Restructuring Charges (Notes)

3 Months Ended

Apr. 02, 2020

Restructuring Costs [Abstract]

Restructuring and Related Activities Disclosure [Text Block]

23.  Restructuring Costs

In March 2019, the B737 MAX fleet was grounded in the U.S. and internationally following the 2018 and 2019 accidents involving two B737 MAX aircraft. At the time, the Company was producing B737 aircraft at a rate of 52 aircraft per month and was expected to increase production to 57 aircraft per month in mid-2019. On April 12, 2019, Boeing and the Company entered into the 2019 MOA relating to the Company's production of aircraft with respect to the B737 program. Under the MOA, the Company was to maintain its delivery rate of 52 shipsets per month with respect to the B737 program following Boeing’s announced temporary adjustment in the production rate from 52 to 42 aircraft per month. The MOA established that all excess shipments (B737 shipsets in excess of Boeing’s rate) would be deemed to be delivered to Boeing “FOB” at the Company's facilities, which would trigger Boeing’s payment obligations for the excess shipsets. On December 19, 2019, the Company was directed by Boeing to stop all B737 MAX deliveries to Boeing effective January 1, 2020, due to Boeing’s announced temporary suspension of B737 MAX production. Accordingly, the Company suspended all B737 MAX production beginning on January 1, 2020. On February 6, 2020, Boeing and the Company entered into the 2020 MOA providing for delivery to Boeing of 216 B737 MAX shipsets in 2020, which represented less than half of the Company’s B737 MAX annualized production rate in 2019. As a result, the Company took actions to align costs to the expected 2020 production levels (restructuring activity). The Company’s planned restructuring activities are documented in a restructuring plan that is approved and controlled by management. The planned activities to align costs to expected production levels following Boeing’s announcement materially affected the scope of operations and manner in which business is conducted by the Company.

Restructuring costs under the plan, which are presented separately as a component of operating loss on the consolidated statement of operations, are related to involuntary workforce reductions and the VRP. The total restructuring costs of $42.6 for the three months ended April 2, 2020 includes $31.5, which is the total amount expected to be incurred for the involuntary termination benefits of approximately 3,200 employees. This amount represents the full cost of the involuntary workforce restructuring activities included in the plan, which has been accrued and substantially paid as of April 2, 2020. The remaining $11.1 of restructuring costs represents the total costs expected to be incurred for the voluntary retirement packages of 207 employees. The cost related to packages under the VRP are generally accrued and charged to earnings when the employee accepts the offer. Of the $11.1 total, $1.2 was paid during the period ended April 2, 2020 and the remaining $9.9 is recorded in the accrued expenses line item on the consolidated balance sheet as of April 2, 2020.

The costs of the restructuring plan are included in segment operating margins. The total amount expected to be incurred for each segment is $30.1 for the Fuselage Systems Segment, $8.8 for the Propulsion Systems Segment, and $3.7 for the Wing Systems Segment.