Lewis E. Platt
The Boeing Company
"Boeing: Moving Ahead"
Boeing Shareholders Meeting
May 02, 2005
I will comment on three issues of great importance -- both now and looking out beyond the next couple of years. The first is leadership, or succession. The next is reputation. And the third is the need to level the playing field, to eliminate Airbus launch-aid subsidies that are damaging to Boeing and contrary to the rules of world trade.
I'll begin with leadership.
We thank Harry Stonecipher for the intense focus on execution that he brought to Boeing. Under his leadership, Boeing improved and performed at a very high level in 2004. We turned in strong results across all of our businesses.
Eight weeks ago, as you all know, the Board asked for and received Harry's resignation. As I've told reporters many times, what caused us to ask for Harry's resignation was strictly an internal matter, something that happened within the walls of our company. It was not a breach in business ethics that involved either our customers or our partners. Nevertheless, the Board concluded that the facts reflected poorly on Harry's judgment and would impair his ability to lead the company going forward.
The Board has a robust succession-planning process in place. We are addressing this matter deliberately and without haste, and we are not setting any artificial deadlines for naming a new CEO. We have the luxury of conducting a thorough search and evaluation of both internal and external candidates ... thanks to James Bell.
James, who has told us he does not wish to be a candidate, is serving as president and CEO in an outstanding manner. And we are confident he will continue to do so until the search-and-selection process is complete.
During this time, you may be sure, Boeing will continue to execute its business plans consistent with its strategy to operate as the leading broad-based aerospace company. We continue to move ahead and continue to perform well. James, who also remains our CFO -- and will return to doing that job once the board has selected a new CEO -- has already demonstrated that he is just the right person to step up to the responsibility of leading this company.
He has a different management style, but his strength of will certainly matches Harry's. James is continuing the in-depth operational reviews that he and Harry instituted. And working with James are strong leaders in each of our businesses. Finally, as someone with long experience serving as CEO of another major company, I am working closely with James and supporting him in every way possible. We make a good team, and I will remain deeply and intensely involved in the business until the board resolves the matter of succession.
The second issue that I mentioned involves one of our most important assets -- the reputation of the company. For decades, Boeing has symbolized discipline and daring in extending the frontiers of flight. We have been among the most admired and trusted companies in the world. Unfortunately, that proud and hard-earned reputation was tarnished by a few well known events from which we're still feeling the fallout.
Over the last year, we have made progress in rebuilding trust and repairing damage that had been done to our reputation. As an example, two months ago, the U.S. Air Force lifted our 20-month suspension from government launch competitions. We are grateful that our efforts to enhance our business-conduct practices are being acknowledged, but we know we still must work to build our reputation every day.
Clearly, the circumstances of Harry's departure were disappointing. While Harry's actions surrounding a personal relationship in no way equated to the very serious breaches of ethical business conduct that damaged our reputation in the first place, they represented a misstep that the Board could not overlook. In fact, the Board demonstrated its willingness to hold the top executive in the company to an unimpeachable standard, and this further illustrates the impartiality and the rigor of our approach to integrity. Integrity is not something we just talk about at Boeing; we make it central to everything we do.
So, yes, we're making progress in restoring our reputation. But this is a continuous journey, and acting with integrity is something that must -- and will -- remain a priority for all employees at every level of the company.
The last issue is that of launch aid for Airbus. Four years ago, Airbus once again drew on substantial launch aid from four European governments to begin development of a new airplane, the A380 super jumbo. The A380 completed the Airbus airplane family and was based on a viewpoint that the future of travel would be on very large airplanes flying between big hub cities.
We have a different idea of where the market is moving and launched the all-new Boeing 787 for the middle of the market. While 787 orders are climbing steadily, A380 sales have stalled. Now Airbus is seeking launch aid to support a competitor to our 787.
This practice -- the use of government money as a competitive weapon -- must be stopped. Subsidized competition is unfair competition, and, when it causes harm, it is clearly forbidden by World Trade Organization rules. Officials from both Airbus and EADS have said they don't need government handouts to launch another airplane, and yet they sought them.
In negotiations that are now underway between the United States and the European Union, the U.S. government -- with our support -- is calling for the complete elimination of launch subsidies on all future Airbus airplanes. We hope these negotiations will be successful. If they are not, we will support the U.S. government in WTO litigation. We are confident that we have a very strong case. We work every day to become more competitive, and we do not shun competition from Airbus or anyone else. All we are asking for is a level playing field. Airbus is all grown up now, and it's time to play by the same rules.
That concludes my remarks.