NetJets and FSI Report Strong 3Q Revenue, But Rising Costs Weigh on Earnings
Berkshire Hathaway’s aviation services division, which encompasses NetJets and FlightSafety International (FSI), saw impressive growth in third-quarter revenues, up 10.4% compared to the same period last year.
This strong performance mirrors the gains made in the second quarter and brings the year-to-date revenue increase to 9.8%. However, despite the robust revenue figures, pre-tax earnings for the division declined by 17.5% compared to Q3 2023, largely due to higher operating costs.
The revenue growth was primarily driven by NetJets, the fractional jet ownership provider, which continued to see increased demand for private aviation. The surge in flight activity, combined with a growing demand for private jet services, helped offset some of the challenges posed by rising operating expenses, including higher costs for maintenance, personnel, and fuel.
Similarly, FSI, a leading provider of aviation training and simulation services, also benefited from strong demand, but like NetJets, it faced escalating costs that tempered its earnings growth.
Demand for Private Aviation Remains Strong
One of the key drivers behind the strong revenue growth for NetJets is the ongoing recovery in business aviation, which has been propelled by the desire for flexibility and safety in private flying. According to data from Jefferies and WingX, NetJets’ flight departures were up 55% compared to pre-pandemic levels in 2019, and 10% higher than last year.
This growth highlights the broader trend in the private aviation sector, where business jet departures globally surged 32% in October 2024 versus 2019 levels. This continued momentum reflects businesses and high-net-worth individuals’ preference for private flights, especially given the increasing demand for travel flexibility.
FSI’s Training Services Drive Growth
FSI, a Berkshire Hathaway subsidiary providing aviation training and simulation services, also saw revenue gains in the third quarter. However, rising operational costs, including those related to personnel and facility maintenance, have put pressure on profit margins. Despite these challenges, the growing need for aviation training—particularly as the aviation industry continues to recover—has supported FSI’s positive revenue trajectory.
Berkshire Hathaway’s Broader Services Group
While the aviation services division performed well, Berkshire Hathaway’s broader services group, which includes NetJets, FSI, and other subsidiaries such as Dairy Queen, XTRA Logistics, and TTI, reported total revenues of $5.13 billion for the quarter, a modest increase compared to last year.
However, the group’s pre-tax earnings took a significant hit, falling by 26.3% year over year. A major factor in this decline was the lower sales and price competition at TTI, which contributed to weaker earnings in the broader services group.
Outlook for the Aviation Division
Despite the rising costs that have impacted earnings, the overall performance of Berkshire Hathaway’s aviation services division—driven by strong demand for private aviation and aviation training services—signals a positive outlook for the coming quarters.
NetJets’ continued growth and FSI’s robust training services position the division well, even as the broader economic conditions exert pressure on operating costs.
