GE to Shut Down Corporate Jet Fleet in Cost-Cutting Move -- 2nd Update
September 20 2017 - 1:08PM
Dow Jones News
By Thomas Gryta and Mark Maremont
General Electric Co. executives will have to find new ways to
fly around the globe.
The conglomerate is grounding its corporate fleet of jets as new
CEO John Flannery continues to look for ways to slash costs at the
industrial giant.
Mr. Flannery is cutting spending in GE corporate operations,
including unwinding the internal airline for corporate executives,
effective Wednesday, according to a person familiar with the
situation. GE will still operate some helicopters and other
aircraft overseas, while using charter services as needed.
GE owns several business jets, federal records show, including
at least two Bombardier Challenger aircraft. Its pilots for decades
have shuttled executives to business meetings and operations around
the globe, racking up hundreds of hours a year.
The company has required the CEO to use corporate aircraft for
all travel, including personal travel, for safety and security
purposes. But with profits under pressure and sales pinched by
weakness in parts of the company, Mr. Flannery is looking for ways
to save.
"As we have said, we are executing on a plan to take out $2
billion in cost by the end of 2018," a GE spokeswoman said. "As
part of that effort, starting today, we are reducing the Corporate
Air Transport services and will use charter companies as
needed."
The move marks a change from GE's recent plans. When it
relocated from Fairfield, Conn., to Boston, the company negotiated
with city and state officials to secure parking at Logan
International Airport for one executive jet and one helicopter,
according to the agreement. The company also requested a hangar at
nearby Hanscom Field that could fit six business jets, the
documents show.
Mr. Flannery is trimming staff at the corporate level and
recently delayed part of the construction of GE's new headquarters
complex in Boston, a relocation initiated by his predecessor, Jeff
Immelt.
Mr. Immelt, who stepped aside on Aug. 1, pledged to boost
cost-cutting earlier this year after talks with activist investor
Trian Fund Management LP, which has been frustrated by missed
profit goals at GE.
GE doesn't just own business jets; it also supplies engines and
other parts used on some business jets. The company also makes jet
engines for commercial planes, and its GE Capital division has a
large business of leasing aircraft, though it sold the unit that
rents corporate jets in 2015.
In July, GE told investors they would have to wait until
November to hear the new boss's strategy for boosting results, but
investors haven't been waiting in selling their shares. The stock
is down 23% this year amid a surging broader market and has lost
15% in the last three months alone.
Mr. Flannery, who formerly ran GE's health-care unit, is meeting
with small groups of investors and visiting the business units of
the roughly 300,000-person company. He has said he would look at
every aspect of the company and its strategy, although he won't
consider reducing its dividend.
Write to Thomas Gryta at thomas.gryta@wsj.com and Mark Maremont
at mark.maremont@wsj.com
(END) Dow Jones Newswires
September 20, 2017 12:53 ET (16:53 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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