Automakers got Grilled
Today on Capital Hill the Big Three Automakers were grilled about their business practices. Apparently the Senator from Massachusetts heard my trimming the fat suggestion at the end of my last Big Three Post. But in the latest round of American Companies needing government funds the Auto Executives were grilled by a Senator from MA about their corporate jet usage. Read about it on ABC News.
Big Three CEOs Flew Private Jets to Plead for Public Funds
Auto Industry Close to Bankruptcy But They Get Pricey Perk
By BRIAN ROSS and JOSEPH RHEE
The CEOs of the big three automakers flew to the nation’s capital yesterday in private luxurious jets to make their case to Washington that the auto industry is running out of cash and needs $25 billion in taxpayer money to avoid bankruptcy.
The CEOs of GM, Ford and Chrysler may have told Congress that they will likely go out of business without a bailout yet that has not stopped them from traveling in style, not even First Class is good enough.
All three CEOs – Rick Wagoner of GM, Alan Mulally of Ford, and Robert Nardelli of Chrysler – exercised their perks Tuesday by flying in corporate jets to DC. Wagoner flew in GM’s $36 million luxury aircraft to tell members of Congress that the company is burning through cash, asking for $10-12 billion for GM alone.
“We want to continue the vital role we’ve played for Americans for the past 100 years, but we can’t do it alone,” Wagoner told the Senate Banking Committee.
While Wagoner testified, his G4 private jet was parked at Dulles airport. It is just one of a fleet of luxury jets owned by GM that continues to ferry executives around the world despite the company’s dire financial straits.
“This is a slap in the face of taxpayers,” said Tom Schatz, President of Citizens Against Government Waste. “To come to Washington on a corporate jet, and asking for a hand out is outrageous.”
Wagoner’s private jet trip to Washington cost his ailing company an estimated $20,000 roundtrip. In comparison, seats on Northwest Airlines flight 2364 from Detroit to Washington were going online for $288 coach and $837 first class.
After the hearing, Wagoner declined to answer questions about his travel.
Ford CEO Mulally’s corporate jet is a perk included for both he and his wife as part of his employment contract along with a $28 million salary last year. Mulally actually lives in Seattle, not Detroit. The company jet takes him home and back on weekends.
Plants Closed, Company Jets Stay
Mulally made his case Tuesday before the committee saying he’s cut expenses, laid-off workers and closed 17 plants.
“We have also reduced our work force by 51,000 employees in the past three years,” Mulally said.
Yet Ford continues to operate a fleet of eight private jets for its executives. Just Tuesday, one jet was taking Ford brass to Los Angeles, another on a trip to Nebraska, and of course Mulally needed to fly to Washington to testify. He did not address questions following the hearing.
“Now’s not the time to do that sort of thing,” said John McElroy of the television program “Autoline Detroit.”
“Now’s the time to be humble and show that you’re sharing equally in the sacrifice,” McElroy said.
GM and Ford say that it is a corporate decision to have their CEOs fly on private jets and that is non-negotiable, even as the companies say they are running out of cash.
Private jet travel is perhaps the greatest perk of all for CEOs, who say it allows them to travel more efficiently and safely, even in a recession.
AIG, despite the $150 billion bailout, still operates a fleet of corporate jets. The company says it has put two out of its seven jets up for sale and is reviewing the use of others. Though there are no such plans by GM or Ford.
“It appears that the senior management of the automakers simply don’t get it,” said Schatz.