By Jon Ostrower
Boeing Co. said Chief Executive Jim McNerney will step aside
next week after a tumultuous decade at the aerospace giant and hand
over the top job to one of his lieutenants.
Mr. McNerney, 65 years old, is retiring at the end of February
2016 after a transition period, but will continue on in his role as
chairman. He said in an interview he will remain on the board "for
the foreseeable future. Until such time that I start getting in the
way."
His successor, Dennis Muilenburg, said Tuesday that Boeing's
strategy was unchanged as it headed into its second century.
Tackling the challenge of delivering a half-trillion order backlog,
sharply reducing 787 Dreamliner costs and adjusting its defense and
space business to rapidly changing domestic and international
spending are the main challenges as he prepares to take over after
the 10-year tenure of Mr. McNerney.
Mr. McNerney reached Boeing's mandatory retirement age in 2014
but had stayed on as CEO. Under his watch, Boeing's defense
business shrank and airlines binged on their largest-ever jet
buying spree.
Mr. Muilenburg, 51, had been widely expected by analysts and
company insiders to be the next CEO after being promoted to
president and chief operating officer in December 2013. The latter
position didn't exist prior to his elevation. He previously headed
Boeing's defense and space business. Tuesday's appointment,
however, came sooner than many analysts had expected.
The 30-year Boeing veteran assumes the CEO job as the company
implements plans to boost production of its best-selling commercial
jets and refresh its product lineup with revamped planes, while
Pentagon budget pressures could also force it to further reshape
its defense business.
"I don't see this as a generational shift," Mr. Muilenburg said
in an interview. "We're confident in the strategy that we have in
place and we're going to continue to drive that strategy with
pace."
Mr. Muilenburg's appointment "universally supported" by the
board, which met Monday, said a spokesman.
Boeing shares more than doubled during Mr. McNerney's tenure as
CEO, though the former 3M Co. boss and General Electric Co.
executive was at the helm during the erosion of its single-aisle
jet market share to rival Airbus Group SE and a series of crises,
including cost overruns, a three-year delay in delivering its
marque Dreamliner jet and the plane's subsequent three-month
grounding after two lithium-ion batteries overheated.
The company was bruised by the Dreamliner's problems and still
faces significant cost pressures, with combined production losses,
known as deferred production costs, climbing to $27 billion. The
program is considered profitable by Boeing's accounting which
allows it to spread the high early costs over 1,300 deliveries. In
the program's wake, Mr. McNerney last year said it would steer
clear of "moonshot" new programs in favor of incremental
improvements to its commercial jets, though it has started
exploring a possible successor to its 757 workhorse.
Mr. Muilenburg's tasks include executing planned increases in
production of its workhorse 737 Max jet and the revamp of its
popular 777 long-range jetliner--all while maintaining record
output of both heavy cash-generating programs. Ray Conner will
remain head of Boeing's commercial jet business and becomes the
sole vice chairman.
Mr. Muilenberg took over the defense unit in 2009, and oversaw
acquisitions that have helped make Boeing the world's
second-largest defense contractor by sales after Lockheed Martin
Corp. But it is facing the potential closure of its fighter-jet
line in St. Louis unless it can secure more orders. Boeing is
bidding with Lockheed for a $80 billion contract to build a new
bomber for the U.S. Air Force in competition with Northrop Grumman
Corp.
Mr. Muilenburg's appointment also returns an engineer to the
company's top management position. Mr. Muilenburg holds a
bachelor's degree in aerospace engineering from Iowa State
University and a master's degree in aeronautics and astronautics
from the University of Washington. The outgoing Mr. McNerney was
often criticized for not having a classical technical background
when running the aerospace giant. Mr. McNerney holds a bachelor's
degree from Yale and a master's of business administration from
Harvard University.
Mr. McNerney's exit on July 1 will be 10 years to the day since
he assumed the position. An often divisive figure among the
company's workforce and its supply base, Mr. McNerney made
significant strides in bringing together both the commercial and
defense sides of the company's business to win new business and
solve problems. Mr. McNerney cultivated deep ties within
Washington, D.C., having served as the chairman of President
Obama's Export Council.
"My legacy is for others to conclude," said Mr. McNerney.
Boeing shares fell 0.4% at $143.88 in after-hours trading, and
are up 11% so far this year. The shares were down 0.9% to $144.43
at 4 p.m. Tuesday.
Doug Cameron and Angela Chen contributed to this article.
Write to Jon Ostrower at jon.ostrower@wsj.com
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