Julie Johnsson Chicago
BOEING’S Dennis Muilenburg becomes chief executive next week with a to-do list of decisions that could reshape the world’s largest planemaker.
On his watch, Boeing will face choices including whether to pursue a $10 billion (R121.52bn) takeover of Sikorsky Aircraft, move forward on an all-new jetliner and keep – or cancel – the venerated 747 jumbo, the model nicknamed the “Queen of the Skies.”
As Jim McNerney retires after a decade as chief executive, the 51-year-old Muilenburg moves up from chief operating officer to lead a company bent on disciplined aircraft development after the 787 Dreamliner’s tardy and costly debut, and bolstered by labour peace with the Machinists union after crippling strikes.
Storm has passed
“McNerney did the really hard job. He changed Boeing to the core,” said Michel Merluzeau, vice president for global aerospace development at consultant Frost & Sullivan. “With Muilenburg, I’d say, ‘OK, the storm has passed. Where do we go from here?’ “
Setting a course for the $60bn commercial plane business and navigating complicated global marketplaces will be among his greatest challenges as chief executive, Muilenburg said after his promotion was announced.
“The greatest opportunity that we have ahead of us is the strong commercial market,” Muilenburg said, nodding to plans to boost the monthly output of the 737 and 787 jets to new highs.
Muilenburg will inherit challenges such as whether to pare output for the 777, one of Boeing’s most-profitable models, ahead of the successor 777X next decade. He also will have to choose whether to invest billions in offering a replacement for Boeing’s mid-sized, out-of-production 757.
While Boeing has cited positive momentum in airfreight markets, slow orders may force the company to cut output of the four-engine 747-8 even deeper, or altogether.
One of the new chief executive’s most-difficult calls could come this year. It involves how to reshape Boeing Defence Systems, the $30.9bn division that Muilenburg used to run, as the clock runs out on the fighter jets made in its St Louis factories. That operation may be in sharper focus if a joint Boeing-Lockheed Martin bid for the US Air Force’s new long- range bomber loses to a Northrop Grumman proposal.
The fate of the US Export-Import Bank, a crucial source of financing for Boeing jets sold abroad, also is in the hands of Washington politicians. McNerney has been a vocal champion for the bank, nearing the June 30 expiration of Congress’s short-term reauthorisation.
Boeing isn’t discussing prospects for Sikorsky, the helicopter maker being unloaded by United Technologies; a 757 successor – too early, the company says; or the idea that the 747’s days are numbered. It’s also staying mum on the work on the bomber, whose technology is highly classified.
The stock slid 0.5 percent to $143.69 in late morning in New York amid a decline among broad US indexes. Boeing’s 11 percent gain this year to Tuesday beat the 3.2 percent rally for the Standard & Poor’s 500 Index.
Muilenburg, an engineer by training and Iowan by upbringing, started at Chicago-based Boeing as an intern in 1985 and worked his way to the top. Among his successes as defence chief was winning a contract to build the Air Force’s new refuelling tanker.
Transition
His promotion to chief executive caps a transition that began 18 months ago when he was named chief operations officer and president, working alongside McNerney.
“This is a big, long-cycle company that needs somebody running it for an extended period of time,” McNerney said.
Muilenburg now must prove he can manage growth and the competition from Airbus as adeptly as he handled military budgets being pruned by the Pentagon. From 2005 to 2014, Boeing’s sales soared by about two-thirds.
Continued heavy investment to develop new jetliners kept investors from reaping a greater share of the spoils. The Dreamliner, which is still not yet profitable after its 2011 debut, may have cost as much as $50bn.
– Bloomberg