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Double trouble for private jets

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The Record (Hackensack, N.J.) (MCT) - It's not only the down economy that's hurting the private jet business.

Highlights

By Richard Newman
McClatchy Newspapers (www.mctdirect.com)
3/26/2009 (1 decade ago)

Published in Business & Economics

Public outcries against government-bailout-seeking executives flying around in luxurious corporate jets also have contributed to steep declines in orders for new jets and cancellations of existing orders for jet makers.

The stigma on private jet travel is putting well-paying aviation jobs at risk, said John Rosanvallon, chief executive officer of Dassault Falcon at Teterboro Airport in New Jersey. Dassault Falcon's French parent, Dassault Aviation SA, said last week that orders for new jets fell to 115 last year from 212 in 2007, and that some customers have canceled orders in recent months.

Other aircraft makers also are hurting. Wichita, Kan.-based Cessna Aircraft Co. plans to lay off 4,600, or 30 percent of its workforce, amid declining orders. Hawker Beechcraft Corp., also in Wichita, cut 2,300 jobs in February.

Rosanvallon has joined other private-aviation industry leaders in arguing that the criticisms are unfair and are exacerbating an already difficult situation, with corporations tightening their travel budgets. "When you look at use of business aviation, it's not just a few fat cats traveling around," he said in a recent interview. "It's used by a lot of middle-management people."

French-owned Dassault Falcon employs nearly 500 people at Teterboro with a payroll of about $50 million a year, Rosanvallon said.

Flights at Teterboro, one of the busiest private jetports in the country, are down more than 30 percent this year, according to the Port Authority of New York and New Jersey, the airport's operator.

Widespread criticism of private jet travel came to the fore last year when the leaders of struggling U.S. automakers flew in corporate jets to Washington to tell lawmakers why they need taxpayer assistance.

The Obama administration in January pressured Citigroup Inc., which has received tens of billions of dollars in government assistance, to cancel an order for a $50 million Falcon 7X. The 7X, which has been flying since mid-2007, has been a hot seller for Dassault Falcon. It seats 12 and can reach Honolulu from New York without refueling.

Rosanvallon declined to comment on specific deals. Citigroup's cancellation was "just one example," he said. "The automotive thing got more publicity," he said.

Dassault Falcon jet orders from Citigroup, Royal Bank of Scotland Plc and American International Group Inc. "are now worthless," said Charles Edelstenne, CEO of Dassault Falcon's parent company, according to the Wall Street Journal.

However, companies that cancel orders often lose deposits in the millions of dollars.

Rosanvallon said Friday that some job cuts may be coming soon to Teterboro because of the industry's deepening woes. The cuts "will be modest compared to Wichita," he said, referring to the layoffs at Cessna and Hawker.

He will have more information about job reductions in about a month, he said.

Corporations are in no hurry to buy new jets. JPMorgan Chase & Co. said this week that it has no plans to purchase new jets or renovate an aircraft hangar until after it has paid off the money it received as part of the government's bank investment program last fall. Chase received $25 billion from the government's Troubled Asset Relief Program.

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© 2009, North Jersey Media Group Inc.

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