Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Citi says no to $45 million jet

Treasury Department disapproves of Citigroup's plan to spend $45 million on a corporate jet after receiving TARP funds.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Ed Henry, CNN White House Correspondent

What is hurting you the most?
  • Housing meltdown and foreclosures
  • Job cuts and unemployment
  • Cutbacks in government services

WASHINGTON (CNN) -- Citigroup reversed course Tuesday, a day after a Treasury Department official called the struggling company and "told them it was unacceptable" to accept delivery of a new $42 million corporate jet, a senior administration official said.

The move comes as new Treasury Secretary Timothy Geithner tries to quickly bring more accountability and oversight to the much-maligned TARP program he now oversees.

Under that program, Citigroup has already received some $45 billion in government bailout funds, which is why a New York Post report about the scheduled delivery of the new jet sparked outrage.

White House Press Secretary Robert Gibbs said Monday the president believes private jets aren't "the best use of money at this point" with America facing a financial crisis.

Citibank spokesman Michael Hanretta told CNN Tuesday the company has "no intent to take delivery of any new aircraft."

This came after the company initially said on Monday it could not comment on whether it was purchasing the jet, citing security reasons. Hours later it reversed course, issuing a statement saying it signed a contract in 2005 for a replacement aircraft as part of a plan to reduce the number of planes it owns and cut operating costs. "Refusing delivery now would result in millions of dollars in penalties," it said. "Citi is exploring all its options for these assets, including the potential sale or lease of the aircraft."

Citigroup (C, Fortune 500) paid $42 million for the corporate jet, according to a source familiar with the situation. The company will get most of that money back, but is likely to have to pay a penalty in the range of $3 million to $4 million, the source told CNN. The exact amount and terms were still being negotiated.

The luxury jet that was to be purchased is a Dassault Falcon 7X, which seats 12. It is so exclusive that Dassault says only 21 are operating around the world. It said the price is listed at $45 million.

-- CNN's Mary Snow and Emily Anderson contributed to this report.

Talkback: Get your economic questions answered. E-mail realstories@cnnmoney.com with questions about jobs, housing, energy, student loans, credit cards, Americans' spending and savings habits, etc., and they could be answered on air as part of the first CNN Money Summit.  To top of page

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
Top luxury hotel suites for business travelers For many people, you can't put a price on comfort. More
Million-dollar startups: These firms scored big sales their first year Their first year in business, these companies generated $1 million in sales. More
The 10 best states for retirees It might be worth moving to a new place to find your dream retirement home. Check out these 10 states. More