Eric Connor: The man who restructured NetJets Europe
[nonmember]Eric Connor started his working life 1000 feet underground. He now manages a business where much of its takes place 40,000 feet high. But whilst aviation was a new industry for him in October 2009, when he was made chairman and CEO of NetJets Europe, his entire working life has been about managing change. This made him uniquely qualified for restructuring Europe’s largest business aircraft operator.::join::[/nonmember][ismember]
Eric Connor started his working life 1,000 feet underground. He now manages a business where much of its takes place 40,000 feet high. But whilst aviation was a new industry for him in October 2009, when he was made chairman and CEO of NetJets Europe, his entire working life has been about managing change. This made him uniquely qualified for restructuring Europe’s largest business aircraft operator.
“When I took over I told people that I have seen all the ingredients of NetJets. I have just not had the chance to bake the cake,” he says.
Connor grew up in a mining area in the northeast of England and his first job was as a miner working for the state-owned National Coal Board. Connor says it is a very different industry but it did give him vital “experience of working in a high safety environment”, which he says is “of course NetJets biggest priority.”
He then successfully applied for a Coal Board scholarship which paid for him to study electrical engineering at university.
It proved to be a good career move for Connor. Unlike other European countries, the UK government choose not to support its mining industry and – following a bitter strike in the 1980s – coal mining effectively ended in the country by the early 1990s.
He spent a year in manufacturing after graduating and then returned to university, this time for a postgraduate course in mathematics. He then taught maths for five years before joining engineering companies where he specialised in real time computer systems for a variety of uses including underwater weapons, rolling mills and finally nuclear power systems.
For the second time in his career, he realised that the government was not supporting the industry he worked in. When it was clear that no new nuclear power stations were going to be built in the UK he moved to Reyrolle a company that produces and exports power management products for electricity companies. It is now part of Siemens. Reyrolle gave him experience of international sales and introduced him to electricity distribution.
This time government policies worked in his favour. When the UK decided to privatise the electricity industry he moved to Northern Electric. As president and COO he restructured the company moving out of power generation completely and focusing on distribution. The re-named Northern Energy was then acquired by CalEnergy in 1996 – a US company led by David Sokol. CalEnergy became MidAmerican Energy Holdings when Warren Buffet’s Berkshire Hathaway acquired it. Bekshire Hathway, of course, is the owner of NetJets.
Connor worked in a variety of roles at MidAmerican, mainly reporting to Sokol, eventually becoming senior vice-president and chief procurement officer of the energy company. When Buffet made Sokol CEO of NetJets, following losses of $700 million in 2009, Connor was the natural choice for the European fractional ownership business. (In fact the losses, which were largely write-offs, were higher as they did not include the cost of guarantees provided by Berkshire Hathaway, which NetJets now accounts for.)
“Businesses have three stakeholders: owners, shareholders and employees. It was clear in 2009 that shareholders did not do well,” says Connor.
Despite being the largest operator in the region, NetJets Europe has not been a success for Berkshire Hathaway shareholders. It made losses of $212 million in its first 10 years up to 2007 and lost more in 2009. In 2010 NetJets Inc and NetJets Europe hadtogether made a cumulative loss of more than $157 million since Berkshire Hathaway bought the US fractional operator (and, again, this is with cheap Berkshire guaranteed funding).
At the start of 2010 Connor set NetJets Europe the target of saving Eu80 million. By the end of the year it had cut almost Eu100 million. “We looked at everything. Every time someone had identified a saving we would say ‘does it impact on safety or customer service,’ if the answer was ‘yes’ they had to go away and find another saving,” says Connor. “A lot of our savings came through not spending money on things that do not add value.”
Although a number of senior employees left – several of whom followed former CEO William Kelly to Milestone Aviation, a new helicopter leasing company – Connor says the remaining management team is strong and that the changes gave good people the opportunity to advance.
NetJets Europe made an operating profit in 2010, contributing to the $207 million that NetJets overall made in 2010. It is on track to be profitable in 2011.
Two years into the role, Connor says he is enjoying NetJets. “If I didn’t enjoy it I would not be here,” he adds. “I didn’t enjoy mining.”