In your recent letter to shareholders, you wrote that it was clear you failed us in letting NetJets descend into such a condition that it has recorded an aggregate pre-tax loss over the 11 years we have owned the company. What specifically were the errors committed by you and the previous CEO? What have you learned? And how will you prevent such a thing from happening with any of our other businesses in the future?
Well, I probably won't. We'll make mistakes from time to time, and some of our managers may make mistakes. And sometimes you run into conditions that are really extraordinary. But the mistake, the biggest mistake made with NetJets is essentially we kept, we were buying planes at prices that were fictitious in terms of the price at which we would later be able to sell them. And there's a certain time lapse involved in buying fractional shares and everything. There's a lot of explanations for it, but in the end, we didn't properly prepare for what was obviously happening. And we lost a lot of money, a good bit of which was attributable to the write-down of planes, which you could call as our inventory, where we bought them at X, and we couldn't sell them at X or 90% of X. Some of those were new planes that we should not have taken on, and many of them were planes coming back from owners. We also let our operating costs get out of line with recurring revenues.
But, you know, I made plenty of mistakes. I stayed in the textile business for 20 years, and when it was, I knew it was a lousy business. Charlie was telling me it was a lousy business in the first year, the second year. And 20 years later, I woke up. I was like Rip Van Winkle. I mean, it's kind of depressing when you think about it.
But the one thing we will guarantee: we'll make some mistakes. It was a big mistake at NetJets. $711 million is the figure. We are now operating at NetJets at a very decent profit. The figures you saw there on the screen reflect a pre-tax profit of well over $50 million in the first quarter. And that's not with any big boom in plane sales or anything else. It's just with a business plan that involves not an iota of diminution of safety or service, but just got things in line that needed to be in line. And I give Dave Sokol enormous credit. I mean, he turned that place around like nobody could have. And all the shareholders here owe him a big vote of thanks for that. Charlie?
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Buffett, W. (2026, November 1). Warren Buffett: ‘Charlie told me it was a bad business in the first year’ [Interview transcript]. The Financial Review. CEOInterviews.AI. https://ceointerviews.ai/interview/3176026/
MLA
Warren Buffett. "Warren Buffett: ‘Charlie told me it was a bad business in the first year’." The Financial Review, 1 Nov. 2026. Transcript, CEOInterviews.AI, https://ceointerviews.ai/interview/3176026/.
BibTeX
@misc{buffett2026_3176026,
author = {Warren Buffett},
title = {Warren Buffett: ‘Charlie told me it was a bad business in the first year’},
howpublished = {Interview transcript, The Financial Review. CEOInterviews.AI},
year = {2026},
month = {nov},
url = {https://ceointerviews.ai/interview/3176026/},
note = {Speaker-attributed transcript with timestamps}
}
