Boeing 2011 Annual Report Download - page 49

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BCC’s customer financing and investment portfolio at December 31, 2011 decreased from
December 31, 2010 due to normal portfolio run-off and asset sales, partially offset by the origination of
notes receivable and purchase of equipment under operating lease. At December 31, 2011 and 2010,
BCC had $521 million and $583 million of assets that were held for sale or re-lease, of which $476
million and $28 million had either executed term sheets with deposits or firm contracts to be sold or
placed on lease. Additionally, aircraft subject to leases with a carrying value of approximately $111
million are scheduled to be returned off lease during 2012. These aircraft are being remarketed or the
leases are being extended and approximately $13 million of such aircraft had either executed term
sheets with deposits or firm contracts as of December 31, 2011.
BCC enters into certain transactions with the Other segment in the form of guarantees and other
subsidies that mitigate the effects of certain credit quality or asset impairment issues on the BCC
segment.
Bankruptcies
On November 29, 2011, American Airlines, Inc. (American Airlines) filed for Chapter 11 bankruptcy
protection. American Airlines retains certain rights by operating under Chapter 11 bankruptcy
protection, including the right to reject executory contracts, such as aircraft leases. At December 31,
2011 American Airlines accounted for $653 million of our customer financing portfolio, including $362
million recorded by BCC. American Airlines has not rejected any of the leases related to our aircraft.
We believe that our customer financing receivables from American Airlines are sufficiently
collateralized such that we do not expect to incur losses related to those receivables as a result of the
bankruptcy. We continue to monitor the American Airlines bankruptcy for potential impacts on our
business.
Restructurings and Restructuring Requests
From time to time, certain customers have requested a restructuring of their transactions with BCC. As
of December 31, 2011, BCC has not reached agreement on any restructuring requests that would have
a material effect on our earnings, cash flows and/or financial position.
On May 2, 2011, Southwest Airlines Co. (Southwest) completed its acquisition of AirTran Holdings, Inc.
AirTran Holdings’ successor entity (AirTran) and its subsidiaries represent approximately 26% of our
gross customer financing portfolio carrying value, consisting principally of 717 aircraft. AirTran is the
largest customer in terms of BCC’s segment revenue and customer financing portfolio carrying value.
In the fourth quarter of 2011, we revised the contractual terms of our leases with AirTran in conjunction
with receiving a full guarantee from Southwest of those lease payment obligations. Revenue and
earnings are expected to be approximately $30 million lower in 2012 due to these lease revisions.
Other Segment
(Dollars in millions)
Years ended December 31, 2011 2010 2009
Revenues $138 $ 138 $ 165
Earnings/(loss) from operations 54 (327) (152)
Other segment operating earnings for the year ended December 31, 2011 increased by $381 million
compared with 2010 primarily due to a $241 million reduction in the allowance for losses on AirTran
receivables and $124 million of lower impairment charges related to our customer financing portfolio in
2011.
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