* Muilenburg also named president, to move to Chicago
* Defense, commercial chiefs both named vice chairmen
* Current CEO McNerney has no specific retirement plan
By Andrea Shalal-Esa
WASHINGTON, Dec 18 Boeing Co on Wednesday
promoted Dennis Muilenburg, head of its defense division, to the
post of president and chief operating officer, a move that
company insiders and analysts said makes him "heir apparent" to
Chief Executive Jim McNerney.
Muilenburg, 49, and Ray Conner, the 58-year old head of the
Boeing Commercial Airplanes unit, were both named vice chairmen,
Boeing said in a statement.
Boeing said Muilenburg would move to Chicago headquarters
and share oversight of operations with McNerney. One source
familiar with Boeing's planning said the promotion of Muilenburg
over Conner made him heir apparent to McNerney, especially given
his move to Chicago.
Boeing spokesman John Dern said McNerney, 64, had no plans
to retire, but the changes should provide the board with a
"range of viable options" when he eventually does retire.
"It's about putting the right leaders in the right places
who can drive business performance," Dern said.
Muilenburg has been a vocal proponent of the "One Boeing"
strategy, which seeks to better coordinate supply chain and
other functions across the commercial and defense units. Boeing
said its focus on bringing the parts of its business closer
together was paying off in domestic and international markets,
and had generated savings across the corporation.
"As Boeing scales up for growth, Muilenburg, as president
and COO, will share with McNerney oversight of the company's
business operations and focus on specific growth enablers,
including important global relationships and development program
performance," the company said.
Boeing's plan to expand in Brazil suffered a big setback on
Wednesday when Brazil awarded a $4.5 billion fighter jet deal to
Sweden's Saab AB. One Brazilian official said
news of U.S. spying on Brazilians derailed the chances of
Boeing's F/A-18 Super Hornet, which was once favored to win.
Last month, South Korea said it would buy 40 Lockheed Martin
Corp F-35 fighters instead of Boeing's F-15 jet, the
only plane that met the country's price requirements.
Chris Chadwick, 53, who now heads Boeing's military aircraft
unit, will succeed Muilenburg at the helm of Boeing's defense
division, while Shelley Lavender, who runs Boeing's logistics
business, will replace Chadwick as head of the military aircraft
business, Boeing said in a statement.
Loren Thompson, chief operating officer of the Lexington
Institute think tank, said Muilenburg was the most energetic and
athletic executive he had ever met in the defense industry.
"He's very focused and intense in a way that few executives
are," he said.
Muilenburg told the Reuters Aerospace & Defense Summit in
September that he cycles about 120 miles a week to stay in
Thompson said the decision to promote the defense business
chief to a top corporate role underscored Boeing's commitment to
that side of its business, despite surging commercial orders and
an expected drop in U.S. military spending.
"During a period of declining military demand, Muilenburg
has managed to maintain the revenues of the company," Thompson
said. "He has done more with the business than many people
thought was possible when he took over in 2009."
Rob Stallard, aerospace analyst with RBC Capital Markets,
said he did not believe McNerney's retirement was imminent.
"Today's promotions signal to us that Muilenburg is the
anointed heir apparent, though it could be a couple of years
before he actually gets promoted to the top slot," he wrote in a
note to investors.
"This creates an interesting dynamic for BCA, in that the
head of that division has again been potentially passed over for
the CEO spot at Boeing." Alan Mullaly left the company after
Boeing hired McNerney, an outsider, to become CEO.
Aerospace analyst Richard Aboulafia said the decision
reinforced his impression that Boeing's leadership was more
focused on the military side of the company. "This is a company
that is majority civil in revenues, but is majority military in
management, outlook and disposition," he said.
If Muilenburg succeeded McNerney as Boeing chief executive,
it would mark the first time a leader from the defense side has
headed the company since 1986, when Boeing was led by Thornton
"T" Wilson, who worked on the B-52 bomber and Minuteman
ballistic missile programs, stepped down.
The CEOs immediately before McNerney, Harry Stonecipher,
Phil Condit and Frank Shrontz, came from the commercial side,
although Shrontz had worked at the Pentagon. McNerney came from
outside Boeing, previously heading 3M and several General
Electric divisions, including aircraft engines and lighting.
During his tenure as defense chief, Muilenburg helped Boeing
beat out Europe's Airbus to win an Air Force competition for 179
new refueling tankers. Boeing has also sharply expanded foreign
sales, and beat out rivals to hold onto its role as the prime
contractor for the ground-based missile defense system.
Conner was named to head Boeing Commercial Airplanes in June
2012, replacing Jim Albaugh, who previously headed the defense
division. Muilenburg has run the defense business since
Boeing shares closed down 39 cents or 0.3 percent at $135.49
on the New York Stock Exchange.