I'm Not Convinced Here

Not quite convinced, anyway:

Warren Buffett's private jet company NetJets Europe is to buck the credit crunch by splashing out $715m (£365m) on 39 new luxury aircraft for its fleet.

NetJets, owned by the so-called Sage of Omaha's conglomerate Berkshire Hathaway - has brought forward the order which will increase its fleet by 29 per cent to satisfy Europeans' growing appetite for private jet travel.

NetJets leases planes to customers in 25-hour blocks or allows companies and individuals to buy timeshares in corporate jets. Prices aren't cheap, but are a fraction of the cost of buying a plane.

Now as I heard it from a man in a pub that's not quite how NetJets works. The value of this conversation over a pint or two was rather enhanced by the fact that he was a financial controller for the company, the pub being one in Cascais, the one that the European office of NetJets routinely uses for their their pre-prandials (O'Neill's, if you're interested).

The way I understand it NetJets doesn't buy planes. Those customers on the timeshares do: the capital risk of, say, a fall in second hand prices, falls upon those with a share in a jet, not upon the operating company. Rather like a letting agent: the individuals take the risks of housing ap- or de-preciation,  the agent taking a slice of the revenues only.

It's this model, I'm told, that led Buffett into the company in the first place. He's often noted that airlines have, over the years that they've existed, not made a return on their capital. So he'd only get into such a business if he wasn't in fact providing the capital.

But then again, I was only told this by a man in a pub.