After the Obama administration indicated it opposed any company receiving federal bailout dollars buying a new corporate jet, Citigroup cancelled its order for a $50 million Falcon 7X. Citigroup received $45 billion from the Troubled Asset Relief Program (TARP), which is part of the federal government’s economic bailout plan.
According to AvWeb and Bloomberg News, a Treasury Department official called Citigroup to express concern over the jet purchase. Citigroup, in an e-mailed statement to Bloomberg, said that it is seeking to sell two of its older Falcon 900EXs, worth about $27 million each, and replace them with new, more fuel-efficient airplanes. TARP money wouldn’t be used to buy new airplanes, Citigroup said.
Sen. Carl Levin (D-Mich.) criticized the airplane purchase. “It is unconscionable and unacceptable for a corporation to purchase a fancy new custom jet to fly around their executives while the public is pouring billions of dollars of taxpayer money into the company, trying to keep it afloat.”
According to Hong Kong’s International Business Times, Citigroup signed the contract for the 7X “several years ago,” and planned to take delivery this year. “We expect proceeds from the sale of our existing aircraft will exceed the cost of the replacement aircraft, and refusing delivery now would result in millions of dollars in penalties,” said Citigroup spokesman Mike Hanretta.
Nevertheless, it appears that Citigroup has caved to pressure and will face those penalties.