The Boeing Co. set a huge organizational transition into motion today by bringing in an outside aerospace executive as the next head of its commercial airplane unit and setting up a new business unit for aviation services.
GE Aviation Services’ president and CEO, Kevin McAllister, will become the next president and CEO of Boeing Commercial Airplanes. The business unit’s current head, Ray Conner, will ease out of that role during a transitional period culminating in his retirement at the end of 2017, the company said in a statement.
The new unit, called Boeing Global Services, will integrate the customer service operations currently provided through Boeing Commercial Airplanes and Boeing Defense, Space and Security.
Veteran Boeing executive Stanley Deal will be president and CEO of the services unit, which will have a small core headquarters based in Dallas.
“With Ray Conner’s retirement timeline in sight and an expanding global services market to pursue, these moves will further strengthen and grow Boeing and better serve our customers, employees, shareholders and other partners in the years ahead,” Dennis Muilenburg, Boeing’s chairman, president and CEO, said in today’s statement.
During a follow-up teleconference, Muilenburg told reporters that the services unit would take advantage of what’s expected to be a $2.5 trillion market over the next 10 years.
Boeing has long talked about putting more emphasis on the money to be made by servicing its airplanes. Muilenburg said “today’s action is a very concrete step in that direction.” The unit’s aspirational target wlll be to triple Boeing’s services business to roughly $50 billion, he said.
Deal’s immediate task is to restructure servicing operations in cooperation with Conner as well as Leanne Caret, who heads the defense, space and security unit.
Conner, meanwhile, will show McAllister the ropes while preparing for retirement. In addition to heading the commercial airplane unit, the 61-year-old Conner is a Boeing vice chairman.
“We are immensely grateful to Ray for his leadership and contributions over nearly four decades. … He’s led us through a tremendous period of commercial airplane growth. He oversaw the development of several new airplanes, and deepened our presence in the Puget Sound community.”
McAllister, 53, has spent 27 years at GE Aviation, which is a supplier for Boeing airplanes.
“He’s one of our industry’s most highly regarded and highly qualified senior leaders. Kevin knows Boeing well. He shares our values and our commitment to our people,” Muilenburg said of McAllister. He said McAllister was selected after reviewing a “healthy pipeline” of internal and external candidates.
Deal, 52, was previously senior vice president of Boeing’s Commercial Aviation Services business. He has three decades of aerospace experience. “He’s ideally suited to take on this very important job,” Muilenburg said.
Boeing has had to trim back jobs in the commercial airplane unit to stay competitive with Europe’s Airbus consortium. In response to a question, Muilenburg said the formation of a new business unit for services shouldn’t be seen as a signal that Boeing is easing back on its expectations for commercial jet sales.
“We still see commercial airplanes as a growth business,” he said. “But as I think you’re aware, today we enjoy a 50 percent market share in that business. So while it’s a growth business, we have even greater growth space ahead of us in services … where today our market share is smaller and we just have more headroom to grow.”
Muilenburg told reporters that the prospects in growth for sales and service “go hand in hand.”
“There’s real synergy between those,” he said.
Boeing Commercial Airplanes is the company’s largest operating unit, currently accounting for just more than half of its 153,000 employees worldwide. Although Boeing’s overall corporate headquarters is in Chicago, the commercial airplane unit is based in Seattle by virtue of the fact that many of the unit’s employees work at plants in Everett and Renton.