By Shifting Boeing's Focus To Defense, Did Its Outgoing CEO
Phil Condit had a
vision back in 1996.
He believed the future of Boeing, which he'd just been tapped to
lead as president and CEO, was not in commercial aviation, but in
defense contracting. Condit surprised the aerospace world Monday by
resigning, leaving his post to former Vice Chairman Harry
Stonecipher. But what about the vision thing?
Condit's reasoning seemed a simple example of capitalism at its
best. The average profit margin in building commercial aircraft,
Boeing's most visible endeavor, was five percent. But the margin in
defense contracting is about eight percent. When you're dealing in
astronomical numbers as Boeing does, a difference of three percent
amounts to a load of cash.
So Boeing got hawkish under Condit's command, changing the ratio
of its overall business until the point where, today, commercial
aircraft manufacturing accounts for only 44% of Boeing's revenue.
Its main rival in that field is Airbus, which, next year, will
overtake Boeing as the world leader in commercial aviation
The quest for higher
profits brought ethical scandals to Boeing. In competing with the
likes of Raytheon and Lockheed-Martin, Boeing executives found
themselves under investigation for breaches like industrial
espionage and unethical practices. Those allegations, involving the
Evolved Expendable Launch Vehicle in 1997, the missile defense
shield in 2002 and now the "supertanker" replacement for the USAF's
KC-135s, hang like a sour cloud over the company.
So perhaps that's why Stonecipher appears headed back to
Boeing's roots -- commercial aviation. In an interview with Fox
News, along with outgoing CEO Condit, Stonecipher said he's
personally backing the 7E7 project as it goes before the Boeing
board of directors this month for the green light to
"Oh, I think it is a great idea," he said.
"I think we need a new airplane program and I think the guys
(developing the 7E7) have done a good job, a very thoughtful job
and they’re going to be bringing it to the board. And
I’m going to be right there beside them helping them present
the thing to the board."