DealZone

A tale of jet-setting and cost cutting

July 1, 2008

falcon2.jpg

(Adds comment from Anheuser)

August Busch IV may be trying to show he can be tough on cost controls as the beer giant he leads attempts to fight off a takeover bid from Belgian-Brazilian rival InBev. But an analyst has pointed out that when it comes to flying its executives around, the company may have some questions to answer.  

It seems that Anheuser-Busch could be running a substantial fleet of executive jets, Bernstein Research said in a note dated today. 

Bernstein said that according to a Dassault Falcon Customer Service Newsletter published at the end of 2006, Anheuser had eight Falcon executive jets and was the US launch customer for the new top-of-the-range Falcon 7x in 2007. 

“It may be completely insignificant but we note that the defence presentation assigns savings to G&A (general and administrative) personnel rather than corporate expenses,” the Bernstein note says in reference to Anheuser’s effort to thwart the InBev bid.  

Anheuser’s Vice President and Controller John F. Kelly responded on Monday: We’ve reduced our corporate aircraft by two planes since 2007 and continue to assess our travel needs.  St Louis commercial direct flight options have become more limited, requiring connections and more management time.  Our planes make travel more efficient with fewer overnight trips.  Anheuser-Busch has facilities in many areas, including rural regions, and wholesalers in both large and small markets.  Like many major corporations, we have found corporate aircraft are an important and efficient means of maintaining the face-to-face relationships that drive our business.  The company did not take ownership of the 7X, but rather transferred our position to another company.”

The company said last week that it would make some staff cuts and reduce some employee pension payouts

The Federal Aviation Administration’s aircraft registry lists two Dassault Falcon corporate jets, two Bell light helicopters and a Raven hot air balloon as owned by Anheuser Busch Cos Inc. 

In its annual statement to shareholders in March, Anheuser disclosed it pays Ginnaire Rental, a company owned by August Busch III, August IV’s father, $407,611 in 2007 to lease aircraft. 

In a recent Q&A to shareholders, August Busch said the company had always “effectively contained costs compared to other domestic brewers”. 

Busch III’s son Steven Busch seems to be heeding that advice. Anheuser’s annual statement on compensation said that last year Steven Busch sometimes accompanied his father or piloted the aircraft “at no additional cost to the company”.

(Additional reporting by Bill Rigby in New York) 

(Photo from Reuters archives: A Dassault AviationFalcon 7X jet)

Comments
2 comments so far | RSS Comments RSS

hard for me to believe this board is going to be fair about this takeover as august the 4th said “this company will not be sold under my watch” before the official ^% offer. now he wants us to believe the board will give it an objective look. also if you ask to speak to the investor relations at A B you will have your name and topic taken and a promise that they will get back to you in 7 to 10 days. i have still not heard from them after 2 weeks. this is a self serving management and board and they could care less about the average shareholder in my opinion. the fllet of jets they have is a good example of that.

Posted by Steve Galambos | Report as abusive
 

Savings of $407,611 per year will not make a big difference.

 

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