Customer Financing

9 Months Ended

Sep. 30, 2023

Customer financing consisted of the following:


	September 30 2023	December 31 2022
Financing receivables:
Investment in sales-type/finance leases	$628	$804
Notes	115	385
Total financing receivables	743	1,189
Less allowance for losses on receivables	51	55
Financing receivables, net	692	1,134
Operating lease equipment, at cost, less accumulated depreciation of $72 and $76	359	470

Total	$1,051	$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 September 30, 2023 and December 31, 2022, $54 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 nine months ended September 30, 2023.

Our financing receivable balances at September 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			$2			$26	$28
BB	$56	$32	203	$105	$37	116	549
B					16	96	112
CCC	10		35			9	54


Total carrying value of financing receivables	$66	$32	$240	$105	$53	$247	$743

At September 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%, 2.5%, 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:


	September 30 2023	December 31 2022
717 Aircraft ($0 and $45 accounted for as operating leases)	$485	$563
747-8 Aircraft (accounted for as sales-type/finance leases)	131	394
737 Aircraft ($149 and $174 accounted for as operating leases)	168	186
777 Aircraft (accounted for as operating leases)	197	209
MD-80 Aircraft (accounted for as sales-type/finance leases)		96
757 Aircraft (accounted for as sales-type/finance leases)	63	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 nine months ended September 30, 2023 and 2022 included $43 and $52 from sales-type/finance leases, and $45 and $50 from operating leases, of which $4 and $6 related to variable operating lease payments. Lease income recorded in revenue on the Condensed Consolidated Statements of Operations for the three months ended September 30, 2023 and 2022 included $14 and $16 from sales-type/finance leases, and $18 and $18 from operating leases, of which $3 and $1 related to variable operating lease payments.

Profit at the commencement of sales-type leases was recorded in revenue for the nine months ended September 30, 2023 and 2022 in the amount of $24 and $16. Customer financing interest income received was $122 and $10 for the nine months ended September 30, 2023 and 2022. Profit at the commencement of sales-type leases was recorded in revenue for the three months ended September 30, 2023 and 2022 in the amount of $4 and $4. Customer financing interest income received was $60 and $4 for the three months ended September 30, 2023 and 2022.