2014: What are the current prospects for NetJets?

BECKY QUICK: This question comes from Frank Robinson in Madison.

And he asks, “Ten years ago, NetJets was mentioned at the annual meeting each year as an exciting growth opportunity for Berkshire. Five years ago, there were some problems which seem to have been addressed since they’re no longer mentioned.

“What are the current prospects for NetJets? Is it a substantial contributor to growth and revenue and earnings?”

WARREN BUFFETT: Yeah, it’s not a big grow — it’s a very — it’s a perfectly decent business.

The number — it peaked in new unit volume more or less coincident with what happened in the stock market in 2007 and ’08.

I mean, there were a fair number of people whose income was dependent on stock market behavior, particularly hedge fund managers. But other — a lot of others.

And they gave us quite a boom in sales. And not only did their demand fall off, but when their contracts ran out — and they tended to run out in, like, 2011 and ’12 — a lot of them did not renew.

Until the last — won’t be totally accurate on this — but until the last six or eight months, net ownership in the U.S. was declining just slightly. And that’s turned around now. Net ownership is growing month by month.

But it is not a huge growth business at all. I mean — it’s a very large-size business. I mean, we are, you know, probably 60-some percent of the industry and there’s nobody remotely close as a second. I mean, we are the premier product.

But I don’t see the market being double or triple the present size.

We are going to China very soon. But that’s a very, very long-range play. We are in Europe and that is not — that still is declining a little bit in unit volume.

Now, the flight hours have picked up a fair amount. So the owners are using the planes more in the last six months to a year, and that fell off a lot in the 2007- 8 period.

So I would not characterize NetJets as a big growth opportunity. But I would — but I’m glad we own it. And I think it’s very — it’s a very satisfactory business.

But it is not one I would expect to see a whole lot of growth out of.

Charlie?

CHARLIE MUNGER: Well, I demonstrated my optimism by buying 25 more hours. (Laughter)

WARREN BUFFETT: He was a tough sell, too, I got to tell you that. (Laughter)

I can think of a few more comments, but I won’t make them.