GE to Cut Costs by Shedding Jet Fleet -- WSJ
21 Septiembre 2017 - 4:30AM
Noticias Dow Jones
By Thomas Gryta and Mark Maremont
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (September 21, 2017).
General Electric Co. executives will have to find new ways to
fly around the globe.
The conglomerate is grounding its corporate fleet of jets and
preparing to sell them, as new GE chief John Flannery continues to
look 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, 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 its chief executive to use private
aircraft for all travel, including personal travel, for safety and
security purposes, but the board recently changed that policy to
allow for charter and commercial flights. 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."
GE disclosed that it spent $258,000 on personal jet travel for
former CEO Jeff Immelt in 2016, counting only the "incremental"
costs of the flights such as fuel and crew travel expenses. The
company spent another $75,000 on personal travel for other top
executives, it said.
The move marks a change from 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 hangar space 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 Mr. 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 21, 2017 05:15 ET (09:15 GMT)
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