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New Boeing defense chief Dennis Muilenburg takes over at a turbulent time for the aerospace giant.

Boeing was hit especially hard by proposed Pentagon budget cutbacks this year. But Muilenburg, the new president and CEO of Boeing Integrated Defense Systems in St. Louis, said Tuesday that the company has been bracing for the eventual flattening or decline of defense spending for a couple of years.

"It’s certainly a challenging time," Muilenburg, 45, said during his first day on the job. "But at the same time, we’re well-positioned. We recognize the realities of where we are with the defense budget."

Boeing seeks to extend its existing product lines, including the C-17 Globemaster III transport planes and St. Louis-built F/A-18 Super Hornets it builds for the U.S. military. But reshaping Boeing’s defense business will involve expanding into new markets, as well, including intelligence and cybersecurity.

Before his promotion, Muilenburg was president of Boeing Global Services and Support. The business provides global post-delivery support services for military aircraft and systems.

Boeing Integrated Defense Systems is the second-largest employer in the region with 16,000 workers. Muilenburg said St. Louis remains Boeing IDS headquarters, and "we’re here for the long run." The company just celebrated 70 years in the region, beginning with McDonnell Aircraft at Lambert Field.

Muilenburg, a 24-year Boeing employee, on Tuesday formally replaced Jim Albaugh, who took over as president and CEO of Boeing Commercial Airplanes.

Industry analyst Rob Stallard this week questioned the appointment of Albaugh because of his lack of experience with commercial aviation, and "the less than perfect track record that IDS had in program execution and wins over the last couple of years under his leadership."

Among them was Boeing’s initial loss in the Air Force competition to build an aerial refueling tanker, Ballard wrote.

The Air Force initially awarded the contract to a team of Northrop Grumman and Airbus parent European Aeronautic Defence & Space Co. Government auditors found the Air Force made significant errors and urged the contract be rebid. The Air Force is expected to seek new proposals for the tanker later this year.

"That will be a high-profile competition and one that we intend to win," Muilenburg said.

Paul Nisbet, president of JSA Research Inc. of Sarasota, Fla., said most of the difficulties Boeing is dealing with now stem defense cuts under President Barack Obama.

"I think the largest problems they have are external," Nisbet said. "They have had their share of internal problems. But I think most of those are behind them."

Muilenburg said Boeing also sees opportunity to sell more of its military aircraft to international customers. For instance, Boeing is competing to sell its Super Hornet fighters to Brazil, Denmark and India.

Meanwhile, the management shake-up marked the latest Integrated Defense Systems executive to move to Boeing Commercial Airplanes.

Pat Shanahan, former vice president of Boeing’s missile-defense unit, was named to lead the 787 Dreamliner program in October 2007, and Scott Fancher joined the 787 program in December.

Muilenburg said the Boeing IDS has a multitude of "major programs," making it a great place to develop people with technical and management talent. "You see some of that talent right now being deployed to commercial airplanes," he said.

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