Phil Condit, CEO of Boeing
This is a partial transcript from Your World with Neil Cavuto, January 23, 2002. Click here for complete access to all of Neil Cavuto's CEO interviews.
NEIL CAVUTO, HOST: Could you imagine the surprise when China's president Jiang Zemin heard that a spanking-new Boeing 767 he had ordered for his personal use was found loaded with listening devices? Predictably, he was ticked. The White House was mum, and the plane's maker, Boeing, was caught in the middle.
Today, I had a chance to catch up with Boeing's CEO, Phil Condit, and get an update on how that mess could have even happened.
PHIL CONDIT, CEO, BOEING: I can't make anything out of it. You know, there's been that one story. That's been it. I don't know any more than you know.
CAVUTO: So, this didn't happen obviously in the building process when it was with you guys. Something had to happen, post it, leaving Boeing, right?
CONDIT: You know, there is a lot of room in there. It left Boeing. It was in a mod center. A lot of people worked on it. It went to China. I can't even speculate on what or what might have happened. So, I guess I will watch with you.
CAVUTO: Yes, so, the fact that our government has not disputed that, that there might in fact have been listening devices on this, maybe more than two dozen, does that make you think that, in fact, there were listening devices on it?
CONDIT: I very honestly do not know. The Chinese have said almost nothing. The U.S. hasn't said anything. Watch the news.
CAVUTO: I got you. Has it put a crimp on your business, though, even though you might not have anything to do with this, but that other countries might say, well, you know, maybe we won't deal with a U.S. contractor here?
CONDIT: No. You know, we have a very open production process. They can put as many inspectors as they want on the airplane. Most airlines put a few on there. They watch the production process. So, there's nothing to hide there. No, I don't think it changes anything.
CAVUTO: So from China or any other country, have you heard any, let's go slow here, we are not interested in pursuing?
CONDIT: Heard nothing at all. Zero.
CAVUTO: OK. Back to the business at hand and what other of your customers are doing. In your earnings report, you know, you met Street estimates. Of course, they were revised a little lower in light of, obviously, the September 11 events. What is the outlook for 2002?
CONDIT: We've got part of the company that obviously is going to be hurt by what happened on 9/11, commercial airplanes. On the other hand, we've got a space and comp business that is growing strongly and doing very well, improving margins, good, strong military aircraft business.
CAVUTO: So, let me understand, that military part and what you are doing in the space part, that is offsetting what's is happening on the commercial part?
CONDIT: To a large degree.
CAVUTO: Let me ask you a little bit about just the appetite for new planes going forward. I know Continental and Delta, if my memory serves me correctly — correct me if I'm wrong — have postponed or deferred new planes. Has that hit you hard?
CONDIT: Yes, clearly, but that is reflected in what we said fairly shortly after 9/11. We knew that was going to hit them hard. So there are no surprises in there. The delivery numbers that we have talked about, 380 airplanes in '02, to 75 to 300 in '03, reflect that information. So there is nothing new there. That is what we knew.
CAVUTO: The one upshot you hear from analysts who like your stock, like your company — despite the fact that you had a tough year last year — is they say you're most poised for a comeback precisely because we are committing a lot more money to defense and you're an instant beneficiary from that. What do you think of that big picture?
CONDIT: We have some great potential longer-term programs as we look toward an integrated battle space and all of the things that we do with satellites and communication. So we stand clearly to profit on that side. That is why we built this company this way.
CAVUTO: Let me ask you finally, in light of the Enron developments, people are now gravitating toward companies whose business they can understand, I guess, and whose business model they can relate to. Are you a beneficiary of that?
CONDIT: I think so. We have tried to, one, be very clear. For just as an example, we do a pro forma, an adjusted earnings, without non- recurring items.
CAVUTO: By the way, you are one of the few companies who does.
CONDIT: We do a very good reconciliation with, item-by-item, what are the nonrecurring, so that the clarity in there is very high. And we think that is the right thing to do.
CAVUTO: All right, Phil Condit of Boeing.
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