Boeing taps GE executive to head airplanes unit as part of services push

NEW YORK: Boeing Co on Monday named a senior General Electric Co executive to head its commercial airplanes division and announced a new services unit, in moves to capture more of the profitable market for parts and repairs after a jet is sold.

The changes are "a big and important step" toward Boeing´s goal of increasing annual services revenue to about $50 billion in 10 years from about $15 billion currently, Boeing Chief Executive Officer Dennis Muilenburg said on a call with journalists.

The changes do not alter plans for developing aircraft, but put a new "emphasis on generating life-cycle value," Muilenburg said, referring to building an aircraft with an eye to gaining revenue from servicing the plane during its decades-long life.

"We´ve always said growing services is a core part of our strategy, and now you see us emphasizing and investing accordingly," Muilenburg said.

Boeing tapped Kevin McAllister, 53, to lead its $66 billion commercial airplane business, succeeding Ray Conner, 61, effective immediately.

Conner, who started as a Boeing mechanic nearly 40 years ago, will serve as vice chairman through 2017 to help with the transition, the world´s biggest planemaker said.

McAllister has been with GE´s aviation unit for nearly 30 years and knows Boeing and its customers well, Muilenburg said.

Boeing named Stanley Deal, 52, to head the new services unit, to be known as Global Services.

Deal had been senior vice president of Boeing´s Commercial Aviation Services business.

The Global Services business is due to begin operating in the third quarter of 2017.McAllister has been chief executive of GE´s $8 billion aviation services business, a unit that earns much of its revenue from contracts servicing GE aircraft engines.

Airlines generally pay a fee for every hour they run the engines, which covers service and maintenance.

"Muilenburg is shaking up BCA with a surprise outside appointment which is likely a healthy move given that fresh leadership eyes can create positive movement," said analyst Peter Arment from Baird Equity Research.

Last year, Muilenburg named Leanne Caret head of the defense business.