Boeing Co. on Tuesday ousted the president and other executives of its beleaguered commercial airplane unit, which has struggled through a year of costly production problems that ultimately triggered the company's first yearly loss in a half-century.
The move to replace Ronald Woodard represents a reversal for Boeing Chairman Phil Condit, who has for months resisted shareholder pressure to fire the president of the Commercial Airplane Group, while saying the blame for Boeing's financial woes extend to all company managers.
But amid reports of yet another unexpected production glitch--this time in Wichita, Kan.--Condit was apparently forced to act.
"We have experienced unsatisfactory financial performance with our commercial airplane operations," Condit said in a statement. "We concluded there must be significant changes in the composition of the management team at this time."
Alan Mulally, president of the company's growing Information, Space and Defense Systems unit, was named to replace Woodard.
The change comes as Boeing prepares to celebrate the first flight of its newest jetliner, the 100-seat 717, which is scheduled to take off from Long Beach today to begin 10 months of testing in Yuma, Ariz.
A company spokesman said the shake-up will not affect the locally based 717 program or Boeing's plans to add a Long Beach assembly line for specialty versions of its popular 737 plane.
In the last year, the Seattle company's commercial airplane unit pushed forward with an ambitious production hike that triggered parts shortages and assembly bottlenecks and ultimately strained the entire company.
As a result, the company--one of Southern California's largest employers-- posted a string of write-offs and in 1997 recorded a loss of $178 million, its first annual loss in 50 years. The plane maker's stock price has also fallen sharply.
To help soothe anxious shareholders, Boeing had already announced major consolidation plans and reassured investors that its production problems are in hand.
On Monday, the company said it will buy back up to 15% of its common stock to help jump-start the stock's recovery.
Boeing's stock rose $2.13 to close at $33.06 in New York Stock Exchange trading Tuesday.
"I think it was the right move," said Jack Modzelewski, an aerospace analyst at PaineWebber Inc. "People who own Boeing stock were quite aggressive and saying there needed to be some head changes."
Company spokesman Larry McCracken would not confirm a report in the Seattle Times on Tuesday that a new cost overrun in a commercial plant in Wichita prompted the management change.
"Things have been getting better in production," McCracken said. But the company has specific goals to meet, "and we had some things continue to happen that show that that wasn't happening, and we needed to change out the senior management."
Woodard, a 32-year employee, was offered another, unspecified position within Boeing. A Boeing spokesman said Woodard is weighing the offer.
Woodard's deputy, Tom Shick, has been reassigned to "a key job" within Boeing, McCracken said.
Harry Stonecipher, Boeing's president and chief operating officer, was named acting chief financial officer until a replacement can be found for CFO Boyd Givan, whose early retirement took effect Tuesday.
The company also reassigned or forced out several other top executives at the troubled airplane unit to create a new leadership team.
"There was a push to blame one person for all of Boeing's problems . . . and you can probably blame some things on [Woodard], but not everything," said Keith Patriquin, an analyst at Loomis Sayles & Co., which owns about 1.5 million Boeing shares.
Boeing also announced additional organizational shuffling in Southern California, where it continues to consolidate the many operations it inherited in its purchase of McDonnell Douglas and other businesses.
Boeing is eliminating its Information, Space and Defense Systems group and assigning the four operations from that group to two separate units: the newly formed Space and Communications Group, based in Seal Beach, and the Military Aircraft and Missile Systems Group in St. Louis.