2004: Many steps forward, a few back

Harry Stonecipher
President and CEO


There's an adage: The first thing you have to do to get out of a hole is stop digging. In 2004-with a couple of glaring exceptions that are the result of past ethical problems-Boeing stopped digging and started making very good progress toward becoming the company we all expect it to be.

The people of Boeing deserve the credit for that progress. You have delivered consistently in every possible way. Where you could affect the outcome, you put us on the positive side of the ledger. Where you couldn't affect the outcome, you nevertheless acted with dignity and stayed focused on all those many variables that, done properly, contribute to flawless execution of our business plans and mutual support of one another.

Thank you.

As we go through the process of assessing 2004 performance and setting team and individual goals for 2005, I want to acknowledge what the people of Boeing have accomplished together.

At the beginning of 2004, Chairman Lew Platt and I asked you to execute your piece of the business flawlessly, with attention to every detail. I can't say everyone performed perfectly across the board, but many organizations around the company got very close a good portion of the time. That's why challenging goals are good.

The year started with all of us recommitting to the fundamentals of executing with integrity. In 2004, every employee personally certified that she or he abided by the Boeing Code of Conduct. In the first year of the Office of Internal Governance, Boeing strengthened-and people followed-many policies, procedures and practices to help us avoid ethical breaches, especially in the areas of handling proprietary information, hiring employees from governments and competitors, and avoiding conflicts of interest.

In terms of executing our existing programs and winning new business, the 2004 results were superb. While I don't want to make this sound like a recipe, some highlights are

. The 7E7 team made its entrance with our biggest-ever launch order. Development has been progressing well, and customer interest has been strong.

. Our U.S. Army Systems team signed a $6 billion contract modification, bringing the value of the Future Combat Systems contract to more than $21 billion. It's a sign of how well we're performing as lead systems integrator for the accelerated FCS program.

. Boeing won the U.S. Navy's $3.9 billion Multi-mission Maritime Aircraft competition. MMA-potentially worth more than $40 billion in revenues-is a great example of our strategy to operate as a diversified aerospace company. We couldn't have won it without the expertise of people from all across Boeing.

. While ongoing investigations into past ethical breaches prevented us from either securing a contract for U.S. Air Force 767 aerial-refueling tankers or competing for new U.S. government space-launch contracts, the people who work on those programs can hold their heads high. Everybody involved with the 767 Tanker and Delta launch programs today has been doing their best, and they continue to do so. If there's to be a new Tanker competition, I am confident we have the best team to win it.

. Our ongoing programs and the many organizations that support them one way or another are performing well. And in those rare instances where performance has been an issue, we have reliable people with solid recovery plans in place.

When I meet with our customers and suppliers, most are firmly behind us. That's because one by one, as individuals and teams, you have earned their respect and generated a vast reservoir of goodwill. I hear it frequently from a variety of customers: "We know you're going through a tough time, but let me tell you, the Boeing people I work with are top-notch. They pay attention to safety, cost, schedule and quality. And they act with integrity."

As a result of the fine work of so many individuals and teams, Boeing has remained profitable and delivered more than respectable stock-price growth. As Boeing Frontiers went to press, Boeing was recording the Dow Jones Industrials' best performance, up 28.9 percent since the first of the year. We also were performing well against our aerospace and defense peers, which as a group were up 17 percent.

I am proud of all you've done to help drive Boeing's success. We've experienced many great achievements and a few serious disappointments in 2004. With continued focus by all of us, 2005 should be considerably better.