By Mike Stone, David Shepardson and Aishwarya Nair
WASHINGTON (Reuters) -Boeing Co said on Thursday that it will consolidate its struggling defense unit by cutting in half the number of divisions and the planemaker made a series of executive leadership changes.
The plan to consolidate is aimed at making its defense business more manageable as Boeing (NYSE:BA) attempts to improve its relationship with the Pentagon, a person briefed on the move said.
Effective immediately, Boeing is slashing its defense unit from eight to four divisions, which include Vertical Lift, Mobility, Surveillance & Bombers, Air Dominance and Space, Intelligence & Weapon Systems, the company said.
The Virginia-based planemaker is trying to emerge from overlapping crises - the pandemic and the grounding of its best-selling model 737 MAX after fatal crashes, which have left it with a pile of debt. It also faces stiff competition from rivals like SpaceX and Lockheed Martin (NYSE:LMT).
Boeing has also racked up $1.9 billion in losses on its 2018 $4 billion contract to build two new U.S. presidential airplanes that faced repeated setbacks and is at least three years behind schedule.
Last month, Boeing's defense business recorded a $2.8 billion charge for a number of programs, including Air Force One. Reuters first reported in October that Boeing appointed a senior troubleshooter to help turn around loss-making programs at its Defense, Space & Security (BDS) division.
Additionally, Boeing Global Services (BGS) will integrate all government services – domestic and international – into one organization.
Boeing also said Thursday that Tim Peters, currently vice president and general manager of Mobility and Surveillance, and Cindy Gruensfelder, currently vice president and general manager of Missile and Weapon Systems, will be retiring after helping with the the transitions.
Shares of Boeing fell less than 1% to $172.14 in afternoon trading.