By Kyle Peterson
CHICAGO (Reuters) - Boeing Co <BA.N>, which has experienced a series of embarrassing and costly delays on the long-awaited 787 Dreamliner, said on Monday that Scott Carson, the head of its commercial airplanes division, is retiring and will be replaced by Jim Albaugh, effective on Tuesday.
The news comes four days after Boeing said it would finally make the first flight of the 787 by the end of this year. Boeing is the world's top aircraft maker followed by EADS <EAD.PA> unit Airbus.
The first test flight has been delayed repeatedly because of production problems and a two-month labor strike, hurting Boeing's credibility as it grapples with the commercial aerospace slump. At least one expert said the management change does not necessarily improve Boeing's fortunes.
"Where we are surprised is in Boeing's choice of successor, given Jim Albaugh's lack of experience in commercial aerospace, and the less than perfect track record that IDS has had in program execution and wins over the last couple of years under his leadership," said Rob Stallard, analyst with Macquarie Securities.
"We are not convinced that this move improves the situation at BCA (Boeing Commercial Airplanes), and we reiterate our Neutral rating on Boeing," Stallard wrote in an analyst note.
Stallard noted that Albaugh was taking on several pressing issues, the first flight of the 787, and how to proceed with the 737 program given delivery deferrals over the last 12 months.
Shares of Boeing, a Dow component, were unchanged in after hours trade from the $49.67 closing price on the New York Stock Exchange.
Carson, 63, who has led the unit since 2006, will work on transition and other projects till year end, the company said. Speaking on a media conference call, Boeing Chief Executive Jim McNerney said Carson made the decision to step down.
"The decision to retire was Scott's," McNerney said. "It was based on many factors, the most important of which was resetting the 787 schedule last week and giving his successor a clear path forward on the program."
Albaugh, 59, has headed Boeing's Integrated Defense Systems (IDS) since 2002, overseeing some of Boeing's largest systems integration contracts, including the $160 billion Future Combat Systems modernization program and the multibillion-dollar ground-based segment of missile defense.
"Jim is a seasoned and effective aerospace executive with substantial experience leading and integrating technically complex businesses and programs from initial development through full production and delivery," McNerney said in a statement.
McNerney said Albaugh already has "working knowledge" of BCA and the 787 program from his role on the senior leadership team at Boeing.
Some analysts had questioned Albaugh's future after the company lost several large defense competitions in recent years and saw its biggest programs cut by Defense Secretary Robert Gates as part of a sweeping overhaul of Pentagon procurement.
A Boeing spokesman said most IDS development and production programs under Albaugh's watch were on time and on budget and earned solid earnings for Boeing.
Dennis Muilenburg, 45, got good reviews for his work running the Future Combat Systems program before moving over to head Boeing's support services division.
Chicago-based Boeing said Carson and Albaugh will work together to ensure a smooth transition of customer and other business relationships and that Carson will also assist on special projects for the company through year end.
Jim McAleese, a Virginia-based defense consultant, said the move came amid pressure from large institutional shareholders, who were growing increasingly worried about the 787 program.
He said many questioned if the 787 wing lamination issue could not have been found earlier through a more rigorous engineering and testing process.
He said Albaugh was a seasoned manager with years of experience running complex programs.
"I see no problem with Albaugh. He is probably the most qualified, seasoned senior manager they have right now and in a damage control and restructuring process, you pick the best you have," he added.
(Reporting by Deena Beasley, Andrea Shalal-Esa, Bill Rigby and Kyle Peterson; editing by Bernard Orr, Gunna Dickson and Andre Grenon)