SPR Spirit Aerosystems Holdings Inc

By Jon Ostrower 

Spirit AeroSystems Holdings Inc. on Wednesday said Chief Executive Larry Lawson will retire at the end of July and be replaced by Tom Gentile, who was hired by the aerospace supplier four months ago, triggering speculation about a possible succession.

Mr. Gentile joined as Chief Operating Officer in April from General Electric Co., and his elevation was sooner-than-expected by analysts after a period of upheaval at Spirit, a big supplier on key jetliner programs at Boeing Co. and Airbus Group SE.

Spirit has restructured in recent years, shedding unprofitable work on business jets, winning new defense business and cutting costs under pressure from the big commercial plane makers that are boosting production following a multiyear order boom by airlines and leasing companies.

The moves earned Mr. Lawson, 58, plaudits on Wall Street. Spirit's stock price has more than doubled since the former Lockheed Martin Corp. executive took charge in 2013.

News of Mr. Lawson's departure sent its shares down 3.1% to $46 by noon Wednesday in New York. Over the past three years, the company has recorded annual declines in sales, including a 2.3% slip last year.

Mr. Gentile, 51, takes the reins as Spirit enters a period of significant growth. It is in the early phases of transitioning its production lines to build more fuselages and other parts for Boeing's updated 737 Max jetliner. The jet has been in test flights since January and delivers to Southwest Airlines Co. next year. Spirit, in lockstep with Boeing, will be raising monthly production from 42 currently to 57 in 2019.

Internally, Mr. Lawson earned a reputation as domineering manager, according to present and former staff. This was viewed as a contrast to his predecessor, Jeffrey Turner, a veteran Boeing plant manager who took the company from a regional unit of the aerospace giant in 2005 to a stand-alone business.

Many senior company leaders had departed over the last 18 months, including its former chief financial officer, head of strategy and executive vice president of its Boeing, business and regional jet programs.

A Spirit spokesman declined to comment on Mr. Lawson's leadership style, but cited an earlier statement by the company's chairman Bob Johnson. Mr. Johnson called Mr. Lawson "a tremendous leader for Spirit. Under Larry's leadership the company's financial health has greatly improved, as has its operational performance."

Mr. Lawson's departure comes as Spirit remains in contract talks with its biggest customers and "his sudden decision to go with contract negotiations with Boeing and Airbus unresolved is puzzling," said Cai von Rumohr, aerospace analyst at Cowen & Co.

Left unresolved is a revised master contract with Boeing, by far its biggest customer, for which it makes everything from complete 737 fuselages -- shipped by rail to the Seattle area -- to engine pods and fully outfitted sections of the company's 787 Dreamliner. The companies haven't agreed on future pricing for new models of both jets.

Spirit's statement and spokesman offered no further explanation for the timing of the announcement, saying only "the time is right." Mr. Lawson will remain a consultant to the company for two years.

"I've spent the last couple of months deeply embedded in the business -- visiting the sites, meeting the teams, and assessing Spirit's expertise, capabilities and opportunities for growth," Mr. Gentile said in a statement.

Mr. Gentile started with Spirit AeroSystems in April, taking charge of all programs in addition to aspects of engineering, operations and business development. His hiring coincided with reports the company was seeking a chief operating officer as part of a potential succession plan for the CEO.

Mr. Gentile spent two decades with GE, including roles as chief executive of GE Aviation's services division and chief executive of GE Healthcare Systems. Before GE, he spent more than five years with McKinsey & Co.

--Anne Steele contributed to this article.

Write to Jon Ostrower at jon.ostrower@wsj.com

(END) Dow Jones Newswires

June 08, 2016 13:16 ET (17:16 GMT)

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