Nortel Dumps Challengers
Nortel Networks has become the latest high-profile company to dump its corporate aircraft and it left the aircraft lessor holding the bag for the lease cancellation costs. Nortel, once a powerhouse in the dotcom world, filed for bankruptcy protection last month and one of its cost-cutting moves was to cancel the leases on its two Challenger aircraft. Because it filed for bankruptcy under the Companies' Creditors Arrangement Act, it was able to simply hand the aircraft back without the normal lease-cutting penalties that would follow, company spokesman Mohammed Nakhooda told the Toronto Star.
Nortel CEO Mike Zafirovski was under criticism for his personal use of the aircraft. He regularly commuted between Nortel's Toronto headquarters and his home in Chicago. In 2007 his commute, in both the company jets and on airlines, cost the company $136,262. During Zafirovski's tenure, Nortel has lost about $7 billion. The company says it will save about $1 million a month by getting rid of the flight department.