Customer Financing

12 Months Ended

Dec. 31, 2022

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

Customer financing consisted of the following at December 31:


	2022	2021
Financing receivables:
Investment in sales-type/finance leases	$804	$944
Notes	385	412
Total financing receivables	1,189	1,356
Less allowance for losses on receivables	55	18
Financing receivables, net	1,134	1,338
Operating lease equipment, at cost, less accumulated depreciation of $76 and $58	470	474

Total	$1,604	$1,812

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


	2022	2021
Minimum lease payments receivable	$924	$1,099
Estimated residual value of leased assets	86	110
Unearned income	(206)	(265)
Total	$804	$944

At December 31, 2022 and 2021, $405 and $378 were determined to be uncollectible financing receivables and placed on non-accrual status. The increase in allowance for losses on receivables during the year ended December 31, 2022 was primarily due to impacts of the war in Ukraine. Customer financing interest income received for the years ended December 31, 2022 and 2021 was $13 and $18.

There were no past due customer financing receivables as of December 31, 2022.

Our financing receivable balances at December 31, 2022 by internal credit rating category and year of origination consisted of the following:


Rating categories	Current	2021	2020	2019	2018	Prior	Total
BBB						$68	$68
BB	$35	$218	$112	$39	$12	63	479
B		35				218	253
CCC				19		370	389


Total carrying value of financing receivables	$35	$253	$112	$58	$12	$719	$1,189

At December 31, 2022, our allowance for losses related to receivables with ratings of CCC, B, BB and BBB. We applied default rates that averaged 100.0%, 31.5%, 2.9% and 0.1%, respectively, to the exposure associated with those receivables.

Customer Financing Exposure

The majority of our customer financing portfolio is concentrated in the following aircraft models at December 31:


	2022	2021
717 Aircraft ($45 and $62 accounted for as operating leases)	$563	$603
747-8 Aircraft (Accounted for as sales-type/finance leases)	394	435
737 Aircraft ($174 and $145 accounted for as operating leases)	186	163
777 Aircraft ($209 and $225 accounted for as operating leases)	209	233
MD-80 Aircraft (Accounted for as sales-type/finance leases)	96	142
757 Aircraft (Accounted for as sales-type/finance leases)	107	126
747-400 Aircraft ($0 and $1 accounted for as operating leases)	46	50

Operating lease equipment primarily includes large commercial jet aircraft.

Impairment charges related to customer financing operating lease assets for the years ended December 31 were as follows:


	2022	2021	2020
Boeing Capital	$2	$23	$32
Other Boeing	5	8	(8)
Total	$7	$31	$24

Lease income recorded in Revenue on the Consolidated Statements of Operations for the years ended December 31, 2022 and 2021 included $69 and $54 from sales-type/finance leases, and $65 and $68 from operating leases. Profit at the commencement of sales-type leases was recorded in revenue for the years ended December 31, 2022 and 2021 in the amount of $28 and $78.

As of December 31, 2022, undiscounted cash flows for notes receivable, sales-type/finance and operating leases over the next five years and thereafter are as follows:


	Notes receivable	Sales-type/finance leases	Operating leases
Year 1	$201	$239	$61
Year 2	18	161	50
Year 3	19	131	47
Year 4	21	118	43
Year 5	22	116	43
Thereafter	104	159	61
Total financing receipts	385	924	305
Less imputed interest		(206)
Estimated unguaranteed residual values		86
Total	$385	$804	$305

At December 31, 2022 and December 31, 2021, unguaranteed residual values were $86 and $110. Guaranteed residual values at December 31, 2022 were not significant.