Story ID: 
NetJets Places First-ever Bombardier Order
By: Matt Thurber
Caption: 
by Matt Thurber
NetJets, the Berkshire Hathaway-owned fractional-share operator, completed a purchase agreement early last month for up to 1
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NetJets, the Berkshire Hathaway-owned fractional-share operator, completed a purchase agreement early last month for up to 120 new Bombardier Globals, a deal worth $6.7 billion if all aircraft options are taken. Notably, this is NetJets’ first order for Bombardier business jets; previous large-cabin acquisitions by the fractional provider have been for Gulfstreams and Falcons. Teal Group vice president Richard Aboulafia called the order “a powerful endorsement of the new Bombardier products and a clear sign that the high end of the market is leading the recovery.” He added: “Of course, any fractional provider order has to be regarded as at least somewhat speculative, but it’s an encouraging sign.”
The news came days after Berkshire Hathaway revealed record profits for the fractional-share operator and 15 months after NetJets cancelled a large order for Hawker Beechcraft Hawker 4000s and 900s. The agreement with Bombardier involves a firm order for 50 jets (retail value $2.8 billion, comprising 30 Global 5000s and Global Express XRSs and 20 Global 7000s and 8000s) and options for another 70 Globals. NetJets did not break down further details of the order. Deliveries begin in the fourth quarter of next year, but Global 7000/8000 deliveries won’t begin until 2017. NetJets chairman and CEO David Sokol commented to AIN: “Our criteria for this decision were based on owner requirements, reliability, global service, and overall economics and contractual conditions. We are excited about the decision.”
Opening New Markets
NetJets said it will deploy the new Global fleet in its U.S. and European networks. Like NetJets’ order for up to 125 “Platinum Edition” Embraer Phenom 300s announced last October, the Bombardier order includes custom-cabin and technology design features exclusive to NetJets. “The decision to add the Global…to the NetJets fleet was based upon owner research, a comprehensive view of flight patterns and service requirements, as well as NetJets’ unique insight into the continued global growth of business aviation,” according to NetJets.
The company is planning to expand into the Asian market, and long-range aircraft such as the Globals will help open these new markets. NetJets also cited the relatively steady demand for large-cabin, long-range jets during the economic downturn as a factor in its decision. The company will continue to maintain its relationship with other OEMs, including Gulfstream and Dassault Falcon, NetJets told AIN.
There remains a potential hole in the NetJets fleet, in the opinion of business aviation consultant Brian Foley. “We could envision another fleet announcement this year to fill the gap between the Phenom 300 and Global 5000,” he explained, “which would gain the full attention of other midsize airplane makers, including those based in hard-hit Wichita.” Logical candidates include Embraer’s midsize Legacy 450 and 500, the Bombardier Learjet 85 and Gulfstream G250. “NetJets needed to update its aging fleet,” Foley added, “while at the same time reduce costs by standardizing models. Long-term this order could round out its top-end offerings to the detriment of other large-cabin manufacturers. As it already has a sizable order for Phenom 300s with Embraer, it has now spread its sourcing risk beyond just one provider and has the added benefit of near-term deliveries.”
“The Global aircraft family is ideally suited to our owners’ needs for range, reliability, interior comfort and operating efficiency,” said NetJets president Jordan Hansell. “These aircraft will be an excellent complement to our existing large-cabin capabilities and overall fleet, which is unmatched in private aviation.”
The NetJets fleet (which includes its Executive Jet Management charter/management division) now totals more than 800 aircraft made by Cessna, Dassault Falcon, Gulfstream and Hawker Beechcraft. o