Guy Norris, Los Angeles
The surprise announcement, which ends growing speculation over the choice of future leadership of BCA, comes earlier than expected and marks the first time since the formation of the commercial division of Boeing in the mid-1960s that it has been led by an executive recruited from outside the company.
At the same time, Stanley Deal, currently head of Commercial Airplanes customer services, has been appointed president and CEO of a new unit called Boeing Global Services (BGS). The new business arm will be formed from the customer services groups within BCA and the company's existing defense, space and security business units. The creation of BGS will spearhead Boeing’s goal to triple its services business to around $50 billion by the middle of next decade.
The appointment of McAllister, who was president and CEO of GE Aviation Services, also underlines Boeing’s increasing emphasis on building its services business says president and CEO Dennis Muilenburg. McAllister’s recruitment, along with the creation of BGS under Deal, marks the completion of a strategic transformation which Muilenburg began in February with the appointment of former Boeing Global Services and Support President Leanne Caret to lead the company’s Defense, Space and Security unit.
Boeing captures around only 7% of the global commercial services market and 9% of the defense services business. “So there is ample room to grow,” says Muilenburg. Boeing estimates the potential services market across all sectors is valued at about $2.5 trillion over the next 10 years. “We have the potential to achieve significant growth in our services business,” says Muilenburg who adds the formation of BGS, which will begin fully operating as the company's third major business unit by the third quarter of 2017, “is a very concrete step in that direction.”
BGS will be formed with a small core headquarters group based in Dallas, Texas, where Boeing services company Aviall currently operates a large facility. Boeing says that although specific business details and additional leadership assignments are yet to be announced, “the vast majority of the work performed by Boeing Global Services is expected to remain at existing locations for the foreseeable future.”
Deal, 52, previously was vice president and general manager of supply chain management and operations for BCA, before leading customer services. Deal originally joined the company as an engineer on the C-17 airlifter and also has held senior roles in sales and marketing. Deal will be involved in the detailed planning for the start-up of BGS over the next six to seven months, and will oversee efforts to grow the services business through organic growth, investments in modification programs, spare parts, new service programs like Goldcare and leveraging information and data services.
Conner, 61, will meanwhile continue to serve as Boeing vice chairman through 2017 and will work with McAllister during the hand-off phase. Conner also will provide “strategic oversight and guidance for the company's transition to a single integrated services business and remain involved in ongoing product development strategy at Commercial Airplanes,” says Boeing. “Ray will be very engaged and we want to take full advantage of the year of transition,” adds Muilenburg.