Challenges loom for Boeing
CHICAGO — The sudden ouster of its chief executive for questionable behavior leaves Boeing Co. facing several short-term challenges in both defense contracting and its commercial airplane business.
A day after the shocking announcement that Harry Stonecipher had been sent back into retirement for exercising “poor judgment” in an intracompany affair, analysts and Boeing officials continued Tuesday to praise his performance during 15 months on the job.
Observers thus see Stonecipher’s absence, coupled with Boeing’s decision to forgo naming an immediate successor, as weakening the company at least temporarily at the top level and putting it under extra pressure to select a permanent CEO who can remain at the helm for years.
“Near-term, it’s going to make it a little more difficult for them because Harry was doing a very good job,” said Cai von Rumohr, an analyst for SG Cowen Securities in Seattle. “I think it will especially affect them in commercial (airplane) marketing, where Harry was a good salesman.”
The transition comes with numerous key issues pending.
Boeing is locked in a tight struggle with Airbus SAS for supremacy in passenger jet sales as the airline industry shows signs of recovering — a battle featuring its new fuel-efficient 787 against its rival’s A380 “superjumbo.” Complicating matters further, Airbus has said it will try to sell a direct rival to the 787, and Boeing is considering whether to offer a new version of its jumbo 747.
Stonecipher was an enthusiastic advocate of Boeing’s planes and took a prominent role in the dispute with Airbus over government subsidies that is now being negotiated by U.S. and European officials.
He also had said a decision would come by midyear on whether to halt production of the 767. Demand for the plane has been sagging and Boeing had been hoping the Pentagon would issue a verdict by then on reviving the controversial contract under which Boeing was to have converted 767s for use by the Air Force as refueling tankers.
Even while those decisions are hanging, Boeing still needs to smooth over lingering tensions with the Pentagon and Capitol Hill — a top Stonecipher priority — after its recent contract scandals if it hopes to avoid losing the next tanker contract or other big deals.
Former Pentagon official Lawrence Korb thinks Boeing’s influence could be weakened without its veteran CEO’s presence.
“The real problem is that Stonecipher was so well-connected and thought of in Washington,” said Korb, now a senior fellow at the Center for American Progress, a Washington research group.
Analysts also said the scandals that have claimed three top executives since 2003 — Stonecipher, predecessor Phil Condit and jailed ex-chief financial officer Mike Sears — may shadow Boeing’s CEO search and force it to choose either an outsider or an ultra-safe candidate to avoid a recurrence.