Boeing Splits Production, Design Activities At Commercial Airplane Division

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12/3/2012 10:38 PM ET

Aerospace giant Boeing Co. (BA: Quote) announced Monday that it has split the production and design divisions at its commercial airplane division in order to focus separately on boosting production by about 25 percent over the next 18 months and to develop Boeing's future aircraft and derivatives.

This is the first major restructuring at Boeing after the Boeing Commercial Airplanes new CEO Ray Conner took over in June from Jim Albaugh. The move comes on the back of the rough ride experienced by Boeing's flagship 787 Dreamliner project, with development delays, cost overruns and order cancellations hampering the project.

The Chicago, Illinois-based airplane maker reveled the restructuring in a note from Conner to employees and said it will help production to reach the highest levels in commercial aviation history.

Conner has also put two of Boeing's most productive executives in charge of the two goals. Boeing Vice President Scott Fancher will head the Airplane Development group with focus on future aircraft, and Senior Vice President Pat Shanahan will head Airplane Programs group with focus on current aircraft production.

Conner reportedly wrote in an email to employees, "This framework will help clarify responsibility, streamline decision-making and accelerate our progress on these priorities. In addition, it will improve our focus on quality, efficiency and affordability throughout the life cycle of our products and services."

"Successfully balancing our production and development priorities is critical to our future viability and success with customers," Conner added.

Conner had earlier said at the Farnborough International Airshow in July that he is focused on production rate increases and new airplane development.

Boeing had then revealed that its backlog stands at more than 4,000 airplanes, equating to nearly seven years of production at current rates. In addition, Boeing's 2012 Current Market Outlook forecasts a market for 34,000 airplanes worth $4.5 trillion over the next 20 years.

BA closed Monday's regular trading session at $74.02, down $0.26 or 0.35% on a volume of 3.72 million shares.

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