On July 1, Boeing announced that it will purchase its largest supplier, Spirit AeroSystems, for $4.7 billion. As producer of all the fuselages for Boeing’s bestselling 737 Max series, and sections of those units for the rest of its commercial planes, Spirit has been responsible for the bulk of the notorious quality gaffes at the icon that manufactured half the planes now flying worldwide. The rework required on a Spirit fuselage shipped to the 737 plant in Renton, Wash., contributed to the reinstallation error that led to the notorious door-plug blowout 16,000 feet over Portland, Ore. And Pat Shanahan, the leader now striving to mend Spirit’s sundry production gaffes, has emerged as the top contender in what ranks as the most suspenseful and significant CEO search in decades: the choice of Boeing’s next CEO.
As a source familiar with the situation told Fortune, “Pat’s a guy who knows his way around building planes and around Boeing. He’s very accomplished and widely respected in the world of aircraft manufacturing. I do think he has the leading position right now.”
The knowledgeable people to whom this writer has spoken note that Boeing’s board strongly favors an outsider over an internal candidate, and that finding the right newcomer is proving a tough challenge. “The directors are finding that external hires are not plentiful,” says one person familiar with the search. The Boeing job requires a rare combination of managerial, diplomatic, and production skills, led by detailed knowledge of the complex processes in assembling what may rank as the world’s most complex products.
Shanahan has been widely viewed as a serious contender ever since the blowout heard round the world on Jan. 5 prompted current CEO Dave Calhoun to declare that he would retire by year-end. The reasons: First, he’s a kind of a hybrid insider-outsider who worked at Boeing for almost three decades, and second, his specialty is operating as a Mr. Fix-It expert, repairing just the sort of production mishaps plaguing his alma mater right now. A Seattle native who earned a mechanical engineering degree from the University of Washington, Shanahan, now 62, joined Boeing in 1986. A decade later, he took a crisis management job running the program for the wide-body 767, where a campaign to speed production was forcing workers to run up and down the assembly line, installing parts out of sequence, a problem called “traveled work” that haunts Boeing to this day. After several years running key defense platforms, including those for rotorcraft, the Apache and Chinook helicopters among them, Shanahan returned to the company’s commercial side in 2008, dispatched to rescue the stricken 787 program, then lagging years behind schedule and more than $20 billion over budget.
Shanahan virtually camped out on the factory floor. According to a story in the Seattle Times, he arrived at the giant plant in Everett, Wash., at 6 a.m. and departed around 8 p.m., laboring seven-day weeks. A self-styled “adrenaline junkie,” Shanahan won renown among the rank and file by stalking the assembly line, questioning machinists about the obstacles slowing production, then calling down middle managers, and standing there while a mechanic or welder told their boss about the problem and proposed a solution. The idea was pushing the guys in the offices to heed the folks wielding the wrenches. In 2008, Shanahan took charge of the commercial airplanes division and oversaw smooth production ramps for the 737 and 787 that spearheaded a period of sterling profitability.
In 2017, Shanahan left Boeing for the Pentagon to serve as deputy secretary of defense. In that role, he led the DOD in crafting strategies for countering cyber and missile attacks, and also spearheaded the AI initiative. When his boss Jim Mattis departed, President Trump named Shanahan as acting secretary, a post he held during the first six months of 2019.
Shanahan doesn’t deny an interest in running Boeing
In a Seattle Times story published on July 1, Shanahan confirmed that he had personally negotiated the Boeing-Spirit deal, a complex transition that also required winning approval from Airbus, which accounts for around one-quarter of Spirit’s revenues. As part of the pact, Spirit will pay the European colossus to absorb money-losing facilities that make parts of its A350 and A320 models. In the interview, Shanahan didn’t deny an interest in the CEO position at Boeing, simply stating: “It’s not my job to comment on what Boeing might or might not do. I’ll be keeping my eye on getting the deal done at Spirit.”
As one of my sources puts the task facing Boeing’s next leader: “The CEO position is really two jobs, running the mothership and operating the commercial airplane business.” The first requires the skills of both a great general manager, and someone with the diplomatic chops to win favor with regulators and Congress. If Shanahan gets the nod, he’s likely to name someone very much like himself to lead making the planes as chief of Boeing’s Commercial Airplanes division.
Of course, Shanahan is just the apparent front-runner, and Boeing could make another pick. But right now, the choices are few, and Shanahan both appears willing to serve and boasts a résumé that’s hard to match.
