UPDATE 2-Boeing names defense chief as chief operating officer

Andrea Shalal-Esa
Wednesday, 18 Dec 2013 | 10:46 AM ET

WASHINGTON, Dec 18 (Reuters) - Boeing Co on Wednesday named Dennis Muilenburg, head of its defense division, as president and chief operating officer, a move that company insiders and analysts said makes him the "heir apparent" to the company's chief executive, Jim McNerney.

Muilenburg, 49, and Ray Conner, the 58-year old head of Boeing's commercial business, were both appointed to new roles as vice chairman of the company, Boeing said in a statement.

Boeing spokesman John Dern said there were no specific plans underway for McNerney's retirement but the changes were aimed at insuring the board had a "range of viable options" when McNerney, 64, does retire.

"It's about putting the right leaders in the right places who can drive business performance," said spokesman John Dern.

Boeing said Muilenburg - a vocal proponent of the company's "One Boeing" strategy - would move to the company's headquarters in Chicago, where he will share oversight with McNerney of the day-to-day business operations of the company.

One source familiar with the company's planning said the move made Muilenburg the heir apparent to McNerney, especially given his move to Chicago.

Boeing said its focus on bringing the two parts of its business closer together was paying off in domestic and international markets, and had generated savings across the corporation.

"As Boeing scales up for growth, Muilenburg, as president and COO, will share with McNerney oversight of the company's business operations and focus on specific growth enablers, including important global relationships and development program performance," the company said.

Chris Chadwick, 53, who now heads Boeing's military aircraft unit, will succeed Muilenburg at the helm of Boeing's defense division, while Shelley Lavender, who runs Boeing's logistics business, will replace Chadwick as the head of the military aircraft business, Boeing said in a statement.

Loren Thompson, chief operating officer of the Lexington Institute think tank, said Muilenburg was the most energetic and athletic executive he had ever met in the defense industry. "He's very focused and intense in a way that few executives are, " he said.

Muilenburg told the Reuters Aerospace & Defense Summit in September that he cycles about 120 miles a week to stay in shape.

Thompson said the decision to promote Muilenburg, the head of the company's defense business, to a top corporate role underscored the company's commitment to that side of its business, despite the recent surge in commercial orders and an expected drop in U.S. military spending in coming years.

"During a period of declining military demand, Muilenburg has managed to maintain the revenues of the company," Thompson said. "He has done more with the business than many people thought was possible when he took over."

During his tenure, Muilenburg helped Boeing beat out Europe's Airbus and win a huge Air Force competition for 179 new refueling tankers. The company also sharply expanded foreign sales, and held on to its role as the prime contractor for the ground-based missile defense system.

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