BOEING SHOCKS SEATTLE AFTER 85 YEARS IN CITY, CORPORATION DECIDES TO MOVE HEADQUARTERS.

Byline: Ian Hanigan and Evan Pondel Staff Writers

The Boeing Co. stunned industry analysts and its own employees when it abruptly announced Wednesday that it would move its headquarters out of Seattle, the aerospace giant's home for 85 years.

Boeing Chairman and Chief Executive Officer Phil Condit said the company has narrowed its search for a new home to Chicago, Dallas-Fort Worth or Denver. One of those locations will be selected by early summer and Boeing expects to be operating from its ``new, leaner corporate center'' by fall, he said. Half of the 1,000 corporate jobs will be eliminated in the move.

Regardless which city is selected, Boeing's new headquarters will be geographically central to its operations in 25 states, its customers and the financial community, Condit said.

``We have started a very fundamental transformation at Boeing,'' said Condit, speaking at a Washington, D.C. news conference. ``Simply put, we intend to run Boeing as a business that has the flexibility to move capital and talent to the opportunities that maximize shareholder value.''

As part of the restructuring, Condit said Boeing's three major business units - commercial, military and space and communications - will stand on their own. The company will still have a single stock price.

Analysts on Wednesday said individual programs like Canoga Park's aerospace facility and Long Beach's assembly plant will not be affected by Boeing's changes.

``It should have no impact (locally),'' said Jon Kutler, president of Quarterdeck Investment Partners, a Century City investment banking firm that focuses on defense and aerospace. ``What (Boeing is) doing is trying to make corporate (executives) equally responsive to all of the divisions. It's a traumatic event in Seattle, but not too much for the other cities.''

Boeing has been a staple of the Seattle area since it was founded in 1916 by William Boeing, who originally made wooden seaplanes.

The aerospace company became an aerospace behemoth in the 1990s, when it scooped up longtime rival McDonnell Douglas Corp. and the space divisions of Rockwell International and Hughes Electronics Corp.

Bill Fiala, an aerospace analyst for Edward Jones, a St. Louis-based consulting firm, said Boeing is following in the footsteps of companies like General Electric, which also granted its subsidiaries the independence to run themselves. He said Boeing has once again demonstrated its ability to change.

``They're clearly setting up the three companies to run more independently and with more accountability,'' he said, ``and it's a good move long term. In theory, it makes sense.''

Jim Albaugh, who had been president of Boeing's Space and Communications Group in Seal Beach, was also given the title of CEO for the growing division, which earns $10 billion annually.

Alan Mulally was promoted from president to president and CEO of Commercial Airplanes in Seattle, and Jerry Daniels is now president and CEO of Military Aircraft and Missiles in St. Louis.

Boeing employees were blindsided with the news their company is leaving its Pacific Northwest nest. Workers did not see it affecting daily operations.

``It's a big pain in the neck to make that kind of move, but I'm optimistic it will have a positive effect on the stock,'' said Bill Vietinghoff, a 72-year-old Boeing retiree who now does contract work at the company's Canoga Park plant. ``But with the market in such terrible shape, I don't try to draw any conclusions - I'm just taking a wait and see attitude.

``I'm a systems engineer, not a stock person,'' he said.

Shares of Boeing fell $1.15 to close at $53.85 on the New York Stock Exchange.