NetJets, which is part of Berkshire Hathaway, named new executives on Monday as a contract dispute with pilots rumbles on.
The company announced that Jordan Hansell will be leaving his post as chairman and CEO of the company. NetJets sells partial ownership interests in business jets, and is facing a labor dispute with pilots over concessions that the company is seeking, writes Josh Funk for the Associated Press.
Pilots resisting cuts to benefits
A number of pilots protested outside Berkshire Hathaway's annual meeting in May due to the dispute. Berkshire CEO Warren Buffett had previously lauded Hansell's leadership of NetJets, praising his cost-cutting measures, however he did not immediately respond to questions about the change of leadership.
Hansell continued the cost-cutting measures implemented by his predecessor David Sokol, which were put in place due to a dip in demand for private jets during the recession.
"NetJets is very well positioned for future success and to grab hold of the opportunities before it," Hansell said in a statement. He did not provide any information on his future plans.
The company is holding out for benefit cuts for its 2,700 pilots, but their union claims that the cuts are no longer necessary now that NetJets is more profitable. A federal mediator has stepped in to try and resolve the dispute.
New NetJets leadership to deal with dispute
Union President Pedro Leroux is hopeful about the future. "We hope they share our goal of rebuilding a once progressive labor-management relationship," he said.
Berkshire announced that revenue from its service businesses increased almost 10% last year, but did not provide detailed results for NetJets. However it did announce that earnings improved last year due to increased revenue and reduced restructuring, aircraft impairment and finance charges.
Buffett is confident that an agreement can be reached, although he did claim that their compensation package is competitive, and pilots from across the industry want to work for NetJets.
Adam Johnson is to become chairman and CEO of the company, while Bill Noe will be president and COO. Both have worked for the company for a long time.
At this point in time NetJets employs almost 6,400 people and runs a fleet of over 700 aircraft.
Lawrence Cunningham, ValueWalk contributor and author of “Berkshire Beyond Buffett,” discusses the departure of NetJets Chief Executive Officer Jordan Hansell and the changes in the executive suite since Buffett purchased the company. He speaks on “Bloomberg Markets.”
