I don't think so. But, the alternative they are comparing to is probably flying in their old jets, not booking seats on a commercial airline. If there is a valid business reason why they can't fly commercial, they should probably get the jet.
I agree that they are comparing to flying their older jets. But even then, it would be hard to save $50 million by flying a newer jet unless you're looking at a really, really long time period. You'll save some in fuel (if it's more efficient) and maintenance, but it would be difficult to get to $50 million in any short period of time.
I think they are comparing the operating costs. They sold 2 of their old jets to pay the capital expense. Which is funny -- they had 4 jets and sold 2 expecting to get a shiny new one. They can't get the new one, but can't have the old ones back either.
At the least make it put wholes in their golden parachutes! That money comes directly out of their pockets Rocket River
If they sold two planes to pay for this one, I don't see what the problem is. This kind of public scrutiny is getting a little ridiculous.
Ah ha. I had somehow missed the part that they were selling two other planes. This is entirely a PR thing then. Kind of sucks for Citi - although they'll probably really save money by flying commercial.
so you don't think the government has a right to object to certain expenses given the bailout money they have received?
Well, if they sold two planes to buy one that will have lower maintenance costs, it just lowers their total expenditures, so it's actually a good thing in absolute terms. The big question is what is the net effect of selling two planes but not buying the new one - hopefully that saves even more money. .
In this case no, I don't think they have a right to do so. I seriously doubt that this expenditure was an impulse purchase by Vikram Pandit over the last few days/weeks. The fact that Citi sold two other jets in order to purchase this shows me that they are trying to save money. I know the jet costs $50MM, but what is the actual net cost after selling the two jets. And what is that cost compared to the breach of contract cost that they are likely to incur for canceling the order?
