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2019: Could the 737 MAX's problems increase demand for FlightSafety flight simulators?
JONATHAN BRANDT: No one’s ever asked a question about FlightSafety, but perhaps this year it’s somewhat topical given the 737 MAX controversy. The New York Times spoke to engineers who said that Boeing explicitly designed the MAX in a manner that allowed airline customers to avoid paying for simulators to train their pilots.
Do you expect the worldwide regulatory and commercial response to the MAX’s problems to result in increased demand for FlightSafety simulators? And could you please more generally discuss FlightSafety’s competitive position and growth prospects?
WARREN BUFFETT: Yeah, well, FlightSafety is — their specialty would be with corporate pilots. They train our NetJets pilots, for example. They have a major facility with simulators for that.
I don’t think what’s happened with the 737 MAX will have any particular effect. I mean, we have — I don’t know how many of the Fortune 100 companies that we do business with, but it’s a very significant percentage.
And they train their pilots with FlightSafety because we’ve got the talent and the simulators like nobody else has for that business. And Charlie, didn’t you have that friend of yours that was trying to get Al Ueltschi to pass him when he shouldn’t?
CHARLIE MUNGER: What?
WARREN BUFFETT: You remember that story of your friend that wanted to have FlightSafety —
CHARLIE MUNGER: Oh yes.
WARREN BUFFETT: Yeah, why don’t you tell them? I mean, Al Ueltschi, who started FlightSafety with a few thousand dollars and a little visual simulator, or whatever it may have been at, LaGuardia, I mean, he really cared about saving lives. And he made a lot of money in the process, but he was dedicated throughout his lifetime to truly train better pilots and reduce the chance of accidents dramatically.
It was a mission with him. And that spirit still continues.
And as I say we’ve got a — I can’t tell you the percentages, I don’t know, but I know it’s very high — of certainly the corporate business. We have government business, we have some airline businesses and all of that.
But I don’t expect any great change in the flight training business. But tell them about your friend, Charlie.
CHARLIE MUNGER: Well, of course, people pass those tests with flying colors, and then some of them just barely pass. And one of my friends just barely passed and they called me and told me. It’s (inaudible) of the business.
WARREN BUFFETT: FlightSafety would not —
CHARLIE MUNGER: They care about everything.
WARREN BUFFETT: They care.
CHARLIE MUNGER: They watch the details.
WARREN BUFFETT: They care. And those simulators can cost over $10 million, I mean, just — and they’re dedicated, obviously, to a given model of plane.
You might find it interesting, at NetJets our pilots only fly one model. I mean — most charters and all those, I’m sure they — and incidentally, I think they could fly other models and all that, but we just want them to be flying one model. And we give them the maximum amount of training annually.
And it’s — when I bought the company for Berkshire in, I think it was 1998 or thereabouts, you know, the thought obviously bothered me that I would have a significant percentage of people who would be friends of mine that were using it, and you know, you’d hate to have anything happen.
I use it, my family uses it, our managers use it. And there’s nobody that cares more about safety. But I don’t see — other than at NetJets — it’s a first-class operation.
CHARLIE MUNGER: They’ve never killed a passenger. They had one pilot who hit a glider at 16,000 feet, and it was kind of a difficult landing.
WARREN BUFFETT: It was more than difficult landing —
CHARLIE MUNGER: They’ve never killed a — it was a woman pilot, yeah.
WARREN BUFFETT: And she was flying the next day. The copilot was kind of taken out of operation for a while. But this woman ended up almost with the control panel in her lap because this guy turned off his battery and hit one of our Hawkers. And she had one shot at the runway and she brought it in.
And we’ve had some remarkable training and pilots there. You should ask for her if you’re flying on NetJets. (Laugher)