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Jim McNerney, Boeing (BA)

Source: Wikipedia

Shareholders who have been riding Boeing’s rise since Jim McNerney took the helm in mid-2005 have been handsomely rewarded — the stock has more than doubled since then, which is twice as good as the Dow and the S&P 500 during that same period.

But BA faces serious headwinds, too. The FAA this week will warn airlines not to fly Boeing jets equipped with General Electric’s (GE) new GEnx engines near thunderstorms in the wake of ice buildup on some 787s and 747-8s. United Continental (UAL), the only U.S. operator of the Dreamliner, has GEnx engines on all of its 787s. GE is working on a software fix for the problem, but it is unwelcome news for the troubled 787 program — and for McNerney.

This week’s news adds to the agitation over the 787’s so-called “teething troubles” — the first 787 was delivered in September 2011 — 40 months behind schedule. The FAA grounded the jets worldwide in January after lithium-ion batteries in two 787s overheated — and in one case caught fire. BA fixed the plane, which returned to service in late April, but three months later, a parked Ethiopian Airlines 787 caught fire at London’s Heathrow Airport from an apparently unrelated cause. These challenges have all happened on Jim McNerney’s watch — and with the all-important 777X launch looming, BA can’t afford similar delays or teething troubles.

But BA is in another tiff with its Machinists’ union, which rejected a contract extension last week that would have kept production of the 777X in Washington state. Boeing says it’s done talking to the union until 2016, when the current contract expires, and is checking out moving 777X production to other states.

If the Dreamliner’s glitches persist — or the union standoff raises concerns about production delays with the 777X — Jim McNerney could be pushed out. If that happens, Ford (F) CEO Alan Mulally could top the short list. Mulally, the former president and CEO of Boeing Commercial Airplanes, is an aerospace engineer who designed most of BA’s current fleet. He worked wonders with Ford’s unions and personally spearheaded the highly successful 777 program, leaving him well qualified to take the twin-engine mini-jumbo into its next generation.

Article printed from InvestorPlace Media,

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