The Columbus Dispatch

May 9, 2010

By Marla Matzer Rose

Investors' interest shows prominence of Columbus-based private-jet company

At the Berkshire Hathaway annual meeting, NetJets doesn't have the same advantages as some of its sister companies, such as See's Candies, Fruit of the Loom and Justin Boots, which move huge amounts of merchandise to the tens of thousands of attendees.  Its wares are too large to fit in a tote bag and too pricey for most people to put on a credit card. This means investors had to make an extra effort to get to Omaha's Eppley Airfield, 3 miles away, where Columbus-based NetJets - the world's largest private jet company - displayed six of its multimillion-dollar private jets that it sells in fractional shares for hundreds of thousands of dollars.

Despite this obstacle, 3,500 people took a look at what NetJets had to offer. Certainly, some simply wanted to sit inside a Gulfstream jet with leather seats and burled-wood trim. Some investors also might have been curious about a company that lost $711 million last year, in stark contrast to a profitable year overall for Berkshire. Regardless, the annual meeting highlighted how firmly entrenched NetJets is among Berkshire's diverse stable of companies, which also includes the likes of Geico insurance and Burlington Northern Santa Fe railroad.

"The team told me that the response was excellent - they got more (sales) leads from this year's meetings and activities than ever before," said David Sokol, the Berkshire manager and Omaha native who was appointed chairman and CEO of NetJets by Warren Buffett in August. The meeting also highlighted how NetJets has shifted its marketing approach under new marketing chief Robert Kahn. The company's ads no longer feature sports stars such as Tiger Woods and Roger Federer. Instead, they emphasize NetJets as a "productivity tool" for business, Kahn said, including the new tagline: "NetJets: Be There."

And there was an army of NetJets planes in Omaha for private use. Officials said 62 of the company's planes arrived in Omaha the day before the meeting began - a record number, as far as the NetJets folks know. As Buffett did in his annual letter to shareholders earlier this year, he praised Sokol. Buffett said shareholders owed Sokol "a big thanks" for restoring NetJets to profitability in recent months.

Those were nice words, but not the only reason why a buzz followed Sokol through the convention center. Being seen as one of the leading candidates to succeed Buffett was enough to turn Sokol into a star as he moved among the booths of MidAmerican Energy, BYD (a Chinese electric-car company that Berkshire has a stake in) and NetJets - all businesses in which he is a key player. Sokol's photo and autograph were in demand among fanatic Buffett followers.

"I'm usually not that popular," Sokol said jokingly. He said he's amazed by Buffett's stamina during the weekend-long whirlwind of events surrounding the shareholders meeting. Sokol is 53; Buffett, 79.

Sokol's mission at NetJets was to, first, stop the bleeding. The company had resisted layoffs even as the economy fell deep into recession, and it continued taking on planes as values cratered.

Sokol ran afoul of some in Columbus by announcing layoffs, pulling back on charitable contributions and scotching plans for a new $200 million campus to house both NetJets and the Columbus operations of FlightSafety, a Berkshireowned pilot-training company. Buffett has said the NetJets decline was a rare case of Berkshire's well known practice of giving its divisions great autonomy leading to the company running off the rails financially.

In the end, though, Sokol's appointment and the economic revival of NetJets look to be good for the city. Amid the cuts and management changes last year, Sokol returned the company's official headquarters to Columbus. Though he is busy in several other Berkshire ventures, Sokol bought a Columbus-area home last month and remains committed to keeping the chairman title at NetJets even after he eventually names a new chief executive.

These moves, along with Sokol's own rising profile, could help the image of Columbus. And though the ambitious campus plans might have been shelved, Sokol has said he hopes to begin growing the company slowly again by the end of the year, assuming conditions continue to improve.

"Given the size of the company, the industry is excited and happy that they've reported solid firstquarter results," said Scott Liston, a former NetJets employee who now works for Ohio-based industry tracking firm Aviation Research Group/U.S. "When NetJets is doing well, the impact is felt throughout the industry and thro ugh all the related services. Everyone benefits when a company like that is healthy."

Adam Johnson, a 14-year NetJets employee who is senior vice president in the Columbus office, attended the Berkshire annual meeting for the first time this year. He said he and other longtime employees are gratified by the fact that the company's fortunes are improving without compromising the strong "safety and service culture" that was instilled by longtime CEO Richard Santulli. "I think certainly David has instilled a sense of urgency and rigor, and moved to establish more processes than we had in the past," Johnson said. "I think it's started to work."