UPDATE 1-Elan cuts 10 pct of workforce, keeps private jet

* Most job losses at San Francisco R&D facility

* About half are scientists

* Elan continues to use private jet (Updates with details of jet, fund manager comment)

BOSTON, Jan. 25 (Reuters) - Irish drugmaker Elan Corp ELN.IELN.N has quietly laid off 130 people, or about 10 percent of its workforce.

The layoffs mostly occurred at the company’s research and development site in San Francisco. About 50 percent of the cuts were of scientists.

Elan did not publicly announce the news but confirmed it in response to a query from Reuters.

The board was notified of the cuts after a handful of executives flew to New York from San Francisco by private jet, according to a source familiar with the situation.

Elan’s use of private jets has been a sore point with investors for several years.

In 2009, the company told Bloomberg News it had not renewed its contract with NetJets Inc, the private jet company owned by Warren Buffett, though it said that that could change “if the scales balanced in terms of less overnights, associated expenses and executive time.”

Elan, which makes the multiple sclerosis drug Tysabri in partnership with Biogen Idec Inc BIIB.O declined to comment on its current corporate jet contracts, but records with the Federal Aviation Administration show the company is part owner of a Gulfstream G-400 jet.

A G-400 is one of the biggest in NetJets’ fleet, according to the company’s website. It seats 13 passengers and can fly 4,100 nautical miles, or nonstop from Chicago to Berlin, without refueling.

According to one hedge fund manager who owns a share in a NetJets plane, and also holds shares of Elan, the cost of operating a G-400 is between $10,000 and $11,000 an hour. That includes capital outlay, maintenance costs, and hourly fees, he said.

On that basis, the all-in round-trip flight from San Francisco to New York would have cost about $100,000.

“That works out to about one scientist per round-trip,” he said.

Elan, which reported a loss of $258.7 million for the first nine months of 2010, has seen its shares fall 80 percent to $7.03 since July 2008.

Investors have called for a shake-up of the board, and for Chief Executive Kelly Martin to resign. He has said he will quit as CEO in 2012 and retire from all duties at the company a year later.

Elan has in the past sought to defend its private jet use.

Kyran McLaughlin, the company’s outgoing chairman, previously told investors that the use of private jets represented only 20 percent of total travel costs and less than 1 percent of operating expenses.

Elan said in its email that its job cuts were part of an effort to remain efficient.

“In a highly competitive market where resources are limited, we have a responsibility to continually evaluate our programs so that we remain efficient and focused on the best opportunities for patients and investors,” the company said in an email.

It said it has a “multiyear objective to become a profitable, sustainable and self-funding biotechnology company by the end of 2011 -- a goal we are well on target to achieve.”

Reporting by Toni Clarke; Editing by Steve Orlofsky