http://www.nakedcapitalism.com/2009/01/your-tax-dollars-at-work-citi-buys-new.html Even if there were a rationale for Citi buying a corporate jet now (which I cannot fathom, given their horrid financial condiiton), why buy new? There are no doubt plenty of used jets for sale right now. This incident illustrates the degree to which a corporate/financial elite has developed in the US. Top executives feel they have a right to fly on private jets. If the company is, say, a Wal-Mart, with a lot of operations in remote areas where access by commercial flights is indirect, private jets make sense (Sam Walton famously flew his own plane to visit stores). But for Citigroup, where the vast majority of their operations are in major, well served financial centers, it's hard to justify (the usual rationale is that the top brass can discuss business on a private plane, while they cannot do so on commercial flights. Funny how that was seldom seen as a justification in the early 1980s, when executives were for the most part content to fly first class). From the New York Post (hat tip reader Marshall): Beleaguered Citigroup is upgrading its mile-high club with a brand-new $50 million corporate jet - only this time, it's the taxpayers who are getting screwed. Even though the bank's stock is as cheap as a gallon of gas and it's burning through a $45 billion taxpayer-funded rescue, the airhead execs pushed through the purchase of a new Dassault Falcon 7X, according to a source familiar with the deal. The French-made luxury jet seats up to 12 in a plush interior with leather seats, sofas and a customizable entertainment center, according to Dassault's sales literature. It can cruise 5,950 miles before refueling and has a top speed of 559 mph. There are just nine of these top-of-the-line models in the United States, with Dassault's European factory churning out three to four 7Xs a month. Citigroup decided to get its new wings two years ago, when the financial-services giant was flush with cash, but it still intends to take possession of the jet this year despite its current woes, the source said.... It's not uncommon for large companies to pay a deposit on a new plane then cancel the order before delivery, according to a source in the corporate aviation business. Citigroup execs are also quietly trying to unload two of their older Dassault 900EXs. Those jets, nearly 10 years old, are worth an estimated $27 million each. They were still listed for sale yesterday on the Web site of Citigroup's aviation broker, Aviation Professionals.
"a corporate/financial elite has developed in the US" It's called the 'Aristocracy' - something gotten rid of in Europe (for a reason) a few hundred years ago is currently being instigated in the US.
Marie Antoinette summed it up best..."let the poor fucking taxpayers eat cake and kiss my fat ass"...or something like that. They chopped her head off. There is a message here somewhere, I just cant figure out what.
I find it amusing that every blogger out there just somehow happen to be an expert when corporate jets are necessary and when they are not. The truth is nobody knows if this or that company is justified to own a jet, the reason people jump at this thing is because jets are a symbol of wealth and jealosy 'rich bashing' takes over the populists(which includes laissez faire types interestinly enough)
I do not beleive that there is a single employee of Citi who is so important to their multi billion loss making strategy that he needs to fly on a brand new jet as opposed to their older model. The bad publicity and poor public perception of them will cost them more than 50 big ones.
It's actually not that difficult to figure out if a company needs a plane. You just have to pull up the numbers: how many trips, average trip range, how many ppl, type of business, frequency, etc. A good aircraft broker will crunch the numbers and tell you if you need a plane and what type. There's also fractional ownership. I'm not defending Citi, but I'd love to see the reasons for this purchase. The only one I can see it is the loss of the deposit. Also, WRT used/new: used jets can be quite expensive to maintain, especially if the engines need to be overhauled.
I figure less than 1% of the critics do some kind of math, yet they speak as if they wrote a paper on risk adjusted cost savings from corporate jets
Daal, Im not saying they did not need one...maybe they did. What Im saying is that any dollar savings made has been wasted on a poor PR move.
How about the $400 million spent on naming rights to the new stadium in New York? Citi Field (New York Mets).