Berkshire News Briefs - 6/2/15

NetJets replaces CEO amid prolonged labor dispute (Columbus Business Journal)

NetJets Inc. announced Monday the departure of CEO Jordan Hansell and named a replacement to take over immediately.

The Columbus-based private jet company, a subsidiary of Warren Buffett’s Berkshire Hathaway Inc., said Adam Johnson, with the company since 1996, including most recently as president of marketing, sales and owner services, has been named NetJets chairman and CEO. Hansell had been CEO since 2011.

NetJets Shuffle: Costs of Deviations from the Berkshire Model (ValueWalk)

At NetJets, Sokol left behind both his thrifty business model and a successor, Hansell, whom Sokol had recruited from Berkshire's energy business. NetJets' pilots love Santulli and have always lamented his departure. They detest both Sokol and Hansell, and especially their low-cost strategy. After Santulli left, management-labor relations deteriorated steadily [...]

Amid mounting turmoil, in early 2015, two Santulli-era senior executives resigned from NetJets and today the company announced that they are returning to lead NetJets: Adam Johnson, a 20-year company veteran, and Bill Noe, who is also a pilot. Their stated goal is to reengage NetJets' employees in the business and return the company to greatness. In other words, they appear poised to abandon the Sokol business model in favor of Santuilli's original concept.

Warren Buffett wants to cut benefits of his planes’ pilots (NY Post)

(Note that this was published last week, before the leadership change.)

Berkshire Hathaway-owned business-jet operation NetJets is trying to wrangle benefit cuts from its pilots union just as boom times fuel a pilot shortage that could crimp its business. [...]

With the economy on the rebound, wealthy customers have returned to buying shares in NetJets planes in exchange for flying hours. Last year it sold 3,500 NetJets Marquis cards — 1,000 more than expected, the exec said.

Nevertheless, NetJets, which almost collapsed during the downturn when CEOs cut back on private-jet travel, said it has to trim costs to meet Berkshire’s demands for greater returns.

BNSF plans temporary layoffs with slipping freight demand (Tulsa World)

BNSF Railway Co. says it’s planning employee furloughs due to slipping freight shipping demand across its rail network.

The company said Wednesday in a statement that it hopes to call back employees “as soon as business needs change.”

The railroad would not say how many employees were being furloughed but that they are “at different locations across our network.”

Kraft Heinz Turns Into A Hedge Fund Favorite As Buffett And 3G Mix Ketchup With Macaroni (Forbes)

Although analysts have a big appetite for synergy loaded deals like Berkshire and 3G’s latest M&A foray, they question whether the company’s lack of organic and natural foods, and its exposure to salty, sugary and fatty goods will prove a roadblock for growth no matter how successful 3G is in cutting costs. Other possible headwinds include dealing with refrigerated foods, technical issues from supply chain changes, and volatile global currencies, issues that have so-far weighed on Heinz sales.

Citigroup analysts, however, see an ability for Kraft to generate new sales as it takes back trademarks it’s licensed out to Mondelez over the two-to-10-years. Heinz’s existing infrastructure in Europe, Brazil and Asia, meanwhile, could help increase the penetration of Kraft brands. Were one to assume 3G’s guidance on synergies is credible, Kraft Heinz also doesn’t look overly expensive when compared against industry competitors.

Las Vegas Casinos Challenging Warren Buffett's Energy Company (Fool)

But the energy industry might be changing faster than Buffett realizes, and Berkshire Hathaway's $10 billion takeover of Nevada utility NV Energy two years ago could show just how problematic the business is today. He's not being challenged by environmentalists or fossil fuel prices; instead, it's casinos on the Las Vegas Strip, NV Energy's biggest customers, that are threatening to leave the utility and find their energy elsewhere.

It takes a lot of power to run a Las Vegas casino. MGM Resorts alone accounts for about 5% of NV Energy's electricity delivered, and that's from just 12 properties. Add in Wynn Resorts, Las Vegas Sands, and data center company Switch, and NV Energy relies on just four customers for about 10% of its demand each year. All the more problematic is the fact that; all four companies want to leave the utility.

Berkshire Hathaway Energy advances utility legislation despite Cantwell pushback (E&E Publishing)

Berkshire Hathaway Energy appears to be successfully pushing legislative language through both chambers of Congress that would scrap federal requirements for utilities to buy power from small renewable and cogeneration units.

But Warren Buffett's multinational conglomerate will have an uphill battle getting that language past the Senate Energy and Natural Resources Committee's top Democrat, Maria Cantwell of Washington.

Cantwell has made clear she plans to work against Berkshire Hathaway Energy's (BHE) proposal, which she said amounts to an attempt by the company to bolster its position in the Western coal markets, where it owns both rail lines and generators. [...]

Richline to Unveil Smart Jewelry Designs and Partnerships at JCK (BusinessWire)

Richline Brands is set to introduce its highly anticipated foray into the world of wearable technology with an array of smart jewelry offerings at the JCK trade show in Las Vegas. [...]

Buffett Auction Draws $1 Million Bid, Exceeding 2014 Pace (Bloomberg)

Warren Buffett’s annual lunch auction drew a top offer of more than $1 million in the charity event’s first full day, exceeding the pace of last year’s bidding.

The annual charity event, now in its 16th year, started Sunday evening and concludes Friday. The highest offer was $1,000,100 as of 10:46 a.m. Monday in San Francisco, according to Ebay Inc.’s website. [...]

Buffett, 84, has raised $17.8 million for San Francisco’s Glide Foundation by offering admirers an avenue to get face time with him. Glide, which offers free meals, affordable housing and counseling for the poor, is led by the Rev. Cecil Williams, 85.

Origins of a Buffett and Mark Cuban sighting in midtown Omaha (Omaha World Herald)

“Someone just gave me Warren Buffett’s email,” Cuban had replied. “I’m going to email him and see if he’ll meet with me. I really want to talk with Warren Buffett.”

So there they were, Buffett in a nice suit and Cuban in a polo shirt, waiting for a driver to do a U-turn on Farnam Street to pick them up for a trip to the Dairy Queen [...]