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, will continue his role as chairman until he
retires at the end of February 2016. 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
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 years old, 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 NV and a series of crises,
including cost overruns, a three-year delay in delivering its
marque 787 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. 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 work on a possible successor to its popular 757.
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 bachelors
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 form 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.
Boeing shares fell 0.5% at $143.71 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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