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The story I’m going to tell over the next few days shows how a talented manager can create a business with a deep and dangerous moat given enough time and dedication, even in an industry dependent on the notorious unprofitable airlines. There are many lessons for today’s value investors.
Al Ueltschi fell out of an aeroplane in 1940 when he was 23 years old. One moment he was sitting comfortably, the next “the whole airplane was missing!” he says.
The seat, with him strapped to it, had simply detached when the biplane was upside down. He was no longer an instructor pilot, “but rather a falling object heading straight for a patch of Ohio farmland”. It was very cold, but he knew he had to rip off his gloves to pull the rip chord on his parachute. The chute exploded through his legs, “so I guess I was upside down”. With only 150 feet to go the canopy finally opened.
The episode was so jarring that the leg straps ripped his underwear. He landed in a briar patch, tearing more of his clothes. “Apart from some minor scratches and a severely bruised ego, I was fine”, he says.
But the lesson in the importance of having a well-trained pilot who you could trust in all circumstances was truly learned. He had put his life in the hands of someone under his instruction. The student was trying a half snap roll. He kept failing and stalling the aircraft. The last attempt was so abrupt that Ueltschi’s seat simply fell out of the biplane. In those days, most training took place in the air, rather than in simulators, which resulted in more deaths by accidents in training than in normal flying.
It was the same Al Ueltschi (pronounced Yule-chee) who 56 years later sold his pilot training business to Berkshire Hathaway for $1.5bn. He swapped his 37% holding for around $555m worth of Berkshire shares. The aviator who had flown solo at 16, continued to be in charge of the company until his death in 2012, aged 95, by which time his shares were worth $2bn.
Much of that money has been used to provide millions of people in the developing world with sight-saving operations through the charity he established, Orbis. Today, FlightSafety International dominates the pilot training industry.
Lindbergh and the love of flying
Ueltschi was the youngest of seven born on a Kentucky farm in 1917. As he grew, he observed how his parents work all day, seven days a week for a meagre profit at the end of the year. He didn’t want to be a farmer.
The ten-year old Alfred was enthralled when Charles Lindbergh flew the Atlantic. His ear was glued to the family vacuum-tube RCA radio, “listening for every scratchy- sounding news report on the progress of his flight. When the bulletin came announcing that he had landed in Paris and was carried off the field on the shoulders of thousands of cheering Frenchmen, I was hooked.”
From then on there was no doubt in his mind, he was to be a pilot. (Running ahead of the story: Ueltschi and Lindbergh became friends and 35 years after the biplane mishap they ended up sharing a room at Le Bourget, the place in Paris where Lindbergh had landed all those years before. The pair were in France to evaluate an airplane).
The young Alfred quickly recognised that farming would not earn him the money needed for flying lessons so he looked for something else. At sixteen he opened a tiny hole-in-the-wall hamburger stand selling burgers for 5c and a Coke to go with it for 5c. He sold a lot. The only p
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