Lifting the Lid: In face of criticism, companies deplane

NEW YORK (Reuters) - Wary of the bailout-era backlash against company airplanes, more business executives are scrutinizing their use and distancing themselves from the aircraft they once flaunted as proof of corporate power.

Executives in many sectors, some of whose companies are receiving massive funds from the government to stay afloat in a deepening recession, are taking steps to purge their image of excessive corporate privilege.

Although companies have defended corporate planes on business grounds, they have become such potent symbols that even economy consumer airline Jetblue Airways Corp (JBLU.O) is running an advertising campaign that welcomes aboard big cheeses, bigwigs and head honchos -- all those who might need to ditch the private jet.

Stuart Miller, chief executive of No. 2 U.S. homebuilder Lennar Corp (LEN.N), has taken the step of volunteering to pay not only for his personal use of the plane his company leases but for his business use of that plane as well. In addition, Miller pays for any Lennar employee's business use of the plane, according to a Securities and Exchange Commission filing.

Lennar declined to elaborate on the filing.

"That's a first," said Charles Elson, of the corporate governance center at the University of Delaware. "I can see why he's doing what he's doing," given the sector's poor performance over the past few years.

Lennar would likely struggle to unload the lease, Elson said: "The value of leases is probably nothing these days because there's so little demand for those planes. They're probably stuck with it."

Centex Corp CTX.N, the third-largest U.S. homebuilder, sold its plane in 2007. All company employees fly commercial for business travel, which the company has tried to curb overall, spokesman Eric Bruner said.

Homebuilders are mired in a protracted downturn, rooted in the rampant risky lending practices of the boom years and exacerbated by the more recent recession. The Dow Jones U.S. Home Construction Index .DJUSHB is about 86 percent off its July 2005 lifetime high, which is when Lennar's shares also peaked. They are down about 89 percent at $7.50.

Meanwhile, the bankers and automakers who first felt the heat are doing more damage control around the issue, which erupted into headlines in November when a congressman asked auto industry executives why they did not at least "jet-pool" down to hearings.

In the second half of 2008, General Motors Corp GM.N returned four of its leased corporate jets. Spokesman Tom Wilkinson said the company needed to realize how sensitive an issue corporate jets had become, but also said GM decided to return the jets before the hearings.

Now Ford Motor Co (F.N), which as late as 2007 cited security reasons for requiring its chief executive to use company aircraft for business and personal travel, is looking into selling its airplanes, spokesman Mark Truby said.

Last week Ken Lewis, CEO of Bank of America Corp (BAC.N), quipped that he was "going commercial," as the company was no longer allowing personal use of its aircraft.

Yet the flight from jets is not universal.

Big business typically justifies corporate jets by invoking the bottom line, saying they are essential to ensure quick travel to meetings, said Mark Poerio, a partner at law firm Paul Hastings in Washington D.C. who advises companies on compensation.

American Express (AXP.N), for example, also requires its CEO to fly on its planes for security reasons. It will maintain a fleet of three planes, cutting one as part of a broader drive to reduce expenses, said spokeswoman Joanna Lambert.

The Coca Cola Co (KO.N) cites efficiency as well as safety in its 2008 proxy filing discussion of business aircraft. "The Company-owned aircraft allow employees to be far more productive than if commercial fights were utilized," the company said in the filing.

Even Poerio, who said he is generally advising clients to avoid controversial perks as company planes, said firms could still have valid reasons to own them: headquarters in a remote location, the expense of retail airfare and the cost of travel time.

(Reporting by Helen Chernikoff, David Bailey, Poornima Gupta, Jon Stempel, editing by Matthew Lewis)