Life has not been quite the same for Eric Connor since he was appointed head of NetJets Europe in October last year – nor for his family.
Not long after he took on the job, one of his daughters, a student and hockey player at Leeds University, was chatting to the head of the men’s hockey team.
The man was intrigued to discover he was talking to the daughter of the person running Europe’s biggest business jet group, says Mr Connor. “He said, ‘My ambition is to be a pilot for NetJets’. And then, after about a three-second pause, he quipped: ‘Will you marry me?’”
Mr Connor, a 61-year-old engineer from County Durham in the north of England, with many years in the energy business, leans back in his chair in NetJets’ airy Kensington offices in central London and grins.
But much of the change at NetJets over the past year has been less entertaining, in line with the rest of the battered private jet industry.
Since October, the European arm of the fractional operator NetJets, a part of US billionaire Warren Buffett’s Berkshire Hathaway empire, has lost four of its top people.
Mark Booth, chairman, and Bill Kelly, chief executive officer, both went in October. Robert Dranitzke, chief operating officer, went in January. Graeme Weston, president of marketing and sales, resigned in February.
Before then, the group laid off some 100 staff from its Lisbon operations centre and arranged for 250 pilots to take voluntary leave, leaving a full-time staff of 1,740 workers, about 1,000 of whom are pilots and crew.
Though its 1,500 customers and 158 aircraft still dwarf its rivals, it has had to defer a number of deliveries to adjust to the downturn.
All this has been a sharp turnround for a company that had been riding the financial boom enjoyed by many of its wealthy clients, and placed the biggest single order for business jets in Europe in 2006, before the financial crisis struck.
When Mr Buffett delivered his annual letter to Berkshire Hathaway shareholders in February this year, he described NetJets as “the major problem for Berkshire last year”.
NetJets Inc, which is 100 per cent owned by Berkshire and owns between 40 per cent and 50 per cent of NetJets Europe (the rest is held by European investors), grew into the largest corporate jet group in the US under Richard Santulli, its former owner and chief executive.
But its business operation has been, as Mr Buffett put it, “another story”.
“In the 11 years that we have owned the company, it has recorded an aggregate pre-tax loss of $157m,” he said, adding that its debt had soared from $102m 11 years ago to $1.9bn in April last year. In 2009 it made a “staggering” $711m loss, he said, although debt had been cut to $1.4bn, and the group was now “solidly profitable”.
This was thanks to the “enormously talented” David Sokol, he said, who was plucked from the Berkshire empire’s MidAmerican energy group to run NetJets in August.
Mr Connor was a top executive at MidAmerican until he became head of NetJets Europe. He has known Mr Sokol since 1996 and like his US counterpart, is expected to keep a close eye on expenditure.
“He’s been given a mandate to be as ruthless as possible on costs,” says an executive from a rival company. “They’ve said: Anything that doesn’t look like a proper commercial deal, kill it’.”
Mr Connor confirms that a number of cost-cutting initiatives have taken place, such as the renegotiation of airline contracts for crew travel and the re-tendering of fixed base operations.
“In some places that has resulted in a decrease in cost and an increase in facility, so that’s been a win-win,” he said.
Some observers say the top-level executive shake-up has created a “divisive atmosphere”.
Mr Connor says market conditions meant the company had to respond. “Yes, some people left, but people always leave organisations and organisations live on.”
Despite the cutbacks, NetJets Europe remains committed to Frankfurt-Egelsbach airport, a popular business jet centre, in which it became an 80 per cent owner last year, announcing last month that it planned to invest €20m-€30m ($27m-$40m) in it over the next five years.
In December, it said it would invest €750m in training and safety over the next five years.
Safety is one part of the business with which Mr Connor is very familiar.
“I don’t have any great knowledge of aviation other than to say I’ve used it a lot,” he says, but adds: “I’m an engineer by background, so I understand technical aspects and complex systems. In terms of safety, I’ve done work in power stations, in coal mines, with underwater weapons, in nuclear installations, so I understand the importance of safety.”
Mr Connor is quietly optimistic. “Generally speaking, for the first quarter of 2010 – and obviously one quarter isn’t a whole financial year – the indications are quite positive.”
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