Boeings CEO search has a new frontrunner—and insiders say it could mean a radical change for the $104 billion ailing planemaker – Fortune

Boeing’s search for a new CEO ranks as the most closely watched succession drama in decades. If the manufacturing icon makes the wrong choice, its airline customers won’t get the planes they desperately need in the years ahead, raising prices and cutting frequency of travel for the 2.2 billion people who fly each year. It’s now clear that the directors’, regulators’, and Wall Street’s view of what the legendary planemaker needs in a new leader has totally changed since the notorious blowout over Portland, Ore., on Jan. 5 exposed manifold flaws in its manufacturing processes and procedures. Last year, the odds strongly favored a veteran insider, and like all its CEOs from the past two decades, not anyone bringing deep experience on the factory floor. Now, the likely choice is a newcomer offering detailed knowledge of how planes get built, a radical change agent determined to restore high-quality production, on-schedule deliveries, and great aerospace expertise, as opposed to financial engineering, job one.The Alaska Airlines cataclysm upends Boeing’s old succession planOn March 25, Boeing unveiled a sudden upheaval in its C-suite and boardroom. Its press release that day announced that David Calhoun will step down as CEO at year-end, and that chairman Larry Kellner, former head of Continental Airlines, will depart following the annual meeting on May 16, to be replaced by director Steve Mollenkopf, retired chief of Qualcomm. Stan Deal, the top executive at Boeing Commercial Airplanes, is leaving the company, and Stephanie Pope, the COO, is taking Deal’s old job. It’s Mollenkopf who will lead the search for the next CEO.Fortune interviewed sources that include past Boeing executives and current and former high-ranking figures in the aerospace industry to get their take on the qualifications needed in a new leader, and the candidates the board is most likely favoring right now. All of them chose to speak on background. On the sudden resignations and

shake-up at Boeing Commercial Airplanes, they generally agreed that the board was responding to pressure from both airline customers and the FAA. Four days before the big reshuffling, airline CEOs made the extraordinary request to meet with Kellner sans Calhoun. “When your customers say they want to meet with your chairman, you know they want change at the top,” says one person to whom I spoke, and who added: “The board realized that the FAA can make things harder if today’s leadership stays in place.” Said a second source: “When all these guys at the top are immediately replaced

or retire at the first opportunity, it would appear that the FAA had a hand in that.”Just three weeks before the catastrophe aboard Alaska Airlines Flight 1282, Boeing announced that Pope would ascend to chief operating officer on Jan. 1, making her heir apparent to Calhoun. Pope spent most of her three decades at Boeing in financial jobs, serving as CFO of both Global Services and Commercial Airplanes, and most recently headed Global Services, the unit that supports commercial and industry customers. Pope has proved an expert financial manager in an enterprise that—until the flood of safety issues—focused heavily on shareholder returns. She also apparently did a good job as a general manager. But according to my sources, financial acumen isn’t what’s needed going forward. “I was surprised that after all that happened, Boeing would put a former CFO in the top Commercial Airplanes job,” says one source. Though that move keeps Pope in the running, the people to whom I spoke believe that the board is now leaning heavily toward an outsider with the manufacturing chops to get things right at its giant plants in Renton and Everett, near Seattle, and in North Charleston, S.C.A probable solution: A great manager who also understands manufacturing, paired with a production hawk who’s all over the factory floorThe big problem the board faces: Running Boeing requires a combination of skills that’s highly unusual, and tough to find in a single leader. “The CEO job at Boeing is so complicated,” explains one industry veteran. “You have all the public-facing and regulatory work to do, all the airline customers around the world, the constituency in Washington. To fill those roles, you need someone with stature and sophistication. And that isn’t always the same person who knows how to build airplanes.” The one obvious candidate blending the two talents is GE Aerospace CEO Larry Culp, who greatly streamlined GE’s manufacturing engine, frequently touring the assembly lines in person and swapping ideas for moving parts faster and safer with welders and machinists. Culp also showed strong diplomatic skills in dealing with Congress and regulators. But Culp has declared he has no interest in leaving the engine-manufacturing business he’s done so much to make highly efficient and profitable.The best solution for Boeing, say several source