Bows To White House Pressure Against $50 Million Purchase

Once again, business aviation has been held up to be an all-too easy scapegoat... and, has been sacrificed in the name of public pressure. On Tuesday, embattled investment firm Citigroup reversed its decision to take delivery of a Dassault Falcon 7X corporate jet, one day after a New York Post article called out the company for going ahead with the purchase, after receiving $45 billion in federal Troubled Asset Relief Program bailout funds.

"Beleaguered Citigroup is upgrading its mile-high club with a brand-new $50 million corporate jet -- only this time, it's the taxpayers who are getting screwed," Monday's article stated. "Even though the bank's stock is as cheap as a gallon of gas and it's burning through a $45 billion taxpayer-funded rescue, the airhead execs pushed through the purchase of a new Dassault Falcon 7X, according to a source familiar with the deal."

Such obvious rhetoric is not commonly seen in articles without the word "editorial" noted somewhere nearby, not even in tabloid publications such as the Post... but has become increasingly common in the months since CEOs of the Detroit Three automakers flew to Washington in their corporate jets, to ask for federal bailout money. In those cases, the automakers subsequently slashed their corporate fleets.

The Post article about Citigroup seems to have had its intended effect as well... since by Monday afternoon, word of the story had reached the White House. Bloomberg reports that in his afternoon briefing, White House press secretary Robert Gibbs said President Barack Obama "doesn't believe" using corporate jets "is the best use of money... He said that as it relates to the auto industry, and he believes that as it relates to banks, as well" -- an obvious jab at Citigroup.

Lawmakers on Capitol Hill were also able to spot an easy PR opportunity. "The notion of Citigroup spending $50 million on a new corporate jet, even as it is depending on billions of taxpayer dollars to survive, does not fly," read a statement on the web site for Michigan Democratic Senator Carl Levin .

Early Tuesday, White House spokeswoman Jen Psaki disclosed an unnamed Treasury Department official had called Citigroup, to 'express concern' over the planned purchase. Soon thereafter, a Citigroup spokesman said the company has "no intent to take delivery of any new aircraft."

As ANN reported, Citigroup signed the contract to buy the $50 million plane two years ago, when the company was flush with cash. The Post also noted Citi has two of its older Falcon 900EX planes for sale, at $27 million apiece... presumably to cover the cost of the single, more efficient 7X.

"We signed a contract in 2005 for replacement aircraft, which was part of our plan to reduce the number of aircraft Citi owns and use more fuel-efficient aircraft," Citi told Bloomberg on Monday, adding TARP funds wouldn't be used towards the 7X purchase. "Refusing delivery now would result in millions of dollars in penalties."

It would seem that cost, however many millions it proves to be, is less expensive than taking a very public hit in the court of public opinion.

FMI: www.citigroup.com, www.dassaultfalcon.com