August 4, 2009 / 9:46 PM / 10 years ago

UPDATE 2-NetJets CEO leaves, may affect Buffett succession

* NetJets co-founder Santulli steps down

* Had been considered candidate to run Berkshire Hathaway

* Berkshire shares close up $310 at $100,310 (Adds comments, background throughout, byline)

By Jonathan Stempel

NEW YORK, Aug 4 (Reuters) - Richard Santulli, the chairman and chief executive of Berkshire Hathaway Inc’s (BRKa.N) (BRKb.N) private jet company NetJets Inc and long considered a possible successor to Warren Buffett, has stepped down, effective immediately.

Santulli, 64, said he is leaving to spend more time with his family and to pursue other interests, and will be a NetJets consultant for at least a year. The Brooklyn, New York, native said he told Buffett of his decision on Tuesday morning.

Buffett appointed David Sokol, the chairman of Berkshire’s MidAmerican Energy Holdings unit and also considered a top candidate to run Berkshire, as NetJets’ chairman and interim chief executive.

The change may narrow the list of candidates to succeed Buffett at the helm of Berkshire, which he was run since 1965.

Buffett, who turns 79 on August 30, has said Berkshire’s board has three possible internal successors to replace him should the need arise, including one who would step in immediately. The candidates have not been named publicly.

Analysts have long said the candidates may also include Sokol, top Berkshire insurance executive Ajit Jain, and Geico Corp Chief Executive Tony Nicely. Sokol is the youngest.

“David has been increasingly appearing as a person who might be a strong horse in the race for CEO,” said Thomas Russo, a principal at Gardner, Russo & Gardner in Lancaster, Pennsylvania, which owns Berkshire shares. “This certainly wouldn’t be inconsistent with that direction.”

NetJets specializes in fractional aircraft ownership, which lets individuals and companies buy shares of private jets rather than full ownership. The Woodbridge, New Jersey-based company has more than 800 aircraft, according to its website.

“It is with reluctance that I accept Richard’s decision to step down,” Buffett said in a statement. “Richard Santulli is synonymous with the fractional jet ownership industry and his vision and energy has made NetJets the leader that it is today.”

Buffett, Santulli, Sokol and their respective companies were not immediately available for further comment.

Berkshire bought NetJets for $725 million in 1998. Buffett uses NetJets aircraft for his own business travel, and has praised Santulli in annual letters to Berkshire shareholders.

“If you were to pick someone to join you in a foxhole, you couldn’t do better than Rich,” Buffett wrote last year.

Russo said Buffett has long praised Santulli “for having one of the business minds that is most agile, in terms of understanding competitive advantage.”

NetJets has not been immune from the recession, though. In the first quarter, NetJets had a $96 million pretax loss, hurt by $55 million of aircraft writedowns, an 80 percent decline in aircraft sales, and fewer flight revenue hours.

“The jet market stinks,” Santulli told The New York Times last December.

Berkshire Class A shares closed Tuesday up $310 at $100,310 on the New York Stock Exchange. The company announced the executive changes after U.S. markets closed. (Editing by Andre Grenon and Steve Orlofsky)

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