Boeing chairman Condit resigns in surprise announcement; company had fired two execs last week

Monday, December 1st 2003, 12:00 am

By: News On 6

CHICAGO (AP) _ Boeing Co. chairman and chief executive Phil Condit has resigned, the aerospace giant said Monday in a surprise announcement just days after two other high officials were fired for an alleged ethics breach involving defense contracts.

The company's board accepted Condit's resignation, effective immediately, after deciding ``a new structure for the leadership of the company is needed,'' according to a Boeing statement.

Condit said he resigned to ``put the distractions and controversies of the past year behind us.''

Company spokesman John Dern insisted that Condit was not fired and said the board accepted his resignation ``with great sadness.''

Boeing shares dropped 69 cents, or 1.8 percent, to $37.70 in early trading on the New York Stock Exchange.

The move comes a week after Boeing unexpectedly fired chief financial officer Mike Sears for unethical conduct, saying he negotiated the hiring of Air Force missile defense expert Darleen Druyun while she was still working for the Pentagon and was in a position to influence Boeing contracts.

Druyun also was dismissed. She had been hired earlier this year as vice president and deputy general manager of Boeing's Missile Defense Systems unit.

Boeing made no connection between Condit's departure and the firings in Monday's announcement.

It named Lewis Platt, a Boeing board member and retired chairman of Hewlett-Packard, as non-executive chairman and Harry Stonecipher, who retired from Boeing last year, as president and chief executive officer. Stonecipher had worked in a number of capacities, including vice chairman, president and chief operating officer.

The dismissals last week and Condit's departure follow months of controversy over a plan for the Air Force to lease 100 Boeing 767 planes for use as aerial refueling tankers. The Pentagon launched an investigation this fall into allegations that Druyun gave Boeing information about a competing bid on the $21 billion deal.

Sen. John McCain, R-Ariz., and others have called the leasing agreement a sweetheart deal for Boeing. Asked about the firings last week, McCain said: ``I think it substantiates our reason for the inquiry and the concern I had about the way that this whole deal was concluded.''

Sears, 56, issued a statement last week denying wrongdoing. He was named to the financial post 3 1/2 years ago and had been considered a top candidate to succeed Condit.

Druyun could not be located for comment last week; no telephone number for her could be located.

Platt, 62, praised Condit's ``characteristic dignity and selflessness in recognizing that his resignation was for the good of the company'' and said the board ``is in unanimous agreement that the company has been pursuing the right transformation strategy and that Boeing is in excellent financial condition.''

``We have the right strategy,'' Stonecipher added. ``The task before us is to execute.''

Condit has been chief executive since 1996 and chairman since 1997, the company's seventh chairman since it was founded in 1916.

For decades, Boeing was primarily an aircraft maker, earning most of its money from its airliners. But in the aftermath of the Sept. 11, 2001, terror attacks, Boeing's defense division now brings in more revenue than commercial airplanes. Boeing has expanded its space, communications and other businesses as well.

Rival Airbus expects to eclipse Boeing this year as the world's largest commercial aircraft manufacturer.

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