Companies Rush to Ditch Corporate Jets
Out of embarrassment or economics, once-coveted exec aircraft are up for sale.
December 4, 2008— -- After a lengthy public flogging for flying private jets to Washington to ask for a multi-billion dollar bailout, the Big Three auto CEOs rolled into town in more modest, fuel-efficient cars Wednesday.
GM and Ford announced plans this week to sell off their corporate aircraft, and they're hardly alone. A bad economy -- and bad press -- are spurring more corporations to hock their fancy private jets.
Troubled banking giant Citigroup has quietly put up for sale two of its planes, richly-outfitted Falcon 900EXs, according to online advertisements and public records. The planes seat twelve passengers in ample club chairs, a divan and a single "VIP seat," amid mahogany woodwork with gold trim, according to the ads. The planes' asking prices are not listed, but similar aircraft are advertised for $30 million.
The company last week negotiated a $300 billion deal with the U.S. government to "backstop" its potential losses and keep from going under.
A Citi spokeswoman declined to confirm the planes were for sale, which was first reported on the Web site CityFile.com. In a written statement, she claimed the company had reduced the size of its air fleet by two thirds over the last eight years, and said that executives "are encouraged to fly commercial whenever possible to reduce expenses."
Also selling planes is foundering insurance giant AIG, which has taken $150 billion in U.S. taxpayer money to stay alive. It has three planes on the market, including one it has ordered but is not scheduled to receive until next year.
Of the planes for sale it currently possesses, one is a nearly-new 2007 Falcon 2000EX. Its brief life with the company began earlier this year, around the time AIG's troubles began to be publicly known.
AIG executives could enjoy the aircraft's "Ultraleather" club seating, store refreshments in its custom cabinetry, and enjoy drinking water from its UV water treatment system, according to the list of features in the plane's online ad. The jet also features "convenient tie downs for golf bags or skis," the ad claims.
Execs Want to Avoid Public Criticisms that Hit Auto Titans
AIG sold two other planes earlier this year, according to company spokesman Joseph Norton. The company has cancelled an earlier order for a new plane that was scheduled to be built in 2010. Once those sales go through, AIG's fleet should be pared down to five planes.
"The economy sucks, everybody knows that. As a result of a bad economy, people are looking for ways to cut costs, cut overhead, and that leads to airplane sales," said Josh Mesinger, vice president of J. Mesinger Corporate Jet Sales in Boulder, Colo.
But executives also want to avoid the kind of public remonstrations the automotive titans suffered, after they rode in luxury to ask Washington for billions in bailout funds.
"Everybody wants to stay under the radar," said Mesinger. "Some are selling because they have to, but some are selling because they don't want the profile of having it."
At Starbucks, dismal sales have led execs to close 600 stores and increased pressure from stockholders to find millions of dollars in savings. A 2002 Gulfstream V that government records shows as owned by the coffee company is listed for sale on public Web sites. (Federal Aviation Administration records show the company also has a Bombardier 12-seat plane.)
Frequent use of the aircraft had made company chairman and billionaire Howard Schultz a target of criticism. Shultz has enjoyed free air travel on the planes valued as high as $475,000 a year, according to reports.
Starbucks' asking price for the plane is not listed in its advertisement, but similar planes are advertised for more than $40 million. The company did not respond to repeated requests for comment.
The Starbucks Gulfstream seats 16 in "tasteful" neutral-toned leather and cloth seats, according to its advertising copy, and comes with in-flight satellite television, DVD and CD players -- and a coffee maker.