Boeing's long-term story hasn't changed, structurally: Analyst

The hunt is on for aviation manufacturer Boeing (BA) to find a new CEO after current chief executive Dave Calhoun announced his intention to step down by the end of 2024. The company and its manufacturing process have become the subject of several federal investigations after a mid-air incident involving one of Boeing's 737 Max jets.

Citi Managing Director Jason Gurksy called Boeing's leadership changeup amid controversy as "both predictable and thoughtful." Gursky — Citi's Aerospace and Defense Lead Analyst — joins Yahoo Finance Live to discuss Boeing's leadership search and its implications on the stock and shareholder sentiments.

"The way that they're doing this is the right way to do it, right? Suggesting that they're going to have the existing leadership step out at the end of the year, to give themselves plenty of time to conduct a really methodical search," Gurksy says. "And give the current CEO plenty of time to de-risk what's going on at the company — they've got to get through this FAA process and get permission to increase their production rates over time."

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Luke Carberry Mogan.

Video Transcript

BRAD SMITH: Boeing facing another leadership shakeup and the second CEO change since its 737 MAX 8 crash in 2018. Dave Calhoun announcing he will step down from the helm at the end of 2024.

Our next guest remains bullish on the aerospace company, though, saying, the move was both predictable and thoughtful. Jason Gursky, who is the Citi managing director and aerospace and defense lead analyst joins us now.

Great to have you here with us. Just take us into your thesis now that this management change is taking place. And the second that has come because of the MAX line.

JASON GURSKY: Yeah. Sure. Look, I think we step back here and look at the big picture. We've got an industry that has very, very large backlogs stretching out to well into the 2030s. In some cases for some of these product lines, you have a duopoly. So it's not as if Boeing's customers have a lot of options here.

So you've got huge backlogs, a lot of demand from customers. But you've got a company that's struggling post-pandemic to produce aircraft in the way that it should by design. They've got some things that they've got to fix. And part of that process, I think, is going to be bringing in some new management to help them get that done.

So I don't think, structurally, the story has changed here, the long-term story, which is why we remain relatively constructive on the company and its stock. We've just got to get through the near term, which in these kinds of situations with all turnarounds is always a bit messy.

SEANA SMITH: Yeah. Jason, talk to us a little bit more about, not specifically, who, obviously, you think the new successor is going to be, the new CEO is going to be, but more so in terms of who they would be looking for.

Do you they're likely to go outside the company, maybe even potentially go outside the industry? Walk us through what you think is the most likely scenario here.

JASON GURSKY: Yeah. I think they're going to look at both internal and external candidates. They had recently elevated Stephanie Pope to the position of Chief Operating Officer. She has a pretty accomplished background there within Boeing, having led the services business CFO of the other two divisions of the company, even spent some time in investor relations talking to people like myself all of the time.

So I think she's beloved within the company. So I think if they're going to go internal, she would, obviously, be the leading candidate. I think, to your point, it's a question perhaps of external versus internal.

I don't know how this will play out. I think most investors would certainly desire to have somebody with a strong engineering background, somebody that has a proven ability to lead a manufacturing organization, I think, would be pretty helpful at this point.

And there are certainly lots of current and ex executives across the industry that have that background.

SEANA SMITH: Jason, overall, would you say it's a good thing here for shareholders-- new leadership?

JASON GURSKY: Well, to be honest with you, I think the way that they're doing this is the right way to do it. Suggesting that they're going to have the existing leadership step out at the end of the year. So give themselves plenty of time to conduct a really methodical search.

Give the current CEO plenty of time to de-risk what's going on at the company. They've got to get through this FAA process and get permission to increase their production rates over time.

So look, I think they're doing this the right way. Give themselves seven, eight, nine months to go find somebody new and allow the current guy to continue the work at hand. I think what would have been worse is just to have him leave. And then put somebody in an interim basis or not have a really smooth transition.

And I think the way that they're doing this is spot on.