Tesco attracts investor support as it defends use of private planes

Michael Bow
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TESCO’s fleet of private jets, used to ferry its executives around the globe, has been laid bare for the first time as a leading City figure sprang to defend the firm over the use of the planes.

The supermarket giant, which reveals its much-anticipated Christmas trading figures on Thursday, operates a subsidiary, Kansas Transportation, to lease three planes to fly executives to work around the world, costing the business nearly £9m last year.

The use of the jets based at Luton Airport – a Hawker 800XP, a Cessna Citation CJ2 and a Gulfstream G550 – has attracted attention due to Tesco’s poor performance in the short-term and the rising cost of the jets, which has nearly tripled since 2009.

Since 2005, the firm has spent nearly £30m on the private planes.

Between 2005 and 2012 – the period the jet division has operated between – Tesco as a whole has doubled annual profits from £1.8bn to £3.8bn.

Yesterday City grandee David Buik rushed to defend the firm over the use of the jets.

“You’ve got a pretty big empire when you’re a publicly listed company.

“Providing the use of them is for executive purposes and it’s transparent and improves efficiency, I have got no problem with it.

“To be seen to be indulgent would be utterly stupid, but that’s not the case in this instance.”

A source close to the company yesterday said it had received no complaints from shareholders on the use of the jets.

“I’d be surprised if any global company didn’t at some point use a private jet. We don’t have a reputation for extravagance.

“They’re not a perk, they’re not just a frivolous luxury,” the person said.

Tesco refused to comment. It has previously said it is “common” for multinational companies to use private aircrafts help executives make “efficient” use of their time.

Tesco currently operates in 14 countries around the world and said its travel spend had gone up after putting more resources into Asian offices to oversee growth in the region.

In December, the firm announced a review of its loss making US chain Fresh & Easy, which could see its interests in America eventually sold.

Tesco has been undergoing a transition period since its previous chief executive Sir Terry Leahy stepped down in 2011 and was replaced by Philip Clarke in April 2011.

The use of private jets by global supermarket jets is not uncommon.

American multinational Walmart has its own aeroplane division, Walmart Aviation, which it gives significant prominence to on its website.

The firm proudly boasts that the jets give it “competitive business advantage” on a daily basis.

Tesco set up its jet leasing operation Kansas Transportation in 2005 in a bid to obtain better terms from suppliers of aircraft and fuel.

The Gulfstream 550 jet, commonly referred to as a G5, is a favourite of other high profile companies.

Google reportedly operates two of the planes for executives based out of an air field in California and Apple’s Steve Jobs was also known to own one.