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Document And Entity Information
6 Months Ended
Jun. 30, 2011
Jul. 27, 2011
Document And Entity Information
Document Type 10-Q
Amendment Flag false
Document Period End Date Jun 30, 2011
Document Fiscal Year Focus 2011
Document Fiscal Period Focus Q2
Entity Registrant Name BOEING CAPITAL CORP
Entity Central Index Key 0000711513
Current Fiscal Year End Date --12-31
Entity Filer Category Non-accelerated Filer
Entity Common Stock, Shares Outstanding 50,000
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Condensed Consolidated Balance Sheets (USD  $)
In Millions
Jun. 30, 2011
Dec. 31, 2010
ASSETS
Cash and cash equivalents  $ 203  $ 425
Short-term investments 400 900
Receivables:
Finance leases 1,801 1,907
Notes and other 461 375
Notes, loans and financing receivable, gross 2,262 2,282
Allowance for losses on receivables (67) (87)
Notes, loans and financing receivable, net 2,195 2,195
Equipment under operating leases, net 1,555 1,821
Investments 6 8
Assets held for sale or re-lease, net 553 583
Other assets 41 54
Total assets 4,953 5,986
LIABILITIES AND SHAREHOLDER'S EQUITY
Accounts payable and accrued expenses 65 88
Other liabilities 291 328
Accounts with Boeing 66 66
Deferred income taxes 1,346 1,371
Debt 2,656 3,446
Total liabilities 4,424 5,299
Shareholder's equity:
Common shares -  $100 par value; authorized 100,000 shares; issued and outstanding 50,000 shares 5 5
Additional paid-in capital 522 682
Accumulated other comprehensive income (loss), net of tax    
Retained earnings 2  
Total shareholders' equity 529 687
Total liabilities and shareholders' equity  $ 4,953  $ 5,986
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Condensed Consolidated Balance Sheets (Parenthetical) (USD  $)
Jun. 30, 2011
Dec. 31, 2010
Condensed Consolidated Balance Sheets
Common stock, par value  $ 100  $ 100
Common stock, shares authorized 100,000 100,000
Common stock, shares issued 50,000 50,000
Common stock, shares outstanding 50,000 50,000
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Condensed Consolidated Statements Of Operations (USD  $)
In Millions
3 Months Ended 6 Months Ended
Jun. 30, 2011
Jun. 30, 2010
Jun. 30, 2011
Jun. 30, 2010
REVENUE
Finance lease income  $ 34  $ 36  $ 69  $ 73
Interest income on notes receivable 8 17 16 34
Operating lease income 91 98 181 195
Net gain on disposal of assets 10 15 6
Other income 4 11 9 16
Total revenues 147 162 290 324
EXPENSES
Interest expense 29 41 62 82
Depreciation expense 41 50 83 101
Provision for (recovery of) losses (3) (1) (9) 2
Operating expenses 12 11 23 23
Asset impairment expense 5 3 14 10
Other expense 1 3 3 5
Total expenses 85 107 176 223
Income from continuing operations before provision for income tax 62 55 114 101
Provision for income tax 22 20 41 37
Income from continuing operations 40 35 73 64
Net loss on disposal of discontinued operations, net of tax (1) (2) (3) (2)
Net income  $ 39  $ 33  $ 70  $ 62
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Condensed Consolidated Statements Of Shareholder's Equity And Comprehensive Income (USD  $)
In Millions
Common Shares [Member]
Additional Paid-In Capital [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Retained Earnings [Member]
Comprehensive Income [Member]
Total
Balance at Dec. 31, 2009  $ 5  $ 696  $ (2)  $ 699
Non-cash capital contributions from Boeing 1 1
Net income 62 62 62
Unrealized loss on investments, net of tax (1) (1) (1)
Balance at Jun. 30, 2010 5 697 (3) 62 61 761
Balance at Dec. 31, 2010 5 682 687
Cash dividends to Boeing (including return of capital) (160) (68) (228)
Net income 70 70 70
Balance at Jun. 30, 2011  $ 5  $ 522  $ 2  $ 70  $ 529
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Condensed Consolidated Statements Of Cash Flows (USD  $)
In Millions
6 Months Ended
Jun. 30, 2011
Jun. 30, 2010
OPERATING ACTIVITIES
Net income  $ 70  $ 62
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense 79 97
Net gain on disposal of assets (15) (6)
Provision for (recovery of) losses (9) 2
Asset impairment expense and other charges 14 16
Share-based plans expense 1
Adjustments related to discontinued operations, net of tax 3 2
Change in deferred income taxes (25) (24)
Change in assets and liabilities:
Other assets 16 (7)
Accrued interest and rents 2 3
Accounts payable and accrued expenses (23) 2
Other liabilities (30) (15)
Accounts with Boeing 4 28
Net cash provided by operating activities 86 161
INVESTING ACTIVITIES
Purchase of short-term investments (500) (300)
Proceeds from maturities of short-term investments 1,000 100
Proceeds from available-for-sale investments 2 1
Payment for capitalizable costs in process (23)
Proceeds from disposition of equipment 53 7
Payments of leases, notes and other receivables 155 280
Net cash provided by investing activities 710 65
FINANCING ACTIVITIES
Repayment of debt (790) (64)
Payment of dividends (including return of capital) (228)
Net cash used in financing activities (1,018) (64)
Net increase (decrease) in cash and cash equivalents (222) 162
Cash and cash equivalents at beginning of year 425 596
Cash and cash equivalents at end of period 203 758
NON-CASH INVESTING AND FINANCING ACTIVITIES
Net transfer from assets held for sale or re-lease (9) (144)
Net transfer to notes receivable 193 24
Net transfer to (from) equipment under operating leases (165) 142
Net transfer to (from) finance leases (44) 6
Transfer from other assets (28)
Transfer to allowance for losses on receivables 11
Transfer to accounts with Boeing 2
Transfer to other liabilities 12
Increase in debt due to fair value hedge derivatives  $ (4)  $ (36)
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Basis Of Presentation
6 Months Ended
Jun. 30, 2011
Basis Of Presentation
Basis Of Presentation

Note 1 – Basis of Presentation

Boeing Capital Corporation (together with its subsidiaries, referred to as "us," "we," "our" or the "Company") is a wholly owned subsidiary of The Boeing Company (Boeing). We prepared the accompanying unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. In our opinion all normal recurring adjustments necessary for a fair presentation are reflected in the condensed consolidated financial statements. Operating results for the period ended June 30, 2011 are not necessarily indicative of the results for the full year. The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our 2010 Annual Report on Form 10-K.

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Transactions With Boeing
6 Months Ended
Jun. 30, 2011
Transactions With Boeing
Transactions With Boeing

Note 2 – Transactions with Boeing

As a wholly owned subsidiary of Boeing, our mission is to arrange for the financing of products manufactured by Boeing. When third party financing is not available, we may provide such financing directly.

We have a number of general contractual arrangements with Boeing to facilitate our operations including, among others, a support agreement, tax sharing agreement and an agreement allowing us to borrow under Boeing's committed revolving lines of credit. We also have an intercompany borrowing and lending arrangement with Boeing.

In addition, we may require other forms of support from Boeing with respect to certain financing transactions we undertake. This support may take the form of intercompany guarantees, subsidies, remarketing agreements or other support arrangements.

There can be no assurances that these intercompany agreements and arrangements will not be terminated or modified by us or Boeing. However, our and Boeing's ability to terminate or modify the support agreement is subject to certain conditions. See Item 8. Financial Statements and Supplementary Data, Note 2 of our 2010 Annual Report on Form 10-K.

At June 30, 2011, we were the beneficiary under  $1,682 of guarantees from Boeing which mitigates our risk with respect to portfolio assets totaling  $2,063.

Intercompany guarantee amounts by aircraft type are summarized as follows:

 

      June 30, 2011      December 31, 2010  
     

Guarantee

Amount

    

Carrying

Value

    

Guarantee

Amount

    

Carrying

Value

 

717 (out of production)

    $ 1,528        $ 1,852        $ 1,586        $ 2,099   

Out of production single-aisle aircraft

     61         61         66         66   

Out of production twin-aisle aircraft

     50         65         51         71   

Other, including other Boeing aircraft

     43         85         46         90   
    $ 1,682        $ 2,063        $ 1,749        $ 2,326   
   

At June 30, 2011 and December 31, 2010, Accounts with Boeing included  $43 and  $47 for deferred revenue associated with guarantee and subsidy settlements and terminations.

 

We recorded the following activity under the intercompany guarantee and subsidy agreements for the six months ended June 30:

 

      2011     2010  

Finance lease income (1)

    $ (1    $ 1   

Interest income on notes receivable

     1        1   

Operating lease income

     33        25   

Net gain on disposal of assets

     2          

Asset impairment expense

            5   
    $ 35       $ 32   
   

 

(1)  

For the six months ended June 30, 2011 and 2010, finance lease income included  $(1) and  $(1) for fees paid to Boeing related to guarantee agreements.

For the six months ended June 30, 2010, we recorded operating lease income from Boeing, exclusive of guarantees and subsidies, of  $5.

For the six months ended June 30, 2010, we recorded new business volume of  $20 related to Boeing aircraft, equipment or services we purchased or financed.

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Portfolio Quality
6 Months Ended
Jun. 30, 2011
Portfolio Quality
Portfolio Quality

Note 3 – Portfolio Quality

Allowance for Losses on Receivables

The following table reconciles the activity in the allowance for losses on receivables for the six months ended June 30:

 

      2011     2010  

Allowance for losses on receivables at beginning of period

    $ 87       $ 71   

Provision for (recovery of) losses

     (9     2   

Write-offs

     (11       

Allowance for losses on receivables at end of period

    $ 67       $ 73   
   

Allowance as a percentage of total receivables

     3.0     2.8

Allowance for losses on receivables collectively evaluated for impairment

    $ 67       $ 73   

Credit Quality

We assign internal credit ratings for all customers and determine the creditworthiness of each customer based upon public information and information obtained directly from our customers. We utilize these credit ratings as one of the factors in assessing the adequacy of our allowance for losses on receivables. Our rating categories are comparable to those used by the major credit rating agencies.

The following table details our receivable balances by the internal rating category which was used as a factor in determining our allowance for losses on receivables:

 

      June 30, 2011      December 31, 2010  
Rating categories    Out-of-
Production
Aircraft
     In-
Production
Aircraft/Other
     Total      Out-of-
Production
Aircraft
     In-
Production
Aircraft/Other
     Total  

BBB

    $ 128        $        $ 128        $        $        $   

BB

             65         65                           

B

     111                 111         135         72         207   

CCC+

     1,245                 1,245                           

CCC

     384         329         713         1,658         417         2,075   

Total carrying value

    $ 1,868        $ 394        $ 2,262        $ 1,793        $ 489        $ 2,282   
   

 

At June 30, 2011, our allowance primarily related to customers with ratings of CCC+ and CCC in the table above, and we applied default rates, that averaged 41.2% and 48.7% to receivables from these customers. On May 2, 2011, Southwest Airlines Co. (Southwest) completed its acquisition of AirTran Holdings, Inc. and AirTran Holdings, Inc. became a wholly owned subsidiary of Southwest. As of June 30, 2011 the internal rating category of CCC+ is assigned to the receivables with AirTran Holdings, LLC (AirTran), the successor to AirTran Holdings Inc., for the purpose of assigning default rates discussed above.

At June 30, 2011 and December 31, 2010, our receivables were primarily related to customers we believe have less than investment-grade credit.

Impaired Receivables

At June 30, 2011 and December 31, 2010, we had no impaired receivables.

For the six months ended June 30, 2010, our average recorded investment, interest income recognized and cash received on the income recognized related to the impaired receivables, all of which related to out-of-production aircraft, were  $141,  $3 and  $3, respectively.

Past Due Receivables

At June 30, 2011 and December 31, 2010, we had no past due receivables.

Non-Performing Assets

Non-performing assets (assets not earning income on an accrual basis) consisted of the following:

 

      June 30,
2011
    December 31,
2010
 

Assets placed on non-accrual status:

    

Equipment under operating leases, net

    $ 14       $ 29   

Assets held for sale or re-lease, net(1) (2)

     24        43   
    $ 38       $ 72   
   

Percent of total non-performing assets to total portfolio

     0.9     1.5

 

(1)  

At June 30, 2011 and December 31, 2010, assets held for sale or re-lease of  $529 and  $540 are not included in non-performing assets due to intercompany guarantees provided by Boeing.

 

(2)  

At June 30, 2011 and December 31, 2010, non-performing assets held for sale or re-lease of  $4 and  $28 had either a purchase or lease commitment.

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Debt
6 Months Ended
Jun. 30, 2011
Debt
Debt

Note 4 – Debt

The carrying value of debt, including the net effect of interest rate swap revaluation adjustments and unamortized deferred debt costs, consisted of the following:

 

(Interest rates are the contractual rates at June 30, 2011)    June 30,
2011
     December 31,
2010
 

3.25% - 7.58% fixed rate notes due through 2019

    $ 2,531        $ 3,314   

1.48% floating rate note due in 2023

     25         25   

1.29% - 5.79% non-recourse notes due through 2013

     53         55   

0.89% capital lease obligation due through 2015

     47         52   
    $ 2,656        $ 3,446   
   

At June 30, 2011, and December 31, 2010, we had interest rate swaps which effectively convert debt of  $388 and  $875 from fixed rates to floating rates. During the first six months of 2011 we terminated  $187 of interest rate swaps in order to improve our expected alignment between fixed and floating rate assets and liabilities. An additional  $300 of swaps matured as scheduled concurrently with corresponding debt maturities.

 

The most restrictive covenants in our debt agreements require us to (a) limit the payment of cash dividends to the extent that our consolidated assets would be less than 115% of our consolidated liabilities (excluding deferred taxes) after dividend payments and (b) restrict the amount of liens on our property to secure indebtedness to 15% or less of consolidated assets, other than liens specifically excluded. At June 30, 2011, we were in compliance with these covenants.

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Derivative Financial Instruments
6 Months Ended
Jun. 30, 2011
Derivative Financial Instruments
Derivative Financial Instruments

Note 5 – Derivative Financial Instruments

We primarily use derivative instruments to manage exposures to interest rate risk. We enter into interest rate swap contracts to hedge interest rate risk associated with our debt obligations. These interest rate swap contracts are designated as cash flow hedges or fair value hedges. Our contracts entered into as of June 30, 2011 do not require collateral or other security from either party.

The fair values of derivative instruments included in the Consolidated Balance Sheets were as follows:

 

June 30, 2011    Other Assets      Other Liabilities  

Derivatives designated as hedging instruments - Interest rate swaps

    $ 19        $   
   

December 31, 2010

                 

Derivatives designated as hedging instruments - Interest rate swaps

    $ 24        $   
   

The notional amount of our interest rate swaps is disclosed in Note 4 – Debt.

For the six months ended June 30, 2011 and 2010, we did not hold any derivatives in cash flow hedging relationships, resulting in no effect to Accumulated Other Comprehensive Income (AOCI) or the Statement of Operations.

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Commitments And Contingencies
6 Months Ended
Jun. 30, 2011
Commitments And Contingencies
Commitments And Contingencies

Note 6 – Commitments and Contingencies

Litigation

Various legal proceedings and claims are pending or have been asserted against us. We believe that the final outcome of these proceedings and claims will not have a material adverse effect on our earnings, cash flows and/or financial position.

Restructurings and Restructuring Requests

From time to time, certain customers have requested a restructuring of their transactions with us. As of June 30, 2011, we have not reached agreement on any restructuring requests that would have a material adverse effect on our earnings, cash flows and/or financial position.

Commitments

As of July 22, 2011, we and Boeing had unfunded financing commitments of  $14,254, primarily resulting from firm contracts, options for deliveries or proposals as part of sales campaigns. These commitments are provided to give Boeing customers reasonable assurance of financing in connection with orders of Boeing products in advance of delivery. However, customers typically seek lower cost financing from other sources prior to actual delivery. In addition, we continue to work with third party financiers to provide alternative financing to customers and eliminate the need for our financing. We anticipate that we will not be required to fund a significant portion of our financing commitments as we continue to work with third party financiers to provide alternative financing to customers. However, there can be no assurances that we will not be required to fund greater amounts than historically required. To the extent we are obligated to provide financing, such financing generally includes participation by engine manufacturers which further reduces our obligation. Therefore, the reported amount of commitments does not necessarily represent a future net cash requirement. However, we expect to ultimately provide funding for those commitments which are exercised, whether they are Boeing's or our commitments. If there were requirements to fund all Boeing's and our commitments, the timing in which these commitments may be funded (based on estimated earliest potential funding dates as of July 22, 2011) is as follows:

 

      Total  

July through December 2011

    $ 1,094   

2012

     905   

2013

     1,456   

2014

     2,352   

2015

     2,766   

Thereafter

     5,681   
    $ 14,254   
   
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Fair Value Measurements
6 Months Ended
Jun. 30, 2011
Fair Value Measurements
Fair Value Measurements

Note 7 – Fair Value Measurements

The following tables present our assets and liabilities that are measured at fair value on a recurring basis and are categorized using the three levels of fair value hierarchy.

 

June 30, 2011    Total     

Quoted Prices in
Active Markets for
Identical Assets

(Level 1)

    

Significant Other
Observable
Inputs

(Level 2)

     Significant
Unobservable
Inputs
(Level 3)
 

Assets

           

Available-for-sale investments:

           

EETC

    $ 4        $        $        $ 4   

Interest rate swaps

     19                 19           

Total

    $ 23        $        $ 19        $ 4   
   
  

December 31, 2010

                                   

Assets

           

Available-for-sale investments:

           

Marketable equity securities

    $ 1        $ 1        $        $   

EETC

     5                         5   

Interest rate swaps

     24                 24           

Total

    $ 30        $ 1        $ 24        $ 5   
   

Marketable equity securities. The fair value of our marketable equity securities is determined using quoted prices in active markets for identical assets. Unrealized gains (losses) are recorded in AOCI.

Enhanced Equipment Trust Certificate (EETC). The fair value of our EETC is derived using discounted cash flows at market yield based on estimated trading prices for comparable debt securities. Unrealized gains (losses) are recorded in AOCI.

Interest rate swaps. The fair values of our interest rate swaps are determined using cash flows discounted at market interest rates in effect at the period close.

 

The following tables present a reconciliation of Level 3 assets measured at fair value on a recurring basis for the six months ended June 30:

 

2011    Fair Value
Beginning
of Year
     Unrealized
Gains
Included
in Income
     Accumulated
Other
Comprehensive
Income/(Loss)
     Purchases,
Sales, and
Settlements
    Transfers
In/(Out)
     Fair Value
at End of
Period
 

Assets

                

EETC

    $ 5        $        $        $ (1    $        $ 4   

Total

    $ 5        $        $        $ (1    $        $ 4   
   
2010                                               

Assets

                

EETC

    $ 5        $        $ 1        $ (1    $        $ 5   

Total

    $ 5        $        $ 1        $ (1    $        $ 5   
   

Certain assets are measured at fair value on a non-recurring basis using significant unobservable inputs (Level 3). The table below presents the non-recurring losses recognized for the six months ended June 30, and the carrying value and asset classification of the related assets still held as of June 30:

 

      2011     2010  
      Carrying
Value
     Total
Losses
    Carrying
Value
     Total
Losses
 

Assets

          

Equipment under operating leases (1)

    $ 24        $ (10    $ 53        $ (11

Assets held for sale or re-lease ( 1 )

     15         (4     22         (4

Total

    $ 39        $ (14    $ 75        $ (15
   

 

( 1 )  

Represents carrying value and related write downs which were based on the fair value for the related aircraft. For the six months ended June 30, 2010, losses on equipment under operating leases includes  $5 which were offset by intercompany guarantees.

The following table presents the carrying values and estimated fair values of our financial instruments for which we did not elect the fair value option:

 

      June 30, 2011     December 31, 2010  
     

Carrying

Value

   

Fair

Value

   

Carrying

Value

   

Fair

Value

 

Assets

        

Notes and other

    $ 461       $ 503       $ 375       $ 395   

Liabilities

        

Debt, excluding capital lease obligations

    $ (2,609    $ (2,722    $ (3,394    $ (3,528

Items not included in the above disclosures are Cash and cash equivalents and Short-term investments. The carrying value of those items approximate their fair value at June 30, 2011 and December 31, 2010 as reflected in the Consolidated Balance Sheets.

The following methods and assumptions were used to estimate the fair value of each class of financial instruments:

Notes and other. The fair value of our variable rate notes that reprice frequently approximate their carrying values. The fair values of fixed rate notes are estimated using discounted cash flows analysis using interest rates currently offered on loans with similar terms to borrowers of similar credit quality.

Debt. The fair value of debt is based on current market yields for our debt traded in the secondary market.

 

Financing commitments. It is not practicable to estimate the fair value of future financing commitments because the amount and timing of funding those commitments are uncertain.

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Concentrations
6 Months Ended
Jun. 30, 2011
Concentrations
Concentrations

Note 8 – Concentrations

A significant portion of our portfolio is concentrated among a few customers and in distinct geographic regions, particularly in the United States. Our portfolio is also concentrated by varying degrees across aircraft product types and vintages. Our concentration risk is mitigated in part by intercompany guarantees from Boeing with respect to certain portfolio assets, which primarily relate to 717 aircraft.

Portfolio carrying values for our five largest customers were as follows:

 

      June 30, 2011     December 31, 2010  
      Carrying
Value
     % of Total
Portfolio
    Carrying
Value
     % of Total
Portfolio
 

AirTran

    $ 1,309         29.9    $ 1,364         29.0%   

Continental

     431         9.9        447         9.5     

American

     383         8.7        426         9.1     

Hawaiian

     365         8.3        422         9.0     

Korean

     166         3.8        172         3.7     
    $ 2,654         60.6    $ 2,831         60.3%   
   

For the six months ended June 30, 2011 and 2010, AirTran, accounted for 21% and 21% of our revenue.

Portfolio carrying values were represented in the following regions:

 

      June 30, 2011     December 31, 2010  
      Carrying
Value
     % of Total
Portfolio
    Carrying
Value
     % of Total
Portfolio
 

United States (1)

    $ 3,382         77.3    $ 3,604         76.8%   

Europe

     556         12.7        619         13.2     

Asia/Australia

     270         6.2        280         5.9     

Latin America

     83         1.9        89         1.9     

Other

     85         1.9        102         2.2     
    $ 4,376         100.0    $ 4,694         100.0%   
   

 

(1)  

United States includes assets held for sale or re-lease that may be physically located in another region.

Portfolio carrying values were represented by the following product types:

 

      June 30,
2011
     December 31,
2010
 

717

    $ 2,068        $ 2,163   

757

     677         720   

767

     348         383   

737

     346         386   

MD-11 (1)

     346         359   

747

     240         256   

MD-80

     192         200   

777

     38         47   

Other (2)

     121         180   
    $ 4,376        $ 4,694   
   

 

(1)  

MD-11 aircraft are currently in freighter configuration or are committed to be modified into freighter configuration.

 

(2)  

Other includes aircraft, equipment, notes and stock. Some of these aircraft are out of production, but are supported by the manufacturer or other third party parts and service providers.

 

Our aircraft portfolio by vintage, based on carrying value (excluding investments and pooled assets), are categorized as follows:

 

      June 30,
2011
    December 31,
2010
 

2006 and newer

     3.9     3.8%   

2001 – 2005

     64.3        64.1     

1996 – 2000

     20.2        20.0     

1995 and older

     11.6        12.1     
     100.0     100.0%   
   
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Discontinued Operations
6 Months Ended
Jun. 30, 2011
Discontinued Operations
Discontinued Operations

Note 9 – Discontinued Operations

On May 24, 2004, we entered into a purchase and sale agreement with General Electric Capital Corporation (GECC) to sell substantially all of the assets related to our Commercial Financial Services business. The final asset sale closed December 27, 2004.

Part of the purchase and sale agreement with GECC includes a loss sharing arrangement for losses that may exist at the end of the initial and subsequent financing periods of the transferred portfolio assets, or in some instances, prior to the end of the financing period. Such losses may result from asset sales, provisions for loss or asset impairment charges offset by gains from asset sales. The loss sharing arrangement provides that cumulative net losses (if any) are to be shared between us and GECC. The provisions effectively limit our exposure to any losses to  $245. At June 30, 2011, our maximum future cash exposure to loss associated with the loss sharing arrangement was  $224, for which we have accrued a liability of  $78.

The following table reconciles the reserve under the loss sharing arrangement, which is included in Other liabilities for the six months ended June 30:

 

      2011     2010  

Reserve at beginning of period

    $ 82       $ 77   

Increase in reserve

     4        4   

Payments to GECC

     (8       

Reserve at end of period

    $ 78       $ 81   
   
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