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UPDATE 2-GM dumping some jets, Ford may too after outcry
November 22, 2008 / 12:29 AM / in 9 years

UPDATE 2-GM dumping some jets, Ford may too after outcry

(Adds Ford comment on its corporate jets, details from Ford proxy on executive)

By Poornima Gupta

DETROIT, Nov 21 (Reuters) - General Motors Corp(GM.N) will return two of its leased corporate jets, and Ford could sell some of its jets after intense criticism in Washington this week over the travel arrangements of their CEOs, who went there to plead for a U.S. government bailout.

GM CEO Rick Wagoner was in the capital to testify on the company’s dire financial situation, but his testimony was overshadowed by irate lawmakers who blasted him for flying on a private jet to ask for public funds and failing to make personal sacrifices in exchange for federal assistance.

Chief executives from Ford Motor Co (F.N), and Chrysler LLC, who were also there to plead for $25 billion in federal aid, came under fire, too, for flying to Washington in private jets.

GM spokesman Tom Wilkinson said on Friday that GM decided to return the aircraft ecause of a “really aggressive cutback in travel.”

The company, which is in cost-cutting mode, is scrutinizing every trip, he said, but declined to disclose the name of the company from which it leases the planes.

Wilkinson said the decision to return the leased corporate jets was made before this week’s hearings and that the company in September returned two other of the seven jets it had at the beginning of the year.

“There is a perception issue,” Wilkinson said of Wagoner’s travel to Washington on a private jet. “We need to be very sensitive to that going forward.”

He, however, said the company has not decided on what mode of transportation Wagoner would take if had to travel to Washington again.

Wagoner and Ford CEO Alan Mulally are required by their companies to fly by private aircraft for security reasons, according to documents filed with the U.S. Securities and Exchange Commission.

According to Ford’s proxy, Mulally was required to use Ford aircraft for all business and personal air travel in 2007 for security reasons and his family and guests were allowed to accompany him.

The arrangement also covers travel by Mulally’s wife, children and guests on company aircraft for personal reasons without him at company expense upon his request to “ease the burden” of moving to Michigan and away from family in Seattle, according to the proxy.

Ford’s proxy said the only other person allowed to use corporate aircraft for personal reasons is Executive Chairman Bill Ford Jr.

The policy for Chrysler [CBS.UL] CEO Robert Nardelli is not required to be disclosed because the company is private.

Skeptical lawmakers took to task the three CEOs for their luxurious travel arrangements at congressional committee hearings.

“Couldn’t you have downgraded to first class or something, or jet-pooled or something to get here?” Rep. Gary Ackerman, a New York Democrat, asked the executives at a hearing held by the U.S. House Financial Services Committee.

Even Democrats who said they were sympathetic to the automakers’ plight expressed frustration that the executives used private jets while professing ruthless cost-cutting measures.

A Chrysler spokesman said the automaker also leases or charters jets. He, however, declined to comment on whether the company was rethinking the use of private jets for executive travel, saying it was a “private matter.”

Late on Friday, Ford said it was exploring options for saving money on its corporate air travel, including selling the jets it owns. Ford, which has sold four airplanes and reduced its use of corporate aircraft by about half since 2005, owns five planes. Three are used for executive travel and two primarily for marketing teams.

When asked whether the review was a response to the criticism on Capitol Hill earlier this week, Ford spokesman Mark Truby s aid Ford’s “top priority is to continue to make progress in our plan.”

“We don’t want anything to distract us, but we have been loo king at all of our operations to reduce costs and operate more e fficiently,” Truby said.

According to Ford’s proxy, CEO Mulally’s compensation included $752,203 in 2007 for personal use of company aircraft.

About two years ago, the head of Ford’s North American operations, Mark Fields, gave up use of a corporate jet for personal travel to his home in Florida after the arrangement came under criticism at a time when the automaker was losing billions and slashing jobs.

He now flies first class on commercial planes. (Additional reporting by David Bailey, editing by Dave Zimmerman)

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