February 26, 2024
During the Berkshire Hathaway annual meeting, Warren Buffett lauded NetJets CEO Adam Johnson while tweaking Wheels Up’s share price.
During the annual Berkshire Hathaway shareholders meeting earlier today in Omaha, Nebraska, Chairman and CEO Warren Buffett heaped praise on his private aviation business when answering a question about NetJets.
Buffett said that based on scale and operations, NetJets, the world’s largest private jet operator, is in a league of its own.
He said with competitors are too far behind to catch up to its scale.
He compared brand desirability as similar to Ferrari.
“It’s in a class by itself. It’s done what Ferrari has done in a different sort of way in cars,” Buffet said.
NetJets currently has a backlog of orders from fractional customers stretching into 2024.
Berkshire Vice Chairman Charlie Munger said the value of NetJets today is similar to major airlines.
He told shareholders, “NetJets has been remarkable. You can argue it’s worth as much as any airline now.”
The market cap for Delta Air Lines is just over $21.8 billion, while United is $14.7 billion, and American Airlines closed last week at $9.1 billion.
Berkshire Hathaway bought NetJets in 1998 for $711 million. It doesn’t break out operating results for NetJets.
Buffett also dinged Wheels Up, the third-largest U.S. operator.
He noted Wheels Up went public in 2021 at $10 per share and is trading under 50 cents. A single share of Berkshire stock closed Friday at $491,840.
He said, “(Wheels Up has) 12,600 people who have given them over a billion dollars on prepaid cards…and I think there’s a good chance some people are going to be disappointed later on.”
In 2010, NetJets acquired Marquis Jet Partners from Kenny Dichter, who launched Wheels Up in 2013.
Buffett reiterated NetJets continued expansion with plans to add 100 private jets per year for the foreseeable future.
He also said the company isn’t selling airplanes, meaning pure growth.
Buffett praised NetJets Chairman and CEO, saying, “Adam Johnson has performed; you can’t believe what he’s done with the business.”
He added, “It was a tough model for a long time, but (Johnson) has brought it where it is, and we should have a wonderful company forever.”
READ: NetJets 2023 Pricing: 10 routes the private jet provider costs less than competitors
If you are concerned about the cost of private jet travel, Buffett provided some encouragement to open your wallet.
He told the audience, “Your heirs are paying for it…Find me anybody whose estate came in less than zero because of what they spent on NetJets…let me know. I haven’t seen a case yet.”
Neither Buffett nor Munger addressed the private jet operator’s current labor unrest, which included pilots picketing outside the meeting.
Editor’s note: This article has been updated with additional quotes from Buffett and Munger
