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Plane Folly
This year, Stephen Schwarzman’s birthday was a much more modest affair than in 2007, when he cemented his position as poster child for hedge fund excess. His 60th birthday bash was said to have cost $3 million and included a performance by Rod Stewart.
Yesterday, we’re told, Blackstone Group employees were invited to a giant boardroom for a brief roast (no, not a toast) and some cake. But it wasn’t all humble pie. Huge flat-screens in the rooms displayed the birthday invitation—a map showing the many miles Schwarzman had traveled in the last year, complete with cute little pictures of private planes.
Private planes were the perk of choice during the boom, which meant waiting lists for the most coveted models. Now, the downturn has re-routed the industry. The General Aviation Manufacturers Association said yesterday that shipments were down 7.1 percent in 2008.
But some bigwigs, including Schwarzman, are refusing to have their wings clipped. A source tells us that hedge funder Daniel Loeb recently said his plane was the last thing he would give up. The eight bank C.E.O.s who testified before the House Finance Committee last week took commercial flights or Amtrak to Washington. But when asked if they owned or leased a private jet, all but one—Goldman Sachs’ Lloyd Blankfein—raised their hands. And who could forget how the top execs from the Big Three automakers were excoriated last November for flying private jets from Detroit to Washington to beg for a $25 billion bailout?
There are supporters in Washington, too. One version of the stimulus bill required that companies getting aid dump their private planes or leases, but members of Kansas’ congressional delegation managed to get the provision axed—the state is home to several private aviation companies.
“It’s time to cool the overheated rhetoric on the use of business aviation,” Sen. Sam Brownback said in a statement. “The general aviation industry is already feeling the effects of the economic downturn; it shouldn’t be grounded by the government.”
He said the industry employs 1.2 million people—slightly fewer, now that Cessna plans to lay off off 4,600 workers. Last week the company started running an ad encouraging businesspeople to buy: “True visionaries will continue to fly,” it reads.
“The reality of business aviation is a far cry from the misconception of CEOs flying in large luxurious airplanes,” Cessna’s C.E.O. said in a statement. “Most of these aircraft are fairly Spartan, designed for business, with a cabin about the size of a minivan or SUV interior.”
Oh. Well, that’s okay then. But make sure it’s a small SUV.
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[...] be pleased to hear that the mogul's tendency to show off has not been diminished. Recessionwire has the scoop: "Yesterday, we’re told, Blackstone Group employees were invited to a giant boardroom [...]