View from Inside Aviation Industry

 This excerpt from an editorial, from the February 2011 issue of Business & Commercial Aviation, discusses NetJets, Warren Buffett, Richard Santulli, and David Sokol from the perspective of within the aviation industry. Investors will probably find it interesting to see the view from inside the cockpit of NetJet's competitors and the assembly lines that make its planes (figuratively speaking). By William Garvey, Editor in Chief.

"The businesses of business aviation have been beset by daunting circumstances over the past two to three years. The setbacks have been so severe as to possibly cause workers to question the viability of their companies or their roles within them. That's an understandable reaction at the nadir of a business cycle that's shuttered flight departments and sent tens of thousands to unemployment offices. 

"A successful climb out depends on several factors, some of which are beyond any single entity's control, but some absolutely depend on individuals in leadership roles. It's a given that disastrous circumstances are really 'opportunities,' but for the right kind of leader, they actually can be.

"In this issue we focus on two prominent business leaders ....The second business leader featured [in a Q&A discussed in "NetJets Update" blog post] is David Sokol, the person Warren Buffett installed to fix the problems at NetJets, a controversial operation since the day Richard Santulli created it. Some established flight departments saw it as a predator, competitors likened it to a legal Ponzi scheme, aircraft owners worried it would corrupt traditional valuations. 

"Regardless, Buffett loved NetJets, paying three quarters of a billion Berkshire Hathaway dollars to call it his own. The company grew at a breathtaking pace, becoming a formidable entity within business aviation on both sides of the Atlantic. Buffett lionized Santulli, a dynamic, visionary, inspiring figure ... until the red ink became a gusher two years ago. 

"Quite suddenly the founder was gone and Sokol, an energy industry exec, was calling the shots in Columbus. While he had used what he calls 'private aviation' for years, to him it was simply a time-saving tool, and NetJets was broken. So, he set about to fix it in a by-the-numbers way. Those numbers have pained many within and without NetJets and given rise to a new wave of controversy and speculation -- nothing unfamiliar to Sokol. He says the hemorrhaging is stanched, the right people in place, and before long he'll depart to focus on other things.

"Since taking command, Sokol says he's been particularly impressed with the passion aviation people feel for the industry. 'This is a business people are passionate about,' he said, 'whether it's our pilots, flight attendants, logistics people or customer service folks. It's quite an interesting phenomenon.'

"That passion, I believe, is a critical element in the industry's recovery. Yes, you've got to get the numbers right. You've got to be disciplined and use your head. But it took heart -- passion -- to create and grow business aviation and it will require even more to return it to full health. Fortunately, it's got that in abundance."