Warren Buffett jumped into a new line of work - financing private aircraft.
Buffett started hawking little-money-down, low rate, quick-approval loans on a lifestyle-changing purchase.
No, America’s wealthiest man isn’t selling subprime mortgages, he has introduced a financing arm to his NetJets unit aimed at helping the well-heeled keep up their luxury-jet lifestyles by loaning them cash to fly on his fleet of 800 planes, which lost a ton of money last year but posted pre-tax profits of $158 million in the first nine months of 2010.
Buffett’s NetJets, which sells air travel by the hour aboard posh private jets and turboprops, yesterday began selling loans virtually on the spot with no outside financing hassles, to help customers climb into their own private planes in “just a few days.”
Sounding a lot like the familiar late-night TV used-car commercials espousing — “Just a dollar and a job is all you need,” NetJets embarked on a possibly risky business model of basically lending to itself, in hopes of offsetting its dismal 2009, in which it had to lay off pilots as corporate business plummeted.
While announcing NetJets Direct Financing, the company said that it would make fast-track loans only to “qualified clients” and not subprime losers. The financing arm can ground Buffett’s recovering corporate jet business should the economy worsen.
A similar strategy failed at Harley-Davidson, whose bottom line and shares suffered last year after its financing operation lowered qualifications, wrote loans to less-deserving customers to churn sales and then got stuck with billions in bad paper when the motorcycle owners defaulted.