The appointment of James McNerney to the Boeing Co.’s top job could be good news for the company’s Puget Sound-based commercial jet group, an analyst said Thursday.
“He’s widely identified with the faction that wants to invest in the future and spend more on new product development,” Teal Group analyst Richard Aboulafia said.
But the new boss isn’t likely to rock the boat with sweeping changes, said Aboulafia and analyst Paul Nisbet of JSA Research.
“His main goal has to be to keep the momentum going,” Nisbet said. “He’s indicated he thinks the company has the correct strategy.”
Boeing announced Thursday that the 55-year-old McNerney – a member of Boeing’s board of directors and head of Minneapolis-based 3M – will be its new chairman, president and chief executive officer.
McNerney “met all the board’s criteria,” said Lewis Platt, who had been chairman of Boeing’s board of directors. “He is, in the unanimous judgment of our board members, the ideal person to lead Boeing.”
Boeing’s board “had him in mind from the outset,” Nisbet said. “He finally came around.”
By choosing McNerney, Boeing bypassed two internal candidates, Integrated Defense Systems chief Jim Albaugh and Commercial Airplanes chief Alan Mulally, who was viewed as the favorite by much of Boeing’s rank-and-file in the Northwest.
Platt said Thursday that both Mulally and Albaugh have “expressed … their personal commitment to the company and to working closely with Jim.”
Aboulafia and Nisbet both said they expect Mulally to stay at the helm of the commercial jet operation.
Being overlooked had to be a disappointment to Mulally, Nisbet said, but “he’s been part of the fabric of Boeing for so long, I just don’t see him leaving.”
And going with an outside candidate was probably Boeing’s best shot at keeping both Mulally and Albaugh with the company, said Aboulafia, who suggested that having “two very strong operating heads” in charge of its main business units is more important than having one dynamic CEO in Chicago.
McNerney is Boeing’s fourth chief executive in the past 18 months. Scandals claimed two of his predecessors.
Phil Condit resigned in 2003 after two Boeing executives were implicated in a bid to swing a $23 billion Pentagon contract to the company, and Harry Stonecipher was forced out this spring after admitting an affair with a female executive.
Chief financial officer James Bell has been interim CEO since March. He’ll remain with the company as CFO.
McNerney “wins respect for his integrity, ethical leadership and personal business style wherever he goes,” Platt said.
McNerney was considered an early favorite for the job. He’s been one of Boeing’s corporate directors since 2001, was CEO of a major company and spent 19 years at GE, where he headed that company’s aircraft engine division and was executive vice president of its financial services division, which includes GE Capital Aviation Systems, one of the world’s largest jet-leasing companies.
At 55, he’s younger than either Mulally or Albaugh, with the opportunity to serve almost a decade in the job before hitting Boeing’s retirement age of 65.
“He was someone who everyone wanted to be the guy,” said J.B. Groh, an analyst at D.A. Davidson &Co. “He has a great aerospace background and experience on the leasing side, too.”
But in April, McNerney issued a statement saying he would stay at 3M. He said Thursday he was sincere in rebuffing Boeing’s advances, but began having second thoughts earlier this month.
“It was a difficult decision, a late change of heart,” McNerney told analysts and reporters in a conference call.
McNerney may have been swayed by Boeing’s market success in recent months, Aboulafia said. “There’s been a lot of progress since then. It’s a much more attractive company to run.”
And, Aboulafia noted, Boeing is giving McNerney more power than his recent predecessors.
Stonecipher was Boeing’s chief executive but shared authority with Platt, who ran the board of directors as its chairman. Condit, who preceded him, was chairman and chief executive but shared authority with Stonecipher, who was president.
As a director and an aerospace industry veteran, McNerney has “had a lot of opportunity to watch Boeing from the outside,” Nisbet said.
His first task will be to “become as familiar as he can with the internal works of Boeing,” Nisbet said. “He’s got a steep learning curve there.”
In a statement, McNerney said his job will be to “make sure we deliver continued profitable growth” by providing customers with “outstanding new products and superior service.”
“Our financial position is strong, and we have proven the logic of our strategy,” McNerney said.
Investors sent Boeing’s share price up $4.29, or 7 percent, to close at a four-year high of $65.96 Thursday on the New York Stock Exchange.
The Associated Press contributed to this report.
Reporter Bryan Corliss: 425-339-3454 or corliss@heraldnet.com.
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