Albaugh retires, replaced by Ray Conner

Update: 8:00am PDT June 27: The Seattle Times has a detailed story, including indications why Albaugh chose to retire.

Original Post:

In shocking news, Boeing announced that Jim Albaugh is stepping down as CEO of Boeing Commercial Airplanes and retiring Oct. 1.

Albaugh is just 62. He had been a candidate for CEO of The Boeing Co. when Harry Stonecipher was fired, a job that went to Jim McNerney. McNerney later tapped Albaugh, who was CEO of what was then known as Boeing Integrated Defense Services, to head Boeing Commercial Airplanes when BCA CEO Scott Carson was largely forced out following yet another delay in the 787 program.

Conner was widely assumed to be one of two candidates–Pat Shanahan was the other–to succeed Albaugh, who was assumed to be the CEO of BCA until retirement at age 65–three years from now.

Albaugh came to BCA when the 787 and 747-8 programs were in deep disarray. An engineer by trade, he contrasted to Carson’s finance and sales background, a career path that left Carson largely unprepared for the highly technical problems of the two flagship programs. Albaugh, although somewhat imperial in style, can be credited with steering the two troubled programs to production. While neither is fully healed and the 787 program in particular still faces serious challenges, both are at least on the mend.

Albaugh also repaired labor relations that had gone downhill under Carson and McNerney. But it was Conner who is credited with opening the way toward the unprecedented four year contract extension with the militant IAM 751 nearly a full year ahead of the amendable date. This brought important labor peace and production stability between two warring parties that had resulted in strikes in four of the previous five contracts.

Conner is well regarded throughout the company and with customers.

32 Comments on “Albaugh retires, replaced by Ray Conner

  1. I wish Jim Albaugh well in his retirement

  2. Shocking news indeed! As you have alluded to, it seems to be a premature departure. Maybe he was fired, or he left out of frustration. No one would be surprised to learn that there are considerable tensions at the upper echelon of Boeing right now.

      • Could it be a health problem then? Or a family problem like it apparently was for Gary Scott?

  3. Thee must be some serious stuff behind this, too bad as Boeing really does not need more troubles…

    I still don’t understand why McNerney is still there!

    • Why could Jürgen Schrempp lead Daimler-(Aerospace/Benz/Chrysler) to its deathbed after first having assasinated Edzard Reuter ? Why did they give him Deutsche Bahn as his next “play to death” toy ? ( both entities seem to have survived for now. but it was an expensive experience. )

    • IMO they should get guys like Dennis Muilenberg to BCA, just below the top, in a key commercial position for the next few years. Youth and energy iso indept engineering knowledge and life long experience. “Major Tom” seems to work for Airbus/EADS.

  4. Ray Conner started with Boeing as a mechanic and has earned his way up the corporate ladder. He is an extremely competent individual and very well suited for the job. He has had responsibilities in all phases of the business including maintenance, production servicing customers and most recently, his successful lead in arranging a contract with the Union. He is well liked and familiar with hands on observation and factory and production savy.

    Except for the early and unexpected retirement of Jim Albaugh, there is no question that a very able replacement has been appointed.

  5. Albaugh entered the game when the base for the problems was already firmed.

    Under his command Boeing had the 737/NSA glitch.

    Boeing has time to decide, the customers will wait, little interest in re-engining, the 737 NG is better anyway, we have seen no brand switches, parity with Airbus will be secured. Southwest, Delta, Try to get through but are greeted by friendly arrogance. Boeing knows better.

    Then AA invites Albaugh for a meeting, tomorrow will be fine.. Qantas, Garuda, Norwegian switch too. Boeing has to deeply discount to get a few hardly convincing orders.

    Is the 737 that important? Yes..

    • That extraordinary picture said everything then and could possibly explain a lot today as well.

    • keesje, you are just babbling again.

    • You have no idea what you are talking about.

  6. Less than two weeks before Farnborough opening, it seems to me, a very inopportune, and somewhat compulsive decision !
    Some logical cause has to emerge, through the following days !

  7. Jim Albaugh was and will continue to be a fine gentleman, but in my humble
    opinion, Jim was totally misplaced as CEO of BCA, because of his lifelong
    exposure to and experience with military programs only, when he was ap-
    pointed CEO of BAC!
    In addition to inheriting the 787 program at about it’s worst time during it’s
    disastrous development, Jim was unprepared for the onslaught of the A320
    NEO last summer, while his predecessor had been playing with the NAP v.v.
    a modified 737, favoring the NAP, which they should have stayed with,
    because of the resulting engine ground-clearance problem, which still has
    NOT been officially resolved.
    Instead, he and presumably with the backing of the other totally inexperienced
    Boeing Co. CEO McNerney, panicked and switched back to re-engining the
    737, without even taking into account the fact that there might be inadequate
    engine ground-clearance by going to a larger fan, BEFORE even confirming
    that there was, to match or preferably better the operating costs of the NEO.

    Because it has been very quite from Boeing on this issue for a while and now
    with this startling announcement of Jim’s retirement before the FAS, I am
    quietly hoping that Boeing will announce the decision at the FAS, that the Co.
    will go back to the NAP program, because of the marginal operating costs it
    can provide with the MAX v.v. the NEO, due to the limitations on the fan dia-
    meter they require and save Jim a very embarrassing moment at the FAS!

    • Albaugh / Boeing had IMO little alternative to launch the MAX and say its the best. They might have lost even SW, who clearly indicated they could not wait until 2020 or 2022.

      What surprised me was that Boeing seemed to be in total denial until Q2 2011. Really believing the NEO was just catching up and the airlines would wait for the NSA. That seemed like a misunderstanding of the market and their own position. Even at the time.

      • misunderstanding?

        More like “perception management” breaking under high load 😉
        It worked for Microsoft ( and for two decades ) but then there was no “Airbus” around in the OS world.

  8. keesje :
    What surprised me was that Boeing seemed to be in total denial until Q2 2011.

    When you have a clear vision of where your are going you can bring your best customers on board and use their feedback to make the necessary adjustments. But it looks like Boeing never had a definitive plan. They were unprepared.

    They could not keep their eyes on the ball because of all the distractions caused by the problems with the unions, the problems with the Dreamliner, the problems with the government on the Tanker, the problems on the 747-8, the problems with Airbus at the WTO, etc.

    If you look at the time period between Condit and McNerney it is all very tumultuous. Management never had time to concentrate on long term planning. When they were not flirting with the staff they were flirting with the government. Or both at the same time as in one infamous case. It seems that in the last 15 years Boeing hasn’t done anything right, except maybe for the 777. Even then, the take-off run lasted more than ten years.

    The book they have been writing for the last two decades is entitled “The History of the Decline and Fall of the Boeing Empire.” As inspired by Edward Gibbon. Another two decades like that and they will indeed become History.

    • Management was never allowed to concentrate on long term issues. That’s not what their performance was measured on under Stonecipher. You get what you measure.

      I find it quite interesting that you cast off an airplane program as a “failure” when it has already sold over 800 units. Hardly a “failure”. While it’s birth was painful, you can not, with a straight face, say it is a failure. Failure is L1011, A340-500/600, 767-400. In no way can you say 800+ and going orders on 787 is a “failure”. The same is true for the A350, while not as large a backlog as 787, 500+ orders is hardly “failure”. You say Boeing has “failed”, yet you ignore the similar trials and tribulations of Airbus from A318, to A340-500/600, to A380, to A350. You’re definition needs revision, badly. Boeing is not going to die, no matter how much you and others here would desperately love to see that. You are going to be sadly disappointed. Neither Boeing nor Airbus is going to go away. Period. They will certainly not be replaced by the Russians or the Chinese in the foreseeable future, perhaps not even in our lifetimes. Not that they aren’t capable, but it will take them a good 40 or so years to achieve the status of Airbus and Boeing, and maybe not even then.

      The simple fact is that the development of modern airliners is an EXTREMELY complex business. Far too complex for armchair CEO wannabes to comprehend. It’s just a fact of life in the airliner business. Expectations of development times will have to be adjusted, those who can’t grasp that will continue to be disappointed.

      • Howard, when searching this page for the word “fail”, I received 7 hits, all from your comment.

        Who else said anything about failure?

  9. Howard :
    Boeing is not going to die, no matter how much you and others here would desperately love to see that. You are going to be sadly disappointed.

    I love Boeing as much as you do. You don’t understand where I stand. But the Boeing I always loved no longer exists. It has been destroyed by a succession of irresponsible CEOs. Starting with Condit and Stonecipher. And you probably know the details better than I do.

    For the 787, it is simply the largest industrial failure in the entire history of the world. What’s the use of selling 800 + aircraft if you loose money on each and every one you build?

    In regards to Airbus, I have previously identified in these pages the A340 and all its variant as a failure. I never mentioned the A318, but if you want to know I have always seen it as a joke. The A400M was doomed from the Start when President Chirac rejected the Pratt & Whitney of Canada engine, which had been offered for 10% less. And the A380 gaffe revealed to the world the problems the French and Germans were having with their respective nationalistic pride. And the A380 was itself based on pride and hubris. The largest ego undertaking in European history.

    But whatever the travails of Airbus, it still has class and dignity. Something totally lacking at Boeing. Whenever they come out with an important announcement they make it sound like if it was written by a bunch of cowboys in a whorehouse. It’s all boasting and bragging.

    If Boeing survives over the long term it will by default. Like you mentioned it is a particularly difficult business to get in. You also mentioned that I might be disappointed. Well, I am already badly disappointed. I feel like I have been let down by Boeing.

    • “The largest industrial failure in the history of the world”

      “Cowboys in a whorehouse”

      “Airbus…has class and dignity”

      You’re running perilously close to self-parody there, my friend.

      • WCOG, you are running perilously close of being personal here.

      • Do not mistake me, sir, that was absolutely my intention. I do not appreciate your similies likening me and my coworkers to drunken cowboys in a brothel, nor your outrageous auxesis.
        As to that supposed exemplar of class and style, Mr. Leahy of Airbus? He is no gentleman.

        Should you choose to come to Seattle I would be glad to give satisfaction; with sword or pistol, at your discretion.

        Your servant. etc.

        (with apologies to the proprietor of this website for my grave indiscretion and inattention to the custom of polite company)

  10. Howard: “Boeing is not going to die, no matter how much you and others here
    would desperately love to see that.”

    I do not know what you base that statement on, or what your background is,
    but let me assure that I and most of the others feel insulted by what you put in
    writing, about what we would like to see happening.
    This because we old-timers, have no other objective by writing write these
    blogs, but to stress our serious concerns with the manner in which BCA has
    been managed ever since Airbus came into being at about the same time T.
    Wilson and his team of militarily experienced colleagues were appointed to
    head up the Boeing 1970!
    After having firmly established BCA as the world-leader in its field, with the 707,
    727, 737 and 747 family of aircraft, they had such alack of understanding of
    commercial aviation and the leading position Boeing had attained in that field,
    that the first thing they tried to do and almost succeeded, was to cancel the 737
    program, launching the ridiculous 747SP!
    Than they decided that commercial aviation was for the bids and decided to
    invest a $ billion or more diversified products like Hydrofoil Boats, Rapid
    Transport systems, small Turban Engines and several other products, totally
    unrelated to aviation, which all had to be shut down by the end of the ’70s,
    without ever making a penny in profit!
    Fortunately, the old-timers were able to point to that disaster and convince “T”
    qnd his team, that commercial aviation was and would continue to be our
    strength, by launching the 767 in 1976 and the rest was history until MDD
    was purchased in 1979, causing a bad cycle to start all over again, allowing
    Airbus to take the leadership position in commercial aviation away from Boeing
    during the past decade, which we regrettably will not win back for a long time,
    if ever!

    • I base my statement on comments uttered here by several posters. Your beef with Boeing goes back to 1970? Well, that’s an awfully long time to hold a grudge.

      Do not presume that I am some kind of Boeing Fanboi who only looks at the company through rose tinted glasses that many seem to view Airbus through. I am perfectly able to see failures, and have pointed out some in this thread and others.

      However, it is a fools game to suggest that Boeing is going to somehow disappear, again no matter how fervently some here would wish it. There is a penchant here on this board, to cheer all things Airbus, while castigating anything Boeing. Companies are run by people. Sometimes they make good decisions, sometimes they go horribly wrong. There are cases of this on both sides of the Atlantic, and there will be so again in the future.

      Large commercial aircraft market is a duopoly. It will remain a duopoly for the foreseeable future. Both competitors have essentially 50/50. Since you seem to be an “old timer” as you have said, let me say that in a duopoly there is no “god given right to 70% of the market” as the “old timers” used to think of it. There is no god given right to any of it. Boeing and Airbus compete strongly against each other, and will continue to do so going forward.

      How do you define leadership? Orders? Deliveries? Profits? Technology? All of these cycle back and forth between the two. As is the nature of a duopoly.

      • Excellent post. Thanks, Howard.

        My world is full of former Boeing executives (I am a 3rd generation Boeing employee) and you have struck this nail square on its head. Many of these “old timers” see Boeing through a perspective formed between the 707 and the 767 – a time at which the real competitors were US-based and the European upstart was dismissed as a government funded Euro pride festival with little chance of competing on any technical basis. As you note, that is not the world Boeing exists in today, in part due to the failure of these past “heroic” Boeing leaders to recognize the potential of Airbus to evolve into a dominant force in this business.

        I read some of the posts here from “old timers” claiming “I told so and so in 1995 to pursue BWB rather than Sonic Cruiser” and “Boeing should have gone forward with NSA rather than the 737 MAX” and “I hope they come to their senses, reverse course on the MAX and launch the NSA”. Honestly, it’s hard not to laugh out loud. There is zero technical or business acumen behind these sentiments. In the same breath they are mourning the “decline” of the “once great” Boeing company, they are advocating the strategic moves which would most certainly bring about the decline they fear most.

        Anyhow, thanks for a post which included a dose of reality.


  11. Surprising indeed. With the fancy new executive offices downtown I thought he might stick around to enjoy some of the finer restaurants downtown Seattle has to offer.

  12. Normand, Uwe, with the “denial” and “market misunderstanding” I refer the events 1 yr ago:

    Albaugh, June 20 2011.

    “Re-engining the Next-Generation 737 is technically viable and a real option for us. What we are working on now is whether that’s a good enough answer for the next decades in light of the rising cost of fuel and emerging environmental regulations,” Albaugh said. “One thing is certain: we will always provide more value to our customers than our competition.”

    By improving aerodynamics and engines, Albaugh said Boeing can deliver a new small airplane that’s 20 percent more fuel efficient than its predecessor. “When our competitor says they don’t have the technology for a new small airplane until 2030 or even 2035, we believe them,” Albaugh said. “We do have the technology as a result of developing the breakthrough 787.”

    The company also will continue to improve the Next-Generation 737 and reduce fuel burn by an additional two percent this year. “The 737 is a great airplane, and it will remain the leader in the single-aisle market for years to come,” Albaugh said. “We will compete vigorously for the heart of this market in the future.”

    Exactly ONE month (july 20, 2011) later we had the AA order announcement, that was far from a “split” (260 NEO orders + 365 options and an MOU/LOI for a still undefined MAX), and everyone knew it.

    I can imagine this glitch damaged Albaugh’s credibility internally and towards the market. Maybe he was to much an engineer..

    • This is one of the most pertinent post I have seen on this blog so far. Thank you keesje.

  13. keesje :
    Albaugh, June 20 2011.
    “Re-engining the Next-Generation 737 is technically viable and a real option for us. What we are working on now is whether that’s a good enough answer for the next decades in light of the rising cost of fuel and emerging environmental regulations,” Albaugh said.

    In other words the MAX is not such a good idea after all.

    keesje :
    Albaugh, June 20 2011.
    By improving aerodynamics and engines, Albaugh said Boeing can deliver a new small airplane that’s 20 percent more fuel efficient than its predecessor. “When our competitor says they don’t have the technology for a new small airplane until 2030 or even 2035, we believe them,” Albaugh said. “We do have the technology as a result of developing the breakthrough 787.”

    That sounds like a plea for the NSA.

    keesje :
    Exactly ONE month (july 20, 2011) later we had the AA order announcement.

    So the MAX is not such a good idea, but we are not going to do the NSA either.

    1-1 = 0