777, 787 execs trade jobs, signaling 777-X plans

By Michelle Dunlop Herald Writer

A management shift this week by the Boeing Co. seems to indicate the company’s intent to develop a new version of the Everett-built 777, now that the future of the 737 is well-defined.

Boeing swapped the managers of the 777 and 787 programs to “better align our organization for the challenges ahead,” Jim Albaugh, president of Boeing Commercial Airplanes, told employees late Thursday. The announcement was made public today.

Larry Loftis, who has led a mature 777 program, takes over as general manager of the 787 model, a program with production-rate challenges ahead.

Scott Fancher, who led the 787 program through design and testing, not only becomes general manager of the 777 but also will work with Lars Andersen, who leads 777 product development, in “defining the next variant of the 777,” according to a Boeing press release.

Although Boeing shares dipped initially this morning, the company’s stock closed up 21 cents at $76.06.

In a note to investors, Richard Safran of Buckingham Research dismissed the idea that the management change was a demotion of Fancher, who has overseen the often-troubled 787 program since late 2008. If Boeing wasn’t happy with Fancher, Safran reasoned, the company would “place him in a far less prestigious position than 777 program manager.”

Boeing’s 777 had its best year for orders in 2011. The production rate will increase to 8.3 jets permonth by early 2013 from the current pace of seven. But after 17 years of production, Boeing is looking to upgrade the plane with a variant being referred to as the 777-X.

The management switch indicates to Safran that a 777-X “program launch may be more near-term than expected.”

The move enables Boeing to capitalize on Fancher’s “vast experience on development programs and allow him to align the 777 production system with the next-generation 777,” Albaugh said.

As the 787 transitions into production, Loftis’s appointment takes advantage of his “more than 32 years of commercial product experience and knowledge of Boeing’s production system,” Albaugh said.

Loftis quietly has presided over Boeing’s successful 777 program through a number of changes, including introduction of a new 777 freighter, a transition to a moving assembly line and increased production rates. He spent several years in leadership positions — largely focused on manufacturing — in the 737 and 757 programs in Renton.

While increased and more efficient production of the 787-8 is an immediate concern, Boeing also is developing the next, bigger version of the Dreamliner, the 787-9, slated for delivery by the end of 2013. That leaves the anticipated 787-10, an even larger version the company hasn’t formally launched. Safran noted that the 787-10 should be less complicated to develop than the 777-X.

In terms of the 787, Safran said, the management move indicates Boeing’s confidence in the Dreamliner’s planned production increases.

Herald reporter Michelle Dunlop: 425-339-3454 or mdunlop@heraldnet.com.