Higher revenues and lower aircraft maintenance costs are driving NetJets’ profitability despite slower aircraft sales, says NetJets parent company Berkshire Hathaway. NetJets reported pretax earnings were up 10% to $227 million in 2011, a performance that Berkshire Hathaway Chairman Warren Buffett says was particularly impressive because sales of new aircraft shares were slow during most of the year. NetJets did see an uptick in December “that was more than seasonally normal,” he says, but it’s still unclear whether that improvement is sustainable, Buffett says.

Along with still slow aircraft shares, revenue hours flown in 2011 were about the same as in 2010. But the Columbus, Ohio-based fractional ownership aircraft provider brought in higher revenues from adjustments to the aircraft operating costs that are passed on to the customers, along with slight increases in rates.

Berkshire Hathaway also credits lower aircraft maintenance costs for the improved 2011 earnings. The drop in maintenance costs stems from a 10% reduction in fleet size. However, NetJets is still incurring impairment charges from the disposition of aircraft, along with fees for the cancellation of certain aircraft purchase commitments. Since 2008, NetJets has shrunk its fleet by 20% and lowered its operating cost structure.

At the same time, NetJets has laid out a plan to overhaul its fleet with newer models over five-plus years, including firm orders from Embraer for 50 Phenom 300s and from Bombardier for 50 Global aircraft. The Embraer contract includes options for up to 75 more, and the Bombardier contract has options for up to 70 more.

Berkshire Hathaway believes these changes have positioned the company to operate profitably in the future. “A few years ago, NetJets was my No. 1 worry. Its costs were far out of line with revenues and cash was hemorrhaging. Without Berkshire’s support, NetJets would have gone broke,” Buffett says in his annual shareholder letter. “These problems are behind us, and [NetJets President Jordan Hansell] is now delivering steady profits from a well-controlled and smoothly running operation.”

Also improving profits in 2011 was NetJets affiliate company FlightSafety International. FlightSafety’s revenues were up 8% for the year as demand for training increased in both the business aviation and regional airline markets. Government business, however, was down in 2011. While revenues were up 8%, earnings increased 16%, in part from FlightSafety’s ongoing cost containment efforts, Berkshire Hathaway says.