US car bosses rapped for using private jets

Top executives from US car giants GM, Ford and Chrysler did themselves no favours by going cap in hand to Washington for financial help - by arriving in private ‘planes.

It was a point quickly picked up by the Financial Services Committee during a four and a half hour bail-out hearing which chastised the bosses for the symbolism of arriving in Washington aboard executive jets.

They suggest that the executives may have to tighten their own belts. News reports estimate that each executive’s flight cost $20,000 (£13,000) round-trip against about $900 (£600) for first-class tickets. CEO Rick Wagoner reportedly traveled on GM’s $36 million Gulfstream IV luxury jet

While the chief executives told the hearing they are open to conditions that the federal government might place on a $25 billion rescue package, Automotive News reports that suggestions on executive pay, more fuel-economy regulations and prohibiting the funds from being used on mergers did not sit especially well.

Only Chrysler LLC CEO Bob Nardelli (pictured above) is ready to accept a salary of $1 per year as a condition of the loans, the same as Lee lacocca took decades ago to help Chrysler secure a $1.5 billion loan rescue.

GM chief Rick Wagoner said he had had already taken a 50 percent salary cut and lost most of the value of thousands of shares of GM stock he has purchased over the years while Ford's Alan Mulally said he was "OK where I am." Bloomberg reports that his salary is pegged at his 2007 rate of $21 million.

The hearing was also concerned about possible mergers which could lead to job cuts. GM and Chrysler have recently been in talks about a merger and Wagoner argued that if cost savings from a merger made the players more competitive, it ought to be considered, while Nardelli said Chrysler needs to be open to all alliance opportunities to improve the products and operations of the company.

The House and Senate hearings heard arguments on whether the Detroit 3 should get $25 billion in loans from the $700 billion bailout fund for banks. Among the conditions contained in the House and Senate bailout bills are government equity stakes in the carmakers, limits on executive bonuses, and prohibitions on paying shareholder dividends. The government would also take the top priority among lenders and get paid back before other creditors.