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GM Gives Up Two Corporate Jets

Struggling General Motors, which was blasted and mocked for using one of its corporate jets to fly chief executive Rick Wagoner to Washington this week to beg Congress for $25 million in bailout cash, is preparing to give back two of its leased corporate jets, the company said today.

GM started the year with a fleet of seven(!) leased jets, gave back two in September and is preparing to shed two more, bringing the GM fleet down to three jets.

GM said the company was already preparing to give back the two additional jets even before this week's hearing.

"We understand the symbolic issue of people showing up in Washington in corporate jets," GM spokesman Tom Wilkinson told Dow Jones. "We're very sensitive to that."

Why the private jets to begin with?

GM's board -- like many corporate boards -- requires its top executives to fly on company planes for their own security. Further, GM said, the smaller jets can fly company execs to places not easily accessible by commercial flights.

-- Frank Ahrens

The Ticker is Twittering!


By Frank Ahrens  |  November 21, 2008; 12:12 PM ET
Categories:  The Ticker  | Tags: General Motors, corporate perks  
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Next: Nov. 21, 2008

Comments

Bamas wouldn't need "security" if they did right by their workers!

Posted by: bs2004 | November 21, 2008 12:42 PM | Report abuse

For their own security?! Pure BS. They would be safer on a commercial flight. They don't want to wait in lines, deal with checking in luggage and go through airport screening like the rest of the people. Oh, and the airline "food", yes, that bag of peanuts, crackers and can of soda is not good enough for the quiche, argula and brie eating automobile execs.

Posted by: spam6 | November 21, 2008 12:55 PM | Report abuse

This story is indicative of the state of intelligence among the citizens of the United States. I am sorry to report that far too many of my fellow citizens do not have so much as a rudimentary grasp on the stunning array of economic problems facing our country.

Even if GM were to give up all their corporate jet leases and even if all their executives and senior level management flew business class [or even coach] it wouldn't make a drop in the bucket of their dollar losses.

This is akin to the presidential debate between Obama and McCain where the latter chided the former for being a big proponent of earmarks. I can just hear him now -- "Senator Obama and his projector at the Chicago Aquarium"

Obama responded that all of the earmarks added up to less than 1% of the overall budget. In another word -- irrelevant.

And that is what the news story today is about GM giving up 2 more of the corporate jet leases... irrelevant. A waste of cyberspace.

It is worse than that. It is an indictment of the collective cluelessness of the masses. It is meant to invoke emotions rather than inform the reader.

And that my friends is what is wrong with the mainstream media. Journalism is redefined to take into account the lack of intelligence in the electorate and the increasingly insulated worlds of Washington DC and Wall Street.

Posted by: winoohno | November 21, 2008 1:03 PM | Report abuse

It actually makes sense to use corporate jets to fly a CEO. His time is incredibly valuable to the company (and thus to the shareholders) so if he has to wait hours in lines at the airport for checkin, security, and boarding that's a waste of his time.

Posted by: divestoclimb | November 21, 2008 1:03 PM | Report abuse

So much nonsense in the name of "security", these days.........

Posted by: Citizenofthepost-Americanworld | November 21, 2008 1:04 PM | Report abuse

There is a strong correlation between corporate jets
and poor earnings performance of companies.

the claim of security needs is a joke. As for the
need to fly into smaller airports, well, the lower level
managers and workers do have to use those small
airports also. Having had to suffer the challenges of
flying from omaha to colorado springs and sacramento
to tulsa, it's just part of doing business.

The day before Enron declared Bankruptcy Ken Lay was
picking color swatches for the new jet. I will know
GM is serious about change the day, they dump
the jets and have Rick Wagoner flying Coach.


Posted by: patb | November 21, 2008 1:15 PM | Report abuse

In the interest of accuracy I believe it is 25 Billion they want in bailout money, not 25 million.

Posted by: GaryH8 | November 21, 2008 1:29 PM | Report abuse

Is it supposed to be $25 Billion? With a "bee".

Posted by: phunngo | November 21, 2008 1:37 PM | Report abuse

So first, in terms of GM's financial condition, this whole corporate jet thing is a blip. Indicative of waste, but getting rid of the jets isn't going to change the bottom line enough to care.

Ignoring the excuse from GM (security is silly -- US senators fly commercial planes and are far more recognizable than most CEOs), corporate jets do make sense if you have lots of flights to areas that are underserved by commercial airlines (e.g. saving many hours of time) or if you are flying several people somewhere (cheaper than buying the plane tickets). So, for instance, last I heard Wal-Mart used a couple of corporate jets to get folks to stores in rural areas. Note that this often means it is NOT the CEOs flying, but rather the folks a level or two below the CEO. Good companies have a corporate jet (or a share of a jet) and a process for deciding which trips merit using it.

It makes no sense for a CEO to fly a private jet between Detroit and DC -- there are lots of flights and the travel time saved is likely to be an hour or so. Not worth it -- simply entitlement.

Posted by: WilsonHSgrad | November 21, 2008 2:04 PM | Report abuse

Criticism of the private jets has nothing to do with the actual cost of the jets themselves. It has to do with the executives appearing completely out of touch, which is why they are in this mess in the first place. The jets story IS a story, because it's another example of the executives' ignorance.

Posted by: PhilliePhanatic | November 21, 2008 2:11 PM | Report abuse

Posted by: divestoclimb | November 21, 2008 1:03 PM
It actually makes sense to use corporate jets to fly a CEO. His time is incredibly valuable to the company (and thus to the shareholders) so if he has to wait hours in lines at the airport for checkin, security, and boarding that's a waste of his time.
=================
The time and decision-making capabilities of a CEO losing $5 billion per month might be better spent in line at an airport.

One smart move might be to give all management personnel some paid time off. Then GM would only have to spend salary and benefits, not the vastly larger losses that result from them actually trying to do their jobs.

Posted by: OldUncleTom | November 21, 2008 2:23 PM | Report abuse

I think the Dems took a cue from Sarah Palin. She'll likely not receive any credit for it, however.

Posted by: PamelaofthePoconos | November 21, 2008 2:42 PM | Report abuse

Well atleast it shows they are trying and are desperate. I still see the hypocrisy. Nancy Pelosi will be flying home in the biggest jet ever used by the Speaker Of The House. And soooo many other Senators, and Congressmen will be flying home on their jets. It's all so pointless. All it means is that GM will now 'Charter' a jet, and it will cost GM more. And to top it off the Government now will have a dozen or so less paying tax-payers,( the crew of the jets. And aren't those crews members of the U.A.W.? I mean they were working for GM.?!


Posted by: cinniebobinnie | November 21, 2008 3:03 PM | Report abuse

flim and flam = phlegm. this arrogant crowd just doesn't get it and never will. congress needs to require a clean sweep of the executives and directors at the u.s. automakers before it gives or even lends them a dime. it was their arrogance that got them into this mess, it is arrogance that will prevent them from getting out of it. but in the end, hubris brings everybody down. as www.straightrecord.com has argued, congress needs to focus on taking care of those who are about to lose their jobs, bailout or no bailout, and let the companies sink or swim on their own.

Posted by: rapswork | November 21, 2008 3:10 PM | Report abuse

Why do they have ANY corporate jets?

Time to downsize and outsource the CEOs and execs and replace them with Japanese CEOs who work for less than $400,000 a year (total - salary, bonus, options, EVERYTHING).

DOWNSIZE THE LOT!

Posted by: WillSeattle | November 21, 2008 3:11 PM | Report abuse

Quote from Reuters: "There is a perception issue," Wilkinson [GM spokesman] said. In fact, it's a BEHAVIOR issue, one that's been a problem for too many years. The arrogance of these people is amazing: crying broke from their private jets. Gotta love it.

Posted by: kathrowe40 | November 21, 2008 3:12 PM | Report abuse

The time and decision-making capabilities of a CEO losing $5 billion per month might be better spent in line at an airport.

One smart move might be to give all management personnel some paid time off. Then GM would only have to spend salary and benefits, not the vastly larger losses that result from them actually trying to do their jobs.

Posted by: OldUncleTom

-Repeated for truth; where has the board and shareholders been these past few years? Nobody attempts to reign in these $9 million salaries and ridiculous bonuses.

Posted by: theobserver4 | November 21, 2008 3:15 PM | Report abuse

I grew up in Detroit. GM may be trying, but if they'd tried a bit harder a bit sooner, they would have closed two of the five divisions (Olds and Pontiac) decades ago.

We are facing, with the auto industry and with many other sectors, the failure of "leaders" to make tough choices. I'm a blue-collar boy who thinks Walter Reuther was one of the greatest labor leaders in U.S. history, but even he failed at getting the message across that management and labor need to trust in and rely on each other.

Instead, both sides have colluded in a series of compromises -- high wages in return for building overpriced, mediocre cars that people bought because they were plentiful and gas was cheap.

Even with that, I'm sick of the labor-bashing, because no matter how comfy the UAW benefits look, they pale in comparison to the opulence that the fatheaded, paleolithic executives of the Big Three have showered on them by tame directors.

Posted by: NorwegianBlue | November 21, 2008 3:16 PM | Report abuse

There is something disturbing about people who have a false sense of entitlement, particularly an over-the-top, inflated sense of entitlement: such people think that they are better than the rest of us, so they find themselves unable to understand that they have done wrong. But that does not mean that together we do not have a collective responsibility, to show to them the error of their ways, if such is true. In the name of justice... Yes? Because if we don't, then the injustice around us continues to grow, until in protest it explodes in riotous, societal behavior. Inability to bring such people to justice in tyrannical societies is what causes revolutions, and the slaughter of countless and innocent millions, before its all over. Thank God for American Justice. Yours sincerely, Daryl Atamanyk

Posted by: DarylAtamanyk | November 21, 2008 3:22 PM | Report abuse

The incredible arrogance and obvious insensitivity of CEOs asking for 25B AND arriving in three private jets is a story. The interest rate for these loans, and other terms, never seem to make the news. The public IS entitled to more information, and doesn't need the entertainment that is currently being provided by the press.

Posted by: csrainey | November 21, 2008 3:23 PM | Report abuse

Lets not attack President Bush and Republicans like Sen Shelby. They are sincerely defending AIG executive bonus money, or TARP, from liberal fat cat washington democrats who would use it to fund miss managed american auto companies and lazy over paid auto workers. I say, Billions for our brothers in patriotic AIG, they are victims of the liberal democrat mess in Washington, but not one penny for Detroit! And about those moral boosting jaunts to Califonia resorts for massages and Phoenix, shame on you liberals for even discussing! The executives at AIG need these trips to keep their morale up and provide emploment opportunities to the little people in the motel and food service industries!

Posted by: Bush2 | November 21, 2008 3:30 PM | Report abuse

Obviously these are difficult times with lots of frustrations and fears. It’s hard not to express our most base, emotional reaction to every tiny bit if economic news. But maybe we all need to take a deep breath on the issue of GM or any of the Big Three executives using corporate jets. How were they supposed to get to Washington, car pool? Where is the same scrutiny of the Wall Street executives and their travel arrangements? These are the same financial executives who rolled the dice on derivatives, sub prime backed real estates bonds and other remarkably silly financial products.

The truth is there is plenty of blame to go around. This financial mess our country is experiencing had a lot of fathers. So let’s hold off on happily flushing the core of the American manufacturing industry down the drain. If the Big Three falls then their primary suppliers are the next to fall. The American steel industry, the aluminum industry, plastics, rubber, energy, glass, electronic suppliers which one, if any, could you point to and declare it safe. Don’t just think of the lead domino, think of all the dominos. Remember these core industries are also the basis for your defense manufactures. If you let these businesses unravel, they would be time consuming and difficult to rebuild in a national emergency.

The financial industry has been strangely quiet about the proposed bail out of the Big Three. After receiving their little seven hundred million dollars stipend they have got to be aware that losing the Big Three would put one million and a half to two million and a half of their customers on the street. Call them customers or call them ‘life blood’ the already fragile financial markets would only survive in a grossly atrophied and shrunken form.

Yes, the Big Three did a pretty poor job of presenting their case to the legislature. GM, Ford and Chrysler seemed to have no idea how used and abused the American tax payer is feeling right now. But used and abused and out of work would be even worse.

Truthfully Detroit is probably making the best cars they have ever made. Yet there is no question they have been behind the curve on fuel economy and alternative energy use but the answer is not to kill them off by neglect. I think one of the things we may need is a more uniform standard for deciding who is ‘bailed-out’ and under what guidelines bail-out funds are distributed. The rush to write Wall Street a blank check and thumb our nose at blue collar industries smells a little like one of those ‘isms’. Elitism, regionalism, pure politics or some other counter productive caste or class stupidity. Can’t Washington see, in economics everything is connected. You can’t mortally wound manufacturing and expect finance, agriculture and the service industry to keep clicking along. It’s all connected.
Harold619

Posted by: harold619 | November 21, 2008 3:30 PM | Report abuse

To spam6 and others:
I agree that getting rid of the jets, is not enough save gm. But it shows they are above the problems of gm. They can lay off others to keep their lifestyle. I would agree the time saved would be worth something to gm, but these execs have helped create the problem gm is now in. Toyota and Honda are not making record profits, but can weather out the storm ok without any gov's help (japan or us). GM has built its own trap by not by innovating when times are good. The time of exc of US auto and other companies asking for tax dollars is worthless, b.c they got their company is this trouble. If you have a restaurant that is failing b.c of bad food, and have all the best cooking toys. Do you a buy jet for your cook and fly him/her to paris, and give the cook a bonus of million, in hopes they cook better? But still comes back with same bad food. Or hire a chief with a track record of turning so-so restaurants into 5 star restaurant.

Posted by: howvin | November 21, 2008 3:35 PM | Report abuse

One buzzword frequently used by the in the testimony of the CEOs was LEAN. Creating lean operations implies cutting the fat. Certainly cutting down from 7 corporate jets to one or two for emergency situations, could reasonably be considered a way to lean down operations. Thus, I disagree with this being a symbolic issue. To my mind it is both symbolic and substantive.

Posted by: alansteeler | November 21, 2008 3:52 PM | Report abuse

Corporate jets save money? you can't get to your plants? Havent they heard of video conferencing?

I think they should drive from Detroit to DC in a Saturn. Then they'd figure out why they arent selling cars. And if we dont buy their cars, they are just going to take it out of your paycheck! (in the form of a tax deduction...)

Posted by: mikey999 | November 21, 2008 4:03 PM | Report abuse

No corporate executives need private jets.They can fly commercial plane with their security men.This is austrity. we are facing hard times.Reduce travel and use the Video-cnference found in every plant since the 1985. Make use of your onstar satalite for your own communications.Invest your money on quality hybrids that are affordable.This is the future.

Posted by: ades2domanie | November 21, 2008 4:33 PM | Report abuse

divestoclimb wrote:
It actually makes sense to use corporate jets to fly a CEO. His time is incredibly valuable to the company (and thus to the shareholders) so if he has to wait hours in lines at the airport for check in, security, and boarding that's a waste of his time.


The way the companies are losing money they should pay these guys to stay at home. Valuable time,indeed!!!

Posted by: HistoryChaser | November 21, 2008 4:54 PM | Report abuse

Yes, WINOOHNO, but, if you would, brick-to-brick brings the building up. Where would YOU, if you do not mind telling us, start. Any grand ideas?

Posted by: rafael1 | November 21, 2008 4:54 PM | Report abuse

UNLIKE GM, FORD HAS NOT TRIMMED ITS CORPORATE JETS... AND MULALLY WON'T BUDGE FROM HIS $22 MILLION ANNUAL SALARY!!!!!

FORD HANDED OUT HUGE BONUSES AND RAISES TO UPPER MANAGEMENT IN 2008!!!

IN THE MEANTIME, THOUSANDS OF PEOPLE ARE LOSING THEIR JOBS!

This is NOT about helping the masses of people... This is about corporate greed.

Posted by: johnsmith6 | November 21, 2008 5:10 PM | Report abuse

The automakers should not be bailed out, becuase it's obvious that if WE (the taxpayers) were to bail them out, they wouldn't use the money to salvage the jobs of their underpaid employees. They would make like AIG, steal the money and go on vacation.

Well I'm not paying for a General Motors executive vacation. I don't want to see any Detroit residents starve either, but I say let them all go bankrupt! And buy a Toyota!

Posted by: deaniac | November 21, 2008 5:20 PM | Report abuse

I used to fly regularly, but now I can understand corporations and business people who need to fly extensively owning a share of a jet, so they have use when they need it, and can take whatever they want in the way of baggage without the security hassles. Many of my customers do that and in the long run is much more cost and time efficient than owning and maintaining a fleet of private planes. They have the choice of flying commercial if only one person is travelling, or if in a group, all can travel together.
Maybe selling the jets is a drop in the bucket toward what they owe, but it is a start. One knowledgable person said that if they wait until Chapter 11 is filed, there are more options available in restructuring the company, as to renegotiating contracts with exec and employees, and with retirement funds. If no one is buying their autos anyway, there won't be any loss of sales by filing for Chapter 11 while the industry is being restructured. They should not receive any public money, either as a loan or a grant, until a restructuring plan is approved.
Small businesses don't have access to loans without a plan, why should major corporations with a proven track record of mistakes get a handout?

Posted by: mjc1 | November 21, 2008 6:14 PM | Report abuse

Everyone is talking about the CEO and other upper level executives being the problem. It IS a main problem for GM. But look past that, and look to their workers. The vast majority of them, after benefits and everything are added are making over $70/hr. That is ABSURD, and the real reason GM is in the mess they are in. You can't pay hourly workers like that and expect to survive. The UAW needs to get realistic. They need to get on board with major salary/benefit concessions, because if they don't, everyone will lose their job, not just a few of them. the UAW has caused the vast majority of this problem, and it has gone unchecked by GM management for too long. Automate and make things leaner and more productive. It is the only they can compete with companies like Toyota.

Posted by: gatorhistory | November 24, 2008 1:53 PM | Report abuse

It’s disheartening to see how corporate greed has cast a dark shadow on general aviation. Small aircraft are a vital tool for small businesses to expand their organization. In this time of economic crisis, general aviation needs to be recognized for the good it does do like supporting 1.3 million jobs and adding $150 billion into our economy.

Posted by: MattH2 | November 26, 2008 8:42 PM | Report abuse

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