Not-So-Friendly Skies for Starbucks

News of Starbucks' (Nasdaq: SBUX  ) brand-new corporate jet certainly isn't a high point for the company's public image.

Last week, news broke that Starbucks has gotten the new jet in mid-December, costing the company $45 million. The Seattle Times also reported that CEO Howard Schultz had apparently taken his family to Hawaii on the plane during the holidays. (The company declined to specify who had taken the jet during that period and said it was a trip that combined personal and business use.)

Corporate jets are a perfect symbol of the corporate excess that is quickly losing favor in these days of dwindling profits and government bailouts. There was quite an uproar when the CEOs of General Motors (NYSE: GM  ) , Ford (NYSE: F  ) , and Chrysler took private jets to Washington to appeal for an automaker bailout. (Some of us would have rather seen them hitchhike.) Meanwhile, the financial companies that have received bailout money apparently aren't forcing their employees to fly coach either. AIG (NYSE: AIG  ) , for example, has a fleet of seven planes; although a company spokesman said they are being used "sparingly" now, he wouldn't go so far as to say they're not being used at all.

The Starbucks story isn't quite as awful as it may sound (and it certainly isn't looking for a bailout), but that probably depends on how forgiving you want to be. A company spokesperson was quoted by the Seattle Times as saying that the new plane was ordered three years ago, and cancelling it would have been too expensive. Meanwhile, Starbucks does require executives to reimburse the company for any personal use of the jet.

Still, a brand-new, $45 million jet looks pretty bad when Starbucks annual per-share profit dropped 51% in the last year. It also looks downright hideous when you consider the fact that Starbucks has been closing stores and cutting workers.

In having the jet, Starbucks may not be doing anything any differently than a multitude of companies did during the go-go times. Still, given our troubled economy, and how much decadence and waste there has been, I have a feeling such symbols of excess are quickly becoming a thing of the past. There's going to be plenty of public backlash, and I don't blame anybody for thinking such perks are wasteful, if not insulting, to shareholders.

At the very least, Starbucks' new jet seems to be an expensive, anachronistic symbol of a time when Starbucks was certainly flying a heck of a lot higher than it is today. And that is sad on several different levels.

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Alyce Lomax owns shares of Starbucks. The Fool has a disclosure policy.


Read/Post Comments (3) | Recommend This Article (9)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 12, 2009, at 5:34 PM, jesmith154 wrote:

    Thinking about buying/keeping the corporate aircraft? Consider this, during a recent consulting expense reduction project I had received 800 suggestions by the third week. The aircraft were a significant issue with the employees. That day the CEO announced his decision to sell the planes as part of our project to listen the the employees. Exactly one week later we had 7000 suggestions which generated $300 million in sustainable reductions. Mr. Executive, SELL the DAMN PLANE, if it's absolutely necessary to fly a private plane, CHARTER it!

  • Report this Comment On January 13, 2009, at 4:00 AM, goundgrounds wrote:

    This CEO is an egomaniac and like most CEOs he has a problem with dishonesty. He sat on the board and smiled and nodded through each and every project the other guy undertook...then he pounced on him when the economy got bad and ran the guy off. I believe it is only a matter of time until this place is out of business...Good riddance!!!!

  • Report this Comment On January 13, 2009, at 11:50 AM, brodave66 wrote:

    Dear Ms. Lomax,

    I thought that this dog was your pick for "Best Stock for 2009".

    I suggest that you dump SBUX while you can still get $9 or $10 bucks a share for it.

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