Scott Carson is stepping aside as the head of Boeing Co.'s troubled airplane business, part of a sweeping management shake-up announced Monday by the Chicago aerospace manufacturer.
Carson, 63, plans to retire from Boeing effective Jan. 1 but will depart his current post today.
He will be replaced by Jim Albaugh, 59, who has run Boeing's military business since 2002. Albaugh's replacement is Dennis Muilenburg, 45, president of an $8-billion Boeing unit that provides support to the company's military customers.
For much of the summer, rumors had swirled that Carson would retire after the 787 Dreamliner took its first flight.
Under Carson's watch, Boeing has struggled to resolve manufacturing and design glitches with the largely composite plane, which has broken company records for both sales and delays. The aircraft has more than 800 orders on the books despite being postponed repeatedly.
The executive shuffle comes days after Boeing executives told analysts that the production issues with the 787 appeared to have been fixed, news that sent shares soaring.
The 787, which is running nearly 2 1/2 years late, should take its first flight by the end of the year and be delivered to launch customer All Nippon Airways in late 2010, Boeing announced last week.
Boeing said it would take a $2.5-billion non-cash charge against third-quarter earnings, writing off funds it has spent to develop and build the first three 787s after determining that it could not sell the planes. The three aircraft, which are tons overweight and contain a patchwork of design fixes, will be used for flight testing.
Boeing also assured investors that the Dreamliner would be a profitable program despite its costly delays.
"I wouldn't read any more into this other than Scott deciding to retire," said Howard Rubel, aerospace analyst with Jefferies & Co. "Scott's a hell of a good guy."
Carson, who has been president of Boeing Commercial Airplanes since 2006, inherited the company's ambitious plan to develop a groundbreaking new aircraft and to place much of the jet's development in the hands of subcontractors. Either task alone would have been demanding, but combined they appeared to overwhelm Boeing executives, analysts said.
Carson's prior assignments included leading Boeing's commercial aircraft sales as orders rebounded earlier this decade, serving as its executive vice president and chief financial officer, and heading Connexion, the company's satellite-based broadband system that ultimately was scrapped.
"The board and I appreciate Scott's long record of accomplishment, and it's been a long one," Boeing Chief Executive Jim McNerney told analysts and reporters Monday.
Albaugh, a 34-year industry veteran, is the latest in a long line of executives to shuttle between Boeing's defense and airplane units, the company's two major businesses.
An engineer by training, Albaugh has extensive experience in developing and manufacturing complex systems, which should be an asset as Boeing works with its suppliers to move the 787's production into high gear, analysts said.
"Jim has a working knowledge of the 787 program," McNerney said. "He has a very deep technical understanding of what we're trying to accomplish."
Under Albaugh's lead, Boeing's military revenues have increased 36% to a projected $34 billion in 2009. He began his career with Rockwell's aerospace and defense businesses, which Boeing bought in 1996.
However, Boeing's military business also has suffered miscues in recent years. It ran years behind schedule in providing aerial refueling tankers to Italy and Japan, and in creating a smaller jet to serve as an airborne radar station for Australia and Turkey.
"I think [Albaugh is] a strong manager," said Paul Nisbet, aerospace analyst with JSA Research Inc. "And he certainly knows his technology after all these years. I think it's a good choice."