This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (October 30, 2017).
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General Electric Co. executives didn't notify the company's board until this month about its regular flying of a spare business jet for its CEO, and it didn't tell directors that GE had received an internal complaint about the practice several years ago, according to people familiar with the matter.
GE management first informed the board about the practice after The Wall Street Journal reported Oct. 18 that former Chairman and CEO Jeff Immelt had an extra aircraft follow his corporate jet on some overseas trips during much of his 16-year tenure, the people said.
The company told GE's directors the company had reduced the practice in mid-2014 and that the continued use of the backup plane was limited to isolated situations such as travel to risky destinations. The board members were previously unaware, the people said, and some were dismayed to learn of the practice. "Obviously, this was an excess," one of these people said.
Mr. Immelt told the Journal on Thursday that he, too, didn't know the spare plane was flying. "This is not a practice I would have allowed," he said in an emailed statement. Mr. Immelt stepped down as GE chairman in early October after earlier resigning as CEO.
The practice came to an end when Mr. Immelt's successor, John Flannery, decided to ground the company's fleet of corporate aircraft as part of broader cost-cutting moves. Mr. Flannery plans to sell the aircraft and changed policy so GE executives would instead fly on commercial or charter flights.
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The two-plane trips continued until at least this past spring, according to people familiar with the matter and flight records. They flew in years when the Boston-based giant was under investor pressure to cut spending and boost profits, part of an effort to reverse a prolonged stock slump. GE shares have tumbled more than 33% this year, and investors are bracing for a potential cut to its dividend.
On March 11, for example, two GE-owned Bombardier Global Express jets took off from Boston within 19 minutes of each other and flew to Anchorage, Alaska, according to Federal Aviation Administration flight records reviewed by the Journal.
One plane stayed in Anchorage for more than five days, while the other flew on to South Korea and China, according to FAA records. Mr. Immelt tweeted a photo of his visit to a Chinese factory during the trip. His plane returned to Anchorage on March 17, and within 90 minutes of his arrival, both planes left Alaska to return to the East Coast, the records show.
There were similar two-plane trips to Anchorage in 2013, 2014 and 2016, with one Bombardier plane each time continuing on to Asia and back. Both planes traveled together to the Canary Islands in February 2016 and Honolulu in April 2017, flight records show.
And in September 2016, the two jets followed each other around the globe on a nine-day voyage that included stops in Anchorage, Tokyo, Kuala Lumpur and Helsinki before returning to the East Coast, according to FAA records and flight-tracking services. Mr. Immelt visited several South Asian nations during the trip, according to local press reports, and was photographed with Malaysia's prime minister.
The extra plane added about $250,000 to the cost of the round-the-world trip, based on an estimated hourly cost of $6,500 to operate each Bombardier, including fixed costs such as pilot salaries and maintenance, according to Conklin & de Decker, an aviation-consulting firm. The large jets are the size of a regional airliner and typically are configured to seat 10 to 14 passengers.
Sending a backup plane along is "extremely unusual," said Jim Cannon, an aviation consultant who formerly directed a large-company flight department. "I hope it would only be done in circumstances where there was a significant need."
A GE spokeswoman said, "This practice, which GE has discontinued, involved business-critical itineraries with tight schedules, multiple international stops and, in most cases, security concerns."
"We do not believe that the understandable criticism of this discontinued practice fairly reflects on Jeff's dedicated service to GE for over 30 years," she added, referring to Mr. Immelt.
While CEO, Mr. Immelt wanted a backup jet in case there was a mechanical issue that could lead to delays, the people said. Flight crews were told to not openly refer to the backup planes, for fear of raising eyebrows, especially at the small airport facilities for private jets, the people said. One person said the flight manifest sometimes listed "Robert Jeffries" or "Jeffrey Roberts" as the passenger on the second plane, when in fact the seats were empty.
Mr. Immelt said he didn't request the extra plane. "The Corporate Air team at GE had a practice around managing air travel that I neither instituted nor asked for," he said. "Apparently, this policy was put in place after numerous plane failures on complicated travel to difficult global locations."
Early in Mr. Immelt's tenure, GE would fly spare jets on domestic flights, the people said, but it later stopped that practice. On some trips, both overseas and domestic, the company would charter standby jets at different destinations, the people said.
GE's board required its CEO to fly on the company's aircraft for both business and personal use for security reasons.
GE informed its board's compensation committee each year about how much the company had spent to fly Mr. Immelt on corporate aircraft, the people said. But those total amounts lacked details such as how many flights the CEO took, the number of pilots involved or the cost of aircraft fuel, people familiar with the process said.
Directors assumed that GE's human-resources executives had reviewed details about Mr. Immelt's personal and business trips, according to one person.
The GE board's compensation committee should have requested more detail about Mr. Immelt's usage because "corporate jets have become such a lightning rod" for criticism, said Beverly Behan, a corporate-governance consultant who has never advised GE.
--Coulter Jones contributed to this article.
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(END) Dow Jones Newswires
October 30, 2017 02:47 ET (06:47 GMT)