Boeing
Co 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.
The
company named Scott Fancher, who heads Boeing's 777 jet program, to lead the
new "airplane development" division, 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.
Analysts
called the division sensible given the unusually large number of new planes in
development and the unusually rapid pace of Boeing's factories - "the
highest levels in commercial aviation history," as Boeing put it.
"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.
Analysts
said Boeing needs to optimize both sides of the airplane business, but it was
unclear how the development side would be handled. "The production ramp is
not insignificant" particularly on the 777, said Russell Solomon, an
analyst at Moody's Investors Service in New York. For such a "hugely
important and profitable program you don't want to have a misstep."
Developing
five new planes, including substantial redesign of the 777, is a tall order.
"Organizationally, it makes sense to have someone who's in charge of all
of that," said Scott
Hamilton,
analyst at Leeham Co in Seattle. "The only real risk is will he be
stretched too thin," he
said.
"We have to see how Fancher organizes his new responsibility." Boeing
shares ended down 0.35 percent at $74.02 Monday on the New York Stock Exchange.
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