Customer Financing

Customer financing primarily relates to the Boeing Capital (BCC) segment and consisted of the following:



	September 30 2015			December 31 2014
Financing receivables:
Investment in sales-type/finance leases		$1,659			$1,535
Notes	347			370
Total financing receivables	2,006			1,905
Operating lease equipment, at cost, less accumulated depreciation of $461 and $571	1,470			1,677
Gross customer financing	3,476			3,582
Less allowance for losses on receivables	(18		)	(21		)
Total		$3,458			$3,561

We determine a receivable is impaired when, based on current information and events, it is probable that we will be unable to collect amounts due according to the original contractual terms. At September 30, 2015 and December 31, 2014, we individually evaluated for impairment customer financing receivables of $89 and $86 and determined that none of these were impaired.

The adequacy of the allowance for losses is assessed quarterly. Three primary factors influencing the level of our allowance for losses on customer financing receivables are customer credit ratings, default rates and collateral values. We assign internal credit ratings for all customers and determine the creditworthiness of each customer based upon publicly available information and information obtained directly from our customers. Our rating categories are comparable to those used by the major credit rating agencies.

Our financing receivable balances by internal credit rating category are shown below.



Rating categories	September 30 2015		December 31 2014
BBB		$990		$1,055
BB	555
B	272		633
CCC	100		131
Other	89		86
Total carrying value of financing receivables		$2,006		$1,905

At September 30, 2015, our allowance related to receivables with ratings of B, BB and BBB. We applied default rates that averaged 16%, 9% and 2% to the exposure associated with those receivables.

Customer Financing Exposure

Customer financing is collateralized by security in the related asset. The value of the collateral is closely tied to commercial airline performance and overall market conditions and may be subject to reduced valuation with market decline. Declines in collateral values are also a significant driver of our allowance for losses. Generally, out-of-production aircraft have experienced greater collateral value declines than in-production aircraft. Our customer financing portfolio is primarily collateralized by out-of-production 717, 757 and MD-80 aircraft. The majority of customer financing carrying values are concentrated in the following aircraft models:



	September 30 2015		December 31 2014
717 Aircraft ($405 and $421 accounted for as operating leases)		$1,473		$1,562
747 Aircraft (Accounted for as operating leases)	734		601
MD-80 Aircraft (Accounted for as sales-type finance leases)	327		358
757 Aircraft ($57 and $349 accounted for as operating leases)	285		370
767 Aircraft ($78 and $47 accounted for as operating leases)	182		158
737 Aircraft ($118 and $127 accounted for as operating leases)	118		156
MD-11 Aircraft (Accounted for as operating leases)	60		114