When Embraer’s shareholders approve the nomination of two new members to the Board of Directors of the Brazilian airframer, it will mean the return to the commercial aviation industry after a 22 months’ absence for one of them: Kevin McAllister. He was ousted as President of Boeing Commercial Airplanes in October 2019 but now looks set to bring his knowledge and experience of the industry to Embraer. He has been nominated together with Todd Freeman. An extraordinary shareholders’ meeting on August 16 will decide on their positions. McAllister and Freeman bring fresh blood to Embraer.
Embraer has been looking for some time to strengthen its Board of Directors with fresh blood from outside the OEM. Especially since the planned joint-venture with Boeing collapsed in April 2020 after the American airframer concluded that its Brazilian partner didn’t fulfill conditions of the original master transaction agreement. Something Embraer has been disputing to this day, claiming Boeing ‘wrongfully terminated’ the agreement. Yet, we still haven’t seen what Brazilian has meant when it said it “will pursue all remedies against Boeing”.
During the fifteen months since the announcement of the Boeing-Embraer JV in July 2018 until his own departure from Boeing in October 2019, Kevin McAllister has had plenty of time to get to know Embraer. He has studied the Brazilian’s portfolio of E1 and E2-family aircraft, reviewed the strength and weaknesses compared to Boeing’s own product range, and seen what airlines decided when they went shopping in Seattle or Sao Jose dos Campos.
McAllister joined Boeing after 27 years at GE
McAllister joined Boeing Commercial Airplanes as President and CEO in December 2016, eventually as successor to Ray Conner. Before that, he was 27 years with GE Aviation, his last spell since 2014 as President and CEO of Global Services. Despite being the first President from outside Boeing, he had got to know Boeing very well during his last fifteen years at GE Aviation, “helping support Boeing out of the field, working with customers and in the trenches of campaigns to win in the market around the globe”, he said in a 2017 interview with Boeing. “My wife told me the other day she has not seen me light up like I do when I talk about Boeing.”
These bright and happy days must have become a rarity for McAllister as time went by. Yes, the launch of the MAX has been successful and the type had wrapped up an impressive number of orders, but Airbus was still ahead with the A321neo. The complex changed a bit in June 2017 when Boeing launched the MAX 10 during a ten-minute event at the Paris Airshow, with McAllister and then-acting Boeing CEO Dennis Muilenburg presenting the type. In the days that followed, Boeing secured 361 orders, including conversions.
At the Dubai Airshow in November that year, when during one of the weirdest press conferences of all time in aviation, McAllister was all smiles (main picture). He clinched an order from under Airbus’ nose when Emirates ordered forty 787-10s.
A lot of time in 2018 was spent on sorting out issues with the 777X, which was running behind schedule after General Electric had discovered some durability issues on the massive GE9X that it wished to correct before entering the certification phase. McAllister also had tough discussions with his team about whether to launch the Mid-Market Aircraft (NMA) or not. Boeing believed it had an interesting aircraft on offer, but the market didn’t respond the way McAllister and chief sales Ihssane Mounir might have expected. Not helpful were remarks from GE’s David Joyce that the market for the NMA might be too small to justify its launch.
Happy faces at Farnborough 2018: Kevin McAllister (left), Steven Udvar-Hazy, and John Plueger just signed another order from Air Lease Corporation. (Richard Schuurman)
MAX tragedies shifted priorities
Priorities shifted dramatically at Boeing from October 2018. The crash of a Lion Air MAX 8 off the coast near Jakarta was first seen as a tragic incident, but when another MAX crashed in March 2019 in Ethiopia, it was evident that something was very wrong with this aircraft. It was Muilenburg who tried to defend his and Boeing’s position, but as more details became known of the flawed design of the aircraft and Boeing’s position during discussions with the FAA, the OEM’s top management started to enter a sinkhole.
Kevin McAllister has said very little on the situation, nor to his ousting on October 22, 2019. “We’re grateful to Kevin for his dedicated and tireless service to Boeing, its customers, and its communities during a challenging time, and for his commitment to support this transition,” Muilenburg said in a press statement, only two months before he was forced to leave Boeing too. McAllister was succeeded by Stan Deal, still acting as President BCA.
New role as AE senior operating partner
McAllister took a background role until June 4, when he returned in the news to become a senior operating partner at AE Industrial, a private equity firm specializing in Aerospace, Defense & Government Services, Power Generation, and Specialty Industrial markets.
“Having an industry leader of Kevin’s caliber join AE Industrial is not only an honor, but it’s also a sign that the firm is recognized as one of the leading investors in aerospace and defense,” said David Rowe, Managing Partner said in a statement. “We are confident that Kevin’s insights and unparalleled aviation expertise will be a tremendous asset to all of our portfolio companies as they look to improve operations and realize untapped potential. We welcome him to our leadership team.”
McAllister has acted as Chairman of the board of subsidiary Belcan, a global supplier of engineering, supply chain, technical recruiting, and information technology (IT) services to the Aerospace, Defense, Automotive, Industrial, and Government services markets. In this role, he will have been involved in transactions like the acquisition of other companies like Victor42 in May, and Avista and Telesis last November.
McAllister and Freeman will give Embraer fresh insights
His nomination as Board member at Embraer gives McAllister the opportunity to renew his alliance with the commercial airplane industry, to which he has been so close for most of his life. And brings valuable inside knowledge of what he has learned at GE Aviation and Boeing.
That compliments nicely to the other candidate, Todd Freeman. He has been Senior Vice President of lessor General Electric Capital (GECAS), which is about to be bought by rival AerCap. Since June 2015, Freeman worked in the Middle East as regional manager Middle East, Africa, and Russia/CIS and brought with him 25 years of experience in numerous sales and marketing positions. In September 2019, Freeman joined lessor Nordic Aviation Capital as special advisor to the chairman.
“I’m sure they will add immense value during a time when we are focused on the company’s sustainable growth through global partnerships, innovation, and business diversification”, Embraer’s Board Chairman Alexandre Silva said on McAllister and Freeman. Once their approval has been granted, the new board will be composed of ten members, who, together with the other management, are up to some important strategic decisions.
The most crucial will be the launch of the turboprop in 2022, which according to Commercial Aircraft President and CEO Arjan Meijer will be the platform for Embraer’s next generation of airliners. Especially as this will not be just a new aircraft, but also one that will be a stepping stone between current technology aircraft and the hybrid-electric or even hydrogen area. Embraer has been actively looking for partners to enter this new chapter, as the Brazilian OEM might be too small to go it alone. McAllister and Freeman bring fresh blood to Embraer. It will be interesting to see how Embraer will benefit.