Citigroup Won’t Take Delivery of New Aircraft (Update1)

[CatWoman]

Jan. 27 (Bloomberg) -- Citigroup Inc., which has received $45 billion in U.S. government funds, won’t take delivery of any new aircraft, according to a spokesman for the New York-based bank.

Citigroup has “no intent to take delivery of any new aircraft,” spokesman Stephen Cohen said today in an interview. He declined to comment beyond the statement.

The lender said in an e-mailed statement to Bloomberg yesterday that it planned to buy new, fuel-efficient aircraft and sell older ones to lower operating costs. Citigroup said funds from the Troubled Asset Relief Program, or TARP, wouldn’t be used to buy the aircraft.

White House press secretary Robert Gibbs said yesterday at a press briefing that President Barack Obama “doesn’t believe” using private 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,” Gibbs said.

Citigroup plans to take delivery of a $50 million Dassault Falcon 7X corporate jet, the New York Post reported yesterday, citing a person familiar with the transaction. Citigroup is also seeking to sell two older Dassault 900EXs, worth about $27 million each, the newspaper said.

“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,” Michigan Democratic Senator Carl Levin said yesterday on his Web site.

“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,” the bank said in the e-mail yesterday. “Refusing delivery now would result in millions of dollars in penalties.”

http://www.bloomberg.com/apps/news?pid=20601103&sid=akTKDrKOTJ2M&refer=us

[joeunderdog]

1. Why not sell the other 2 jets for $27m each and borrow less?

WTF? The absurdity of this is so disturbing when many Americans are struggling to pay their light bills...if they even have lights.

[Earth_First]

2. I'm confused...

The title of the article claims: "Citigroup Won’t Take Delivery of New Aircraft" however; an e-mail from Citigroup states (quote) “Refusing delivery now would result in millions of dollars in penalties.”

So which is it?

Are they not going to take deliver of the aircraft or are they going to not pay the penalties (in the millions of dollars) and take deliver of the aircraft.

The article states two completely different situations.