Boeing
is making changes to its strategy and planning department. While investors have been through a lot with
Boeing
over the past few years, these changes aren’t anything to lose sleep over.
Boeing’s strategy personnel—who are responsible for parts of the product-planning process—are moving from their own department that operates outside of the company’s various business units and are being integrated into those business units. It’s part of a planned reorganization.
Within Boeing’s commercial airplane division, strategy personnel are being integrated with product development. Other strategy personnel are being added to the supply chain organization as well as the defense and space business.
The total changes affect roughly 200 employees. Boeing has 60,000 engineers and about 145,000 total employees.
The move aims to bring strategy staff a little closer to the people responsible for building the actual products.
“Boeing has taken [steps] over the last several years to simplify aspects of our corporate structure and focus our resources in the business, as closely as possible to our products, services, team, and customers,” said a Boeing spokesman in an emailed statement.
In 2020, CEO Dave Calhoun oversaw the move to create a separate strategy department outside of the business units in 2020, shortly after he took the helm. His predecessor, former CEO Dennis Muilenburg, resigned during the worldwide grounding of the 737 MAX following two deadly crashes of the new plane.
Chief strategy officer Marc Allen is stepping down and Boeing said it won’t fill that role after his departure. Allen has been in that position since Oct. 2020. He has been a member of Boeing’s executive council since 2015.
MAX woes along with the pandemic created an unprecedented amount of volatility for Boeing and the entire industry. That might be why Calhoun changed things up.
Boeing didn’t comment directly on Calhoun’s thought process in 2020.
Investor have been on high alert for developments at Boeing after the MAX issues and the impact of Covid-19. And despite the MAX’s successful return to service in November 2020, Wall Street still debates whether or not Boeing should design an all-new single-aisle jet to leapfrog competing products from
Airbus.
Any changes that could affect the evaluation process—or slow it down—could be worth investors’ attention.
New planes cost billions to develop and Boeing added tens of billions in debt over the past few years. To this point, the company has focused on restoring normality to operations and its balance sheet, instead of designing an all-new plane.
It’s tough to argue with that decision. Boeing used about $28 billion cumulatively to get through 2019, 2020, and 2021, according to FactSet. Free cash flow turned positive in 2022, and is expected to be about $3 billion in 2023. That’s far from the $13.6 billion generated in 2018.
Boeing delivered 806 planes in 2018. It delivered 157 in 2020 and will deliver some 520 in 2023. Boeing deliveries should hit about 800 again in 2025 as the company ramps up production after a few difficult years.
Investors and analysts might have to wait until 2025 or 2026 for the company to talk more about plans for a new plane. The people working to figure out the best design to meet market demand will be working in the commercial aerospace division—that just isn’t that big a deal, and in fact, makes some sense.
Investors seem to agree with that point of view. Boeing shares were up 0.2% in early trading. The
S&P 500
was down 0.2%, and the
Dow Jones Industrial Average
was flat.
Boeing also got a bit of good news Tuesday. Avolon, an aircraft lessor, ordered 40 MAX jets.
Write to Al Root at [email protected]
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