'Rescued' Citigroup Buying $50M Jet | Hacker News Reader

'Rescued' Citigroup Buying $50M Jet

nypost.com

9 pointspeter12328 comments

Sorry, but this is nothing more than a cheap attempt at stirring up class hatred. The jet is one of the most useful, efficient tools in the corporate arsenal, especially when you have to run around and meet people 24/7 (as tends to be the case with banking). If we lived in a perfect world (which isn't the case), everyone would have access to this sort of transportation; having experienced it first-hand, I can say that it seriously makes life more productive. Also, there's a very small number of short-runway jets capable of transcontinental range, and the Falcon 7X is one of the most efficient of the pack.

I think Citigroup is one of the worst-run companies in America, if not the world, but I don't think their private jet usage is the problem there. In fact, perhaps it would have been better for us all if they had spent more time running around the world and seeing the sort of mess they had been creating (one need only see the tract-home-filled foothills of Orange County, California in 2004 to understand there was a bubble).

This is the absolute worst time for us to start getting morally indignant over others' consumption. The more we do this, the worse it will be. Any purchases that lead to gains in productivity need to be celebrated -- that's how money swirls through the economy and gets us out of this mess!

Oh yeah, and people who work in corporate aviation departments tend to be really cool.

Why can't you 'run around and meet people 24/7' with commercial airlines? This is not a moral issue, it's an issue of corporate governance competence. Corporate jet is a luxury, just like $1M in CEO office renovations at Merrill Lynch. I can't believe you can lose $50M in productivity by using alternatives to private jets.

My tax dollars make it a moral issue. Why should my life's work be hijacked to subsidize this?

The OP's argument is that it will increase productivity. If it pays itself off and makes the company a net gain will you still be upset?

How exactly do you pay off $50M with a private jet that also incurs significant costs of ownership?

I mean there are commercial flights to just about everywhere in the world at very frequent intervals. How can one or two hours offset possibly make such a difference?

Trips on commercial airlines takes hours longer, mostly due to security precautions.

And cost far less. It's not just the 50 million it's also the pilot, fuel, etc.

Say an executive saves 400 hours a year by flying private. If that makes him a few percent more effective in a company the size of Citigroup, it's worth it.

Well, the jet can probably only be used by one executive (or one team) at a time. Thus each of these 400 hours your executive could save would have to be worth $125000 USD. Oh, and remember these jets cost upwards of $15000 per roundtrip, too...

No, I think citigroup suffers from the same illness as GM and Ford - their top management has completely disconnected from reality, long ago.

http://www.youtube.com/watch?v=mk7SKTheO2k

Do you throw out your jets after one year?

My little firm did billion dollar deals, and we used private jets to flit our management teams from one investment fund to the next. Citigroup is much, much bigger. 400 hours (per year!) could easily be worth $50 million.

But how? I agree that my calculation was flawed, but even if you stretch it over 10 years that's still a rate of $12500 per saved hour - without counting the cost of ownership and only to break even.

Are there really deals that turn out so much more profitable only because you arrive 2 hours earlier?

There is a facility that says time in transit does not count. If your on a 3 hour flight in first class you can get a lot of work done. Granted a private plane might make you more productive. The real question is does the value of the flexibility of keeping your own cooperate jet worth the cost vs renting when it's useful.

IMO, if you are constantly flying people around the world to do deals then you have already failed. If they are small pay to bring them to you, if they are large work remotely. If they are large and can't work remotely then you should not be working with them as they are clearly incompetent.

The funds have the $billions. If you want a piece of it, you go to them.

Or perhaps financial firms should hire hackers to talk to investment funds and tell them how irrational they are being by refusing to do things remotely.

The jet is one of the most useful, efficient tools in the corporate arsenal

Maybe they should be taking public airline transportation, it might slow down the rate at which they can flush investors' money down the toilet.

I think buying 100 HP Halos would be a better expenditure than one of these planes (not to mention the pilot/staff/maintenance/fuel that will be spent on this thing compared to the upkeep of a Halo).

I love how the company wouldn't cooperate with the interview: "Why should I help you if this information will hurt my company?".

Here's a hint: if you're doing something that you're ashamed of, perhaps the right solution isn't to try (and fail) to keep it secret; perhaps the right solution is to NOT DO IT.

I'm generally opposed to the bailout in its current (and previous) form- but if you look at the facts, this MIGHT actually end up saving the company some money...

Sure, they get a new jet out of it and that leaves a bitter taste in everyone's mouth- and sure, it might not be "right" or "fair" in everyone's minds - but it's simple math.

Buy one jet for 50mil, sell 2 older jets for 27mil - make a small profit of 4 million and only carry the maintenance/fuel/crew costs of one jet instead of two.

Personally, I think they could probably do without ANY corporate jets, or probably COULD just sell one old jet and keep the other...

But assuming the jets are of roughly equal performance and capacity, can't they just sell one jet for $27M and keep the other?

Not to mention, how much is a cross-country flight in first class these days? $1500? How many execs can you fly for the cost of that airplane? (the answer: over 33,000)

That's already not including hangar, maintenance, pilot/stewardess/ground labor, nor fuel...

My guess is they can fly all their top-dog execs in first class for a clean decade for the price of that plane. I would really like to see them justify this.

I would so the real number of flights would be closer to infinity because the cost of maintaining and flying a private jet across the country is more than the cost of the first class tickets. Also the interest / depreciation on that 50 million works out to ~3 million a year which is 2,000 / 12 people = 166 first class flights by it's self. Double that if you only average 6 people.

Yeah... I imagine it would cost more than $18,000 to fly a plane-load of people across the country. Not to mention the fact that you need to keep pilots and other crew on-staff even when the plane is on the ground... the costs just don't add.

Makes you wonder why they bother. Last I checked first class was still plenty pampered.

Ehm you don't really wonder why they "bother", do you?

Just wanted to say that I think the argument for "needing" corporate jets was that the time spent traveling on commercial airlines was detrimental to the company. Supposedly those private jets are used to get the executives from one place to another in a quick way so they could do more business or keep doing business and not be interrupted.

Like everyone else though, I'd like to see some scientific proof of that.

I suspect that if that were really the case, you'd hear about it from corporate jet sellers ("We compared our clients to their Fortune 500 peers, and found that companies with jets outperform the rest of the market by 2% a year!")

Well, to be fair, I wouldn't hear about it, because I do not make >20million a year :)

I wonder how advertising works for the super-super-duper rich?

As it turns out, this is actually one of the selling points used by the manufacturers: "If time is money, then the time saved jetting from continent to continent is money in the bank." --- http://www.gulfstream.com/products/g650/

They're not generally selling to engineers so AFAIK they don't try to make the argument rigorous and quantitative, but there it is.

This is a reddit article. And not one of the better ones.

It's even from the NY Post. Ick.

They broke the story, so I think they deserve the link.

And?

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