Markets

Williams-Sonoma Dumps Company Jet for $47 Million

By David Phillips

Updated on: September 15, 2008 / 9:26 AM EDT / MoneyWatch

According to its 10-Q filed with the SEC on Sept. 12, in the second quarter ended August 3, Williams-Sonoma took advantage of a bustling corporate aircraft market and sold its Bombardier Global Express airplane for approximately $47 million in cash, resulting in a pre-tax gain of about $16 million. How much the high-end kitchenware retailer will save in annual operating costs by selling the plane isn't yet clear. To address the travel needs of CEO W. Howard Lester, the company entered into an aircraft lease agreement -- with a limited liability company owned by Lester -- for use of a Bombardier Global 5000:

Under the terms of the Lease Agreement, in exchange for use of the aircraft, we will pay the LLC $375,000 for each of the thirty-six months of the lease term through May 15, 2011. We are also responsible for all use-related costs associated with the aircraft, including fixed costs such as crew salaries and benefits, insurance and hangar costs, and all direct operating costs.

The LLC will receive an aggregate $13.5 million over the three-year life of the lease. In 2006 and 2007, Williams-Sonoma reimbursed Lester $453,614 and $346,575, respectively, for his personal use of the company jet, according to the 2008 proxy statement filed with the SEC on May 8. No mention was made in the latest filing as to whether Williams-Sonoma would continue to service Lester's discretionary use of the company plane.