Beggars Can't Be Coach Flyers
Or even first class flyers. Nope, our Big Three aspiring welfare queens flew to Washington to beg for our money on private jets. Estimated cost for the flight, $20,000 -- versus about $800 for a first class ticket and around $300 for a coach ticket from Detroit to D.C. (per ABC News, which reported the story). From ABC:
(Ford CEO) 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.
Ya think?
via Consumerist
The problem with these bailouts is precisely the fact that managements no longer have the incentive to tighten the belt when times get tough. If gov't is there to bail them out, why would they?
Charles at November 19, 2008 10:01 AM
Wow. $20,000 could be someone's salary for 6 months. (OK, probably not a UAW member, but still...) Something to think about.
ahw at November 19, 2008 10:13 AM
Oh, they get it. They just don't want us to know that they get it. Greedy pigdog-self-righteous bastards. I hate them. HATE them.
Flynne at November 19, 2008 10:25 AM
Can we stick THEM in dorm-style housing? Bastards. If we give them money, I'm expating. That's it.
momof3 at November 19, 2008 10:41 AM
Why they dint DROVE from Detroit to Washington DC? They got cars, right?
Toubrouk at November 19, 2008 11:32 AM
All of these bailouts should have come with executive decapitation.
And even now, Congress should be clawing back anything given to the thieves at AIG and Goldman Sacks handing out bonuses and spending taxpayer money on conferences.
jerry at November 19, 2008 12:02 PM
They probably just don't care. Like Big Dick Cheney, who said "conservation is a personal virtue". Everybody else should conserve. BTW, what is with the Big Dick? He's been awfully quiet, which doesn't bode well. Wasn't he involved in developing the current energy plan? I'm bracing myself for the time when Exxon goes to beg money.
Tha Mad Hungarian at November 19, 2008 12:23 PM
Damn, ahw, way to put it in perspective... $20,000 is more than HALF my salary for a year!!
Sometimes I think we see numbers, but we don't really put it in perspective in our head. We hear $700 billion, but we don't see that $700 billion is waaaay more than what even Angelina Jolie makes.
But when you say something like "think of that airline ticket and then think of your salary", it makes one stop to mull over the number.
These guys make three flights a year, and they've already made more than me and my husband make!!
CornerDemon at November 19, 2008 12:33 PM
Well, here we go with class envy at the front again. I suspect that's because nobody's thinking about flying.
I have a nephew who flies bizjets for a living. So before you start foaming (I know, too late for some of you), consider these things:
Companies who use these bizjets arrange leases. The nephew flies jets owned in timeshare arrangements, which works out great for most because deals happen at different times.
In all cases, the shareholders and board of directors of a publicly-held company determine the return on investment.
Company regulations requiring seperate flights for company officers are driven by insurance and written into company policy.
The flight expense is for the entourage, not just one person. The plane costs nearly the same empty and full.
Those of you who have tried to make a business appointment via public air travel, raise your hand now and say how close you were to being on time at any point. And go check out the fare for a flight leaving tomorrow. Expedia says Economy, where you can get bumped, is only $218 from Columbia, SC, to Dulles, but the cheapest business-class is $1593 per person.
Now, try to arrange for a bodyguard and an assistant to accompany you on a commercial flight.
Take the car? There's no way you'd do that from your house to DC.
It comes down to the plain fact that people making lots and lots of money got there by not wasting it standing in a line waiting for the TSA flunky to take their hand cream and scissors, and company policy can't be discarded swiftly. Be consistent here: do you really want a company to ignore its own rules at will? I suggest that the answer is "no", especially if you're a shareholder. A corporation is first responsible to its shareholders, not you and me, however offended we might be that we can't tell them what to do.
This is a "two wrongs", so it doesn't count, but when you, yourself, get on a commercial flight, the airline is subsidized, and may even be operating under bankruptcy laws allowing it to fly while pension and other employee and market issues are being addressed. Patrick Smith has addressed this many times.
The market is nuts because people don't get it. Being mad isn't the answer.
Radwaste at November 19, 2008 3:37 PM
Update: If you leave Detroit tomorrow for DC for a 3-day round trip, it's $218 economy, $997 business and $1280 first-class. Expedia.
Take whoever else you want on that trip - the company lawyers, assistants, security, and you've skipped the TSA lines and got there and left when you needed to.
And your little jet held up Patrick Smith's cargo flight, but that's another story he tells best.
If you could do it yourself, you would.
Radwaste at November 19, 2008 4:03 PM
Screw these guys and everyone else waiting for a handout. I keep hearing that the economy is going to collapse and I keep thinking, "if the building is flawed then maybe it NEEDS to collapse". Years ago some guy off the street could have pointed at these American automakers and told them what they were doing wrong.
Stacy at November 19, 2008 4:24 PM
Amy Alkon
http://www.advicegoddess.com/archives/2008/11/19/beggars_cant_be.html#comment-1606271">comment from RadwasteIf it was cheaper to take a jet, all these jerks from the Big (welfare-grubbing) Three could've shared a ride. Clearly, they're only concerned with sacrifices that are made by the rest of us.
Amy Alkon at November 19, 2008 5:20 PM
ABC estimated that the trip cost GM $20,000 ...
ABC must have pulled that estimate out of their rectal data bank.
The flight is about 90 minutes, block to block; three hours total.
In a few minutes searching, I wasn't able to find the cost per flight hour of a G4, but RJs, which are the same size or larger, come in at under $2000/flight hour.
So, contrary to ABC's estimate, the cost of that flight, round trip, was no more than $7000.
Presuming the airplane was carrying the execs, plus staff, then it was probably cost competitive to take the G4 compared to 1st class.
You should do a little homework before ginning up the class warfare machine.
Also, please keep in mind that the Big-3 had a long-term problem with long term solutions.
The predatory lenders & borrowers in the housing market created the credit crunch which is directly responsible for auto sales going in the tank.
Hey Skipper at November 19, 2008 5:49 PM
Amy Alkon
http://www.advicegoddess.com/archives/2008/11/19/beggars_cant_be.html#comment-1606276">comment from Hey SkipperIt's not about class warfare. I've blogged before that I don't care whether a candidate has 13 houses, or eats lobster and caviar at a hotel, as long as they don't default on their mortgages or run out on the hotel bill. I'm not an expert on private jet costs. I'm angry that these guys want welfare from the rest of us. Again.
Amy Alkon at November 19, 2008 6:16 PM
Right on Amy. It's not class warfare, it's greedy stupidity warfare, which she excels at. They have no business begging for our money while spending at that rate. None. If the execs can't make sacrifices why the hell should we give them anything.
momof3 at November 19, 2008 7:02 PM
Right on Amy. It's not class warfare, it's greedy stupidity warfare
You are right, it isn't class warfare. It is bomb-throwing ignorance warfare.
I'm not an expert on private jet costs.
Then what was the point of this post?
On this count ABC and you are wrong by an order of magnitude. Some bonehead at ABC pulled a number from where the sun doesn't shine, without even nodding in the direction of fact checking.
Then you ran with it, excoriating the execs for their (apparent) extravagance. This is Palin-Africa kind of wrong. I have really come to enjoy reading your stuff, and nearly always agree with you. However, you really need to apply a little healthy skepticism before jumping on someone else's bandwagon.
But never mind that. There are two things you (and momof3, and many others) need to keep in mind when deciding how much opprobrium to heap on the Big-3:
- Other than houses, cars are one of the few things people buy for which they require a loan.
- Predatory buyers and lenders, enabled by Dodd/Frank level-5 morons caused the credit markets to seize.
Combined, they create a black-swan crisis for the US automakers.
Which is their fault how, exactly?
I am a libertarian, and a firm advocate of free markets. Simultaneously, I am no fan of cutting off my nose to spite my face. Some sort of bridge loan to tide the automakers over until credit resumes normalcy isn't good, but I don't see how it is worse than the alternative.
Hey Skipper at November 19, 2008 8:29 PM
Skipper -
The automakers do bear the blame for their situation. Every economy car they sell they lose money on. The only thing keeping GM afloat was the SUV craze. Gas hit 4 bucks a gallon this summer, and that came tumbling down.
Where the automakers went wrong was they did not use the proper language with the UAW when the UAW demanded they create a "Job Bank" to pay idled workers at 90% of salary. Instead of "Please Mr. Hoffa, don't go on strike", it should have been "Go fuck yourself with sixteen feet of curare-tipped wrought iron."
What we saw this week was the CEOs of the automakers going to Congress to beg for protection money to pay off the union.
GM cannot continue to do business with their current cost structure. They can either do a chapter 11 restructuring, or a chapter 7 liquidation. Either way, they need to tell the UAW to take a long walk off a short pier.
And I'll bed a dozen supermodels before that happens.
brian at November 19, 2008 9:02 PM
Brian:
Where the automakers went wrong was they did not use the proper language with the UAW ...
You should spend some time researching the Wagner Act.
All three automakers were faced with a monopoly supplier of labor == a government mandated cartel.
There was no proper language.
Hey Skipper at November 19, 2008 9:49 PM
Amy Alkon
http://www.advicegoddess.com/archives/2008/11/19/beggars_cant_be.html#comment-1606298">comment from Hey SkipperYou don't show where the figure is wrong. Feel free to do so. Be sure you factor in all the exigencies. And no, it isn't Palin-Africa wrong. Feel free to write the reporter at ABC and ask where they got their figures.
And feel free to tell me how this "bridge" (how clever that they've stopped calling it a bailout) is anything but a bridge to nowhere.
I'm from Detroit. My parents bought the crappy cars during the first oil crisis. Detroit has done nothing innovative in the decades they've had to innovate. I'm not impressed.
Again, the automakers want my money? They're all coming from the same place -- the rich neighborhoods of Detroit. Let them share a fucking jet to save money. Would that be something they...aren't accustomed to? Well, boofrigginghoo.
Amy Alkon at November 19, 2008 9:58 PM
Skipper -
They could have closed down at any time. The Wagner act doesn't say you have to stay in business, just that you have to let your employees organize.
And the car companies didn't need to give in to every demand. They could have said no. If the UAW struck and drove GM out of business, then they lose.
I've seen it over and over again. The unions would actually rather have the company go tits-up than not get everything they want. They are like eight-year-olds that way.
And Amy - the corporate jet is a fart in a windstorm. These companies have a combined market cap of 7 billion. They are over a hundred billion in debt. And they are asking for a 25 billion bridge loan?
You're right about one thing - it is a bridge loan to nowhere. Because the UAW has already said they expect the bailout, and they are not willing to make any concessions.
Fuck the UAW to death.
brian at November 19, 2008 10:11 PM
And the car companies didn't need to give in to every demand.
Typically, people and businesses don't prefer suicide when faced with a problem.
Which was the only option on offer, thanks to the Wagner Act.
Also, it pays to keep in mind that these contracts came into being during Detroit's salad days.
BTW -- when you say to f*** the UAW to death, keep in mind that I am a union member.
Who, as it happens, pretty much agrees with you.
That still leaves the principle question on the table: of the options on offer, which is the least bad.
If it wasn't during the knock-on effects of the credit crunch, I'd let the car companies sink like a greased safe.
However, as gratifying as that might be, it may well not be the best choice.
Hey Skipper at November 19, 2008 11:30 PM
"Let them share a fucking jet to save money."
Well, you're not paying attention. Company policies, approved by shareholders under the laws of incorporation, forbid that. No, you don't want company execs to ignore that at any time.
There are two, separate, issues here: the bailout, and the mode of travel company execs use, which is what I have addressed. Keep yelling about their bizjet, and all you're doing is expressing class envy for exactly the reasons I've shown above.
You can save money and the environment by passing a simple law against recreational air travel. Oh, wait, no - because it affects the "little guy". Class warfare, again.
New cars sell because of public vanity, nobody recognizes that and now, for a crude analogy, she wants it all after the divorce, to maintain the lifestyle she's accustomed to. The answer should be complex, but not unsolvable, and somebody's gotta admit that if you're not selling, you can't pay people, period.
Radwaste at November 20, 2008 3:04 AM
Amy Alkon
http://www.advicegoddess.com/archives/2008/11/19/beggars_cant_be.html#comment-1606354">comment from RadwasteCompany policies, approved by shareholders under the laws of incorporation, forbid that.
I'm talking about them sharing a ride to the place they're all going to beg for our tax dollars. And again, see my example above, I'm not into class warfare. In fact, I admire anyone who's earned big and don't begrudge them spending THEIR MONEY one bit. In fact, I encourage them to spend THEIR MONEY to stimulate the economy. Notice the two words that keep popping up? Now you see my problem with these creeps not doing something to keep the cost of their ride down or really making any sacrifice. Yet, they want us to toss them piles of money. Where's Rick Wagoner's remark that he'll donate his salary and benefits to the company until it pulls through? Where are all the executives who mismanaged the car companies saying they'll donate...something...anything? They surely know it's a loser of a deal, why should they? And of course, they'd have to feel a sense of shame at their mismanagement.
Amy Alkon at November 20, 2008 5:34 AM
Nobody commented on the fact that some Canadian UAW official remarked that any givebacks were off the table.
I think that pretty much points out the futility of the exercise. The long term problems will not be solved, absent bankrupcy.
Isn't it remarkable that the fingers of government are all over this fiasco? The Wagner Act enabled the unions to extract uncompetitive wages from the auto makers. CRA forced the banks to lend money to the non credit worthy. The mark to market accounting rule is putting pressure on the credit markets. Now everyone is looking to the government to fix the mess their policies and laws created.
Meanwhile, the posturing princes in the Senate pose on camera and show how tough they are with the auto makers and whine about private jets. If the government ran with the same rules as private industry, we'd be asking GM for a bailout.
MarkD at November 20, 2008 5:35 AM
Skipper, the modern American labor union (as exemplified by the UAW and the Teamsters) is nothing more than an extortion scheme.
Somewhere between the end of WWII and today, labor became a commodity, which meant that companies had to compete for laborers just like they did for raw materials and customers.
The Unions have changed from "make sure management doesn't fuck the little guy" to "fuck management." This adversarial relationship is detrimental to all parties involved.
I'm sorry that you forfeit a percentage of your wages to the union as a condition of being allowed to work. When their unfunded pension liability comes back to bite them on the ass, the one and only thing that you have left to argue in favor of the union will be gone.
I hope you have a separate IRA account, for your future's sake.
brian at November 20, 2008 5:54 AM
The point ISN'T that it's a little harder to get a car loan if you have a poor history of paying loans back right now. It's that people aren't buying GM cars. Period. Not that they can't buy them, that they don't. Because detroit has focused on building cars with crappy gas mileage and crappy reliability. For decades and decades. Even after their last bail-out. If it were a loan issue, toyota and honda would be in the can too. They are not. People want their cars. They do not want GMs. GM has done nothing to fix that. Period. Let them die. Or, give them billions for the priviledge of being right back here, AGAIN, in a few years. Personally, I want off the merry-go-round.
momof3 at November 20, 2008 6:23 AM
Amy Alkon
http://www.advicegoddess.com/archives/2008/11/19/beggars_cant_be.html#comment-1606367">comment from momof3Exactly, momof3. As I mentioned, the "bridge loan" is a bridge to nowhere.
Amy Alkon at November 20, 2008 6:39 AM
They want American tax payers to foot the bill for this:
ST. PETERSBURG, Russia (AP) — U.S. car giant General Motors Corp. launched its first Russian assembly plant Friday, hoping that sales in this emerging market will bolster its staggering global performance.
GM executives basked in the praise of Russian authorities attending the opening of the $300 million, 70,000-car-a-year factory outside St. Petersburg, just hours before the world's largest car maker announced it lost $2.5 billion in the third quarter and warned that it could run out of cash in 2009.
Tha Mad Hungarian at November 20, 2008 6:52 AM
momof3 - it wasn't the mileage until very recently, because people bought all those SUVs. GM's been losing money for years.
Reliability has something to do with it.
But the single biggest reason? THEIR CARS ARE BLAND, BLAND, BLAND.
Other than the Corvette and Mustang, name one GM or Ford that caught your attention.
Exactly.
And their labor costs have a lot to do with it. There's no reason to build cheap little cars that you cannot make a profit on, and therefore no reason to design them to be reliable and cool and attractive.
brian at November 20, 2008 7:53 AM
Amy:
You don't show where the figure is wrong.
Actually, I think I did. But I'll try again.
Here is the assertion you ran with:
ABC estimated that the [GM CEO's] trip [on a G4] cost GM $20,000 ...
The round-trip block time from Detroit to Washington National is just under three hours. (How do I know? I have operated NW 2364 into National.)
A G4 is a little smaller than a regional jet. RJs cost less than $2000 per block hour. Therefore, the most the flight could cost was $7000, far less than $20,000.
Now, factoring in all the exigencies. Wagoner's time has some value. As does whatever support staff he brought with him -- CEOs do not travel to this sort of thing alone. (How do I know? When at the Pentagon, I occasionally traveled with 4-star generals in G4s filled with support staff.)
Who else went with Mr. Wagoner -- GM's CFO perhaps, some lawyers? (There's no telling, since the ABC didn't even bother to check that out.)
Now, add the cost of their tickets to DC. Considering what was going on, I wouldn't be surprised if he brought eight people along with him. At $800 per seat, that gets darn close to $7000, even before figuring in the time savings and the opportunity cost of the travelers' time.
So, not $20,000; $7,000. And not just one traveler, either. In fact, it is very likely that the G4 was the cheapest way there and back.
Other than that the ABC estimate was spot on the money. And, like the Palin-Africa thing, you went with your preconceptions, instead of wondering if, just maybe, consumerist.com might possibly just have, shall we say, a slant on this.
brian:
I pretty much agree with everything in your 5:54 am post, including spelling, punctuation and grammar.
My company happens to have a well funded pension, but I'm not counting on it.
401(k) and IRA? You betcha.
Hey Skipper at November 20, 2008 11:16 AM
CNN now has the story - Democrats are pretty much telling the Big 3 to come back in a few months when the Republicans are gone. Even though it's bad policy and the majority of Americans are dead-set against it, they will do it anyway.
Pirate Jo at November 20, 2008 12:30 PM
Obama and the Democratic leadership owe the UAW bigtime.
Payback is gonna hurt.
You know what? Fuck responsibility. I'm going out and buying a plasma TV. Why the hell should I care any more? If the economy tanks, at least I can watch the Fall of Rome in High Definition.
brian at November 20, 2008 12:57 PM
Brian, I share your sense of futility. For many years I've been irritated at how the smart, productive people always seem to have to bail out the stupid, irresponsible ones. Now it occurs to me to wonder, who is really the stupid one? The one riding in the cart, or the one who keeps humping along pushing it?
Pirate Jo at November 20, 2008 2:11 PM
Amy Alkon
http://www.advicegoddess.com/archives/2008/11/19/beggars_cant_be.html#comment-1606418">comment from Pirate JoNow it occurs to me to wonder, who is really the stupid one? The one riding in the cart, or the one who keeps humping along pushing it?
Pirate Jo, I would imagine that you, like me, try to vote for people and policies against the handout mode. We're like lint that catches on a sweater and gets dragged along for the ride.
Amy Alkon at November 20, 2008 2:38 PM
"Obama and the Democratic leadership owe the UAW bigtime."
In case anyone is wondering just how far Obama has his head stuck up Big Labor's ass, here's your answer:
http://www.ilcaonline.org/ht/display/ArticleDetails/i/74152
The AFL-CIO spent over $ 250 million to get the Obamunist elected. I'll leave you to ponder what they expect from him in return.
Martin at November 20, 2008 3:17 PM
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