*

Patrick Shanahan, Spirit Aero CEO, is a notable candidate

due to

his Boeing ( BA ) experience

*

Shanahan's tenure at Spirit has faced challenges,

including a

mid-air panel blowout incident

*

Some industry experts question whether Shanahan can change

Boeing's ( BA ) culture despite his long association

By Rajesh Kumar Singh

CHICAGO, July 2 (Reuters) - Boeing's ( BA ) long-awaited

announcement that it will buy back its struggling supplier,

Spirit AeroSystems ( SPR ), now shifts the focus of investors to

the planemaker's search for a new CEO.

Boeing ( BA ) has been looking for a new head after Dave Calhoun said

in March he would step down by year-end, in a broad management

shakeup following a January mid-air panel blowout on a 737 MAX

plane.

Several potential candidates have emerged, including Patrick

Shanahan, who has been running Spirit AeroSystems ( SPR ) for the past

nine months. Other candidates include Boeing's ( BA ) chief operating

officer, Stephanie Pope, and current board chair Steve

Mollenkopf.

Regardless of who is named CEO, Shanahan, 62, is notable for

his previous tenure at Boeing ( BA ) and current role as Spirit's CEO.

An engineer by training, during his 31-year career at the

planemaker he was known as "Mr. Fix-It" for his ability to turn

around poorly performing programs.

"It's very significant having Shanahan back into Boeing ( BA ) as

an executive," said Bill George, former Medtronic CEO

and executive fellow at Harvard Business School. "They need

someone who understands the technology or aerospace technology."

Shanahan took the reins at Spirit last October after his

predecessor resigned following a series of mishaps at the

supplier, which makes Boeing's ( BA ) 737 fuselages and other airframe

components.

After taking over, he vowed to stabilize operations and

improve cash flow at Spirit. But the Jan. 5 mid-air panel

blowout dealt a big blow to Shanahan's turnaround plans for

Spirit.

Federal investigators discovered that the panel was removed by

Boeing ( BA ) workers to repair rivet damage present when the aircraft

was delivered by Spirit last year.

After the January incident, Spirit said it would invest in

autonomous technology, increase training for mechanics and the

number of Boeing ( BA ) and Spirit-performed inspections, as well as

take steps to "mistake-proof" 737 MAX production.

In May, the company said it was pursuing various options to

shore up liquidity. It also announced plans to lay off several

hundred workers in Wichita, Kansas.

Shanahan was not available for comment.

He was put in charge of Boeing's ( BA ) 787 Dreamliner in 2008

during a troubled time in the program's development and rose to

become Boeing's ( BA ) senior vice president for supply chain and

operations in 2016.

His Boeing ( BA ) career ended in 2017 when he became U.S. deputy

secretary of defense. Shanahan was named acting U.S. defense

secretary in January 2019 after Jim Mattis resigned but he

pulled out of his quest for the permanent job in June of that

year.

Spirit AeroSystems ( SPR ) was founded as an independent company in

2005 when Boeing ( BA ) sold its Wichita, Kansas, and Oklahoma

plants. With Boeing's ( BA ) new deal for Spirit not due to close until

mid-2025, it was not immediately clear how long Shanahan might

remain tied to the aerostructures company.

Ernest Arvai, president of consultancy AirInsight Group,

said Shanahan's long association with Boeing ( BA ) has made him

"steeped" in its culture, which he said is not what the jetmaker

needs.

"They need to change their culture," he said. "I'm just not

sure he would have the extra gravitas to be able to do that

job."

Some industry sources say Spirit's continued struggles under

Shanahan could impede his chances of gaining the top job at

Boeing ( BA ).

After the January mid-air incident, Shanahan said that

quality would drive the compensation of Spirit executives. He

received about $8.9 million in total compensation last year.

Tony Bancroft, portfolio manager at Gabelli Funds, which

holds shares of both Boeing ( BA ) and Spirit, said that while Shanahan

was trying to get Spirit on "the right track," he possibly had

too little time to make the necessary changes.

Bancroft said he has received "very positive" feedback on

Shanahan from some of Boeing's ( BA ) large shareholders.

"I think he's a logical, natural fit," he said.