Filed under: Government/Legal, GM
Grounded: GM cancels all corporate jet service
General Motors has an early New Years Resolution: to be more fiscally responsible when it comes to corporate travel. With six short, direct sentences (see official press release after the jump), GM has declared that its Corporate Aviation Operations are to be shuttered. It might not seem like a big deal on the surface, but there are apparently numerous contractual agreements that need to be reworked to make this a reality. First, the jets themselves need to be returned, sold or transferred to another operator. Next, after January 1st when The General pulls out, the leased facility and grounds at Detroit Metro Airport will be emptied and GM will work with airport officials to find another tenant.
Although GM suggests that the termination of its Aviation Operations is because its travel volume no longer requires its own dedicated corporate service, we're pretty sure that the ribbing Wagoner and his peers took at the hands of Congress over private jet flight had plenty to do with the decision. Expect the announcement to be part of GM's Congress-bound business plan when it's officially announced this week.
[Source: GM]
PRESS RELEASE:
GM Ceasing Corporate Aviation Operations
DETROIT -- GM today announced that it is ceasing operations at General Motors Air Transportation Services (GMATS) at Detroit Metro Airport.
Due to significant cutbacks over the past months, GM travel volume no longer justifies a dedicated corporate aircraft operation.
GM is currently exploring options for transferring its aircraft to another operator. The company is pursuing sale of four of the aircraft so it can terminate the leases.
GM will shutter the facility at Metro Airport effective January 1, 2009. GM will work with the airport to seek a tenant for the balance of the lease, which expires in 2009.
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Reader Comments (Page 1 of 2)
ack154 2:47PM (12/02/2008)
Anyone have any figures on what exactly this might save the company in expenses per year? Or if they just plan to fly commercially or something?
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jamie 3:23PM (12/02/2008)
You can buy a corporate jet for about $2 million and up, but then you have to hire a pilot, maintenance crew, and airport parking facilities to pay for also (not to mention the price of fuel).
In fractional ownership you have to make the financial commitment of a certain amount of hours and you have to put up an acquisition fee, which can be anywhere from $400,000 to several million dollars. Then you pay a monthly management fee and an operator cost, which you have to pay whether you fly or not.
Normally a trip from Boston to New York for the day would cost between $4,000 and $5,000 in a light jet, which holds four passengers.
It would cost $8,500 to $9,000 for a trip to Miami from Boston. But it wouldn’t be cost effective to have the jet wait for five days on a layover though.
Midsize jets hold a party of up to seven and a cross country trip would cost roughly $20,000. Heavy jets, which hold 10 people, would cost about $30,000 for a cross country trip.
jamie 2:49PM (12/02/2008)
Been looking over the latest sales figures and it looks like GM can no longer afford such luxuries as corporate jets. It's cheaper to contact Hertz rent-a-jet.
TABLE-GM Nov U.S. vehicle sales off 41.3 percent
Dec 2 (Reuters) - Following are General Motors Corp (GM.N: Quote, Profile, Research, Stock Buzz)
U.S. sales of cars and light trucks in November 2008 versus the
same year-earlier month and for the year to date.
Nov 2008 Nov 2007 % Change
All Vehicles 153,404 261,273 -41.3%
Domestic Car 53,642 98,199 -45.4%
Domestic Truck 94,483 155,886 -39.4%
Import Car 5,144 6,878 -25.2%
Import Truck 135 310 -56.5%
Dom+Imp Cars 58,786 105,077 -44.1%
Dom+Imp Trucks 94,618 156,196 -39.4%
Domestic Vehicles 148,125 254,085 -41.7%
Imported Vehicles 5,279 7,188 -26.6%
Yr-to-Date Prev Year % Change
All Vehicles 2,734,789 3,502,774 -22.2%
Domestic Car 1,089,155 1,286,827 -15.7%
Domestic Truck 1,561,529 2,125,279 -26.8%
Import Car 80,820 86,003 -6.4%
Import Truck 3,285 4,665 -29.8%
Dom+Imp Cars 1,169,975 1,372,830 -15.1%
Dom+Imp Trucks 1,564,814 2,129,944 -26.8%
Domestic Vehicles 2,650,684 3,412,106 -22.6%
Imported Vehicles 84,105 90,668 -7.6%
-------------------------------------------------------------
Percent changes are based on the daily sales rate, and
reflect 25 selling days this month vs. 25 in the month last
year, and 282 this year to date vs. 281 last year to date
Excludes Saab sales.
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FFS 8:50AM (12/03/2008)
So it took them a couple of years of losing billions of dollars every semester to figure this out, and the "help" of the press ? how much more crap would there be thats bleeding their capital ? i remember one of the first things that Ghosn did at Nissan was sell some space program they had
happy_penguin 2:52PM (12/02/2008)
That was the right thing to do. Now, as I have said before, Gettlefinger needs to highlight the concessions the union has already made, the concessions which have yet to take effect and offer still more reasonable concessions. Then he must challenge executive management to at least bring their pay in line with their Japanese counterparts and perhaps reduce the ridiculous levels of management so the business model looks more like the Japanese.
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John 4:55PM (12/02/2008)
Getting the UAW people who are making 90% of their base pay while sitting on the couch in the "jobs bank" is a prime example...
jamie 2:55PM (12/02/2008)
Despite the poor results in October, there were a number of bright spots for individual GM car and truck lines, including:
-- Chevrolet Malibu retail sales were up 129 percent. For the month, Malibu total sales reached nearly 11,000 vehicles. For the year, Malibu retail sales have totaled nearly 98,000 cars, up 134 percent from year-ago figures.
-- The all-new Pontiac Vibe recorded a 6 percent total sales increase in October. Almost 42,000 Vibes have been sold this year, up 36 percent from the prior year.
-- Saab retail sales were up 7.4 percent compared with a year ago, driven by the strong retail performance of the 9-3, which was up more than 16 percent.
-- GM sold 44,500 Chevrolet Silverado, GMC Sierra and Chevrolet Avalanche full-size pickups in October, further solidifying its segment leadership.
-- GM hybrids continue to build sales momentum and the company has broken through the 10-thousand vehicle sales mark. A total of 1,496 hybrid vehicles were delivered in the month. Hybrid sales included: 372 hybrid Chevrolet Tahoe, 193 GMC Yukon and 230 Cadillac Escalade 2-mode SUVs delivered. There were 325 Chevrolet Malibu, 22 Saturn Aura and 354 Vue hybrids sold in October. GM has sold 10,549 hybrids so far in 2008.
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happy_penguin 3:00PM (12/02/2008)
Those are good numbers for hard times and they prove a couple of things:
1) GM does build cars that people want.
2) Trucks are still important regardless of gas prices and waning sales.
geo.stewart 2:57PM (12/02/2008)
all that means is it is cheaper for them, at current volume, to use a charter service than to continue its own operations.
Realistically, the three could fund a new corp as a charter service where their needs have priority and rent out the extra availability.
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Concerned Citizen 3:02PM (12/02/2008)
The next story we read will be about the Corporate Jet Service industry asking for a government bailout.
This would have been a great idea before they asked for the bailout. I wonder how long it will take after they get their money to resume the service.
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Scooter 3:25PM (12/02/2008)
Beat me to it
Rich 3:30PM (12/02/2008)
It's called a "House of Cards". You have to take it down from the top.
I'll make it obvious for you: the CEOs are at the top.
Biscuit 3:05PM (12/02/2008)
It's a nice gesture that they're going to look into and correct problems with their corporate travel....after the media brought the problem to their attention.
I just have a hard time believing that corporate travel is the only area they're being fiscally irresponsible. Do we have to rely on the media to find out about these other areas and bring them to light before they'll be willing to review and change accordingly?
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Polly Prissy Pants 3:12PM (12/02/2008)
Let's just hope this is part of a much larger, more expansive cost cutting program and not merely pandering to their sugar daddies in Washington.
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oneviwatara 3:14PM (12/02/2008)
Goodbeye GM!
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AkulaX1 3:49PM (12/02/2008)
S.T.F.U. looser
psarhjinian 3:25PM (12/02/2008)
How much, if you think about Wagoner or Mullaly's salary (and that of their entourage) in terms of dollars per day, will this cost versus one or more jets? If I recall, it's about fifty grand a day for Wagoner and a little more for Mulally. You can bet that a) they aren't travelling alone and b) they aren't going to do the entire eight to ten hours in one day. So, what, a hundred grand or more in salaries, plus expenses (Motel Six? Sure...)
This is showboating on the part of both government and the automakers. I had a lot of respect for Mulally's "I'm fine where I am" comment: it spoke volumes versus Nardelli's token dollar-a-day and Wagoner's spineless prevarication. I'd have respected him even more if he'd flown in again, rather than bow to populist theatre.
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AkulaX1 3:49PM (12/02/2008)
Is Autoblog on junk or something? They get aroused talking about everything that GM does.
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mr.ed 3:54PM (12/02/2008)
These morons screwed themselves with the brainless jet flights to DC. They should all resign immediately and return every bonus they've ever gotten in losing years. Only the most drastic surgery for the three companies, none of which are in the top ten in sales anymore should be acceptable. This includes dropping divisions and overlapping badge-engineered bodies, and to reorganize with fewer levels of management. Of course it'll hurt, including possibly my son's design job. I hope he's not too proud to ask if you want super-size fries with that.
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dave 3:59PM (12/02/2008)
This proves the greed and insanity of Gm and the like. Stock: in the tank/worthless. Quality perception: bottom of the barrel. Record quarterly losses for some time now. GM: "we better start cutting back on the luxuries".
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