Wall Street bigwigs may have begged poverty earlier this fall but that doesn’t mean that they are going to live like paupers. Corporate jets are still their mode of transportation.
Six of the financial firms that received billions to bail them out still operate jet fleets to carry their executives to events and on personal trips.
The jets are equipped as offices making them time-savers for the bigwigs whose time is big money. Some firms, though, are cutting back, either by selling their jets or leasing them out.
American International Group, Inc. was granted $150 million in bailout money. It would make sense that the company would try to find ways of cutting corners but they have no intentions it appears from cutting their fleet. They own seven planes according to the Federal Aviation Administration. They do claim to have reduced the amount of air time their fleet is used though. Two jets were sold earlier this year and they have canceled plans to obtain four more planes that had been ordered to increase their fleet.
Those planes cost a lot of money. Just one cross-country trip takes about $20,000 out of the wallet. That is not including the costs of maintaining, storing and paying pilots.
Some of the biggest companies are now requiring their employees to fly commercial. Intel is one of those. They do though charter jets for execs when they fly overseas for security reasons.
The revelations about the big banks comes on the heels of Congress berating car companies on their use of company aircraft.
Theun reports that the car companies were shamed by members of Congress when they arrived via private fleets to ask for bailout money:
Couldn’t you all have downgraded to first class or jet-pooled, or something, to get here?” Rep. Gary Ackerman, D-N.Y., asked the CEOs.
An AP investigation founds that Citiflight Inc. is owned by Citigroup. In 2007 alone former CEO Charles Prince’s trips cost the company $170,972. Since being appointed in November 2007 current CEO Vikram Pandit reimburses the company for all personal travel on company planes. Only a few select executives are allowed on the fleet. They have been encouraged to fly commercial though whenever possible.
Morgan Stanley is down a plane since 2005. They now operate two jets. In 2007, CEO John Mack used those two jets for a total of $355,882. He is required for security reasons to use the fleet even for personal trips.
JPMorgan owns four Gulfstream jets. The most current one obtained in 2007 for the sum of $47.5 million dollars. CEO Jamie Dimon is required to fly exclusively on the company’s jets even for personal trips because of security.
The Bank of America owns nine planes. Scott Silvestri, the company’s spokesman has refused to discuss whether there have been any changes on corporate aircraft use after they accepted $25 billion in bailout monies.
Wells Fargo owns one single jet that is only for business purposes. They do not use government funds for corporate travel expenses.
While the SEC requires publicly held companies to disclose executives’ personal use of corporate aircraft there is a gray area on what is actually disclosed.
“If you use the plane for a personal trip but make one business call, should you report it?” David Yermack, a finance professor at the Stern School of Business at New York University said. “Or if you’re playing golf with potential business partners, does a company report that as business or personal?”