NetJets to finance customer shares
NetJets will now offer to finance customer’s shares through a new division NetJets Finance LLC.
This is the first time that a fractional ownership company has directly financed shares. The company if only offering financing to companies that buy aircraft shares and will not finance individuals.
It replaces a scheme that CIT Finance offered NetJets customers for several years. CIT financed over $1.5 billion of shares.
“NetJets has always built its market leadership by responding to our owners’ needs with meaningful solutions,” said David Sokol, NetJets chairman and chief executive officer. “Whether they are renewing an existing ownership share, expanding their private jet usage, or simply looking for a way to reduce upfront costs, this financing option represents a smart way to make capital deployment decisions. And, because of our financial strength, NetJets is the only private aviation company to be able to offer direct, competitive financing.”
It is calling the product NetJets Direct Financing. Berkshire Hathaway, which owns NetJets, is providing the money to NetJets.
Customers will need to past credit tests but NetJets says that because no bank is involved it will be able to give a decision in a few days.
Sokol added, “A significant benefit of NetJets Direct Financing is that Owners are able to structure a payment solution that exactly meets their needs and, just as with purchasing a fractional share, they are able to receive the benefits of owning the asset itself, including any depreciation advantages.”
NetJets will finance up to 80% of the share’s value with the fixed interest rate, term and amortization depending on the age of the aircraft and the length of the share. The maximum term is five years with amortization schedule of 20 years, minus the age of the aircraft and a balloon payment at the end.