Nortel Should Turf the Private Jet

The demise of Nortel comes as no surprise. I worked for Nortel from 1979 to 1981. Major problems were apparent when I worked there. Nortel (Northern Telecom, Ltd back then) was a lumbering dinosaur. The corporate management attitude impeded the ability to react to a rapidly changing market place. In 1979 they were still making cross-bar switches and just dabbling in digital switches. All of their competition was going full bore on digital switching. Nortel lost the edge and never regained it. I attended on strategy meeting in 1980. I was shocked. Sales presented their forecast of what they were going to sell. Production presented their forecast of what they were going to make. One big problem! They didn't match! I attempted to bring this contradiction to light, but was "shouted down" by my superiors. Addi tonally, a close associate of mine was appointed to a high level position in "new product development". I congratulated him but asked him about "old product development". He asked what I was talking about. I outlined the fact that the products they were making did not have accurate and up-to-date Bills of Material (BOM) for the products currently being made. Nortel was losing profits on most products being made. When Nortel did a procurement for their products, the wrong components were being ordered. The correct components had to be ordered separately at additional cost. The replaced components were scrapped at pennies on the dollar or thrown away. On several occasions, I tried to raise a "Red Flag", but was ignored. Frankly, I'm surprised that Nortel lasted this long.

He should telework and save Nortel some real estate costs to boot.

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Well the jet is now grounded.....and should go up for sale soon
http://www.financialpost.com/story.html?id=1202794

as for the line:
"Mr. Nakhooda wasn't able to say when Nortel's corporate jet was last used."
http://flightaware.com/live/flight/CFNNT
This is the jet that shows up on Mark's post and flight aware shows it was used yesterday. Keep in mind that although the logs show it seems to travel between Toronto Pearson airport and a small airport near Chicago (code:KUGN), there is no evidence this is used by Mike Z just for commuting...........(yeah right)

The cost to fly by corp. jet is approx $10K per hour..... this is not just flying time, you also need to include the time the jet sits on the tarmac waiting for the Zman.

Not too OT - I just heard the DC area network was overloaded by the Zillions of Zell phones in use at Obama's inauguration.
Whose fault is that? Why, certainly those who didn't believe that Nortel's 100g of hyperconnectivity was an understatement.

But overall, Nortel employees in the US remain laid back because Obama will bail them out - free health care pension, 401k. He promised to, and we believe it!

By BOD - do you mean the same BOD that voted to be paid in cash. You see, they were paid in Stock, but so many poor BOD decision now means they suffer because they are paid in worthless stock. This is not a problem. Just protect the cask. So they do protect the cash thru Chpt 11, then issue new orders ,and now they are first to dine on the overflowing trough. So all this talk about the jet - you can`t blame Mike - he is in Rome and doing as the Romans do.

As I stated months ago, Nortel was heading into bankruptcy. All of the major indicators - declining sales, negative cash flow, lost market share, questionable deferred revenues, and bad management all were showing a company spiraling into bankruptcy.

I also stated that Mike Z and his team of GEniuses would stay at Nortel until Nortel could no longer print out their checks and that they would use bankruptcy to cease severance pay outs and pension commitments while maintaining their current levels of compensation.

Unfortunately he next chapter in the Nortel 'Saga' is the ugly 'Chaos' chapter. In this chapter, Nortel's customer and distributors starting running away from Nortel as if it is radioactive. Nortel's suppliers begin to abandon Nortel or push new and ugly sets of business conditions on Nortel. Nortel's competitors agressively target Nortel's target rich installed base and some of its core engineering talent. Internally, Nortel simply freezes. Its poor management team has lost all credibility with its employees and the public at large. Every move
that this bad management team makes will be scruntized by the courts and by the press. And of course, its employees are simply focused on getting off of a sinking ship while Nortel plunges into chaos as its management pretends to refocus 32,000 global employees and contractors with some new paradigm.
Everyday, a new and random problem will simply materialize. Contracts voided and business lost, suppliers pulling out, distributors publicly announcing their new relationship with a viable vendor, some new management
folly is discovered - like their maintaining their private jet - and publicized, major customers just walking away, and the press wil be pounding away at
the management team. And of course, the public will be watching the spectacle of lawyesr, cavemen, accounts, creditors, and bond holders chopping up the rotting carcass of a dead dinosaur.

Mike also has an appartment inToronto paid by Nortel. The corporate jet won't be droped because it is part of mike's compensation and contract when he signed in 05. The jet is also used by other execs as well. Nortel actually owns 2 jets but one has been put to work for rent.

Mike Z will keep each and every one of his perks to the bitter end. Heck, the man is having Ernst and Young draw up a KEIP bonus for himself at the same time he plans a firing frenzy against employees left without severance packages. And as I understand it, these KEIP bonuses can be designed without any performance benchmarks whatsosever! Zeroman and Hacker's status as "key employees" is enough for them to qualify. So therefore my answer is no, Mike Z will not ground the corporate jet nor wil he dispense with the limousine service that takes him to and from the airport.

Wouldn't it be interesting to hear someone say, about turfing the corporate jet , "This is a tough but necessary step as we restructure to put Nortel on sound financial footing once and for all".

that would be too good to be true.

Its a brand new jet too!

They justified buying it recently because it is a more green than their previous one, yet the cost difference and time to make up the savings I question, No wonder their SGA, the pigs at the trough keystone clowned that too.

Who approved the purchase? Board members on the voting audit committee?

The stock and company has crashed and burned yet they still sport the new jet? What's next?

For an axe-cutter, this seems contradictory too. Yet he looks like such an honest guy. With Hackney, I guess actions speak louder than words, and as for results, they may take a lot of analysis with what we may not know.

Well, he won't be flying in it much longer or working for Nortel so let them auction this off at a loss too.

I do not think they have done very much right over the years in retrospect, even though hindsight is easy, and I never did trust the big business theatrics withtheir high level contacts, they delays or silence, or what so many still there remaining silent under their councel's advise could have been feeding him that made him look like a fool and ruin his career.. if I might make such a bold statement =)

So nice to hear our CEO is still living it up....I mean who cares about the people that have actually worked hard to make this company what it WAS before he got here. I guess if he can expense his commute to the office on a private jet, does that mean the rest of us can expense our car payments, gas, and general car maintaince as well??

If Mike Z and his crew had any decency they would follow the lead of the Japan Airlines CEO Haruka Nishimatsu and work for $1 a year and drop many of the luxuries they have become used to until Nortel is in the clear.

Ofcourse that will never happen.

Greed and corruption is a standard GE management style, Mike Z is a very good student of John F. Welch Jr.

You guys are too funny! Thanks for the humor, it helps make this disaster bearable. Lets all LOL!

Are you kidding me? Ask the all mighty GE-Nius to cut back on the private jet? Why that's just absurd. Next thing you know you thankless people will expect him to get to the office some way other than a limo.

Now lets all be good little sheeple and quit trying to find ways to inconvenience the Z-Man. Just go back to work, keep your heads down, do your job, drink the koolaide, post ridiculous hope filled messages on the I Believe Facebook page, and be thankful when we are picked as the next to go so that costs can go down enough for him to get another 28% bonus for a job well done this year like he has for the past 3 years.

web.alive should allow Mike to tellcommunicate globally. Business done at hyperspeed is an understatement.

When I'm in web.alive, can I throw my shoe at another character?

that was a great comment!!!

I think this is a GREAT idea.

Totally off-topic and unrelated in every way...since web.alive now licenses the Unreal engine, does that mean that web.alive users will be able to get a BFG now?

/Calm down, it's just a joke...

Why doesn't Zafirofski use Nortel products to telecommute? Sort of like the auto execs driving to DC to beg for money. Surely he can be "virtually" in Toronto he could use a chainsaw as his avatar :)

It costs 2000 to $4000 an hour to operate a private jet.

If a CEO is making $1000 / hour and taking the jet saves a couple hours plus factor in $1000 for a first class ticket then the jet is not that much more expensive.

If you add that a couple other big shots might go along on a business trip then using the jet might actually be a savings over commercial. Sort of like car pooling for big wigs.

I once heard that if you were the bottom of the barrel like me and needed to go somewhere like RTP on business. You could find out when the big boys were going and hitch a ride on the company jet. Never found out if that was true, never heard of anybody actually doing it. Nortel urban legend?

According to google his 2008 fiscal year earning was 10,063,100 (http://www.reuters.com/finance/stocks/officerProfile?symbol=NT.N&officerId=692854) divide that by 1950 work hours (37.5/wk) in year and that works out ot $5,128 hour.

The fix is to pay the CEO what he is worth $0-$200 per hour.

Can we replace the JCI4 Pilot with a newlly Hired JCI2 from Mexico..???

He can probably do the same work for less money

Private jets for CEO's don't bug me that much. Everybody seems to feel they are a big waste of money. They fail to take into account the multimillion dollar salaries these guys make. That's $480 dollars per hour per million of salary. So if a CEO is making 2 mill a year do you really want him sitting around an airport waiting on commercial flights for $1000 an hour.

Once you take salaries into account in most cases the private jet is going to be equivalent or cheaper than a commercial flight.

If you want to discuss multimillion dollar salaries, well that's a different issue.

John Chambers, when he travels, always flies commercial. Somehow, that doesn't impact his value to Cisco.

No, I think that is incorrect. John Chambers owns his own private jet, however he only expenses the cost of a commercial flight (at least that's how it used to work).

All Cisco employees, including execs, must travel economy on any flight, including international. If they upgrade, they must pay themselves. It certainly decreases the money wastage I saw at Nortel with the "professional travelers". As for the Nortel corporate jet, that was a waste when they were solvent. Now that they are insolvent and not paying severance or pensions, it has to go.

Private jets are good tools for profitable companies to get senior executives in front of as many customers as possible.

Private jets used by bankrupt public companies to ferry the CEO to and from work is an abuse of spending. The board should stop this abuse immediately.

Mike Zs job is located in Toronto, not Chicago. If he chooses to live in Chicago, that's his decision but shareholders should expect him to get his happy ass to work on his own time and on his own nickel.

The sense of entitlement by the CEO who has driven the country into the ground is hard to understand.

Agree. I was just making the point in general. If he's using the jet for personal travel on his off time then of course that's abuse.

If he's using it for Nortel business, I'm not so concerned. A extra few thousand for a business trip here and there doesn't mean much.

I wonder why he can't video teleconference instead. Nortel is a telecommunications company. I was participating in video teleconferences as far back as 1990.

Wait a minute. This telecommuting thing....Wasn't for that exact reason that Clent Richardson left the company? Help me here, guys....

Also, he can take an apartment in Toronto. Shouldn't be that big of a deal or inconvenience when you take into account how many families he's wrecked due to his mismanagement of Nortel. Those are people who are truly inconvenienced.

How about he personally finance the jet then?

To answer your question regarding his having to hang out with the commoners waiting for a jet, I have no problem with that. The issue isn't him sitting around in a terminal, it's scheduling his time around available flights.

And regarding your statement that in most cases the private jet is equivalent or cheaper, well Joel...I think you're just mistaken.

You mean we can't train someone in one of our "Centers of Excellence" to fly the private jet?

It can't be that hard........ and we can pay them half as much

sigh....with all the begging and pleading done by Mike to all employees to cut costs at in every way possible, including doing away with meetings and R&D conferences that required travel, this is just one more slap in the face.

I don't begrudge the use of a corporate jet if he were using it solely for zipping around the world talking customers into hanging in there with Nortel and to (successfully) generate business, but to use this thing "to commute between his home near Chicago and Nortel’s corporate headquarters in suburban Toronto" is completely inexcusable.

I have no idea how much the jet costs per hour to own and operate but I'm betting it's as much as the now-lost severance of many of the hard working Nortellers recently axed and hosed in one fell swoop.

Isn' t the BoD supposed to reign in this type of excessive behaviour?

Just another example of how the executive abuses their position to bestow undeserved privileges upon themselves.

At the same time the employees were being told to cut back expenses, that travel would no longer be covered (among numerous other dubious cutbacks), this flagrant charlatan was continually flying back and forth between Chicago and Toronto because he did not want to relocate his family when he signed on. (Despite getting a huge signing bonus and other perks)

Tell me, Mr. Z, what will you say to the countless families of Nortel employees who will undoubtedly have to relocate after you complete your destruction of a once great company?

Think about that on your next 1-hour private jet flight, Mike.

Or, hey, wouldn't that web.alive gizmo somehow allow an outsourced pilot to virtually fly the jet from a much cheaper location?

Doesn't surprise me in the slightest!!

To answer the question : Yes, they should ditch the private jet, but they won't listen.

As usual, Mike Z way ahead of us on this and already offered to have 30% of the lights removed from the cockpit to save energy.

I suggest that they remove one of the plane's dual jets. This makes sense (the Nortel Way) as Mike's making "round trips", which means the plane's flying in "circles", which one jet could accomplish just fine.

I bet this was a Six Sigma idea and the Black Belt that had it was fully rewarded in lieu of incentives to the tech folks.

Can we turf the jet AND Mike Z?