Boeing names 3M chief McNerney as new CEO

Thursday, June 30th 2005, 8:51 am

By: News On 6

CHICAGO (AP) _ Boeing Co., which has been searching for a new leader since its chief executive was forced out in March over an affair with an employee, on Thursday named 3M Co. Chief Executive W. James McNerney as its new CEO.

McNerney, 55, who had long been rumored as the strongest outside candidate to lead the aerospace company, will become the third chief executive of the airplane maker since December 2003. His appointment bypasses two internal candidates who head Boeing's largest business units.

Boeing has been without a permanent boss since CEO Harry Stonecipher was forced from his post in March after admitting an affair with a female Boeing executive amid the company's high-profile campaign to improve its ethics and public perception.

Earlier this month, Boeing Chairman Lew Platt said the board was down to a short list of ``five or six'' potential new chief executives, including the head of the commercial division, Alan Mulally, and Jim Albaugh, head of the company's space and defense business.

McNerney's name popped up shortly after Stonecipeher's departure as a likely candidate for Boeing's top spot. But McNerney dampened the speculation in April, saying he was happy at 3M and not a candidate for the Boeing job.

James Bell has served as Boeing's interim president and CEO since Stonecipher's departure and will remain chief financial officer. In addition to the CEO job, McNerney was named board chairman and president.

``Boeing's businesses are performing very well, and the board sought a CEO with the experience and credentials necessary to sustain that momentum and take the company to the next level,'' Platt said in a statement. ``Jim met all the board criteria.''

McNerney has been a Boeing director since 2001. Before joining 3M in 2001, he held several executive spots at General Electric Co., including CEO of GE Aircraft Engines and GE Lighting and as an executive vice president of GE Capital.

McNerney inherits a company performing well financially but still struggling to smooth over lingering tensions with the Pentagon and Capitol Hill.

Stonecipher's predecessor, Phil Condit, resigned in December 2003 as a result of defense contracting scandals that ultimately sent two Boeing executives _ ex-Air Force procurement official Darleen Druyun and Chief Financial Officer Mike Sears _ to jail.

Despite the recent turmoil, Boeing's defense sales rose nearly 10 percent annually in 2003 and 2004, its commercial airplane business is on the rebound and its stock price has doubled in two years.

The Chicago-based company also is locked in a tight competition with Airbus SAS for supremacy in passenger jet sales as the airline industry shows signs of recovering. The battle features Boeing's planned new fuel-efficient 787 against its rival's A380 ``superjumbo.''

``Clearly one of the major challenges he will face is how you beat out Airbus,'' said analyst Paul Nisbet with JSA Research. ``And there's certainly still fence-mending to do on the military side. (McNerney) seems very qualified to keep their momentum going.''