Brainfood: Behind the Spin

THE DILEMMA

by
Last Updated: 31 Aug 2010

A sex scandal, spy charges and unethical behaviour - America's biggest defence and aerospace player has experienced them all in the past two years. Boeing has also gone through three chief executives in 18 months, with the latest, James McNerney, ex-CEO of 3M, appointed in June. He replaced Harry Stonecipher, whose extramarital affair with a Boeing colleague 20 years his junior led to his dismissal. Stonecipher's predecessor Phil Condit had resigned in an attempt to end a period of scandals, including the discovery that Boeing had spied on rival Lockheed Martin. The firm had also fired CFO Michael Sears for negotiating the recruitment of an airforce procurement official while she was still working at the Pentagon; he was later imprisoned. All the while, Boeing has come under competitive pressure from European rival Airbus, which for the past five out of six years has won more civil orders.

THE SPIN

McNerney hinted that he wouldn't be making sweeping changes to Boeing because of its strong financial position. 'It's less big structural or financial or strategic fixes, it's more becoming part of the team.' His priorities would be 'execution, focus and leadership'. McNerney also promises that his regime will be whiter than white: 'I believe there is zero difference between business, personal and community ethics.'

THE STRAIGHT TALK

McNerney has been welcomed by Wall Street. Bank of America analyst Nick Fothergill said 'his experience, relative outsider status and execution track record are a positive for Boeing'. However, the new CEO acknowledges that Boeing has 'a little bit of a hole to climb out of in a few places', but there is a general feeling that it has now turned a corner.

THE VERDICT

Unlike European rival Airbus, which believes that the future of long-haul flight lies with super-jumbos, Boeing is confident that fleets of smaller jets are the way forward. In April last year, it started building its first all-new aircraft for a decade: the fuel-efficient 787 Dreamliner.

And at the Paris air show in June, Airbus admitted that for the first time in five years Boeing had more new orders than it did. 'Boeing's 2005 revival is impressive,' said the FT. Separately, the US accuses the EU of having subsidised Airbus' latest A380 super-jumbo projects, and the wrangle has gone to the WTO for arbitration. Although the skirmishes continue, most would say that Boeing's future is looking positive.

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