Boeing Exec to Run Defense Business

Boeing Co. on Monday announced management changes designed to integrate McDonnell Douglas Corp. into the aerospace company, giving one of its own executives oversight of all of McDonnell Douglas’ vast military operations.

Boeing Chairman Phil Condit and President Harry Stonecipher announced the post-merger reorganization at a Washington news conference beamed by satellite to rallies attended by most of the manufacturer’s 220,000 employees.

“This is Boeing time,” declared Condit, noting that the Seattle-based company is now the largest aerospace company, with expected sales this year of $49 billion and an order backlog of more than $100 billion.

Under the new organization, Alan Mulally, who was recently promoted to run Boeing’s defense and space business, is now president of the new Information, Space and Defense Systems Group, which will run all of Boeing’s growing military and space businesses now that its purchase of McDonnell Douglas is complete.

The move gives Mulally, 52, control of almost everything Boeing does outside the commercial aircraft business. It is a victory for him over McDonnell executives, who have more experience in military products.

“Boeing wants someone with Boeing blood to run this new business,” said Peter Jacobs, an analyst at Ragen MacKenzie in Seattle. “The number of programs Mulally manages just doubled.”

Before January, Mulally had spent most of his 27 years designing jetliners. He made his name at the company managing the launch of the 777.

On the New York Stock Exchange, Boeing shares fell 6 cents to close at $58.44.

With McDonnell, about 40% of Boeing revenue will come from defense and aerospace, from 25%.

Mulally has three large divisions reporting to him, including the new McDonnell Aircraft and Missiles Systems, which will run all of Boeing’s military aircraft operations.

That division will be based in St. Louis, McDonnell Douglas’ former headquarters. It will be run by Mike Sears, formerly president of McDonnell Douglas Aerospace. The division will handle the F-18 and F-15 fighters and the C-17 transport, which is built in Long Beach.

In Orange County, where Boeing in December acquired the space operations of Rockwell International Corp., the combined companies will be a formidable presence, with nearly 10,000 employees. The company’s newly formed space systems unit, headquartered in Seal Beach, will combine the Delta rocket operations of the former McDonnell Douglas Space and Defense Systems in Huntington Beach with the international space station, space shuttle and rocket engine units Boeing acquired from Rockwell.

The third division, Information and Communications Systems, based in Seattle, will handle Boeing’s airborne laser project, its airborne surveillance business and its strategic missile programs.

It will also handle Boeing’s work with Teledesic, a company that is building a satellite network designed to beam Internet access to all parts of the globe. The group will be run by Jim Evatt.