Written by Rajesh Kumar Singh
CHICAGO (Reuters) – Boeing Co’s long-awaited announcement that it will buy back its troubled supplier Spirit Aerosystems Inc has now turned investors’ focus to the planemaker’s search for a new chief executive.
Boeing is looking for a new chief executive after Dave Calhoun said in March he would step down by the end of the year, in a sweeping management shakeup following the 737 Max’s mid-flight control panel explosion in January.
A number of potential candidates have emerged, including Patrick Shanahan, who has been running Spirit AeroSystems for nine months. Others include Boeing CEO Stephanie Pope and current Chairman Steve Mollenkopf.
Whoever is named CEO, Shanahan, 62, is best known for his previous tenure at Boeing and his current role as CEO of Spirit. An engineer by training, during his 31-year career at the aircraft maker he was known as “Mr. Fixer” for his ability to turn around underperforming programs.
“It is very important that Shanahan returns to Boeing as an executive,” said Bill George, former Boeing CEO. Medtronic (NYSE:) CEO and Executive Fellow at Harvard Business School. “They need someone who understands technology or space technology.”
Shanahan took over Spirit in October after his predecessor resigned following a series of incidents at the supplier that makes Boeing 737 fuselages and other airframe components.
After taking office, he pledged to stabilize operations and improve cash flow at Spirit. But the January 5 air-conditioning explosion dealt a major blow to Shanahan’s plans to turn Spirit around.
Federal investigators found that Boeing workers removed the panel to repair damage to the rivets when the plane was delivered by Spirit last year.
After the January crash, Spirit said it would invest in autonomous flight technology, increase mechanic training and the number of inspections Boeing and Spirit do, as well as take steps to ensure no errors are made in the production of the 737 Max.
In May, the company said it was looking at various options to shore up liquidity. It also announced plans to lay off several hundred workers in Wichita, Kansas.
Shanahan could not be reached for comment.
He was put in charge of the Boeing 787 Dreamliner in 2008 during a turbulent period in the program’s development, and rose to become Boeing’s senior vice president of supply chain and operations in 2016.
His career at Boeing ended in 2017 when he became deputy secretary of defense. Shanahan was named acting defense secretary in January 2019 after Jim Mattis resigned, but withdrew his bid for the permanent job in June of that year.
Spirit AeroSystems was formed as an independent company in 2005 when Boeing sold its factories in Wichita, Kansas and Oklahoma. With Boeing’s new deal for Spirit not due to close until mid-2025, it wasn’t immediately clear how long Shanahan might remain involved with the aerostructures company.
Ernest Arvai, president of consulting group AirInsight, said Shanahan’s long association with Boeing had left him “immersed” in its culture, which he said was not what the aircraft maker needed.
“They need to change their culture,” he said. “I’m not sure he has the muscle to do that.”
Some industry sources say Spirit’s continued struggles under Shanahan could hinder his chances of landing the top job at Boeing.
After the January crash, Shanahan said quality would drive Spirit executive compensation. He received about $8.9 million in total compensation last year.
While Shanahan was trying to get Spirit on the “right track,” he may not have had enough time to make the necessary changes, said Tony Bancroft, a portfolio manager at Gabelli Funds, which owns shares in both Boeing and Spirit.
Bancroft said he has received “very positive” feedback on Shanahan from some of Boeing’s major shareholders.
“I think it’s logical and natural,” he said.
