What Does Frank Shrontz Makes Of His Successors At Boeing?

 

Former CEO gives his take on how his successors have maintained the foundation that he laid in the 90’s

It is quite rare for a former CEO of a company, where he initially worked, to keep track of its operational performance, let alone figure out what is happening behind the boardrooms. However, that is what Frank Shrontz has been doing, keeping track of his former employer’s fortunes since his retirement.

Mr. Shrontz served as CEO of Boeing (BA) from 1986 to 1996, and is acutely aware of the inner workings of the company, as well as the people who are running the show in the Puget Sound region’s largest employers.

In an exclusive interview with Steve Wilhelm, writer for the Puget Sound Business Journal, Mr. Shrontz talked about his time there, union leadership, and the future of Boeing in terms of the challenges and market opportunities on the horizon. The analysis given by him might give some weight as to how the performance of various Boeing CEOs have left a financial impact on the aerospace companies and, based on that, what should be taken into account when a new successor has to be chosen.

First consideration was Phil Condit. He served Boeing from 1996 till 2003. He was deemed a high potential candidate, as he oversaw the acquisitions of McDonnell Douglas, Rockwell Aerospace, and Hughes Space and Communications, shifting of the company’s headquarters from Seattle to Chicago, and proved his class by overseeing the complex projects of developing the 757 and the 777.

Next up, Alan Mulally! Though he worked as the CEO of Ford Motor Company, which he was credited for turning around, he did serve in Boeings Commercial Aircraft division from 2001 to 2006. Mr. Mulally was considered as a great sales person with great technical mind, who made the proposal of coming up with a prototype of creating a long-range aircraft that turned in a reality in the form of the 787.

There was a debate on whom to select between Condit and Mulally, and the latter got sidelined as experience and age, which the former possessed, got the better of him. The current CEO, Ray Conner, has been with Boeing for a very long time since he started working on the 727 line as union mechanic. Mr. Shrontz claims that he does not know Mr. Conner very well, but he is secretly serving as his mentor.

Therefore, the question remains that which of the above CEOs, apart from Mr. Connor, is better, if they were given another chance to run better than before. Mr. Shrontz says all of them are equally great in their own strengths, and there is no standout amongst them, at least from their technical point of view, and not from an investor’s view who can deliver better rate of returns from their investments. Boeing’s stock price ended at $153.21, a fall of 0.02%.

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These days, airlines are buying lesser quantities of long-range airplanes despite efforts from the likes of Boeing Inc. (BA) and Airbus in trying to make their commercial aircraft more fuel-efficient, regardless of the future demand for this type of aircraft. With the rising costs making it difficult to justify purchasing large airplanes, many airlines are hooking towards smaller medium-sized airplanes, which is economical, since they are also are fuel-efficient.

The only issue is the number of seats. A typical Boeing aircraft 737 commercial , an Airbus A320, or an A330, has a seating capacity at an average of 190 seats at best. Surely, an addition of a few more seats might do, just to cover for additional demand for spare capacity. This is something that Boeing and Airbus are addressing by launching their set of narrow body aircrafts by 2015 and 2016 respectively.

However, there is a problem. The airlines these days are eyeing towards narrow range aircraft, since they are relatively less costly compared to buying the wide body aircraft, which is vulnerable to fluctuations in demand. Narrow range aircraft mostly address those issues, but what if in case it has to meet some additional demand to cover it. Boeing and Airbus are planning to do exactly that by adding more seats. People wonder about the compromise on leg space and passenger comfort.

When this point was raised by industry an analysts, an Airbus representative responded in an email by pointing out that they put everything into perspective. They explained that an A320, with a possible 195-seats layout, would be for special ‘high-density’ configurations for airlines who want it for business models and certain markets, so they are examining how many more seats can be squeezed in whilst still ensuring passenger comfort, especially in the high demand sector of the route.

Another issue that is being raised is the expectation for passengers to evacuate in 90 seconds as per aviation regulation. One frequent traveler laughs about that happening in the face of a potential congested airplane, when asked about more seats to be added. He responded, “Watch what happens in the real world when [passengers of size and] old people try to get out carrying their bags of medicine!”

Federal aviation authorities say that they want the aircraft manufacturers to demonstrate that additional seating capacity will not affect the 90-second evacuation rule, which has to be followed strictly at all costs. It was asked for accurate analysis showing that it is indeed possible.