GE GE Aerospace

By Doug Cameron 

Boeing Co. made its latest change top management Monday, hiring a General Electric Co. executive to run its commercial aircraft business, the company's biggest division.

Kevin McAllister, who served as chief of GE Aviation Services, the support arm of its big aircraft engine business, is to take over the unit immediately and replace Ray Conner, who was its head for more than four years.

Boeing's profit margins have been under pressure as it absorbed costs from developing new jets and competing with Airbus Group SE. Mr. McAllister takes on the challenge of boosting jet production and cutting costs as Boeing branches into more profitable areas such as selling spare parts.

The company wants to triple service revenues to as much as $50 billion a year over the next decade, and Chief Executive Dennis Muilenburg said it had plenty of room to grow as its share of the commercial market is just 7%, and 9% for military business.

Today's action is a very concrete step in that direction," Mr. Muilenburg said on a call with reporters, noting Mr. McAllister, aged 53, arrives with "fresh ideas" as well as a long working relationship with Boeing. The company is also combining the service arms of its commercial and defense and space operations in a new Dallas-based business unit with 20,000 staff led by Stan Deal, a senior executive in its existing shared services support division.

It is unusual for Boeing to reach outside the company for executives, and Mr. McAllister is the first outsider to head the commercial jet arm and the most senior external hire since Jim McNerney was hired from 3M Co. as CEO in 2005.

Boeing has a backlog of more than 5,600 jets, more than half of them powered by GE engines, and Mr. McAllister will also oversee the development of upgraded models of its 737 single-aisle plane and 777 widebody.

Mr. McAllister joined GE as a product engineer in 1980 and initially worked on developing commercial and military engines before moving into its customer support operation in 1998. GE is the exclusive engine provider for some Boeing jets, including the new 737 Max.

Mr. McAllister's departure wasn't a surprise within GE Aviation, where the executive had previously served as a general manager for global sales and marketing, overseeing jet engine sales. Internally, Mr. McAllister had been considered a potential successor to GE Aviation CEO David Joyce, his mentor.

When Mr. Joyce was named a vice chairman of GE in September, likely meaning he would remain in the position several more years, Mr. McAllister's departure became more likely, a person familiar with the matter said.

Since Mr. Muilenburg took over as chief executive in July last year, the company has hired a new chief for Boeing's defense arm and new leaders for its military and commercial aircraft units.

Mr. Conner, aged 61, had been president and CEO of Boeing Commercial Airplanes since June 2012, and oversees its main aircraft manufacturing facilities around Seattle. He joined the company in 1977 as a mechanic on its 727 jet program and rose through the ranks to lead its 747 and 777 jet lines. He will remain as Boeing's vice chairman before retiring at the end of 2017.

--Ted Mann contributed to this article.

Write to Doug Cameron at doug.cameron@wsj.com

(END) Dow Jones Newswires

November 21, 2016 19:16 ET (00:16 GMT)

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