PenFed Buys $10.5 Million Jet to Become More 'Efficient and Effective'

When Chip Filson was reading the 2020 annual report of the $26.7 billion Pentagon Federal Credit Union in McLean, Va., one new line item caught his eye: $10.5 million for “aircraft equipment.”

“Which I assume means an airplane,” the founder and former CEO and Chair of Callahan & Associates, wrote in his Aug. 9 Just A Member blog. “That amount could buy a whole lot of plane. Not sure why a credit union should have its own plane. Perhaps it could be used to survey the credit union’s national field of membership acquired in its merger with Progressive Credit Union.”

When contacted by CU Times, PenFed President/CEO James Schenck confirmed that PenFed purchased a plane.

“After careful consideration of our business needs, PenFed acquired an employee business shuttle to help us become even more efficient and effective in our national operations serving members through PenFed’s regional financial centers in San Antonio [Texas], Omaha [Neb.], Eugene [Ore.], and our Tysons, Virginia headquarters,” Schenck said. “The cost of the shuttle represents less than 0.2% of PenFed’s annual operating costs, and this decision benefits our members and employees through increased safety and productivity.”

He added, “I encourage other credit unions to evaluate opportunities to cost-effectively meet their transportation needs and accomplish their mission as they do for other investments in their asset base.”

Schenck would not share additional information when asked whether the credit union conducted a cost benefit analysis that indicated purchasing an airplane could be more cost effective compared to flying commercial for business trips.

He also would not answer CU Times’ questions regarding the make and model of the plane, how much would it cost PenFed to maintain and operate it, if the pandemic played a role in the credit union’s decision to purchase the plane, which employees would primarily use the plane, or whether the PenFed board unanimously supported the acquisition of the plane. Schenck also would not explain why PenFed described its airplane as “aircraft equipment,” as opposed to just ”aircraft” in its annual report.

“PenFed does not have anything further to add beyond the statement we previously provided,” a PenFed spokesperson wrote in an email.

Because all aircrafts must be registered with the Federal Aviation Administration, its records showed that PenFed owns a Cessna Citation 560XL midsize business jet manufactured by Textron Aviation in 2020. In March, the manufacturer boasted that it completed the 1,000th delivery of the best-selling jet, noting that every two minutes a 560XL takes off or lands somewhere around the world.

The plane can carry up to eight passengers in first-class comfort and is packed with features generally found in larger jets and commercial aircraft, according to Air Charter Advisors, a private jet charter broker in Blue Bell, Pa. The jet can cruise at 507 mph and travel more than 2,200 miles.

“The cost of ownership for the Citation Excel over 200 hours of flight time carries an annual budget of around $950,000, including fixed costs between $380,000-$580,000, and operating/variable cost of between $370,000-$440,000,” Air Charter Advisors reported. “The operating cost comes out to around $2,150 to $2,250 an hour.”

PenFed is one of the nation’s Top 10 credit unions by assets. CU Times contacted nine of PenFed’s peer credit unions to see if any of them own or lease a private jet for business trips. Eight of them reported they do not own or lease a jet and that their executives fly commercial for business trips. The eight include the $147.8 billion Navy Federal Credit Union in Vienna, Va., $49.9 billion SECU in Raleigh, N.C., $28.6 billion BECU in Tukwila, Wash., $25.9 billion SchoolsFirst Federal Credit Union in Santa Ana, Calif., $17.5 billion Golden 1 Credit Union in Sacramento, Calif., $15.9 billion America First Federal Credit Union in Riverdale, Utah, $14.1 billion First Tech Federal Credit Union in San Jose, Calif., and the $13.9 billion Randolph-Brooks Federal Credit Union in San Antonio.

The $14.3 billion Alliant Credit Union in Chicago did not respond to CU Times‘ phone calls and emails. However, there is no private airplane registered under the credit union’s name, according to the FAA registry.

Schenck has been a pilot since he was a teenager and flew Blackhawk helicopters when he served in the U.S. Army, according to a video he posted on his LinkedIn site about three months ago. The video showed Schenck inspecting and flying a SR22 fixed wing single engine aircraft, which the FAA registry shows was manufactured last year by Cirrus Design Corp. in Duluth, Minn.