- On Friday, the General reported that NetJets -- a subsidiary of Warren Buffett's Berkshire Hathaway
(NYSE:BRK-A) (NYSE:BRK-B)-- inked a contract to buy a total of 40 Gulfstream G450s and Gulfstream G550s large-cabin, long-range business jets. NetJets will take possession of four of each flavor of Gulfstream every year from 2012 through 2016, paying $1.9 billion in all.
- Simultaneously, Gulfstream rival Bombardier came out with its own announcement, nearly as big. According to Bombardier, a customer who'd prefer not to be named has ordered 25 midsize Learjet 60XR business jets (smaller than either of the Gulfstreams that NetJets is buying), and optioned another 85. If all the options are exercised, we're talking $1.5 billion in revenue for Bombardier.
If Bombardier's order maxes out, it will equate to about 8% of that company's annual revenue (although, of course, the planes will not all be delivered in a single year). The significance for General Dynamics is both smaller and larger. Because it's a bigger company, $1.9 billion equates to just 7% of the General's annual sales. Even so, it's a significant victory for the General in two ways.
First, within the company's aerospace business in particular, $1.9 billion equates to 40% of annual revenue. Second, the General just took a $400 million annual march on its rival, increasing its share of the world business-jet market.
And the more capacity, flights, and pilots Northwest