(Bloomberg) -- Marathon Oil Corp. is giving up its corporate aircraft as the shale driller escalates cost cuts.
Just months after announcing plans to shrink his pay package by 25%, Chief Executive Officer Lee Tillman told analysts on Thursday that the company is ditching its aircraft program. Terminating aircraft leases cost Marathon $13 million during during the first three months of the year.
Marathon is fielding offers for a Hawker 850XP at a time of robust demand and a shrinking pool of used corporate aircraft for sale, said Janine Iannarelli, founder of boutique jet broker Par Avion Ltd.
Shale explorers are facing unprecedented pressure from investors to slash spending and return more profits to shareholders. To that end, Marathon on Wednesday doubled its 2021 debt-reduction target to at least $1 billion.
Crowded Planes
Marathon's other aircraft is leased, according to company spokeswoman Rebecca Skiba. In the past, Marathon has generally lumped aircraft obligations in with leases for drilling rigs, frack pumps and real estate.
“We're really seeing a run on inventory” of available planes, Iannarelli said. “For most makes, less than 10% of the installed base is for sale.” The pandemic has helped drive demand as commercial airlines scaled back routes and executives sought to avoid crowded spaces, she said.
Marathon, the fourth-best performer in the S&P 500 this year, fell 3.6% to $11.285 at 2:39 p.m. in New York.
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