GM Corp. Planes Down To Three From Seven

Posted by: David Kiley on November 21, 2008

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General Motors today said it reduced its fleet of corporate jets from five to three. The struggling automaker drew fire this week from Congress when the CEOs of all three U.S. automakers flew in private jets to Washington DC to ask for tax-payer funded loans to help them avoid bankruptcy. GM started the year with seven jets.

GM spokesman Tom Wilkinson said the reduction in the fleet was planned before this week’s Congressional hearings. Several members of Congress chided the CEOs for not sacrificing fat-cat perqs at a time when their companies are losing big money and are asking the public to help bail them out.

Wilkinson said GM’s corporate by-laws require the CEO and several members of the company’s top management to fly privately for “security reasons.” But that argument may not hold water for very much longer. Wilkinson said the company has now cut four leased planes from the fleet because of a reduction in white collar headcount, and a dramatic cutback in travel.

Bill de Decker, president of Conklin & de Decker, an aviation information company, projected that the cost of operating a corporate jet, such as the widely used Gulfstream 5, is about $3,850 per hour, mostly for jet fuel but also crew expenses, airport fees and other expenses. So the round trip to Washington DC comes to about $15,000.
The automakers were turned down for a $25 billion loan this week.

They have to give Congress a detailed report by Dec. 2 outlining how they will spend the money, how much they need, and how it will keep them viable so that tax-payers can be expected to get paid back.

In light of the negative attention on private planes this week, it is likely that the CEOs will find another way to get to Washington for the Dec. 8 hearings that will determine whether or not they get the loans.

It is a lock that members of Congress are going to be looking for evidence in the report and in the hearings that the companies and their employees are willing to make major sacrifices while the automakers are losing big money and being kept afloat by the tax payers.

That will put Ford CEO Alan Mulally on the hot-seat as well. He not only gets to use Ford’s corporate plane to visit his family home in Washington State, but his wife also gets to use it to go back and forth between the Seattle area and Dearborn, MI where Mulally works.

Reader Comments

Mike

November 21, 2008 3:10 PM

A chartered bus would work just fine, and cost a lot less. It's what they deserve for driving their companies into the ground.

Hey, and then they could still have a security detail on board for those machine gun moments they all experience in suburban America.

Jerry

November 21, 2008 3:13 PM

Poor Poor Mr Executives

dennis dabney

November 21, 2008 3:16 PM

This a another example of the rich having no clue what it takes to cut cost.maybe they should get rid of all there jets anf take maybe the bus,amtrak os coach flight.

Vud

November 21, 2008 3:20 PM

HA! Those Auto-exec's sure are sharp! Just beat them over the head a few times and they get it.

Zachary

November 21, 2008 3:24 PM

Cost for round trip about $15,000

spencer

November 21, 2008 3:27 PM

As someone who has lost a lot I mean A LOT of money on Ford tell the ***** to walk. Or better yet tell Mulully to move his family to Detroit or see your family on vacation on your dime. They run a public company like the government runs our country. No wonder both are money loser. I mean LOSERS

Republicans

November 21, 2008 3:27 PM

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!

L Wilson

November 21, 2008 3:29 PM

Corporate CEO compensation needs a significant restructuring to bring their pay more closely in line with the true performance of the company. Far too often the financial incentive structure compensates them more for "perceived" results than "actual" long-term results. The system is and has been flawed for a long time.

Annie

November 21, 2008 3:31 PM

Why can't they just fly coach on United?
They have not sacrificed much in my opinion.

Gary Levin

November 21, 2008 3:33 PM

Why do they need private planes? They should not have urgent needs to get anywhere any quicker than I do if they have good management in place. Another example of things like $600 toilets and $500 haircuts.

jon

November 21, 2008 3:34 PM

pfft...'security reasons'. These guys suck.

Chris

November 21, 2008 3:39 PM

Greyhound

XFN Reporter

November 21, 2008 3:43 PM

Why should my tax dollars go towards bailing out a company or companies that saw it fit to pay their brass millions and millions per annum for salary and bonus while their employees endured years of plant shutdowns, unemployment, devastated communities?

How many people lost their homes when GM shut down plants to move the labor over the border for cheaper costs and increased revenues so their big wigs could pad their pockets?

Let them file and die away. Let the Japanese, who build better products anyway, move in. Uncle Sam will make sure we don't our country away so don't worry about that. The Big Three are now reaping what they have sowed for so long. They deserve to lose it all in the name of the people that suffered at their hands over the decades so that they could live high off the hog.

Squeezebox

November 21, 2008 3:45 PM

Hold an emergency meeting of the board, change the bylaws, and sell off ALL of the jets.

T Bernards

November 21, 2008 3:58 PM

$15k is not much, if they had 4-5 employees supporting their trip and helping them to work on the plane. It costs that much on commercial airlines.

What they should do is drive cars they manufacture, so they know how bad their products are.

Scorpio

November 21, 2008 3:58 PM

Most of these CEOs are DRIVERS not LEADERS!!
Give them a smoothly running prfit making company and they will happily enjoy the ride...The day there is problom..these morons are useless..coz they dont know to fix it!!

True leaders are only those who built the company from scartch and so know how to fix things when they break!! like Steve Jbs, Bill Gates..
Or the people who start at lower lever and rise through each step..they are aware of the system!!

But in recent past these busienss schools have propogated this concept of "LEADERSSHIp"...which convince you to pay huge muney and become leader....overnight!!

CLAUDE LEWIS

November 21, 2008 4:05 PM

THE IDEA OF HAVING A CORPORATE JET WENT OUT WITH SMOKING CIGARETTES ON AIRPLANES WAKE UP CAR COMPANIES THE WORLD OF REALITY IS HERE

B Sama

November 21, 2008 4:06 PM

I think Congress needs to practice what they preach.These F*ckers are the ones that have driven the banks and the auto industry to the brink.I'm just saying......

Mike from NYC

November 21, 2008 4:14 PM

All bonuses for everyone who partakes in the Federal 'pig trough' a/k/a the 'Bailout' should have their bonuses put in escrow accounts for 3 years, and if, after that time their wise investment strategy has paid off, then the bonus will be paid. And GM needs 3 jets for exactly what purpose? Are directors of GM too valuable to 'risk' public transportation? Is Lutz too valuable? Wagoner? Puleeese, they are all fungible just like the rest of us. If there is any one group to blame for the mess Detroit is in it is the executives who signed off on all the big decisions which led to their demise.

Kevin L

November 21, 2008 4:16 PM

This crisis is just a test of how well the American automakers run business to compete our competitors.
I remember 10 years ago when I was in Shanghai, I heard that the CEO of GM in Shanghai rents an apartment for $20,000.00 per month while the average rental was about $300.00 time. I was shocked.

mf

November 21, 2008 4:32 PM

if you really want these CEOs to feel the pain of main street, shuttle them around the country in a couple chevy aveos.

JT

November 21, 2008 4:34 PM

Those execs seem out of touch with reality and it shows. Begging for public funds and at the same time doing what they do - spend excessively. I doubt that any plan will be viable for the 2 out of 3 to survive.

Aren't we in capitalism or socialist society now. The 3 auto execs need to suffer for them to feel hungry enough to change their companies 100% around.

Michael S

November 21, 2008 5:01 PM

GM makes a Hybrid Tahoe SUV. Lots of room for the big boys from the Big3 to car pool down to DC on 12/8 and make a positive statement of corporate responsibility. Who cares that the Hybrid Tahoe only gets 22mpg on the highway!? With three passengers on board that's 66 People Miles Per Gallon which is better than a single person in a Prius.

IceMan

November 21, 2008 5:02 PM

What no-one is mentioning is the good possibility of a deflationary economy.
In this scenario there can be no waste ... zero, nada, zip! With economic pressures forcing prices constantly lower, businesses will have to trim all the BS in order to survive. Sorry Mr. CEO Executive types ... your days of living like a king are over ... you don't know it yet, but you are about to become extinct ... just like the dinosaurs. All I can say is ... good riddance! What utterly useless people you are ...

SJBE

November 21, 2008 5:09 PM

I love the outrage without comprehension. CEO flys coach and wastes two entire days traveling to and from Washington along with his staff. Two days which could be spent fixing the company if they weren't flying coach. Or they can use a jet which the company purchased/leases to allow them to travel straight to destinations (normally factories in fairly remote areas with small local airports and no direct travel) and get more done. If you are a shareholder and want your CEO to waste time flying coach you are an idiot. Even WALMART who are renowned for being cheap has a fleet of private jets because it lets them do a better job managing a far flung business empire.

Then they get criticized by Congressmen who prefer to waste time grandstanding while thousands of people lose their jobs. Want GM to go bankrupt? Fine. Just understand that if GM goes under, so will parts suppliers which in turn will probably take Ford and Chrysler down too because they use the same suppliers. Tens of thousands of additional jobs will be lost right at a time when the economy can least afford it. Sounds like a brilliant plan to me.

Was GM stupid? Probably. But I can't justify bailing out banks who knowingly made bad loans to people who can't afford it (that's where the SUB in SUB-PRIME comes in) when those same banks are necessary for the loans for people to buy cars. If we bail out a single hedge fund - which produce nothing of value whatsoever - then there is no credible reason not to throw a bone towards the auto sector.

Claims that Ford and GM were making cars people don't want is absurd. Until this year GM sold more cars than anyone else. If no one wanted them who was buying? Not as if anyone held a gun to our heads and said we have to buy GM or Ford. WE bought all those SUVs and paid a premium to do it. WE are responsible for $4.00 a gallon gas because WE are responsible for Ford and GM selling us EXACTLY what we wanted.

Aviation Author

November 21, 2008 5:14 PM

If you just want to spread hate and anger about watching the stock market crash and your personal wealth disappearing over the course of a year, go for it, but don't blame the business jet. If you really want to understand why a major company would use a business jet instead of riding cattle class, visit http://web.nbaa.org/public/news/media-response.php

Executives I work with rarely get to enjoy "fat cat" status. Typically, they are holding 2-3 meetings while enroute to their destination, have the meeting(s) at the destination, and have several others while enroute to the next meeting. Once they get home, if they get home that day, they may get an hour or less with the family before it is back to the 5-10 meetings that evening. A 40 hour workweek is a dream, usually they are working 100+ hours per week and don't get a set weekend. If they get to the point of being responsible for 30 million plus jobs, every so often, Congress parades them in front of the cameras for "hearings" and "committee actions" so that Congress looks like they are "doing something" to end whatever ills their constituents are complaining about that week instead of working to solve the problem (naked short selling continues with 6% money down for speculation).

While there are certainly "fat cats" out there that we would all love to string up at high noon, having and using a business jet is not the test for that status.

Signed,
An Aviation Author who's lost 75% of his retirement savings

Prius Driver

November 21, 2008 5:20 PM

The make CARS right? They should drive.

Matt

November 21, 2008 5:31 PM

Let me put this out there, if you support the big companies and all there about maybe you and everyone else who supports them should be the ones that foot the bill for these absolute morons who just don't seem to get the big f***** picture of what is happening to the United States, every company that is asking for money should be giving up all there bonuses, planes, cars, and junkets, I feel what AIG did was just a kick in the face, then they do it again, first time shame on you, second time we should have cut them loose, I feel that if the GM, Ford, and Chrysler get the money they are asking for they will do the same thing, I am all for helping out, I feel they need to start helping themselves first before we dive headfirst into something that is probably only going to be a bandaid on exsanguination that cannot be stopped.

Tom

November 21, 2008 5:38 PM

While a visible symbol, that's all it is. GM, Ford and Chrysler executives want to continue to do what they've been doing - even after decades of struggling with the same business model - that's NOT WORKING! Nancy Pelosi is right: show me the new business model, and you might get some cash. GM pays employees an average of $71 per hour in wages and benefits: Toyota pays $47 (still high!). A GM plant worker can make more than $100,000 a year hanging fenders on a car. And GM has so many 'brands' and models that it steals sales from itself with redundancy rife within the ranks.

I understand that the UAW president was at the same hearings, dolefully telling Congress how workers would be hurt by a collapse. Those union contracts add between $3,000 and $5,000 to the cost of a vehicle over what the imports cost their companies, and prevent any meaningful restructuring like discontinuing a brand. The union told GM that they'd fight that tactic after Oldsmobile was discontinued, and they got assurances built into their contract in '06 to keep that from happening.

The solution would be Chapter 11. Under that protection, the automakers could break the contract deadlocks and do some serious restructuring - just as the airlines did. It's gonna hurt the worker, but they WILL survive and come out better.

Scott

November 21, 2008 5:56 PM

I know for all of us "time is money. But, wouldn't it be a great advertisement for a Ford exec. to say we drove down to Washington in a Ford Crown Victoria.

M Castelli

November 21, 2008 6:17 PM

I always wonderd what the neck tie's these three piecers wear are all about -it cuts the circultion to their brains !

Barb

November 21, 2008 6:19 PM

I guess the problem with the auto companies is they aren't wanting the money to buy other companies out like the financial bail-outs. It is just those that need the money to stay in business and or stay in their homes that are out of luck. We are just supposed to do without so we can help finance buy-outs.

Ogel

November 21, 2008 6:34 PM

Not to seem a little hard on the executives, but the Saudi princes don’t travel as luxurious as theses people. Only in America can idiots fly to a meeting on private jets to ask for money because they are broke. If they receive money from their fellow citizens, as they are clearly destitute and almost homeless, why would anyone trust them to spend the money wisely as they ran their own companies into the ground. Would they as leaders of their companies give a loan or bonus to the assembly line worker that screwed up as bad as they did. I would rather think that they would fire the worker for being incompetent. Of course they will also say that things happened that they could not control. I would assume that they where paid millions per year not counting options and perks just to be as forward looking as a second grader. It comes down to GREED, and if nothing else in this country, we have by far the most greediest, non caring, egotistical, ceo’s and exec. in the world. They lay off thousands of workers, yet they cant fly 1st class on an airline let alone coach to save money. They can be thankful though as our equally corrupt government will give them the money as they sleep in the same bed with the exec’s and they also don’t want their stock portfolios to go down. Why else all the bailouts. As the congressman and senators say “we did this to help our country” not because we have portfolios of stock, not because they contribute to our campaigns , but to help the common every day American. PS voting to save your own stock portfolios is not a conflict of interest.

Evan

November 21, 2008 6:38 PM

$15,000, while expensive, is a lot less than the value of the CEO's time. Do you really think they sit on the plane and do nothing? These CEOs work 12-16 hour days about 6 days per week (most weeks). These planes save a ton of time (if you've flown, you know the time wasted at the airport and on the plane). This allows them to get detailed meetings, phone calls, and real work done. I'm positive the cost is not as bad as it would be if the CEOs flew regular commercial flights. Plus, most CEOs stop at 3 or 4 places in one day. You can't do that flying commercial airlines. However, I believe the planes should ONLY be used for official company business NOT trips to homes in other states.

Sherry

November 21, 2008 6:40 PM

Ohhh brother...Maybe they should have thought about this BEFORE begging.We need to get on about the business of becoming energy independent and using alternative sources of fuel. The high cost of gas this past year seriously damaged our economy and society. While we are doing the happy dance around the lower prices at the pumps OPEC is planning further production cuts to drive prices back up. We have the knowledge, we have the technology, what America lacks is a plan. Jeff Wilson has a new book out that is beyond awesome. The Manhattan Project of 2009 Energy Independence NOW. He walks you through every aspect of oil, what it is used for besides gas, our depletion of it. The worlds increased need ie 3rd world countries becoming more modernized and consuming more. He explains EVERY alternative energy source and what role they can play to replace oil. His research is backed up with hard data and even includes a time frame and proposed legislative agendas to wean America off oil.

Fensterlips

November 21, 2008 6:40 PM

I think it's so symptomatic of business thought / insight / acumen that CEO's that are very overpaid - especially for the performance they have turned in - show up in Washington oblivious to the most obvious necessary steps needed to make an effective request.
That it doesn't even occur to them to show up with a rigorous business plan and a list of the steps they will take to tighten their belt before even dreaming of a request for money speaks volumes of their inability.
Just read the Iaccoca playbook. You don't even need a great imagination (though it wouldn't hurt).
The true audacity is that all they brought was the implied threat of millions of jobs to be lost if we don't respond favorably to the shakedown.
It didn't even occur to them to forsake the corporate jets, the free cars, the stratospheric salaries. Somehow they are all completely entitled no matter the performance, no matter the results.
I think they are emblematic of so much wrong in corporate America today.
Until we can clean up boards with handpicked members, the lack of accountability, the lack of CEO pay for performance, the wide wide gulf from top to bottom pay, and the feasts of perks we will continue to see sub-optimum performance everywhere.
How can we change this? How can we demand accountability? Don't we have a pivotal moment here? Can't we turn this pain into a demand for growth?

c collings

November 21, 2008 7:01 PM

talk about the pot calling the kettle black! As disgusted as I am with the Execs of the big three, the visual of the "high and mighty" talking down to them (as if they could save a dime) is enough to make me barf!

let's call it for what it is and tell them ALL to take a walk

Who needs a Plan?

November 21, 2008 7:13 PM

Why wouldn't these execs have a plan already? How did they come to the estimate for how much money they needed? Just guess work?

Who makes requests like this without detailed projections of what needs to be completed in order to stay in business? The fact that they didn't immediately turn around and present "The Plan" is seriously scary!

jon

November 22, 2008 1:28 AM

That's actually a cheap estimate in my opinion. If they were to all fly first class it would have been a lot more. GM actually owns their G5's and have their own hangar, pilots, flight crew, and mechanics. So for them to fly to Washington it would have been cheaper for them, versus chartering a flight. The planes are not the problem with the big three.

James Raider

November 22, 2008 1:54 AM

A BAILOUT PLAN

Here is the type of plan Congress should consider >

http://pacificgatepost.blogspot.com/2008/11/solution-for-detroit-gm-friends.html

Trying something outside the box like this, is the only way to save the U.S. Auto Industry.

There is much creative talent hidden inside the U.S. Big 3 that has been smothered by mismanagement and the UAW. ... and they actually "make" something, .... unlike Wall Street. Detroit deserves saving.

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