NetJets Expands in Big Deal, Publicly Traded Parent Company Wins Too
Private jet company NetJets just finalized a major deal. Is the luxurious airway publicly traded?
Oct. 12 2021, Published 11:22 a.m. ET
The NBAA (National Business Aviation Association) show has returned to Las Vegas. That means business jet makers and related industries are gathering to strut their stuff beyond the tarmac. That's good news for NetJets, a private jet airway that recently inked a major deal.
Has NetJets made it to the public market, and what does its status in the industry say about where private aviation is headed?
NetJets buys 100 aircrafts from Brazilian planemaker
On Oct. 11, NetJets announced that it was purchasing 100 aircraft units from Brazilian planemaker Embraer (NYSE:ERJ). The deal is worth a total of $1.2 billion and includes a massive delivery of Embraer's Phenom 300E jets. Embraer isn't expected to deliver the aircraft until the second quarter of 2023, but it shows promise for the direction the private jet industry is headed.
Where the private jet industry is at
In 2021, an average of 500 chartered flights are launching per day. This is a more than 20 percent increase from 2019, which saw less than 400 chartered flights per day. With travel fears amid the COVID-19 pandemic, an increase in demand for private and socially distanced flying makes sense. Southwest is still scrambling after canceling nearly a third of its flights on Oct.10 and another 10 percent the following day.
Like every other industry, the private jet sector isn't immune to labor and supply shortages. Such strong demand has put the industry in the hot seat, ultimately showcasing a shortage of workers and building and repair materials. NetJets competitor XO once required 24 hours notice for its charter jet services, but it has bumped that timeline to 72 hours in advance.
How big is NetJets?
NetJets has more than 760 aircraft in its repertoire. That includes 11 different aircraft models and five different jet classes. Riders can fly with minimal notice and use NetJets' private boarding lounges. Wealthy families going on vacation, executives attending a board meeting, and individuals seeking impromptu travel are all welcome. NetJets flies to 5,000+ airports across 200+ countries and territories.
Berkshire Hathaway is NetJets' parent company.
Warren Buffett's Berkshire Hathaway (NYSE:BRK.B) owns NetJets. With the upcoming expansion in mind, NetJets plans to increase its reach in Europe and the U.S.
Berkshire Hathaway stock is a staple of the U.S. public market. An investment in BRK.B is naturally diverse considering that the company owns more than 60 subsidiaries across various industries. These subsidiaries include GEICO, Duracell, Kraft Heinz, and—of course—NetJets. Billionaire Buffett isn't called the "Oracle of Omaha" for nothing.
NetJets equity trades under BRK stock
While NetJets doesn't trade stock on its own, the brand does fall under its parent company's ticker. Berkshire Hathaway's BRK.B stock (and its preferred stock counterpart BRK.A) represents NetJets, even if the private jet company is just a minute fraction of the parent company's overall enterprise value. Still, an investment in Berkshire does place investors in the private jet sector one way or another.