November 4, 2010 / 4:33 PM / 8 years ago

Berkshire's NetJets buys Marquis Jet card company

NEW YORK (Reuters) - NetJets Inc, the corporate aircraft unit of Warren Buffett’s Berkshire Hathaway Inc (BRKa.N) (BRKb.N), said on Thursday it bought Marquis Jet, which has a program that sells flight time on NetJets planes.

Terms of the sale were not disclosed.

Founded in 2001, Marquis provides debit cards that allow customers to purchase 25 hours of flying time on NetJets for a set price. This business model of pre-paying for blocks of flight hours offers access to private jets without the obligations of ownership.

Meyer Shields, an analyst with Stifel Nicolaus, said the acquisition gives NetJets more control over distribution and will help the jet operator cut expenses as it moves to consolidate business functions.

NetJets is run by David Sokol, who also chairs Berkshire’s MidAmerican Energy Holdings Inc unit and is widely considered to be a top candidate to eventually succeed Buffett, 80, as Berkshire’s chief executive.

Buffett installed Sokol at NetJets in August 2009 to slash capacity and a $1.9 billion debt load after difficult economic conditions curtailed business travel. Sokol reduced headcount and sold old planes in a bid to turn the company around.

NetJets swung to a profit in the April-to-June quarter, and Berkshire has said it expects the unit to remain profitable. Last month, the company said it planned to buy as many as 125 jets from Brazil’s Embraer(EMBR3.SA) to upgrade its fleet, a bullish move as the business jet industry looks to bounce back post-recession.

“I think the expense issues (at NetJets) have largely been resolved. The question is what happens on the revenue side,” Shields said. “The Embraer order is certainly a reflection of anticipated demand improvement.”

Speaking on CNBC television, Sokol said Buffett is for now “in great shape” and “not going anywhere.” Sokol also praised Todd Combs, named on October 26 to run some Berkshire investments, saying the hedge fund manager should do a “great job.”

Based in Omaha, Nebraska, Berkshire is expected to report third-quarter results after U.S. markets close on Friday. It has roughly 80 operating units and tens of billions of dollars of common stock investments.

Berkshire Hathaway shares were up 1 percent on Thursday on the New York Stock Exchange.

Reporting by Jonathan Stempel in New York with added reporting by Karen Jacobs in Atlanta, editing by Dave Zimmerman and Gunna Dickson

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