Customer Financing

6 Months Ended

Jun. 30, 2023

Customer financing consisted of the following:


	June 30 2023	December 31 2022
Financing receivables:
Investment in sales-type/finance leases	$673	$804
Notes	203	385
Total financing receivables	876	1,189
Less allowance for losses on receivables	53	55
Financing receivables, net	823	1,134
Operating lease equipment, at cost, less accumulated depreciation of $69 and $76	367	470

Total	$1,190	$1,604

Financing arrangements typically range in terms from 1 to 12 years and may include options to extend or terminate. Certain leases include provisions to allow the lessee to purchase the underlying aircraft at a specified price.

At June 30, 2023 and December 31, 2022, $238 and $405 were determined to be uncollectible financing receivables and placed on non-accrual status. The allowance for losses on receivables remained largely unchanged during the six months ended June 30, 2023.

Our financing receivable balances at June 30, 2023 by internal credit rating category and year of origination consisted of the following:


Rating categories	Current	2022	2021	2020	2019	Prior	Total
BBB						$33	$33
BB	$47	$33	$209	$107	$38	155	589
B					17		17
CCC	10		35			192	237


Total carrying value of financing receivables	$57	$33	$244	$107	$55	$380	$876

At June 30, 2023, our allowance for losses related to receivables with ratings of CCC, B, BB, and BBB. We applied default rates that averaged 100.0%, 0.0%, 2.7%, and 0.1%, respectively, to the exposure associated with those receivables.

Customer Financing Exposure

The majority of our gross customer financing portfolio is concentrated in the following aircraft models:


	June 30 2023	December 31 2022
717 Aircraft ($0 and $45 accounted for as operating leases)	$495	$563
747-8 Aircraft (accounted for as sales-type/finance leases)	217	394
737 Aircraft ($151 and $174 accounted for as operating leases)	171	186
777 Aircraft (accounted for as operating leases)	202	209
MD-80 Aircraft (accounted for as sales-type/finance leases)		96
757 Aircraft (accounted for as sales-type/finance leases)	98	107
747-400 Aircraft (accounted for as sales-type/finance leases)	44	46

Operating lease equipment primarily includes large commercial jet aircraft.

Lease income recorded in revenue on the Condensed Consolidated Statements of Operations for the six months ended June 30, 2023 and 2022 included $29 and $36 from sales-type/finance leases, and $27 and $32 from operating leases, of which $1 and $5 related to variable operating lease payments. Lease income recorded in revenue on the Condensed Consolidated Statements of Operations for the three months ended June 30, 2023 and 2022 included $14 and $18 from sales-type/finance leases, and $16 and $17 from operating leases, of which $1 and $1 related to variable operating lease payments.

Profit at the commencement of sales-type leases was recorded in revenue for the six months ended June 30, 2023 and 2022 in the amount of $20 and $12. Customer financing interest income received was $62 and $6 for the six months ended June 30, 2023 and 2022. Profit at the commencement of sales-type leases was recorded in revenue for the three months ended June 30, 2023 and 2022 in the amount of $8 and $8. Customer financing interest income received was $58 and $3 for the three months ended June 30, 2023 and 2022.