SEATTLE (Reuters) - Boeing Co (BA.N) appointed a new head of its commercial plane unit on Tuesday, turning to a veteran engineer-turned-salesman to give it the upper hand in its battle with Airbus for the $100 billion-a-year aircraft market.
The move, just weeks before the Farnborough Airshow, comes as Boeing attempts to ramp up production of its civil aircraft, including the troubled 787, and regain its leading position in the key single-aisle market, where it allowed Airbus to march into its core territory and take a large order from staunch Boeing customer American Airlines last year. (AAMRQ.PK)
In a surprise move, Boeing said Raymond Conner would be the new head of its commercial plane-making unit with immediate effect, replacing another longtime Boeing executive, Jim Albaugh.
Conner, 57, joined Boeing in 1977 as a mechanic and worked his way up the company’s engineering, supply chain and marketing groups to become head of sales. Albaugh, 62, who came to prominence at Boeing’s defense operations, is to retire on October 1 after 37 years with the company. Boeing’s standard retirement age is 65.
The move, while unexpected, was greeted positively by industry-watchers.
“Commercial aircraft sales is a very customer-centric job,” said Carter Leake, an analyst at BB&T Capital Markets. “Conner is more from true-blue aircraft sales than Albaugh. Arguably Conner has touched more Boeing customers than any person in the entire company.”
Albaugh took over the commercial plane unit in September 2009 after running Boeing’s defense unit, as the company looked for a steady hand to guide the early production of the troubled 787 Dreamliner program after several years of delays.
Industry-watchers agree that Albaugh achieved that, while he also brought the new 747-8 jumbo to market and presided over an unprecedented labor agreement at Boeing’s volatile Seattle-area plants.
Albaugh’s support was key to Boeing’s winning back a multibillion-dollar U.S. Air Force contract to build 179 new refueling planes that had been awarded to Northrop Grumman Corp (NOC.N) and its European partner, Airbus parent EADS EAD.PA.
“Realistically, he’s accomplished everything he was trying to do at Boeing Commercial Aircraft,” said defense consultant Loren Thompson at the Lexington Institute.
One senior industry official said Albaugh likely wanted to exit Boeing at the “top of his game”. “He’s run Boeing defense. He’s run Boeing commercial, and he’s not going to be CEO at Boeing.”
The change comes just weeks before the Farnborough Airshow, one of the key events in the company’s calendar where it shows off its latest planes and will be under pressure to announce new orders.
“It’s a good time to step aside and open the door to increased effort on sales where Conner has most recently focused his attention,” said Stifel Nicolaus analyst Stephen Levenson.
One industry source said Albaugh wanted to hand over the reins now so that his successor would have a chance to represent Boeing at Farnborough.
Conner was only recently appointed to his second stint in the top sales job after Airbus made inroads into its market by pulling off the major sale to American Airlines last July.
A quiet-spoken executive who has led Boeing through a rebound in the aircraft market in recent months, his most immediate task will be to restore Boeing’s position in the narrowbody market, which supplies cash for its other developments after a rocky patch in which Airbus pulled well ahead with a revamped version of its best-selling A320.
Boeing upset some customers by delaying a decision on what to do with its competing 737 single-aisle, eventually deciding to follow Airbus and offer a revamped version, called the 737 MAX, instead of building an all-new airplane.
Under Conner, Boeing has been able to fight its way back into the single-aisle market and is widely expected to outsell Airbus this year for the first time since 2006.
He must also oversee Boeing’s audacious attempt to ramp up production of its 787 Dreamliner to 10 a month by the end of next year from 3.5 a month now.
In a memo to Boeing employees sent on Tuesday and obtained by Reuters, Conner said he aimed to focus on delivering the planes in Boeing’s bulging order book.
“Our job going forward together in the near term is to stay the course on the product and services strategies that have resulted in our record backlog, and to turn up the gain on performance and execution to ensure we meet our commitments,” said Conner in the memo.
Additional reporting by Tim Hepher in Paris, Karen Jacobs in Atlanta, Andrea Shalal-Esa in Washington and A. Ananthalakshmi in Bangalore.; Editing by Matthew Lewis and M.D. Golan