Boeing replaces 787 chief

Boeing Co. has replaced the head of its troubled 787 program, days after revealing that the first delivery of the vaunted new jet would be at least six months late.

Chicago-based Boeing announced Tuesday that Mike Bair, 51, who had overseen the Dreamliner's development since its 2004 launch, has been named vice president for business strategy and marketing within its commercial airplanes division.

He is being replaced by Pat Shanahan, 45, considered a rising star within Boeing, who has held key jobs in both its airplane and defense businesses.

Shanahan most recently oversaw the missile defense system that Boeing is developing for the U.S. government. Before that, he managed Boeing's 757 commercial jet program and oversaw the launch of the 767-400ER, a long-range version of the midsize passenger jet that is to be replaced by the Dreamliner.

Boeing executives were unavailable for comment.

Management shuffles are commonplace in the aerospace world, analysts say, particularly when a company's fortunes are at stake. Boeing's two previous chief executives resigned abruptly, and Ron Woodard, who headed Boeing's commercial airplanes business, was forced out after supply-chain foul-ups brought airplane production to a halt in 1997.

Under Bair, the 787 generated 730 orders worth about $115 billion but ran into production snags that have put the first two years of Dreamliner deliveries in doubt. Boeing executives said last week that they hope to have the 787's production on schedule by 2009. Analysts remain skeptical that the company can meet its goal of producing 109 planes by the end of that year.

"I think it was a prudent move, given what has transgressed versus what has been planned," Paul Nisbet, aerospace analyst with JSA Research, said of the change.

Little known outside of Boeing, Shanahan has a reputation as a dynamic leader with a knack for unraveling complex business tangles. When he joined Boeing's Missile Defense Systems in December 2004, the business had a cloudy future because Boeing's defense technology had fizzled in attempts to intercept missiles. But Shanahan got a handle on the supply-chain issues that had contributed to the failures, and later tests proved successful.

"He's engaging," said aerospace analyst Howard Rubel, who met Shanahan at the ceremony marking the rollout of the first 787 from Boeing's giant assembly line in July. "He can talk with the best machinists and with the guy who's wearing a fancy suit. He's got a special set of skills."

However, the 787's first flight, originally scheduled for August, has been postponed several times, and now won't take place before the end of the first quarter of 2008.

The aircraft shown to the world in July was essentially a carbon-composite shell, held together with temporary fasteners. As Boeing engineers disassembled the plane to install wiring, permanent fasteners and other vital systems, they were confounded by a three-dimensional puzzle, executives said.

It was difficult to know where to start because all of the components were interconnected. The myriad types of fasteners needed to connect the plane's exotic materials were still in short supply, integration of a key computer system was running behind schedule, and the paperwork documenting all of the work was a mess.

In early September, Bair briefed reporters and analysts on the problems and announced that the first flight had been pushed back from late September to late fall. However, the delivery of the first plane to Japan's All Nippon Airways would take place in May, as scheduled, he said, while conceding that Boeing had no cushion to accommodate other production glitches.

By early October, however, Boeing executives determined that the wiring issues were more complex than they had estimated. They announced the six-month delay in the first delivery, saying that this would provide extra time to deal with any additional problems that came to light as the aircraft undergoes the rigorous flight testing required before it is certified by federal regulators.

While CEO James McNerney Jr., Chief Financial Officer James Bell and Scott Carson, president of Boeing Commercial Airplanes, fielded questions on the conference call, one person was conspicuously absent: Bair.

Tuesday, Boeing announced that he has been reassigned to craft long-term business strategy for its airplane business -- a lateral move, according to analysts. It was one of three job changes related to the retirement of Laurette Koellner as president of Boeing International, which was also announced Tuesday.

Shephard Hill, 54, will replace Koellner as the head of global operations. Michael Cave, 47, was promoted to Hill's former position: senior vice president for business development and strategy in Boeing's corporate offices. Bair, meanwhile, assumed Cave's former job.

"McNerney is big on accountability," aviation consultant Scott Hamilton said. "You're given a job and expected to get it done. And the job wasn't done."