It never entirely made sense to me that Santulli's departure was about earnings. Buffett hates losses
of course, but he's never been prone to fire the actual founders of his acquisitions over P&L performance.
Instead, he'd be more likely to give them some adult supervision, folding laggards under some natural business group that had strong management, or putting them effectively under someone like Sokol (pre-Sokol, it sometimes appeared that Mike Goldberg also played that role).
In Santulli’s case it looked like the ‘final straw’ - rather than earnings - might have been Santulli’s inexpicably irrational support for, and allegiance to, supplier HawkerBeecher and the strange circumstance of Santulli and (Netjets ex-president) Boisture announcing that Netjets was placing HawkerBeecher's largest ever order (of unproven and ultimately inferior aircraft) a month before Boisture left Netjets, and having him eventually end up - quite conveniently - as CEO of HawkerBeecher.
Santulli still stuck with that ill-fated order after Boisture's appointment at HawkerBeecher, which no doubt helped Boisture immensely in getting his new job there. The whole thing smelled really bad, and must have caused Buffett a similar sort of anxiety. (Of course when Sokol took over, that Santulli-Boisture Hawker order was canceled.) Santulli was considered a BRK-CEO front-runner at the time by at least one Buffett biographer, which made the whole judgment lapse issue pretty disturbing.
****************************************************************
The timeline:
I know nothing about all this but what I read - but let’s look at some of the background. I also don’t know these people, though I’m sure some here do, so there’s no offense intended and I’ll gladly correct any mis-characterizations.
- Netjet’s Santulli has worked with aircraft executive (and former top gun pilot) Bill Boisture off and on for a couple of decades, including at Netjets.
- In 2003 Santulli hired Boisture as president of Netjets, reporting to Santulli.
- In 2006, with Netjets struggling, Boisture left rather abruptly to try his hand at consulting (per the announcement).
- Beginning a month before Boisture’s departure, and through 2006 and 2007, Netjets (and Netjets Europe) placed large orders for HawkerBeecheer’s 'new' business jet, the Hawker 4000. This was HawkerBeecher’s largest-ever order.
- The Hawker 4000 carries up to eight passengers and has a range of about 3,600 miles.
- Through 2007, the 4000 was discussed on pilot forums. http://www.airlinepilotforums.com/fractional/12159-netjets-h... Examples from May 2007:
.....
NetJets hasn't started flying one around yet. ….things have changed and they cancelled the pilot class bid for it. The last I heard they are hoping to get one this year to kick the tires on in November or so, but who knows what will happen. The airplane performs like a beast….but I guess the avionics still don't work as avertised and NJA doesn't want to mess with it until the glitches are a bit more worked out.
.....
I saw that particular aircraft at NBAA this year...as JTF560 said, there are still alot of problems with it. I wonder if they will ever get them straightened out.
.....
same avionics that the 680 has, and they are a mess in the 680 as well. hope the 680 and the 4000 go to collins before its all said and done
......
- In March 2009 Boisture was hired as CEO of HawkerBeecher
- Santulli left Netjets in August 2009
- Sokol canceled the Hawker 4000 orders in December 2009.
- In March 2011 Netjets place large multi-year order for ultra-long-range Bombadier Globals, 10 passengers, 7,200 mile range (eg, non-stop Omaha to Beijing) and Sokol and Buffett cited ‘customer preferences.’
of course, but he's never been prone to fire the actual founders of his acquisitions over P&L performance.
Instead, he'd be more likely to give them some adult supervision, folding laggards under some natural business group that had strong management, or putting them effectively under someone like Sokol (pre-Sokol, it sometimes appeared that Mike Goldberg also played that role).
In Santulli’s case it looked like the ‘final straw’ - rather than earnings - might have been Santulli’s inexpicably irrational support for, and allegiance to, supplier HawkerBeecher and the strange circumstance of Santulli and (Netjets ex-president) Boisture announcing that Netjets was placing HawkerBeecher's largest ever order (of unproven and ultimately inferior aircraft) a month before Boisture left Netjets, and having him eventually end up - quite conveniently - as CEO of HawkerBeecher.
Santulli still stuck with that ill-fated order after Boisture's appointment at HawkerBeecher, which no doubt helped Boisture immensely in getting his new job there. The whole thing smelled really bad, and must have caused Buffett a similar sort of anxiety. (Of course when Sokol took over, that Santulli-Boisture Hawker order was canceled.) Santulli was considered a BRK-CEO front-runner at the time by at least one Buffett biographer, which made the whole judgment lapse issue pretty disturbing.
****************************************************************
The timeline:
I know nothing about all this but what I read - but let’s look at some of the background. I also don’t know these people, though I’m sure some here do, so there’s no offense intended and I’ll gladly correct any mis-characterizations.
- Netjet’s Santulli has worked with aircraft executive (and former top gun pilot) Bill Boisture off and on for a couple of decades, including at Netjets.
- In 2003 Santulli hired Boisture as president of Netjets, reporting to Santulli.
- In 2006, with Netjets struggling, Boisture left rather abruptly to try his hand at consulting (per the announcement).
- Beginning a month before Boisture’s departure, and through 2006 and 2007, Netjets (and Netjets Europe) placed large orders for HawkerBeecheer’s 'new' business jet, the Hawker 4000. This was HawkerBeecher’s largest-ever order.
- The Hawker 4000 carries up to eight passengers and has a range of about 3,600 miles.
- Through 2007, the 4000 was discussed on pilot forums. http://www.airlinepilotforums.com/fractional/12159-netjets-h... Examples from May 2007:
.....
NetJets hasn't started flying one around yet. ….things have changed and they cancelled the pilot class bid for it. The last I heard they are hoping to get one this year to kick the tires on in November or so, but who knows what will happen. The airplane performs like a beast….but I guess the avionics still don't work as avertised and NJA doesn't want to mess with it until the glitches are a bit more worked out.
.....
I saw that particular aircraft at NBAA this year...as JTF560 said, there are still alot of problems with it. I wonder if they will ever get them straightened out.
.....
same avionics that the 680 has, and they are a mess in the 680 as well. hope the 680 and the 4000 go to collins before its all said and done
......
- In March 2009 Boisture was hired as CEO of HawkerBeecher
- Santulli left Netjets in August 2009
- Sokol canceled the Hawker 4000 orders in December 2009.
- In March 2011 Netjets place large multi-year order for ultra-long-range Bombadier Globals, 10 passengers, 7,200 mile range (eg, non-stop Omaha to Beijing) and Sokol and Buffett cited ‘customer preferences.’
