““CEOs go to their vacation homes just after companies report favorable news, and CEOs return to headquarters right before subsequent news is released. More good news is released when CEOs are back at work, and CEOs appear not to leave headquarters at all if a firm has adverse news to disclose. When CEOs are away from the office, stock prices behave quietly with sharply lower volatility. Volatility increases immediately when CEOs return to work.” —David Yermack, a New York University finance professor, whose recently released study shows a correlation between when CEOs take their private jets on vacation and movements in their companies’ stock price ”
Senior citizen of the sky
While the average car winds up on the junk heap after about 13 years, the typical business jet has a much longer lifespan. In fact, at least a few are still flying after more than 40 years (see box below). One vintage jet we found is owned by Rick Edwards and Louis May of Little Rock, Ark., who are business partners and have been friends since childhood. Their Cessna Citation 500 caught our attention not only because it dates from 1971, but because it has less than 6,500 hours on the airframe. That's less than 200 hours per year.
"It was a creampuff, a good-looking airplane," said Edwards, who purchased the jet with May for $1.2 million in 2003. "It's been a great airplane. It's got some of the new avionics. And of course it has the long wing."
Sierra Industries of Uvalde, Texas, offers after-market modifications to Citation series jets, including wingtip extensions that reduce the required runway length for takeoff and landing and allow for single-pilot operations. Edwards' and May's Citation features this and other modifications that made it a good choice for their mission profile. The jet is powered by a pair of Pratt & Whitney Canada JT-15D-1A turbofans.
Edwards, who founded an air ambulance service called Jet-Med with May, also operates an alarm company and a small entertainment business. May owns a construction firm. The two entrepreneurs, who use the Citation mostly for personal travel and to visit customers, recently put it up for sale, though Edwards said he is considering adding it to Jet-Med's Part 135 certificate. The pair also own a King Air C90-A and a Learjet 35 that has been outfitted with a device that circulates blood in organ-transplant patients while they are awaiting surgery.
"Rick actually tried to get Cessna to do a free RVSM [reduced vertical separation minimums] modification, for the publicity," said Keith Pfeiffer of Little Rock, who sold the Citation to Edwards and May. (RVSM equipment allows aircraft to fly within 1,000 feet of each other, instead of 2,000 feet, at altitudes above 29,000 feet.) Although Edwards' and May's Citation isn't RVSM compliant, it is equipped with a terrain warning system, a global positioning system, dual navigation and communication radios and a color radar display. "The guy we bought it from spent more than $300,000 on the panel. It basically has a CJ1 panel," Pfeiffer added.
The aircraft also features an updated interior with a toilet (concealed by curtains) and expanded baggage compartment. According to Pfeiffer, the jet's logbooks show that it began life as a corporate shuttle for American Airlines, and then had one other private owner before him. Pfeiffer, who owns a King Air B200 and a twin Cessna, said he misses the '71 Citation and thinks that old jets like it get a bad rap just for being old.
"Here's the thing with jets," Pfeiffer said. "Everything is relative to total time. That is a low-time airplane. It's got less time than some '80s and '90s vintage airplanes."
"There is a real misnomer out there," Pfeiffer said. "An older Citation with Serial Number 3 is not going to cost you any more to maintain than Serial Number 693-it's all relative to maintenance history. Service bulletins are not mandatory, but this plane has most of them done. I could go buy that airplane back from Rick and have no more maintenance costs than buying an airplane 12 years newer. But a lot of people who are going to spend a million dollars on an airplane don't want a 1971 model. It's a deal killer-albeit unfounded."