RIM Said to Sell Jet to Help Save $1 BillionHugo Miller
Research In Motion Ltd., which has lost 95 percent of its market value since 2008, is selling one of its two business jets under a plan to save $1 billion in operating costs, two people with knowledge of the matter said.
The maker of BlackBerry devices put its nine-passenger Dassault Aviation SA F50EX up for sale, trying to fetch $6 million to $7 million, one of the people said. The person declined to be named because the sale hasn’t been completed. Selling the midrange jet would leave RIM with one Dassault F900EX, a longer-range aircraft that can fit 14 passengers, the person said.
Chief Executive Officer Thorsten Heins, who answered shareholders’ questions today at RIM’s annual shareholder meeting, is trying to rein in costs as the company’s smartphones fall out of favor and losses mount. A 47 percent plunge in U.S. sales last year has left RIM increasingly dependent on markets such as Indonesia and South Africa, forcing its top executives to roam further afield for sales growth. The company has offices in at least 27 countries and sells phones in more than 175 markets.
“We’re looking at options with both our aircraft costs and finding ways to reduce our travel while still making sure we keep in close contact with our partners around the world,” Waterloo, Ontario-based RIM said in a statement in response to inquiries from Bloomberg. “It’s all part of the effort to find ways to reduce costs and drive efficiencies that Thorsten Heins has talked about.”
Heins has said he’s aiming to save $1 billion this fiscal year through “significant efficiencies and operating cost reductions.” That includes cutting 5,000 jobs, or about a third of RIM’s workforce, and a number of manufacturing sites.
Vadim Feldzer, a spokesman for Paris-based Dassault’s Falcon business, didn’t return phone calls seeking comment.
The F50EX typically costs about $2.1 million a year to run based on an hourly flying cost of $3,400, according to Bill de Decker, founder and president of Arlington, Texas-based business jet consulting firm Conklin & de Decker. The larger F900EX costs about $2.2 million in annual operating costs.
The jet for sale was built in 1999, features beige leather interior, “high gloss Swiss woodwork” and “gold-plated hardware,” according to a sales brochure for the aircraft.
While the yearly savings RIM can expect from paring its fleet is modest because it will now have to pay more for commercial jet travel, such moves assume much greater importance when the company is cutting jobs, de Decker said.
“With corporate aviation, the symbolism far outweighs the dollars,” he said.
Shrinking sales, market share and profitability have shaken investor faith in RIM’s stock, which has lost three-quarters of its value in the past 12 months. The stock fell 5 percent to $7.29 at the close in New York.
The share performance has pushed Heins to intensify cost cutting, even as he pours more resources into finishing the new BlackBerry 10 operating system, RIM’s bet to compete with Apple Inc.’s iPhone and devices running Google Inc.’s Android software.
Heins last month announced a delay of the first BB10 phone until the first quarter of next year. That means the introduction will be at least a year later than originally expected.
Heins and key deputies such as Alec Saunders, head of BlackBerry developer relations, have been crisscrossing the globe to drum up support for the new BlackBerry platform and current smartphone models. For distant markets, RIM’s remaining Dassault F900 -- with a range of 4,500 miles (7,240 kilometers) -- is a useful aircraft, said de Decker.
“They could say, ‘We believe our growth is in X, Y and Z, and we’re keeping a long-range aircraft,’” he said. “And at the same time, ‘We know we need to save money, so we’re going from two aircraft down to one.’”
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