Boeing Shakeup to Ripple Through Supply Chain

Boeing (BA) has tapped an outsider to run its sprawling commercial airplane division, part of a broader revamp of the business that could have repercussions throughout the aerospace supply chain.

Chicago-based Boeing named General Electric  (GE) aviation executive Kevin G. McAllister as CEO of Boeing Commercial Airplanes, replacing 61 year-old Ray Conner. Conner will stay on at Boeing as a vice chairman through 2017, working with McAllister to ensure a smooth transition.

McAllister, 53, joins Boeing after 27 years with GE Aviation including serving as CEO of the unit since 2014.
The company is also forming a third division, Boeing Global Services, to sit beside commercial and defense and coordinate maintenance, service, spare parts and other services for both commercial and defense customers. The move continues Boeing's push to expand its aftermarket business, a portion of the market that should hold up well even when the now eight-year-old surge in commercial plane orders subsides.

The new unit, which will be based in Dallas and be run by Boeing veteran Stanley A. Deal, will have an estimated 25,000 worldwide employees providing 24/7 flight support, parts, training and software for commercial customers and logistics and supplies for the Pentagon.

Boeing dove headfirst into the aftermarket with a $2 billion cash and debt purchase of Aviall in 2006, but in recent years has been more focused on expanding new jet production to manage a swelling order book. But it has shown signs that it is refocusing on the aftermarket, this summer deciding against renewing a deal with one-time subsidiary Spirit AeroSystems (SPR) which allowed Boeing to take control of some of its spare parts manufacturing.

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