Judge Grants GM Approval to Cancel Jet Leases
Chrysler Recently Terminated Its Aircraft Deals; Ford Seeks to Sell Its Planes
Friday, June 19, 2009
NEW YORK, June 17 --
General Motors executives will now fly commercial.
In a move that reflects the leaner company GM is seeking to become, the automaker on Thursday sought approval from a federal bankruptcy judge to terminate leases for all seven of its corporate aircraft, plus a hangar at a Detroit airport. Facing no objections, Judge Robert Gerber granted the request during a hearing in a Lower Manhattan courtroom that lasted less than 10 minutes.
"The new GM will have no jets -- we're all flying Delta," GM spokesman Tom Wilkinson said in an interview.
Then-GM chief executive G. Richard Wagoner Jr. had been assailed by lawmakers at a hearing in November when he and other auto executives flew to Washington on private jets to ask for government funds. In March, Wagoner was pushed out by the Obama administration, which has pumped billions of dollars into GM and Chrysler.
In a recent court filing, GM said it was exercising "sound business judgment" in seeking to end the contracts. "The leases are not necessary or valuable to [GM's] business activities," the automaker said in the filing.
Corporate America has long argued that using private jets is a safety precaution and a way to maximize busy executives' time by allowing them to avoid delays at crowded airports.
Asked if it was in the best interest of shareholders for GM executives to spend time grounded at commercial airports, Wilkinson said: "It's necessary at this point. Flying on private jets is not tenable . . . It was made very clear that the use of private jets was a political hot potato."
Chrysler also recently terminated its two aircraft leases. A spokesman for Ford, the only one of the Big Three Detroit automakers that hasn't taken taxpayer funds, said the company is seeking to sell its five jets, which have been grounded since late last year. Ford's chairman and chief executive have been chartering flights on an as-needed basis, the company said.
Thursday's bankruptcy hearing was GM's second court appearance since filing for protection on June 1. The largest U.S. automaker is seeking to reorganize by selling most of its assets to a new company in which the U.S. government will have 60 percent ownership.
Separately on Thursday, Chrysler appeared before U.S. Bankruptcy Judge Arthur Gonzalez in a nearby courtroom to begin the process of sorting out the assets and debt that remain with the company. After a speedy bankruptcy proceeding, most of Chrysler's assets were sold last week to a new company headed by Italy's Fiat.
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