November 6, 2024
Berkshire Hatahway’s Q3 earnings results highlight the cost pressures impacting its NetJets unit despite revenue gains.
Berkshire Hathaway’s Q3 2024 results, released over the weekend, show continued profit pressures despite growing revenues for its aviation services businesses, NetJets, Inc., and Flight Safety.
The Warren Buffett company does not break out results for specific companies it owns.
However, it does provide an overview of its different groups.
The Services Group, which includes NetJets and its aircraft management arm Executive Jet Management, saw Q3 revenues increase to $5.13 billion from $5.10 billion in 2023
That was a $30 million bump, representing a .06% gain year-over-year in the third quarter.
Services revenues have dropped year-over-year during the first nine months from $15.60 billion to $15.49 billion.
The 0.7% translated into a $108 million drop compared to 2023.
Pre-tax earnings for the group were down from $772 million in Q3 2023 to $569 million in the most recent quarter.
Year-to-date, Services pre-tax earnings were down from $2.43 billion to $1.79 billion through the first nine months of 2024.
NetJets and FlightSafety are the largest companies in the group.
However, it also includes TTI, a distributor of electronics components, and IPS, a provider of facilities construction management services.
Dairy Queen, lease transportation equipment company XTRA, furniture business CORT, a third-party logistics services business serving the petroleum and chemical industries, Business Wire, and a local Miami TV station are also included.
The top line decrease reflects “lower revenues from TTI and XTRA and higher revenues from the aviation services businesses and IPS.”
According to its SEC filing, “Revenues from aviation services increased 10.4% in the third quarter and 9.8% in the first nine months of 2024 versus 2023.”
Berkshire Hathaway attributed the increase “primarily due to higher numbers of aircraft in shared aircraft ownership programs, increases in flight hours across NetJets’ various programs, and higher average rates at FlightSafety.”
NetJets recently said it received its 50th new private jet in 2024.
NetJets, Inc. saw flight hours increase 8.8% through the first six months.
It is the largest private jet operator in the world.
Its 28,926-hour gain alone would have placed it as the sixth-largest North American charter/fractional operator on the list.
At the same time, “Service group pre-tax earnings decreased 26.3% in both the third quarter and in the first nine months of 2024 compared to 2023, primarily attributable to TTI and the aviation services businesses.”
According to the filing, pre-tax earnings as a percentage of revenues fell four percentage points in the third quarter and first nine months of 2024 compared to 2023.
“Earnings from aviation services declined 17.5% in the third quarter and 11.9% in the first nine months of 2024 versus 2023, primarily attributable to increased costs of services, including higher maintenance, personnel and fuel costs and depreciation expense, as well as increased impairment charges,” Berkshire said.
The commentary was similar to its Q2 2024 results filing.
In April, NetJets and its pilots signed a new agreement providing a 52.5% increase in compensation through 2029.
Berkshire Hathaway has $325 billion in cash.
NetJets has long positioned itself as a safe haven for private jet flyers concerned about the financial stability of providers.
According to our 2024 subscriber survey, 17.8% of respondents considering changing providers listed financial viability/uncertainty as a reason.
For NetJets, it was 0.0%.
READ: Why private aviation’s supply chain and labor crisis isn’t going away
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