Owens Corning seeks approval for jet leasing deal

Owens Corning has asked approval from the US Bankruptcy Court in Wilmington, Delaware, to lease three new business jets, worth about USD 45 million, to replace three older aircraft the fiberglass pion…

Owens Corning has asked approval from the US Bankruptcy Court in Wilmington, Delaware, to lease three new business jets, worth about USD 45 million, to replace three older aircraft the fiberglass pioneer plans to sell. A lawyer for the Toledo, Ohio-based firm, which has been in Chapter 11 proceedings since October 2000, said that despite the cost of USD 35 million spread over 10 years, the leasing deal would save the company more than USD 1.2 million a year compared with the expense of flying its employees on scheduled service. Norman Pernick, with the Wilmington law firm of Saul Ewing LLP, told the court that the new leased aircraft will be cost-effective, increase employee productivity, and help Owens Corning manage its global business more effectively. Approval of the leasing is expected at the court“s next regular hearing, on 27 June 2005. In the past, some of Owen Corning“s many creditors have objected to certain corporate expenses and executive bonuses, but so far the court and creditors have accepted the continued use of private planes, Mr. Krull said. The firm plans to sell its seven-year-old Dassault Falcon 900Ex, a 19-seat plane with an original price of USD 28 million, and two 10-year-old Raytheon Hawker 800XP models that seat 8 and were valued at USD 10 million when new. Mr. Krull said the jets are necessary because “Toledo is not a hub airport, and many customer and plant destinations are difficult to access … Most of our hundreds of manufacturing facilities are not located in hub cities.” The planes flew 1,800 hours and logged 6,700 passenger uses in 2004. The firm chose to lease three identical planes to streamline pilot and technician training and because there is a Cessna service center located at Toledo Express Airport. The four Fortune 500 firms in the Toledo area, including Owens-Illinois Inc. and Owens Corning, have a total of 11 corporate planes.