RBS Cancels Luxury Jet For Ousted Execs

RBS placed the order for a state-of-the-art Falcon 7X business jet worth $40-45 million about five years ago.

Royal Bank of Scotland cancelled a $45 million order for a luxury private jet that would have been used by ousted CEO Fred Goodwin and other executives if the bank had not needed a taxpayer bailout.

RBS is majority-owned by Britain's government and is mired in a high profile row over a 16.6 million-pound ($23.7 million) pension pot for Goodwin.

The bank was among a list of companies that cancelled orders for Dassault Aviation's state-of-the-art Falcon 7X business jet and rival models in the wake of the financial crash and fury over boardroom perks, the French manufacturer said on Thursday.

RBS placed the order for the ultra-modern long-range Falcon 7X worth $40-45 million about five years ago, and the plane was due to be delivered this year, Dassault civil aerospace business head Olivier Villa told Reuters.

RBS said it cancelled the order in October. That was the month Britain's government pumped 20 billion pounds into the bank and took a majority stake, and Goodwin was replaced as CEO.

"Our new CEO has taken the decision to dispose of our corporate jet and we are currently in the market looking for a buyer," a spokesman for the bank said. "Prior to this we had considered replacing the current aircraft but a decision was taken last October not to proceed with this."

Deposits of 10 percent before delivery are most times kept on cancelled orders, but RBS said it had not lost its deposit nor any money on the deal and had sold on the order for the jet.

Asked whether the plane, capable of flying from London to Tokyo, had been intended for Goodwin's use, Villa said he did not know but assumed it was for the "top executive team".

Goodwin served as CEO from 2001 until he was forced out in a deal over a government rescue package for the bank in October 2008.

Goodwin has rejected calls from the government to hand back part of his pension, saying it had been agreed by ministers.

The list of Dassault's cancelled orders also includes U.S. bank Citigroup, once the world's largest bank, which has also been battered by heavy losses.

Citigroup said in January it had cancelled an order for a business jet that politicians called wasteful, but officials at Dassault Aviation said it had received a total of three plane cancellations from the U.S. group as it sheds assets.

Citigroup in New York had no immediate comment.

SPACIOUS INTERIOR

The Falcon 7X entered service in 2007 and is the world's first business jet built with "fly-by-wire" or digital technology resembling the cockpit of a modern jetliner.

Assembled in Little Rock, Arkansas, its interior includes hand-stitched leather seats and custom-made furnishings.

Its 39-foot-long (11.9 metre) and 92-inch-wide (2.34 metre) cabin is large enough to accommodate 19 passengers, but it usually comes with fewer seats and more spacious fittings.

Business jet demand fell after automakers flew to Washington in luxury jets to seek bailouts, triggering a scandal in the United States and putting pressure on bankers to get humble.

Edelstenne said Dassault would cut production and may lay off workers because it has received more cancellations than orders so far this year. But he called the scandal overdone.

"You have the pillory out in Congress and people saying 'quelle horreur' that anyone uses a business jet. It's an excess reaction that will be balanced in six months or a year," he told a news conference after the planemaker reported lower profits.

"When you look at studies, 80 percent of passengers are in middle management. They are not all used by the chief executive to get tanned in the Bahamas or to go and play golf."