Is It A Good Timing For Boeing Co CEO Change
The article takes a look at the possible paths Boeing could follow as a result of Dennis Muilenberg’s appointment as CEO.
When the announcement was made by the company that Dennis Muilenberg will be the new CEO of Boeing Co. in place of James McNerney, the shareholders didn’t react well. The share price on June 23 went down by 0.87%.
Mr. Muilenberg has worked as COO and President of Boeing Co. since 2013. He started working as CEO on July 1, remained as President and joined the Board of Directors. To simplify the transition process, the Board decided to retain Mr. McNerney as Chairman until his retirement in February 2016. Although the market did not responded in a good way, new leadership might benefit the company.
During Mr. McNerney tenure as the CEO, the company witnessed significant top and bottom growth.
Revenues in the past ten years increased at 5.64% of compound yearly growth rate and net income increased by almost 11.27%. Apart from FY08 and FY09, the company reported continuous growth in earning per share at an annual compound rate of 13.45% over the past decade.
Time has not been much rosy for the Space and Security, Defense division. It struggled financially, with latest government defense cuts causing more problems in division.
Operating income during the tenure of Mr. McNerney contracted at 1.85%, compounded yearly. During fiscal year 2014, it added 33.8% to company’s total revenue of $90.76 billion and almost 25.30% of operating income of $7.47 billion. This shows the Division’s significance to the company’s financial well-being.
In his interview with Wall Street Journal, the CEO designate said he might follow the strategy of his predecessor in running the company, however he will emphasize on some main areas.
His point of focus will be turning around the Defense segment. However, he did not discuss how he will get it done, but an improvement is required.
Another task will be lowering the 787 Dreamliner cost. Since the start of the current year, the company has received 276 total orders. Only1 order has been for the 787 Dreamliner.
According to Bloomberg report, Boeing Co. has increased the aircraft list price by 2.9%. Its biggest 777X aircraft currently costs $400 million, the most expensive. The 747-8 is valued at $379.10 million.
At the Air Show in Paris, held last month, both Airbus and Boeing received buy commitments for almost hundreds of aircrafts, mainly for their smallest planes. With a steady demand for larger jets, like the 747 and 777X, an increase in per unit price might enhance the company’s top line.
