Boeing to move headquarters from Chicago to Virginia

© Reuters. FILE PHOTO: The Boeing logo is seen on the world headquarters office building in Chicago April 26, 2006./File Photo

By David Shepardson and Eric M. Johnson

WASHINGTON/SEATTLE (Reuters) -Boeing Co said on Thursday it will move its headquarters from Chicago to Arlington, Virginia, as the crisis-plagued U.S. planemaker works to repair relationships with customers, federal regulators and lawmakers.

The move to Arlington - across the Potomac River from the U.S. capital - will also include plans by Boeing (NYSE:BA) to develop a research and technology hub in the area.

"The region makes strategic sense for our global headquarters given its proximity to our customers and stakeholders, and its access to world-class engineering and technical talent," Boeing President and Chief Executive Officer Dave Calhoun said.

Reuters reported last October, citing sources close to the company, that cost cuts and a more hands-on corporate culture had raised questions about Boeing's future in Chicago, and in turn the broad direction Boeing intends to take as it tries to regain its stride.

Boeing said it will maintain a significant presence at its Chicago location and surrounding region.

Boeing has been working to repair its relationship with the U.S. Federal Aviation Administration and lawmakers after prior CEO Dennis Muilenburg was fired in 2019 after clashing the agency over its review of the 737 MAX following two fatal crashes that killed 346 people. Boeing, a key supplier to the U.S. Defense Department, last week unveiled more than $1 billion in charges on its Air Force One and T-7A Red Hawk trainer jet programs.

Boeing already has an Arlington office that opened in 2014 and has significant unused space. It is just blocks from Amazon (NASDAQ:AMZN)'s HQ2 building that is under construction.

Boeing shares were 3% lower in afternoon trading on a down day for the Dow Jones Industrial Average.

The Chicago headquarters - a 36-floor, $200 million riverfront skyscraper - has also been at the crossroads of a cost-cutting campaign that has seen Boeing shed real estate, including its commercial airplane headquarters in Seattle.

Boeing moved its headquarters to Chicago in 2001, leaving its Seattle home after 85 years following its 1997 merger with St. Louis-based rival McDonnell Douglas - a decision that angered rank-and-file mechanics and engineers.

Boeing was seeking a post-merger headquarters in a neutral location separate from those existing divisional power centers.

Chicago, Cook County and Illinois awarded Boeing more than $60 million in tax and other incentives over 20 years to relocate. Those credits have expired, though Boeing was set to receive 2021 funds this year.

House of Representatives Transportation Committee Chair Peter DeFazio blasted Boeing's decision to move in Arlington.

"Moving their headquarters to Chicago and away from their roots in the Pacific Northwest was a tragic mistake," DeFazio said. "Moving their headquarters again, this time to be closer to the federal regulators and policymakers in Washington, D.C. is another step in the wrong direction. Boeing's problem isn't a lack of access to government, but rather its ongoing production problems and the failures of management and the board that led to the fatal crashes of the 737 MAX."

Some critics viewed the Chicago move as a symbol of a company that prized near-term profits and shareholder returns over long-term engineering dominance - a charge repeated after the 737 MAX crashes.

Once the symbol of a new Boeing, the vision of a corporate epicenter rising above its constituent parts has fallen at odds with the imperative of recapturing engineering dominance and repairing relationships with customers and federal regulators.

Boeing Chief Executive Dave Calhoun, for example, has made repeated trips to its 787 Dreamliner factory in South Carolina to deal with production-related defects and certification delays that have hobbled the program.

Calhoun is also working to win certification of the largest variant of the 737 MAX before a new safety standard on cockpit alerts takes effect at year-end and is hoping Congress will step in.

The deadline for changes was introduced as part of broader regulatory reforms at the Federal Aviation Administration following the fatal 737 MAX crashes.