Richard R. Erkeneff, the top executive of AAI Corp. who led the Hunt Valley defense company's pioneering advances in unmanned flight for the past decade, announced yesterday that he will retire this summer.
A former McDonnell Douglas Corp. executive who was hired in 1993 to guide AAI out of a period of poor returns, Erkeneff plans to step down Aug. 1 as chief executive officer of AAI and president and CEO of its parent company, United Industrial Corp.
He is to be replaced in each position by Frederick M. Strader, AAI's president and chief operating officer, who runs the company's day-to-day operations.
The change is being made during a period of marked turmoil for United Industrial, which continues to market itself to potential buyers. As negotiations for a sale continue, hostile shareholders are seeking control of the board of directors and plan to wage a proxy battle at the company's annual meeting in October if the company hasn't been sold by then.
United Industrial's 83-year-old chairman, Harold S. Gelb, announced yesterday that he will step down before the October meeting.
Erkeneff, 67, said the recent tensions had little to do with his decision to retire. After 45 years in the defense and aerospace industries, he wants to "just kind of unwind" with his wife at their home in Monkton, he said. He plans to keep his seat on the company's board, a term that expires in 2005.
"Clearly, it's been a stressful environment recently, but that's not the reason I'm leaving," Erkeneff said in an interview. "I think it's healthy for any company to bring in new management from time to time, and I made a commitment last year when my contract was up that I wouldn't stay on much beyond the summer.
"I feel pretty good about where I'm leaving things."
The boardroom battling and potential sale aside, the past year appears to have been a productive one for AAI and its premier defense product, unmanned military surveillance aircraft. Late last year, the company's Shadow 200 surveillance plane was awarded the Pentagon's first full-production contract for an unmanned aircraft, initially worth $86.1 million but expected to be more valuable as the aircraft matures.
This week, the Shadow played a prominent role in an Army mission in Iraq that led to the capture of a high-level Iraqi fugitive and several million dollars worth of jewels and cash.
Maj. Gen. Raymond T. Odierno, commander of the Army's 4th Infantry Division, who spoke with reporters in a video telecast Wednesday, said the Shadow "worked incredibly well" at identifying targets and tracking suspects during two raids of farmhouses outside the city of Tikrit. Before the war with Iraq, the Shadow had never been used in combat.
AAI also makes the Joint Services Electronic Combat Systems Tester, which is used to test electronic warfare equipment on military aircraft. It also makes simulators used to train service members to operate and maintain aircraft.
AAI, based on Industry Lane in Baltimore County, has about 900 employees and accounts for nearly 90 percent of its parent company's revenue.
When Erkeneff joined United Industrial, AAI had just gone through a costly restructuring and was saddled with several underperforming businesses and contracts.
Erkeneff has since shed most of the less-profitable enterprises and is leaving a company that is no larger but is more sharply focused on its core defense products, and is considered an attractive candidate for a takeover.
His retirement had been expected because word of it was contained in documents filed with the Securities and Exchange Commission as part of the recent shareholder fights for control of the company.
Strader, 50, joined AAI two years ago after serving as general manager of the armament systems division of United Defense L.P.
In a statement released yesterday, he said, "United Industrial has established itself as a leader in key niche segments of the defense marketplace and enjoys excellent growth potential. I am excited to lead the company forward."
