By David Pearson
The Wall Street Journal
PARIS--French auto maker PSA Peugeot Citroen (UG.FR) is considering selling its business jet as part of a broader effort to save money, a company spokesman said Monday, confirming a report on the website of French financial daily Les Echos.
The study of a possible sale of the aircraft, a Falcon 50 built by French corporate jet maker Dassault Aviation in 1984, fits in with broader cost-saving efforts and asset disposals carried out by the company as it struggles to retain cash amid a more serious slide in European sales than the company projected earlier this year.
The gray and white corporate jet with the company's logo painted on the tail has been operated by Air Gefco, a dedicated offshoot of Peugeot Citroen's logistics subsidiary Gefco.
"We're looking at this project as part of our overall cost-savings program," a spokesman told Dow Jones Newswires.
Peugeot Citroen has targeted 1.5 billion euros in asset sales this year. It has already raised EUR440 million from the sale of Citer, a car-rental business, and has brought in another EUR245.5 million from its Paris headquarters as part of a sale and lease-back operation. The company is examining bids from private-equity companies and other investors for a large slice of Gefco--union officials say it plans to sell a majority stake in the profitable company that has been valued at up to EUR1.2 billion.
Separately, Les Echos quoted the mayor of the Paris suburb of Aulnay sous Bois as saying that Peugeot Citroen may announce the closure of its car assembly plant at Aulnay at the end of July. It said French Industry Minister Arnaud Montebourg met with local authority and union representatives Monday, and that on Tuesday Montebourg will discuss the future of the site with Peugeot Citroen Chief Executive Philippe Varin.
Like its local rival Renault SA (RNO.FR), Peugeot Citroen is caught up in an intense price war in the segment for subcompact cars in Europe due to overcapacity, falling sales and uncompetitive labor costs. In May, Peugeot Citroen's European car sales plunged 20% compared with the year before in a market that contracted by 8.7%. For the first five months of the year, its European sales were down 15%, while those of Renault were down 20%.
To improve its manufacturing costs and bring production closer to its end markets, Peugeot Citroen is ramping up production in more robust markets in Latin America and Asia and would like to reduce its footprint in France, where high labor costs are pricing it out of its home market.
Source: http://online.wsj.com
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