Note 8. Finance Assets, net:

At March 31, 2012, finance assets, net, of $3,247 million were comprised of investments in finance leases of $3,392 million and an other receivable of $59 million, reduced by the allowance for losses of $204 million. At December 31, 2011, finance assets, net, of $3,559 million were comprised of investments in finance leases of $3,786 million, reduced by the allowance for losses of $227 million.

PMCC assesses the adequacy of its allowance for losses relative to the credit risk of its leasing portfolio on an ongoing basis. PMCC believes that, as of March 31, 2012, the allowance for losses of $204 million is adequate. PMCC continues to monitor economic and credit conditions, and the individual situations of its lessees and their respective industries, and may have to increase its allowance for losses if such conditions worsen.

The activity in the allowance for losses on finance assets for the three months ended March 31, 2012 and 2011 was as follows:


	For the Three Months Ended March 31,
	2012			2011
	(in millions)
Balance at beginning of year	$	227		$	202
Amounts written-off		(23	)

Balance at March 31	$	204		$	202

PMCC leases 28 aircraft to American Airlines, Inc. ("American"), which filed for bankruptcy on November 29, 2011. As of the date of the bankruptcy filing, PMCC stopped recording income on its $140 million investment in finance leases from American. On February 10, 2012, American filed a motion to reject the leases for nine of the 28 aircraft under lease, which resulted in a $23 million write-off of the related investment in finance lease balance against PMCC's allowance for losses. The remaining leases could be rejected, restructured or, where applicable, foreclosed upon by the debtholders, which would result in a write-off of the related investment in finance lease balance against PMCC's allowance for losses. Should foreclosure occur, PMCC would be subject to an acceleration of deferred taxes of approximately $22 million.

With the exception of American, all PMCC lessees were current on their lease payment obligations as of March 31, 2012.

The credit quality of PMCC's investments in finance assets as assigned by Standard & Poor's Ratings Services ("Standard & Poor's") and Moody's Investors Service, Inc. ("Moody's") at March 31, 2012 and December 31, 2011 was as follows:


	March 31, 2012		December 31, 2011
	(in millions)
Credit Rating by Standard & Poor's/Moody's
"AAA/Aaa" to "A-/A3"	$	1,373	$	1,570
"BBB+/Baa1" to "BBB-/Baa3"		1,029		1,080
"BB+/Ba1" and Lower		1,049		1,136

Total	$	3,451	$	3,786

See Note 10. Contingencies for a discussion of the IRS's disallowance of certain tax benefits pertaining to several PMCC leveraged lease transactions.