Citicorp Bank forced to get rid of new Jet

Completely agree with everything you have stated...the aviation industry is suffering from the media bashing, I guess aviation is not a part of the economy.

 

Remember that STUPID luxury tax Billy created back in the 90s that destroyed the US yacht industry ?

I'm sure US aircraft manufacturers are getting nervous about the idiots in power now

Hussein seems to want to completely mess up the US auto industry and now aviation seems to be in his sites too

 

Corporate aviation is often in the crosshairs when things start to go downhill. The reason is because it's impossible to justify corporate jet use (I'm talking on-demand use, not corporate shuttles that fly on a schedule) from a cost perspective. Believe me, I've tried. And the analysis always boils down to trying to put a pricetag on someone's time, which is a bit of a nebulous argument.

Everyone can see the efficiency corporate jets provide, but at the end of the day they are a luxury. An extremely expensive luxury.

 

Guys on Capital Hill talking about waste...unbelieveable....don't even get me started on Barney, talk about a tic turd....anyway, from what I heard Citibank was selling
two of their Falcon 900s for around $27mil a piece and buying the new jet for about $50 mil which means they make $4mil on the deal and are using one efficient jet
instead of two, saves money in the long run and if people want to get anal about it I suppose there is less carbon footprint etc...if this is true, too bad they didn't fight back with this info...I put myself through college working at Citibank and while far from perfect I think the pointing of fingers is ridiculous...Not saying the bank bailout was right or wrong etc, don't want to go down that road in this thread.....

 

From AVweb this morning:

NBAA responded on Wednesday with a letter to President Barack Obama. "While we support the need for wise stewardship of taxpayer dollars, we are deeply concerned about a pattern that seems to be emerging in which policymakers are discouraging and disparaging the use of general aviation for business purposes," wrote NBAA President Ed Bolen. "This has to stop -- policymakers need to understand that general aviation is about jobs.... Instead of discouraging companies from accepting and using business airplanes or any other strategic business asset, policymakers should be looking for ways to increase general aviation manufacturing jobs, promote economic development in communities without commercial airline service, and facilitate productivity and efficiency at companies trying to do more with less." [more] For the full text of Bolen's letter, click here.

The three-engine 7X was certified in April 2007, and according to Dassault, offers up to 40 percent better fuel efficiency than other aircraft in its class. The airplane has a range of almost 6,000 nm and can carry up to 12 passengers.

 

Corporate aircraft are one of the segments where the US is a dominate force. Not only is the US a manufacturer of the aircraft (Boeing, Cessna, Beechcraft/Hawker, Learjet, Gulfstream) we are the supplier of the major high value systems (engines, avionics, etc.) then there are the support industries with maintenance, interiors and paint. This industry, my industry, provides a fine living for a lot of people. The US has the largest, most extensive infrastructure for corporate aircraft in the world. Even the Dassault (France) and Embraer (Brazil) have very large operations in the US to service and outfit their aircraft.

Corporate aviation has historically tried to stay a bit under the radar with the general populace. The masses have a hard time contemplating the benefits of corporate aviation. MikeMac is right that in a straight up number crunch it loses to the airlines. What this does not show is but is really difficult to get across is how the ability to instantly change schedules because of opportunities, ability to compress time getting between multiple remote destinations and very importantly having an environment that allows very confidential discussions to remain confidential.

Here we have a segment that is a large exporter of high value goods and services that is way to easy to be a target for politicians and editorial writers. Now try telling Nancy Pelosi to give up use of the Air Force 757 that she so strenuously argued for; a Gulfstream wasn't good enough. How about the fleet of corporate jets with the Air Force at the disposal of the government people, including congress.

Did anyone else catch the recent announcement that the Air Force is getting ready to procure replacement Air Force Ones?

Jeff

 

The problem is that truth is less important than what people think. People are angry and Corporate Jets are easy targets.

The effect this will have on this industry and on many "luxury" industries may be something that the New, New Thing guys refer to as a "paradigm shift".

A hard rain is falling and it may fall for many years.

I am amazed by the number of emails and calls I receive offering Jet Charter at rates 50-60% of what they once were. Last Sunday the number of NET Jets sitting idle at White Plains was scary.

 

I think the fact that the jet was french built didnt help.

 

What is happening is the corporate flight departments are selling the jets to leasing companies who then lease the jets back. That way the jet is off the books and the company can still use it, costs a little more this way but hey perception is everything.

 

Well Hawker is moving all of their manufacturing to Mexico. They terminated all of their employees in western kansas last week, which will be effective mid februrary. They shot a video of the employee making the plane so they can teach the mexican employees how to build the plane at a later time. Now that I consider classy, that is what is killing our economy. Classless business owners who refuse to support the economy here in the US.

 

Any idea how long? One to two decades?

 

It all depends on whether you can deduct the depreciation or not. If you cannot utilize the depreciation, it is often cheaper to do exactly what you say because the leasing co's can use the depreciation and you get a lower interest rate.

 

It has nothing to do with whether or not it's cheaper-- it's all about perception. "No sir, we do not own any corporate aircraft."

However, facts really don't matter-- or Ford would have kept their corporate shuttle operation, which saved them millions annually. It's all perception.

 

If one wants to hide the aircraft ownership then put the ownership to an entity without any name connection to the real corporation then have it operated by a management company. XYZ company does not own an aircraft and we do not operate an aircraft. If you know enough to know how to ask the correct question to get the accurate answer then you are probably in the corporate aircraft industry anyway.

A fallout may be more business for the Net Jets fractionals or the Marquis type cards where there is no equity.

In some companies the aircraft may be transferred to individuals who then charge the aircraft usage back to the company. In that case the individual will probably make a profit since they can charter at full retail market rate.

It all depends on how bad someone wants to make sure they fly corporate. A contracting economy may be a bigger problem for keeping aircraft than anything else since in bad times it is an easy target for some level of reduction in quantity of aircraft and/or flown hours.

Jeff

 

If they still have the planes and the shareholders know they still have the planes it doesn't really matter who owns them, IMO.

That's been my experience anyway.

 

It'll usually be disclosed in the footnotes of the financial statements that you are using a private jet. The dollars involved are usually too big to hide unless you're a really big company with billions in revenue.

NetJets has equity. The cards don't, but if you own a NetJets share, you get a title and equity ownership in an aircraft. You might never actually fly on that aircraft, but you own part of it.

 

Not that long but not as short as we all hope. I think things will feel better in two years but it will take five to get back on track.

 

From a thread I created elsewhere on the same topic...

Someone posted the following:

"The auto exec jets and this one are far less expensive to operate than pelosi's gov't sponsored Boeing 767 for her trips back to SF. The cost for her jet is $20K per hour for about 7 hours each way...cost to taxpayers for pelosi's air taxi per round trip: 20,000 x 14hrs = $280,000 for every trip Pelosi makes to get her botox injection and haircut/dye in San Fransico. Hypocrisy? You Betcha (sorry for the Palin jab, lol)

edit: I wonder how many trips she takes to go home ? Every two weeks maybe ? so I will be generous, we will say pelosi makes 20 round trips per year. This POS liberal costs the taxpayers for her jet alone: 280,000 x 20 = $5,600,000 per year. Mad yet ???"

CW

 

Not if they charter, and potentially not if they structure a lease correctly.

 

Correction on the model Boeing - 757 not 767. And she fought mightily for the Boeing as the Gulfstream wasn't good enough for her when she became speaker of the house.

Jeff

 

Yep, I remember that. Wasn't she saying that the G-IVSP (whatever the govt calls it) wasn't big enough for her entourage? 14 seats isn't enough? Wow.

 

Maybe the forward entry door and entryway weren't b ig enough able to fit her ego through!

Jeff