The Wall Street Journal broke one of the most memorable news stories of the year over the summer when it reported that former General Electric CEO Jeff Immelt – who bowed out in June amid intensifying pressure to revitalize the company’s long-suffering share price – would routinely use a "chase plane" when flying to foreign destinations - that is, a second completely empty jet would fly behind Immelt's aircraft. The company has provided multiple justifications for the second plane, including saying it was for security purposes, and to ensure timely arrival for "business critical" meetings.
The story, which has become emblematic of GE’s longstanding tradition of grossly overspending on executive perks, was a major embarrassment for Immelt, who denied reports that he specifically requested the jet, claiming instead that his air transportation was arranged by the company’s corporate air team. Finally, he admitted that he had used two GE corporate jets in this manner up until 2014, when he changed the policy to use "locally sourced jets" as chase planes instead of one of the GE fleet.
Now, in what looks like yet another hollow gesture to try and assuage investors’ concerns about out-of-control spending at the company, WSJ is reporting that the results of yet another internal investigation into Immelt’s in-flight preferences were “discussed at the company’s latest board meeting."
This investigation was purportedly led by William “Mo” Cowan, GE’s vice president of litigation and legal policy, is leading an effort in recent weeks to find out who knew about the extra plane and when they knew it. At first blush, the investigation has the feel of a purge, meant to help the company justify cutting loose any remaining Immelt loyalists.
A similar investigation was reportedly carried out in 2014 after an employee complained to the board about the jets. Though the findings of that probe are unknown, one thing is clear: Nobody was fired because they knew about the jet but didn't inform the board.
General Electric Co. recently conducted an internal review into the flying of a spare business jet to accompany former Chief Executive Jeff Immelt, as it seeks to understand an unusual practice that went on for years and surprised investors when they learned of it in October.
The investigation was discussed at a GE board meeting last week, people familiar with the matter said. William “Mo” Cowan, GE’s vice president of litigation and legal policy, led an effort in recent weeks to find out who knew about the extra plane and when they knew it, one person said.
It is unclear whether any findings would be made public.
Mr. Immelt has said, including in a recent letter to GE’s board, that he wasn’t aware of the backup jet and that he ended the practice when he discovered it in 2014. GE has said that the two-plane practice was discontinued in 2014 and that it was limited to overseas trips with security risks and so-called business critical itineraries.
That’s right: GE conducted a separate “internal investigation” into the two-jet practice back in 2014 after an employee complained to the board. According to Immelt, the practice was discontinued shortly after. But flight records cited by WSJ show the jet was in use as recently as this spring. Furthermore, during Immelt’s 16-year tenure as CEO, GE spent millions of dollars a year on air travel.
Since Immelt left the company before the WSJ story broke, the only person who has been disciplined by the company so far for their involvement in corporate-jet gate is Susan Peters, the company's former head of HR, who recently "retired" after 38 years at the company.
GE’s market cap has shrunk by $125 billion this year as the company’s finances have deteriorated. After taking the reins, Flannery wasted no time slashing expenses, including shedding thousands of jobs and halving the company’s annual dividend.
Meanwhile, Immelt will remain chairman until his retirement at the end of this year.
At that point, Flannery – who has only benefited from this story, which cast his predecessor in a negative light while highlighting his reputation as a fiscally responsible cost-cutter – will be emboldened to continue his push to undo his predecessor's legacy by downsizing the business.