Business

Tesco confirms delivery of Gulfstream jet worth £30m

A Gulfstream jet Image copyright AP
Image caption A Gulfstream jet similar to the £30m aircraft Tesco has bought

Tesco has confirmed it has taken delivery of a new private jet worth £30m, a week after major errors were discovered in the company's accounts.

The new Gulfstream aircraft brings to five the number of private jets owned by Tesco - all of which are to be sold under the orders of the new chief executive, Dave Lewis.

Tesco paid for the jet 20 months ago and is required to take delivery.

The supermarket's share price has plunged by nearly 50% so far this year.

News of the private jet comes a fortnight after it emerged that Tesco had overstated its profits for the first half of the year by £250m.

That prompted an independent inquiry and the suspension of a number of key employees, including the UK managing director.

Analysis

By Joe Lynam, BBC News business correspondent

There is a theory that when big companies splash out on new headquarters or other lavish items, their demise is waiting around the corner.

RBS moved into its huge new headquarters outside Edinburgh just before the financial crisis in 2007. Something similar happened to Lehman Bros, Anglo Irish Bank and Enron.

Hubris at the top of an organisation can be fatal in business terms as it signals that the hunger that got that firm to the top is waning.

Tesco will hope that its move to swiftly sell all five of its private jets will ground the company and its ambitious executives in the reality of the task that faces them.

The days of unstoppable growth and profits are over thanks to Aldi and Lidl. The days of frugality, hard work and no private jets await.

Professor Jeremy Baker from the ESCP Business School said Tesco appeared not to have noticed that its industry had "drastically changed".

"The glamour has gone out of supermarkets," he said.

"It's still a vital part of lives but it's become just like air travel after the arrival of Easyjet and Ryanair.

"This cut-price world affects everything, particularly those at the top who should be setting a lesson for everyone and everything in the organisation - ie everything they do must be cut price."

The Gulfstream G550 was ordered and paid for nearly two years ago under Tesco's previous chief executive Philip Clarke.

It was intended to replace an older but similar private jet.

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