Boeing reorganizes by merging space, defense units

AP Business WriterCHICAGO (AP) -- Boeing Co. is merging its space and military units into a single $23-billion-a-year business in an effort to make its wide-ranging operations more efficient and land more government defense contracts.

Chairman and CEO Phil Condit said the realignment, announced Wednesday, is a strategic shift reflecting the trend toward more integrated defense systems. He said it will have no impact on jobs or on Boeing's top money-generating business, commercial airplanes.

The internal merger, to be completed by year's end, combines Boeing's St. Louis-based military airplanes and missile systems unit with its Seal Beach, Calif.-based space and communications division. The newly created Integrated Defense Systems unit will be based in St. Louis.

Its president and CEO is Jim Albaugh, 52, who has headed the space and communications unit. Jerry Daniels, president and chief executive officer of the military aircraft and missiles division since 2000, is retiring but will help Albaugh in the merger transition, Boeing said.

"Integrated solutions -- joining network-centric information with integrated military air, land, sea and space-based platforms -- is the direction modern defense systems are moving," Condit said.

"We are aligning our business today with the way we believe future systems are going to be designed, acquired and maintained."

Boeing shares fell $2.58, or 6 percent, to $40.98 in afternoon trading on the New York Stock Exchange.

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