Buffett is getting agita from the 1% again.
NetJets, the business jet operation owned by Berkshire Hathaway, is attempting to cut benefits from its pilot union just as boom times fuel a shortage of pilots that could put a hurting on its business.
“A lot of business jet owners are looking for pilots and can’t find them,” said a former executive from NetJets.
With the economy currently rebounding, wealthy customers are starting to buy shares in NetJets planes again in exchange for flying hours. In the prior year, 3500 NetJets Marquis cards were sold, and the executive said that this was 1000 more than they had expected.
Regardless, NetJets, a company that nearly collapsed during the downturn in the economy when CEOs backed off of private jet travel, said that it intends to cut costs in an effort to meet the demands for greater returns from Berkshire Hathaway.
This situation has created angry talk from the 2700 member pilot union, which said the company is looking to make cuts while the business is currently soaring.
“This year and the next year are going to be the best years [the business jet industry] has had in the last decade, and we’re not really in a position to capitalize on it,” said the president of the NetJets Association of Shared Aircraft Pilots Union Pedro LeRoux.
NetJets is once again building its fleet back up after selling planes in order to pay down debt during the economic downturn. At the end of 2014, when compared to 2008, the fleet was smaller by 26% and had 634 jets, according to JetNet, the research firm.
The company has also been subcontracting more flights in order to meet demand and cover grounded planes because they have cut back on the spare part inventory.
Buffett says that the company is not going to have a problem filling copilot seats. But he also fully admits that NetJets would have collapsed if Berkshire Hathaway did not back it’s roughly $2 billion of debt.
“If we have an opening, we have lots and lots of people who want to come join us, and we have very few that want to leave,” he said this month to Fox Business.
In the past year, 98 pilots were either fired or resigned, which is more than twice the amount from the previous year, according to the union. And according to internal polling data, about 30% of the NetJets pilots are thinking about moving to a commercial airline.
“They are the highest numbers we’ve seen,” said union president LeRoux.
NetJets claims that its pilot losses are 93, which is lower than the tally from the union, and says that only 22 of those pilots quit to leave for competitors. The company also mentioned that it is halfway toward reaching its goal of hiring 127 pilots for the year.
During the time of the recession, NetJets had to furlough 495 pilots, and only 240 of them have returned. The company is looking to maintain its current salary structure but wants pilots to begin paying some of their health care benefits.
In 2013, the pilot contract with NetJets expired, but they are not allowed to strike until they go through federal mediation.
“NetJets goal remains as it always has been – to reach a fair agreement with the pilots,” said a rep from NetJets.