Customer Financing

Customer financing primarily relates to the Boeing Capital (BCC) segment and consisted of the following at December 31:



	2015			2014
Financing receivables:
Investment in sales-type/finance leases		$1,620			$1,535
Notes	256			370
Total financing receivables	1,876			1,905
Operating lease equipment, at cost, less accumulated depreciation of $338 and $571	1,710			1,677
Gross customer financing	3,586			3,582
Less allowance for losses on receivables	(16		)	(21		)
Total		$3,570			$3,561

The components of investment in sales-type/finance leases at December 31 were as follows:



	2015			2014
Minimum lease payments receivable		$1,537			$1,475
Estimated residual value of leased assets	530			521
Unearned income	(447		)	(461		)
Total		$1,620			$1,535

Operating lease equipment primarily includes large commercial jet aircraft and regional jet aircraft. At December 31, 2015 and 2014, operating lease equipment included $49 and $48 available for sale or re-lease. At December 31, 2015 and 2014, we had firm lease commitments for $15 and $0 of this equipment.

Financing receivable balances evaluated for impairment at December 31 were as follows:



	2015		2014
Individually evaluated for impairment		$86		$86
Collectively evaluated for impairment	1,790		1,819
Total financing receivables		$1,876		$1,905

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. As of December 31, 2015 and 2014, we had no material receivables that were greater than 30 days past due and we had no impaired customer financing receivables during 2015 and 2014.

Income recognition is generally suspended for financing receivables at the date full recovery of income and principal becomes not probable. Income is recognized when financing receivables become contractually current and performance is demonstrated by the customer. For the year ended December 31, 2013, interest income recognized on such receivables was $30, and the average recorded investment in impaired financing receivables was $376.

The change in the allowance for losses on financing receivables for the years ended December 31, 2015, 2014 and 2013, consisted of the following:



	2015			2014			2013
Beginning balance - January 1		($21	)		($49	)		($60	)
Customer financing valuation benefit	5			28			11
Ending balance - December 31		($16	)		($21	)		($49	)
Collectively evaluated for impairment		($16	)		($21	)		($49	)

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 at December 31 by internal credit rating category are shown below:



Rating categories	2015		2014
BBB		$973		$1,055
BB	536
B	258		633
CCC	23		131
Other	86		86
Total carrying value of financing receivables		$1,876		$1,905

At December 31, 2015, our allowance related to receivables with ratings of B, BB and BBB. We applied default rates that averaged 16%, 10% 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 aircraft. The majority of customer financing carrying values are concentrated in the following aircraft models at December 31:



	2015		2014
717 Aircraft ($372 and $421 accounted for as operating leases)		$1,415		$1,562
747 Aircraft (Accounted for as operating leases)	1,038		601
MD-80 Aircraft (Accounted for as sales-type finance leases)	314		358
757 Aircraft ($48 and $349 accounted for as operating leases)	270		370
767 Aircraft ($84 and $47 accounted for as operating leases)	185		158
737 Aircraft ($115 and $127 accounted for as operating leases)	115		156
MD-11 Aircraft (Accounted for as operating leases)	35		114

Charges related to customer financing asset impairment for the years ended December 31 were as follows:



	2015		2014		2013
Boeing Capital		$162		$139		$67
Other Boeing			45		14
Total		$162		$184		$81

Scheduled receipts on customer financing are as follows:



Year	2016		2017		2018		2019		2020		Beyond 2020
Principal payments on notes receivable		$54		$38		$104		$56		$4
Sales-type/finance lease payments receivable	255		231		220		207		174			$450
Operating lease equipment payments receivable	593		120		100		86		71		357