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Chairman Condit leaves Boeing

Boeing * Founded in 1916 in Puget Sound, Washington, US. * Revenues last year were US$54.1 billion. * It employs more than 156,000 people. * More than 14,000 of its commercial jetliners are in service today, about 75 percent of the total. Source: Boeing

Boeing Co chairman and chief executive Phil Condit has resigned, the aircraft maker said on Monday, a week after it fired its chief financial officer in a scandal that hurt relations with military buyers.

Harry Stonecipher, 67, a shrewd and hard-nosed retired Boeing vice chairman who headed McDonnell Douglas when it merged with Boeing in 1997, was named president and chief executive of the world's largest aerospace company.

The changing of the guard caps a tumultuous year in which Chicago-based Boeing, which is under investigation for its military contracting practices, has suffered a severe downturn in commercial aircraft deliveries, and faces stiff competition from rival jet maker Airbus.

Boeing shares fell nearly 1 percent on Monday, even as the Dow Jones industrials, which include Boeing, rose 1.2 percent to an 18-month high.

The departure of Condit, 62, follows the firing last week of chief financial officer Michael Sears for discussing job possibilities with a top Air Force procurement official, Darleen Druyun, while she was still working for the government.

"I offered to resign as a way to put the distractions and controversies of the past year behind us," Condit said in a statement. He said he offered his resignation a week and a half ago.

Stonecipher said his top priority was reassuring the US government of the integrity of Boeing, the No. 2 US military contractor after Lockheed.

He also said Boeing's proposed new 7E7 commercial jetliner program remained on track. And he said neither an US$18 billion deal to sell and lease air refueling tankers to the Air Force nor a crucial high-tech warfare program for the Army called Future Combat Systems would be scrapped.

Analysts said Condit's departure was necessary even though no evidence has linked him to any ethics violations.

"They needed to send the very strongest signal they could to Congress, DoD [the US Department of Defense], investors," said Richard Aboulafia at Virginia-based consultancy Teal Group.

Sears was Condit's No. 2 man, and industry experts said last week that his firing raised questions about Condit's role in running the company as well as the leadership succession at Boeing.

"Given the issues at the company, it shouldn't have been a total surprise," Marcy Yeamans, analyst for Banc One Investment Advisors, said of Condit's departure.

Boeing also said Lew Platt, former CEO of Hewlett-Packard Co, would become non-executive chairman.

Moody's Investors Service, already considering cutting Boeing's debt ratings over problems in its leasing unit, said it would also review the executive changes, though rival agency Standard & Poor's Corp said its ratings would not be affected.

Boeing has been under competitive pressure for some time from Europe's Airbus. On Monday, Australia's Qantas Airways announced an order for 23 Airbus A320s, worth about US$1.15 billion, for its new low-cost carrier. Airbus is owned by European aerospace company EADS.

Since the Sept. 11, 2001, attacks, Boeing's delivery rate for planes has plunged and rival Airbus is gobbling up market share. For the first time ever, Airbus is set to deliver more planes to the world's airlines this year than Boeing.

Eric Hugel, analyst for New York investment bank Stephens Inc, said Sears' firing was the last straw in a series of missteps for Condit and Boeing.

Those included an indefinite ban by the Air Force on military rocket launches for using rival Lockheed Martin Corp documents to help win the initial award and news last week the Pentagon would look into delaying the tanker deal.

The Air Force on Monday said the alleged ethics violations at Boeing were "serious" and would be considered in assessing whether Boeing units could resuming bidding for military rocket launches, a decision expected early next year.
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