WASHINGTON — Boeing on Thursday announced plans to reorganize its defense unit, which has recently reported high-profile delays of key programs, rising costs and quality concerns as well as significant quarterly losses.

Boeing has consolidated its defense, space and security business from eight divisions into four, according to a company statement. Those reorganized divisions now focus on vertical lift; mobility, surveillance and bombers; air dominance; and space, intelligence and weapons systems.

The changes mark the first major moves to revamp the defense unit since Ted Colbert took over as its president and chief executive in March.

“I am confident this reorganization will drive greater and more simplified integration and collaboration across Boeing Defense, Space and Security,” Colbert said. “These changes will help accelerate operational discipline and program quality and performance, while stabilizing our development and production programs. These are necessary steps to put BDS on the path to stronger, profitable growth.”

In the third quarter of 2022, Boeing’s defense business reported $2.8 billion in losses, which led to the company as a whole reporting a nearly $3.3 billion loss.

The company blamed the losses on problems with the KC-46A Pegasus program — which saw a nearly $1.2 billion charge in that quarter alone — as well as the VC-25B Air Force One, MC-25 Stingray, T-7 Red Hawk, and NASA’s Commercial Crew programs. Boeing pointed to higher manufacturing and supply chain costs as well as technical challenges. Air Force One also had a $766 million charge in the last quarter.

The Pegasus in particular has had persistent troubles, particularly with the faulty vision system that boom operators use to refuel aircraft. A redesigned version of the vision system has been repeatedly delayed, and was most recently pushed back 19 months to October 2025.

Reorganizing Boeing’s defense divisions also brought a reshuffling of its executive ranks — and two major retirements.

Steve Parker, who was vice president and general manager for bombers and fighters, has been appointed chief operating officer for Boeing Defense, the company said.

Mark Cherry will remain vice president and general manager of the vertical lift division, the company said.

Dan Gillian, previously vice president and general manager of U.S. government services for Boeing Global Services, will now head Boeing defense’s mobility, surveillance and bombers division. Programs handled by this division include the KC-46 Pegasus, E-7 Wedgetail, VC-25B Air Force One presidential plane, Survivable Airborne Operations Center, P-8 Poseidon and the E-3 Sentry Airborne Warning and Control System, or AWACS, aircraft.

Steve Nordlund, who headed Boeing’s Phantom Works advanced research, development and prototyping division, is now vice president and general manager for the air dominance division.

Phantom Works’ non-space portfolio, including its Virtual Warfare Center, has been folded into this new division, which will also include the F-15 Eagle, T-7 Red Hawk trainer, MQ-25 Stingray, MQ-28 Ghost Bat — used by Australia in its Loyal Wingman program — and classified programs. And Nordlund will be the senior site executive for Boeing’s St. Louis region, where aircraft such as the T-7 are built.

Kay Sears, now vice president and general manager for autonomous systems, will be in charge of Boeing Defense’s new space, intelligence and weapon systems division. This division will include space exploration and launch programs, satellites, munitions, missiles, weapon system deterrents, space-related components of Phantom Works, and subsidiaries such as Liquid Robotics and Spectrolab.

Boeing said Jim Chilton, now senior vice president for space and launch, will continue to manage space exploration and launch programs, satellites and Phantom Works Space until Feb. 4, 2023. The following day, Chilton will become Colbert’s senior adviser, focusing on future space ventures.

Tim Peters and Cindy Gruensfelder, who now serve as vice presidents and general managers of mobility and surveillance and missile and weapon systems, respectively, will retire after the transitions are complete, Boeing said.

The defense unit is also consolidating its manufacturing and safety, total quality, supply chain, and program management efforts.

Stephen Losey is the air warfare reporter for Defense News. He previously covered leadership and personnel issues at Air Force Times, and the Pentagon, special operations and air warfare at Military.com. He has traveled to the Middle East to cover U.S. Air Force operations.

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