No Show of Wealth

Major companies are selling their jets to cut costs and criticism.

Dec. 4, 2008— -- With the economy sinking, corporate and individual owners of private jets are rushing to sell them, park them or fly less to cut costs and deflect public criticism.

"The corporate jet is a money-loser that has to be justified to shareholders," says Vaughn Cordle, chief analyst of Virginia-based consulting firm Airline Forecast. "I'd be shocked if a significant number of companies don't sell their corporate jets or not renew jet leases."

Major companies that have curtailed corporate jet use or are selling jets include AT&T, Citigroup, Chrysler, Ford, General Motors, McClatchy newspapers and Ur-Energy, a Colorado-based mining company. Gannett, parent of USA TODAY, sold two of its three corporate jets months ago.

The Detroit 3 automakers' CEOs got the message after they were publicly lambasted for taking separate private jets to Washington, D.C., recently to plead for a multibillion-dollar taxpayer bailout.

GM and Ford said this week they will dispose of their corporate jets.

For Thursday's return to Capitol Hill, GM CEO Rick Wagoner drove to Washington in a Chevrolet Malibu hybrid that runs on gas and electricity.

Ford CEO Alan Mulally and Chrysler CEO Robert Nardelli also drove from Detroit to Washington, where they will testify before Congress Thursday on their companies' restructuring plans.

Data from UBS Investment Research and other sources show jet owners are flying fewer trips and putting jets up for sale.

In October, flights by private jets plunged 19 percent year-over-year, and flights are down 10 percent this year, says UBS research analyst David Strauss.

Last month, UBS says, 16 percent of all business jets worldwide were for sale, more than double the percentage a year ago.

"In some cases, companies are getting rid of the only plane they have," says Ed Bolen, president of the National Business Aviation Association, whose members own or fly private aircraft for business trips.

NBAA says 11,000 U.S. companies use private planes or jets. They are sometimes used to transport specialized employee teams, sensitive equipment or busy executives faster than commercial airlines.

Cordle says his firm's research has found that the purchase and use of corporate jets is linked to corporate earnings, a company's share price -- and public perception.

"It's not politically correct to display wealth right now," he says.