Boeing 2009 Annual Report Download - page 49

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Boeing Capital Corporation
Business Environment and Trends
BCC’s customer financing and investment portfolio at December 31, 2009 totaled $5,666 million, which
was substantially collateralized by Boeing produced commercial aircraft. A substantial portion of BCC’s
portfolio is concentrated among U.S. commercial airline customers.
The weak global economic environment and capital market disruptions affected the availability of credit
for the airline industry. While sources of financing available for aircraft deliveries improved during 2009,
BCC provided limited financing to certain Boeing customers. To the extent capital market conditions
continue to improve, we believe the overall aircraft financing market should improve as well and lessen
the need for BCC to provide financing.
Aircraft values and lease rates are impacted by the number and type of aircraft that are currently out of
service. Approximately 2,400 western-built commercial jet aircraft (11.6% of current world fleet) were
parked as of December 2009, including both in-production and out-of-production aircraft types. Over
36% of the parked aircraft are not expected to return to service. In December 2008 and 2007, 11.0%
and 8.2% of the western-built commercial jet aircraft were parked. Aircraft valuations could decline if
significant numbers of aircraft, particularly types with relatively few operators, are placed out of service.
Summary Financial Information
(Dollars in millions)
Years ended December 31, 2009 2008 2007
Revenues $660 $703 $815
Earnings from operations $126 $162 $234
Operating margins 19% 23% 29%
Revenues
BCC segment revenues consist principally of lease income from equipment under operating lease and
interest from financing receivables and notes. BCC’s revenues decreased $43 million in 2009, resulting
from lower operating lease income resulting from a smaller portfolio of equipment under operating
leases as a result of aircraft returns and asset dispositions. BCC’s revenues decreased $112 million in
2008, primarily due to lower interest income on notes receivable and lower investment income.
Earnings From Operations
BCC’s operating earnings are presented net of interest expense, provision for (recovery of) losses,
asset impairment expense, depreciation on leased equipment and other operating expenses.
Operating earnings decreased by $36 million in 2009 primarily due to lower revenues, higher
impairment expense and a provision for losses primarily due to declines in aircraft collateral values and
reduced projected cash flows for certain aircraft. The decrease in operating earnings in 2008 compared
with 2007 was primarily due to lower revenues.
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