Boeing has replaced Ray Conner as head of Boeing Commercial Airplanes with an outsider from GE Aviation and consolidated separate services businesses for commercial and defence into a single unit with marching orders to triple revenues over the next decade to $50 billion.
The sweeping changes announced after markets closed in New York on 21 November establish Boeing’s strategic direction for at least a decade under chairman, president and chief executive Dennis Muilenburg, who succeeded Jim McNerney nearly 16 months ago.
Ray Conner, former chief executive of Boeing Commercial Airplanes, will retire after a five year tenure marked by the troubled entry into service of the 787, relatively smooth production ramp-ups and frequent clashes with union leaders over demands for diminishing contributions to retirement and health care benefits.
To replace the 40-year veteran, Muilenburg selected president and chief executive of GE Aviation Services Kevin McAllister, who will be the first CEO of BCA with no experience as a Boeing employee since the position was created in 1965.
McAllister will now lead a BCA unit with about 80,000 employees and $66 billion in revenues in 2015.He inherits a business managing a steep ramp-up for single-aisle aircraft, a handful of new products to usher into service and critical decisions remaining on addressing a possible gap in the market between the 737 Max 9 and the 787-8.
Any new product will bear the stamp of a veteran of GE’s services business, which already consolidates commercial and defence offerings under a single corporate leader. Boeing’s next products will be designed with a focus on how the aircraft will be supported over its entire 20-40-year lifecycle, Muilenburg told reporters in a teleconference call on 21 November.
Although McAllister will not have direct authority over Boeing Global Services, he and Leanne Caret, chief executive of Boeing Defense Space and Security, are expected to work closely with the new operating division that will be led by Boeing veteran Stan Deal, who currently leads BCA’s services division.
For more than a year, Boeing has signaled its interest in a dramatic expansion of a services business now sized roughly between $15-18 billion a year in revenues. Boeing’s internal analysis forecast a services market with $2.5 trillion in sales over the next decade, whereas the company’s share of that market is currently 6% for BCA and 9% for BDS.
“So we have ample room to grow,” Muilenburg says.
The growth plan will activate when BGS is established in the third quarter of next year with a headquarters in Dallas, the home of Boeing-owned parts manager Aviall.
Deal’s task will be to put the company on a trajectory to triple revenues over the 10-year period, Muilenburg says, rising to around $50 billion a year by the end of 2027. The growth will include some acquisitions, Muilenburg says, but the company’s focus is to grow organically as much as possible.
Source: Cirium Dashboard