December 3, 2012 / 6:49 PM / 6 years ago

Boeing separates airplane production, design

(Reuters) - Boeing Co (BA.N) said on Monday it is creating a new division to oversee airplane development, hiving off that function from production as it seeks to ramp up factory output.

A model of Boeing 787-8 passenger plane is displayed inside its booth at the Asian Aerospace Show in Hong Kong March 8, 2011. REUTERS/Bobby Yip

The company named Scott Fancher, who heads Boeing’s 777 jet program, to lead the new division, “airplane development,” which will handle design and flight certification of planes that are currently on the drawing board. These include the 737 MAX, the 767 Tanker and 787-9, and the 777-X and 787-10X programs that have not yet formally started.

The move comes as Boeing plans to lift factory output by 25 percent over the next 18 months, and tries to develop five derivative jets to meet customer demand for longer-range and more fuel-efficient planes to better compete with Europe’s Airbus EAD.PA.

“Successfully balancing our production and development priorities is critical to our future viability and success with customers,” Ray Conner, chief of Boeing’s commercial airplane business, said in a message to Boeing employees on Monday.

The changes, effective immediately, “will help clarify responsibility, streamline decision-making and accelerate our progress on these priorities,” Conner said.

The new structure creates an “airlines programs” unit headed by Pat Shanahan, a senior vice president currently in charge of production. The division will be responsible for the profit and loss of the jet programs in production, and integrating development of new jets into production.

The division of labor “puts a specific leader in charge of future development,” said Boeing spokesman Marc Birtel, and allows Shanahan to focus on production.

Boeing’s commercial aviation services unit, which provides support for jets in service, will continue to be led by Lou Mancini, a senior vice president.

Boeing shares were down 0.4 percent at $74.00 on Monday afternoon on the New York Stock Exchange.

(This story has been corrected to fix misspelling of the names Fancher, Shanahan, Birtel and Mancini.)

Reporting by Alwyn Scott in New York; editing by Lisa Von Ahn, Matthew Lewis and Bob Burgdorfer

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