractionally-owned aircraft abroad competing for at least 800,000 flight hours a year. That compares with about 700 aircraft chasing 1.2 million flight hours in the U.S., he said.

“The U.S. has somewhat flattened out but the worldwide market is still just beginning,” Ricci said in an interview with Bloomberg Television.

Netjets, a unit of Berkshire Hathaway Inc., is the largest fractional operator with about 700 aircraft in its fleet followed by Flexjet with 150. With fractional jets, customers buy a share in the plane that the companies control, maintain and provide pilots and other services for. That differs from jet charters in which individuals own aircraft and allow management companies to book flights on them.

Seeking Acquisitions

Flexjet may seek to acquire a European company to gain an operator’s license and the knowledge of flying throughout so many countries, Ricci said.

“We don’t have to make a big acquisition,” said Ricci, who is also a principal with Flexjet owner Directional Aviation, which also controls several aviation businesses from jet charters to aircraft engine management. “We just need to get our toe in the water.”

Directional had been in negotiations to buy a smaller fractional jet company in the U.S. two years ago, to increase its fleet, but that fell through, just after it bought Flexjet, he said. The negotiations stretched beyond the first-of-year peak season and Directional decided it was better to buy new jets instead, Ricci said.

That strategy makes more sense now as used jet prices recover and as plane manufacturers offer extended warranties, which can save as much as $800,000 per jet each year, Ricci said.

“With the cost of money and the manufacturers’ support of the new aircraft, they have swung the pendulum and the value to us seems to be more on the new aircraft,” he said. “Today the compelling buy is in the new market.”

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