June 13, 2012
NetJets is continuing its fleet overhaul with the newest round of orders, which, at up to $9.6 billion, mark the largest in the company’s and industry history and continue its track of selecting newer technology aircraft that are customized for the fractional ownership provider.
NetJets’ order for up to 425 new Cessna Latitude and Bombardier Challenger jets, which was announced late June 11, will be used to establish a new “Signature Series” of aircraft and also help round out NetJets’ midsize and super midsize category.
But this may not be the end of NetJets’ new shopping spree, with Chairman and CEO Jordan Hansell saying, “This will not fully complete our transactions.” However, he notes that further commitments will depend on market conditions.
NetJets revealed its initial plans for its fleet overhaul in October 2010, when it placed an order for up to 125 Embraer Phenom 300 light jets. Then in early 2011, it shifted to the long-range, large-cabin category with a $2.8 billion order for a mix of Bombardier Global aircraft.
The latest order will put the Berkshire Hathaway-owned fractional provider in head-to-head competition with Bombardier’s own Flexjet fractional ownership operation, whose fleet also includes Challengers.
Role of Trade-Ins
In addition, rapidly growing San Francisco-based on-demand carrier Xojet has built its fleet around the Challenger 300 and Citation X.
Monday’s announcement includes 100 firm orders for the Bombardier Challenger jets and options for 175 more. Of that number, 75 are firm orders and 125 options for the Challenger 300 series, with deliveries scheduled to begin in 2014. Hansell in a conference call with reporters said that the order was not specifically for the Challenger 300, but a variant modified for NetJets.
The remaining Bombardier contract includes 25 firm orders and 50 options for Challenger 605s, with deliveries to begin in 2015. Hansell valued the Bombardier portion of the newest order at $7.3 billion.