##### Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-K



(Mark One)



|x |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ------------------------------------------------------------------------------------



For the fiscal year ended December 31, 2010



OR



| ̈ |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ----------------------------------------------------------------------------------------



For the transition period from
 to



Commission file number 0-10795

BOEING
CAPITAL CORPORATION

---

(Exact name of registrant as specified in its charter)



|                                                             |  |  |  |                                     
|------------------------------------------------------------ |  |  |  | ------------------------------------
|Delaware                                                     |  |  |  | 95-2564584                          
|State or other jurisdiction of incorporation or organization |  |  |  | (I.R.S. Employer Identification No.)
|                                                            
|500 Naches Ave. SW, 3rd Floor  Renton, Washington 98057    
|(Address of principal executive offices)                     |  |  |  | (Zip Code)                          



Registrants telephone number, including area code (425) 965-4000



Securities registered pursuant to Section 12(b) of the Act:



|                            |  |  |  |                                          
|--------------------------- |  |  |  | -----------------------------------------
|Title of each class         |  |  |  | Name of each exchange on which registered
|5.80% Senior Notes due 2013 |  |  |  | New York Stock Exchange                  



Securities registered pursuant to Section 12(g) of the Act:

Common stock, par value $100 per share

(Title of class)



Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act.

Yes  x    No   ̈



Indicate by
check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes   ̈    No  x



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  x    No   ̈



Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes   ̈    No   ̈



Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. (Not applicable)





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):



|                        |  |   |  |                                              |  |                             
|----------------------- |  | - |  | -------------------------------------------- |  | ----------------------------
|Large accelerated filer |  |  ̈ |  |                                              |  | Accelerated filer  
 ̈       
|Non-accelerated filer   |  | x |  | (Do not check if a smaller reportingcompany) |  | Smaller reporting company   ̈



Indicate by check
mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes   ̈    No  x



No common stock is held by non-affiliates of the registrant. Common stock shares outstanding at February 1, 2011: 50,000 shares



Registrant meets the conditions set forth in General Instruction I(1)(a) and
(b) of Form 10-K and is therefore filing this Form with the reduced disclosure format.



DOCUMENTS INCORPORATED BY REFERENCE: None



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Table of Contents



|         |  |            |  |                                                                                                              |  |     
|-------- |  | ---------- |  | ------------------------------------------------------------------------------------------------------------ |  | ----
|         |  |            |  |                                                                                                              |  | Page
|Part I   |  |            |  |                                                                                                              |  |     
|         |  |            | 
|         |  | Item 1.    |  | Business                                                                                                     |  | 2   
|         |  |            | 
|         |  | Item 1A.   |  | Risk Factors                                                                                                 |  | 3   
|         |  |            | 
|         |  | Item 1B.   |  | Unresolved Staff Comments                                                                                    |  | 5   
|         |  |            | 
|         |  | Item 2.    |  | Properties                                                                                                   |  | 5   
|         |  |            | 
|         |  | Item 3.    |  | Legal Proceedings                                                                                            |  | 5   
|         |  |            | 
|         |  | Item 4.    |  | Removed and Reserved                                                                                         |  | 5   
|         |  |            | 
|Part II  |  |            |  |                                                                                                              |  |     
|         |  |            | 
|         |  | Item 5.    |  | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities |  | 6   
|         |  |            | 
|         |  | Item 6.    |  | Selected Financial Data                                                                                      |  | 6   
|         |  |            | 
|         |  | Item 7.    |  | Managements Narrative Analysis of the Results of Operations                                                 |  | 6   
|         |  |            | 
|         |  | Item 7A.   |  | Quantitative and Qualitative Disclosures About Market Risk                                                   |  | 14  
|         |  |            | 
|         |  | Item 8.    |  | Financial Statements and Supplementary Data                                                                  |  | 14  
|         |  |            | 
|         |  | Item 9.    |  | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure                         |  | 38  
|         |  |            | 
|         |  | Item 9A.   |  | Controls and Procedures                                                                                      |  | 38  
|         |  |            | 
|         |  | Item 9B.   |  | Other Information                                                                                            |  | 38  
|         |  |            | 
|Part III |  |            |  |                                                                                                              |  |     
|         |  |            | 
|         |  | Item 10.   |  | Directors, Executive Officers and Corporate Governance *                                                     |  | 39  
|         |  |            | 
|         |  | Item 11.   |  | Executive Compensation *                                                                                     |  | 39  
|         |  |            | 
|         |  | Item 12.   |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
*             |  | 39  
|         |  |            | 
|         |  | Item 13.   |  | Certain Relationships and Related Transactions, and Director Independence *                                  |  | 39  
|         |  |            | 
|         |  | Item 14.   |  | Principal Accounting Fees and Services                                                                       |  | 39  
|         |  |            | 
|Part IV  |  |            |  |                                                                                                              |  |     
|         |  |            | 
|         |  | Item 15.   |  | Exhibits, Financial Statement Schedules                                                                      |  | 40  
|         |  |            | 
|         |  | Signatures |  |                                                                                                              |  | 42  

|* | Omitted pursuant to General Instruction I(2)(c) of Form 10-K.
|- | -------------------------------------------------------------



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PART I



Forward-Looking Statements



This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such
as may, will, should, expects, intends, projects, believes, estimates, targets, anticipates and similar expressions are used to
identify these forward-looking statements. Forward-looking statements include any statement that does not directly relate to any historical or current fact and include, among others, statements relating to our future financial condition and
operating results, future portfolio size and amounts of new aircraft financing, future levels of indebtedness and debt-to-equity ratios, and the outcome of contingencies.



Forward-looking statements are based on our current expectations and
assumptions, which may not prove to be accurate. These statements are not guarantees of future performance and are subject to risks, uncertainties and changes in circumstances that are difficult to predict. Many factors could cause actual results to
differ materially and adversely from these forward-looking statements. Among these factors are:



| |  |  | the financial condition of the airline industry, which could be adversely affected by changes in general economic conditions, credit ratings, increases in
fuel-related costs, the liquidity of the global financial markets, responses to increasing environmental concerns, as well as events such as war, terrorist attacks or a serious health epidemic,
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the impact of bankruptcies, restructurings or mergers and acquisitions on commercial airline customers,
| | - |  | -------------------------------------------------------------------------------------------------------



| |  |  | the impact of changes in aircraft valuations,
| | - |  | ---------------------------------------------



| |  |  | the sufficiency of our liquidity, including access to capital markets,
| | - |  | ----------------------------------------------------------------------



| |  |  | the impact on us of strategic decisions by The Boeing Company (Boeing), including the amount of financing necessary to support the sale of Boeing products,
the level and types of transactional or other support made available to us by Boeing and the ending of production of certain aircraft programs,
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the market acceptance of Boeing products,
| | - |  | -----------------------------------------



| |  |  | a decline in Boeings or our financial performance, outlook or credit ratings,
| | - |  | ------------------------------------------------------------------------------



| |  |  | the availability of commercial and governmental financing and the extent to which we are called upon to fund Boeings and our outstanding financing
commitments or satisfy other financing requests, and our ability to satisfy those requirements,
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | reduced lease rates as a result of competition in the used aircraft market, or the inability to maintain aircraft on lease at satisfactory lease rates,
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | financial, legal, tax, regulatory, legislative and accounting changes or actions that may affect the overall performance of our business,
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the adequacy of coverage of our allowance for losses on receivables, and
| | - |  | ------------------------------------------------------------------------



| |  |  | volatility in our earnings due to the timing of asset sales, other risk mitigation activities, fluctuations in our portfolio size and changes in interest
rates.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



Additional information concerning
these and other factors can be found in our filings with the Securities and Exchange Commission, including, but not limited to the Risk Factors contained on pages 3 through 5 of this report, Managements Narrative Analysis of
the Results of Operations and Note 12 to our Consolidated Financial Statements included in this report. Any forward-looking statement speaks only as of the date on which it is made, and we assume no obligation to update or revise any
forward-looking statement whether as a result of new information, future events or otherwise, except as required by law.



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Item 1. Business



GENERAL



Boeing Capital Corporation (together with its subsidiaries, referred to as us, we, our or the
Company) is a wholly owned subsidiary of Boeing. The Company was incorporated in Delaware in 1968. In the commercial aircraft market, we facilitate, arrange, structure and provide selective financing solutions for Boeings
Commercial Airplanes customers. In the space and defense markets, we primarily arrange and structure financing solutions for Boeings Defense, Space & Security customers.



At December 31, 2010, our portfolio consisted of equipment under operating leases, finance leases, notes and other
receivables, assets held for sale or re-lease and investments. At December 31, 2010, our portfolio totaled $4.7 billion, which was substantially collateralized by Boeing commercial aircraft. At December 31, 2010, we owned 257 commercial
aircraft and had partial ownership or security interests in an additional 28 aircraft.



RISK MANAGEMENT



We monitor the potential volatility in the value of our portfolio and the amount of capital required to support our portfolio, using internally and
externally developed statistical models. In addition, we track and analyze our exposure to potential net income fluctuations, analyze and assess transactional support and guarantees, and assess individual transaction values considering factors such
as forecasted aircraft values and potential credit rating migrations. This analysis allows us to structure transactions that are designed to achieve our targeted balance of risks and rewards.



RELATIONSHIP WITH BOEING



We have agreements with Boeing that are significant to our operation. These agreements provide for financial support, among other things. At
December 31, 2010, Boeing provided us with various types of partial and full guarantees, including first loss deficiency guarantees, residual value guarantees and rental loss guarantees, with a maximum potential value of $1.7 billion related to
portfolio assets totaling $2.3 billion. For further discussion of these guarantees, agreements and other arrangements with Boeing, see Item 8. Financial Statements and Supplementary Data, Note 2.



For a further description of significant factors that may affect
Boeing, see Boeings Annual Report on Form 10-K for the year ended December 31, 2010. That report is not incorporated by reference into this filing of Boeing Capital Corporation.



COMPETITIVE CONDITIONS



The Boeing products we finance are influenced by the aerospace and financial markets and general economic conditions. The
financing solutions we develop are part of overall sales campaigns and can be integral to Boeing winning orders in the commercial aircraft and space and defense markets. During campaigns, Boeing competes against other companies also offering
in-house customer financing. Some customers periodically require a financing commitment prior to ordering aircraft. Third party financiers are often unwilling to offer financing when orders are made since there may be a delay of several years
between order and delivery. Therefore, we may provide a financing commitment when products are ordered and subsequently assist our customers in obtaining alternative financing from third parties.



When we sell or remarket used aircraft, we compete with other leasing
companies and financial institutions primarily on the basis of pricing, terms, structure and service. The prices at which we sell aircraft or rental rates at which we lease aircraft are impacted by the demand for suitable aircraft and the quantity
and type of aircraft that are available. For further discussion on the airline industry environment, see Item 7. Managements Narrative Analysis of the Results of Operations, Business Environment and Trends.



SIGNIFICANT CONCENTRATIONS



For a discussion of our geographic and portfolio concentrations, see
Item 8. Financial Statements and Supplementary Data, Note 15.



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EMPLOYEES



At December 31, 2010, we had 151 employees, compared with 161 at December 31, 2009. While we believe that our current level of employment
is adequate to support our current and projected business operations over the next year, our actual employment levels may vary from our current levels due to changes in the needs and requirements of our business operations and timing of filling open
positions. No employees are covered by collective bargaining agreements. We believe our employee relations are satisfactory. As of February 1, 2011, we had 150 employees.



AVAILABLE INFORMATION



General information about us can be found at www.boeing.com. The information contained on or connected to Boeings
web site is not incorporated by reference into this Annual Report on Form 10-K and should not be considered part of this or any other report filed by the Company with the SEC. Our Annual Reports on Form 10-K and our Quarterly Reports on Form
10-Q are available free of charge through Boeings website as soon as reasonably practicable after we electronically file them with, or furnish them to, the SEC. Our SEC filings, including any amendments, and our Current Reports on Form 8-K may
be obtained at the SECs public reference room at 100 F Street N.E. Washington, DC 20549. Information on the operation of the public reference room may be obtained by calling the SEC at 1-800-SEC-0330.



The SEC also maintains a website at www.sec.gov that contains reports,
proxy statements and other information regarding SEC issuers, including Boeing and Boeing Capital Corporation.



Item 1A. Risk Factors



An investment in our debt securities involves risks and uncertainties and our actual results and future trends may differ materially from our past or projected future performance due to a variety of factors. We
urge investors to consider carefully the risk factors described below in evaluating the information contained in this report.



A substantial deterioration in the financial condition of the commercial airline industry may adversely impact us.



The financial condition of the airline industry is of
particular importance to us because substantially all of our portfolio consists of lease and loan financing with commercial airline customers. If terrorist attacks; a serious health epidemic; significant regulatory actions in response to
environmental, safety or other concerns; increases in fuel related costs or other exogenous events were to occur, a material adverse effect on the airline industry, increased requests for financing, significant defaults by airline customers,
repossessions of aircraft or airline bankruptcies and restructurings could result. If this were to occur, aircraft values or lease rates could decline. These events could have a material adverse effect on our earnings, cash flows and/or financial
position.



We may be unable to obtain debt to fund our
operations and contractual commitments at competitive rates, on commercially reasonable terms or in sufficient amounts.



We depend, in part, upon the issuance of debt to fund our operations and contractual commitments. If we were called upon to fund all
outstanding financing commitments made by us and Boeing, our market liquidity may not be sufficient. A number of factors could cause us to incur increased borrowing costs and to have greater difficulty accessing public and private markets for debt.
These factors include disruptions or declines in the global capital markets, and a decline in Boeings or our own financial performance or outlook or credit ratings. The occurrence of any or all of these events may adversely affect our ability
to fund our operations and contractual commitments or financing commitments made by us or Boeing.



Our allowance for losses on receivables may prove to be inadequate.



Our allowance for losses on receivables is intended to cover probable losses on notes receivable and finance leases. Unexpected
adverse changes in the economy or other events adversely affecting our customers, the airline industry as a whole or collateral values could cause us to make additional provisions, which could have a material adverse effect on our earnings and/or
financial position.



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We may be required to recognize significant asset impairment charges on equipment under operating
leases.



We periodically review our
portfolio of equipment under operating leases for impairment. The cumulative undiscounted cash flows expected to result from the use and eventual disposition of these assets are greater than their carrying value. However, the fair value of certain
of these assets as measured at their expected sale price is less than their carrying value. Expected undiscounted cash flows could be adversely affected by certain factors, including credit deterioration of a lessee, declines in future rental rates
or by a change in our intention to hold or dispose of an asset. If, during our periodic reviews, we determine that the fair value of an asset is less than the carrying value and the revised expected undiscounted cash flows reflect an adverse change,
we may recognize impairment charges, which could have a material adverse effect on our earnings and/or financial position.



We may be unable to maintain assets on lease at satisfactory lease rates.



Our profitability depends largely on our ability to maintain assets on lease at satisfactory lease rates.
A number of factors can adversely affect utilization and lease rates, including, but not limited to, reduced demand or oversupply in the markets in which the company operates and changes in customer preferences for aircraft types. For example,
bankruptcies or restructurings of our current or potential customers could lead to reduced demand for leased aircraft and reduced lease rates. If aircraft lease rates fall or if a significant number of our aircraft were to remain idle for an
extended period, there could be a material adverse effect on our earnings, cash flows and/or financial position.



We face competition which could cause us to lower our lease rates and offer terms which may adversely affect our financial results.



Our primary competitors include other
commercial aircraft, aerospace and defense companies offering in-house customer financing as well as other finance companies. Additionally, when selling or re-leasing used aircraft, we compete with other leasing companies and finance companies in
the used aircraft market. We compete primarily based upon pricing, terms, structure, service and type of aircraft offered. Increased competition could have a material adverse effect on our earnings, cash flows and/or financial position.



We are a wholly owned subsidiary and therefore subject to strategic
decisions of Boeing and affected by Boeings performance.



We are fundamentally affected by our relationship with Boeing. As a wholly owned subsidiary of Boeing we are subject to a wide range of possible strategic decisions which Boeing may make from time to time. Those
strategic decisions could include the level and types of financing provided to support the sale of Boeing products, the level and types of transactional or other support made available to us by Boeing, and the ending of production of certain
aircraft programs. In addition, circumstances affecting Boeing can significantly affect us. For example, our debt ratings are closely tied to those of Boeing, and when rating agencies take actions regarding Boeings ratings, they may take the
same actions with respect to our ratings. Significant changes in Boeings overall strategy or its relationship with us or material adverse changes in Boeings performance could have a material adverse effect on us.



We may experience volatility and decreases in our earnings due to a
reduced asset base.



From time to time,
we may sell notes, leases, investments or other assets from our portfolio. The timing of these sales could affect our earnings due to the resulting gains or losses. If we sell assets from our portfolio or if normal portfolio runoff or prepayments
from customers occur and we do not replace those assets, our income may decline.



We operate in a highly regulated industry and changes in laws or regulations may adversely affect us.



Aspects of our business are regulated by state, federal and foreign governmental authorities. We are also subject to various laws
and judicial and administrative decisions, mostly as a result of our activities as a lender and lessor, that restrict or regulate, among other things,



| |  |  | our credit granting and financing activities,
| | - |  | ---------------------------------------------



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| |  |  | the establishment of maximum interest rates,
| | - |  | --------------------------------------------



| |  |  | financing transactions we enter into,
| | - |  | -------------------------------------



| |  |  | our collection, foreclosure, repossession and claims-handling procedures and other trade practices,
| | - |  | ---------------------------------------------------------------------------------------------------



| |  |  | the use and reporting of information related to a borrowers or lessees credit experience and other data collection, and
| | - |  | -------------------------------------------------------------------------------------------------------------------------



| |  |  | disclosure requirements.
| | - |  | ------------------------



We may not be able to forecast changes to legislation; tax, accounting and other regulations; and judicial and administrative
decisions and orders or interpretations, and these changes could have a material adverse effect on our earnings, cash flows and/or financial position. Our operations and results could also be materially impacted by financial regulatory reform.



We may act to mitigate certain risk in our portfolio
assets.



When market conditions permit,
we may consider asset sales or other risk reduction initiatives which may involve adjustments in our capital structure, portfolio size and portfolio risk. If we pursue any of those actions our future earnings could be impacted.



A significant portion of our portfolio is concentrated among certain
customers based in the United States, and in certain types of Boeing aircraft, which exposes us to concentration risks.



A significant portion of our portfolio is concentrated among certain customers and in distinct geographic regions, particularly in
the United States. Our portfolio is also concentrated by varying degrees across Boeing aircraft product types, most notably Boeing 717 aircraft. Our concentration risk is mitigated in part by intercompany guarantees from Boeing with respect to
certain portfolio assets, which primarily relate to 717 aircraft. Nonetheless, if one or more customers holding a significant portion of our portfolio assets experiences financial difficulties, defaults or does not renew its leases with us at their
expiration and we are unable to redeploy the aircraft on reasonable terms, or if the types of aircraft that are concentrated in our portfolio suffer greater than expected declines in value, our earnings, cash flows and/or financial position could be
materially adversely affected.



Circumstances and conditions
may change. Accordingly, additional risks and uncertainties not currently known, or that we currently deem not material, may also adversely affect our business operations.



Item 1B. Unresolved Staff Comments



Not applicable.



Item 2. Properties



Our headquarters, which is our main administrative and operational
facility, is located in Renton, Washington, and is leased by Boeing. We also have offices in greater Los Angeles, California; Hong Kong, China; and Moscow, Russia.



We believe that our properties are suitable and adequate to meet the
requirements of our business.



Item 3.
Legal Proceedings



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.



Item 4. Removed and Reserved



5



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PART II



Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities



We are a wholly owned subsidiary of The Boeing Company
(Boeing), and accordingly, there is no public trading market for our common stock. In 2010 and 2009, we declared and paid dividends (including return of capital) totaling $108 million and $93 million to Boeing.



A covenant in one of our debt agreements requires us to 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. At December 31, 2010, as well as at each quarter end during the
year, we were in compliance with this covenant.



Item 6. Selected Financial Data (Unaudited)



The selected consolidated financial data should be read in conjunction
with our audited Consolidated Financial Statements and with Item 7. Managements Narrative Analysis of the Results of Operations.



|                                                  |  |                          |       |  |      |   |       |      |  |   |       |  |  |      |       |  |  |   |       | 
|------------------------------------------------- |  | ------------------------ | ----- |  | ---- | - | ----- | ---- |  | - | ----- |  |  | ---- | ----- |  |  | - | ----- | 
|                                                  |  | Years Ended December 31, |      
|(Dollars in millions)                             |  | 2010                     |       |  | 2009 |   |       | 2008 |  |   | 2007  |  |  | 2006 |      
|New business volume(1)                            |  | $                        | 72    |  |      | $ | 766   |      |  | $ | 155   |  |  | $    | 24    |  |  | $ | 250   | 
|                                                  |  |                          |       |  |     
|Statement of operations data:                     |  |                          |       |  |      |   |       |      |  |   |       |  |  |      |       |  |  |   |       | 
|Revenue                                           |  | $                        | 639   |  |      | $ | 660   |      |  | $ | 703   |  |  | $    | 815   |  |  | $ | 1,025 | 
|Income from continuing operations                 |  | $                        | 96    |  |      | $ | 80    |      |  | $ | 102   |  |  | $    | 147   |  |  | $ | 185   | 
|                                                  |  |                          |       |  |     
|Dividends to Boeing (including return of capital) |  | $                        | 108   |  |      | $ | 93    |      |  | $ | 254   |  |  | $    | 408   |  |  | $ | 344   | 
|Non-cash capital contributions from Boeing        |  | $                        | 2     |  |      | $ | 2     |      |  | $ | 3     |  |  | $    | 5     |  |  | $ | 9     | 
|                                                  |  |                          |       |  |     
|Balance sheet data:                               |  |                          |       |  |      |   |       |      |  |   |       |  |  |      |       |  |  |   |       | 
|Cash and cash equivalents                         |  | $                        | 425   |  |      | $ | 596   |      |  | $ | 305   |  |  | $    | 463   |  |  | $ | 589   | 
|                                                  |  |                          |       |  |     
|Portfolio(2)                                      |  | $                        | 4,694 |  |      | $ | 5,666 |      |  | $ | 6,023 |  |  | $    | 6,532 |  |  | $ | 8,034 | 
|                                                  |  |                          |       |  |     
|Total assets                                      |  | $                        | 5,986 |  |      | $ | 6,774 |      |  | $ | 6,378 |  |  | $    | 7,044 |  |  | $ | 8,584 | 
|Total debt                                        |  | $                        | 3,446 |  |      | $ | 4,075 |      |  | $ | 3,652 |  |  | $    | 4,327 |  |  | $ | 5,590 | 
|                                                  |  |                          |       |  |     
|Debt to Shareholders equity ratio                |  |                          | 5.0   |  |      |   | 5.8   |      |  |   | 5.0   |  |  |      | 5.0   |  |  |   | 5.0   | 
|Ratio of earnings to fixed charges(3)             |  |                          | 2.0   |  |      |   | 1.7   |      |  |   | 1.7   |  |  |      | 1.8   |  |  |   | 1.8   | 



|(1) |  | New business volume consists of capitalized costs and funded transactions that have been recorded as notes, leases or investments excluding transfers from
Boeing.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) |  | Portfolio consists of equipment under operating leases, finance leases, notes and other receivables, assets held for sale or re-lease and investments.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) |  | For the purpose of computing the ratio of earnings to fixed charges, earnings consists of income from continuing operations before provision for income tax
and fixed charges; and fixed charges consists of interest.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Item 7. Managements Narrative Analysis of the Results of Operations



The following should be read in conjunction with our Consolidated
Financial Statements included in Item 8. Financial Statements and Supplementary Data.



Business Environment and Trends



Global passenger traffic exceeded initial expectations in 2010 growing an estimated 8% for the year and showing growth over prior 2008 peak levels. Significant variation existed between regions and airline business
models with emerging markets and low cost carriers leading recovery and growth into 2011. Air cargo traffic also rebounded in 2010 after two years of contraction. Led by strong growth in Asian exports, air cargo traffic recovered to peak 2007 levels
and is poised to resume growth in 2011.



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Airlines cut capacity in 2009 to match the demand environment which allowed them to boost yields as
demand recovered in 2010. Airlines have also pursued new revenue sources by expanding alliances and building ancillary revenue streams. In addition, airlines continued to focus on cutting costs and pursued consolidation opportunities, particularly
in mature markets, to improve market positioning. These airline tactics, combined with improving demand and relatively stable fuel prices, have driven a strong turnaround in airline industry profitability. Airlines are forecast to earn $15 billion
in 2010 following a $10 billion net loss in 2009. The 2011 outlook is for continued profitability which should allow airlines to rebuild balance sheets that suffered from fuel price spikes and recession in 2008-2009.



A substantial portion of our portfolio is concentrated among certain
U.S. commercial airline customers. We provided greater amounts of financing to Boeing customers during 2009 than in any of the preceding five years. Sources of financing available for aircraft deliveries improved during 2010 and as a result, we
provided no financing for Boeing aircraft deliveries.



On
September 26, 2010, Southwest Airlines Co. (Southwest) and AirTran Holdings, Inc. (AirTran) entered into an Agreement and Plan of Merger, whereby Southwest will acquire, subject to certain conditions, all of the outstanding common stock of
AirTran. As disclosed in Item 8. Financial Statements, Note 15  Concentrations, AirTran, together with its subsidiaries, is our largest customer in terms of revenue and portfolio carrying value.



Aircraft values and lease rates are impacted by the number and type of
aircraft that are currently out of service. Approximately 2,200 western-built commercial jet aircraft (10.5% of current world fleet) were parked at the end of 2010, including both in-production and out-of-production aircraft types. Of these parked
aircraft over 30% are not expected to return to service. At the end of 2009 and 2008, 11.6% and 11.0% of the western-built commercial jet aircraft were parked. Aircraft valuations could decline if significant numbers of additional aircraft,
particularly types with relatively few operators, are placed out of service.



Overview



During 2010, we continued to focus on supporting Boeings major businesses and managing our overall financial exposures.



Our portfolio at December 31, 2010 decreased to $4.7 billion from $5.7 billion at December 31, 2009. The following table summarizes the
net change in our total portfolio for the years ended December 31:



|                                      |  |      |      |   |      |   |      |  
|------------------------------------- |  | ---- | ---- | - | ---- | - | ---- | -
|(Dollars in millions)                 |  | 2010 |      |   | 2009 |  
|New business volume                   |  | $    | 72   |   |      | $ | 766  |  
|Write-offs                            |  |      | (1   | ) |      |   | (12  | )
|Recovery of write-offs                |  |      | 1    |   |      |   | 1    |  
|Transfer of assets                    |  |      |     |   |      |   | 19   |  
|Asset impairment and other charges    |  |      | (85  | ) |      |   | (91  | )
|Asset run off and prepayments         |  |      | (605 | ) |      |   | (613 | )
|Asset dispositions                    |  |      | (153 | ) |      |   | (220 | )
|Depreciation and amortization expense |  |      | (201 | ) |      |   | (207 | )
|Net change in portfolio balance       |  | $    | (972 | ) |      | $ | (357 | )
|                                      | 



At December 31, 2010 and 2009, we had $583 million and $385 million of assets that were held for sale or re-lease, of which $28 million and $345 million had either executed term sheets with deposits or firm
contracts to be sold or placed on lease. The increase was primarily due to our termination of aircraft leases with Aevovias Caribe S.A. de C.V. (Click), an affiliate of Compania Mexicana de Aviacion S.A. de C.V. (Mexicana), in August 2010. See
Item 8. Financial Statements, Note 12  Commitments and Contingencies. Additionally, aircraft subject to leases with a carrying value of approximately $174 million are scheduled to be returned off lease during 2011. These aircraft
are being remarketed or we are seeking to have the leases extended.



7



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##### Table of Contents

Our net income was $92 million for 2010 compared with $57 million for 2009. For the years ended
December 31, 2010 and 2009, our return on average assets calculated on Income from continuing operations was 1.5% and 1.2%.



Consolidated Results of Operations



Revenue



Revenue consists primarily of lease income from equipment under operating leases and interest from finance lease receivables and notes. Revenue was
$639 million in 2010 compared with $660 million in 2009, a decrease of $21 million.



Finance lease income was $139 million in 2010, a decrease of $5 million compared with 2009, primarily due to a decrease in the weighted average balance of finance leases as a result of normal run-off. Without the
support of Boeing in the form of intercompany guarantees our Finance lease income would have been $19 million and $7 million less than reported for the years ended December 31, 2010 and 2009. For a discussion of our relationship with Boeing,
see Item 8. Financial Statements and Supplementary Data, Note 2.



Interest income on notes receivable was $76 million in 2010, an increase of $1 million compared with 2009 primarily due to recognition of deferred intercompany revenue of $10 million on early payment of notes,
offset by a decrease in income related to a lower weighted average notes receivable balance during 2010.



Operating lease income was $384 million in 2010, a decrease of $20 million compared with 2009, primarily due to a decrease in the equipment under
operating leases as a result of the return of aircraft and lower lease rates on re-leased aircraft. Without the support from Boeing in the form of intercompany guarantees our Operating lease income, which includes income applied to assets classified
as held for re-lease, would have been $50 million and $46 million less than reported, for the years ended December 31, 2010 and 2009. For a discussion of our relationship with Boeing, see Item 8. Financial Statements and Supplementary
Data, Note 2.



Investment income was $5 million in 2010,
an increase of $4 million compared with 2009, primarily due to the gain on sale of certain available-for-sale marketable equity securities in 2010.



Expenses



Expenses consist of interest expense, depreciation expense, provision for (recovery of) losses, operating expenses, asset impairment expense, and
other expense. Expenses were $487 million in 2010 compared with $534 million in 2009, a decrease of $47 million.



Interest expense was $160 million in 2010, a decrease of $15 million compared with 2009, due to a decrease in the weighted average annual effective
interest rate on all borrowings to 4.2% from 4.7%, partially offset by an increase in the weighted average balance of debt outstanding.



Depreciation expense was $200 million in 2010, a decrease of $7 million compared with 2009, primarily due to a lower depreciable balance of
equipment under operating leases as a result of asset dispositions and asset sales, partially offset by an increase in depreciation resulting from lower estimated residual values.



The provision for losses was $16 million in 2010, compared with $23
million in 2009. The provision for losses for both years was primarily due to the effects of declines in aircraft collateral values and increases in default rates exceeding the impact of run off of our finance leases and notes receivable.



Asset impairment expense was $51 million in 2010, a
decrease of $24 million compared with 2009. The asset impairment expense in 2010 was primarily due to reduced expected undiscounted cash flows on certain aircraft.



8



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Provision for income tax



Provision for income tax was $56 million in 2010, an increase of $10
million compared with 2009, primarily due to an increase in pre-tax income.



Loss on disposal of discontinued operations



Loss on disposal of discontinued operations, net of tax, was $4 million for 2010 due to an increase in our expected losses under our loss sharing
agreement with General Electric Capital Corporation related to the sale of certain assets of our Commercial Financial Services business in 2004. This compared with a loss of $23 million, net of tax, in 2009. These increases in expected losses
resulted primarily from claims associated with specific assets subject to the loss sharing agreement.



Liquidity and Capital Resources



Our cash and cash equivalents balance was $425 million at December 31, 2010, a decrease from $596 million at December 31, 2009. The following is a summary of the change in our cash and cash equivalents
for the years ended December 31:



|                                                     |  |      |      |   |      |   |      |  
|---------------------------------------------------- |  | ---- | ---- | - | ---- | - | ---- | -
|(Dollars in millions)                                |  | 2010 |      |   | 2009 |  
|Net cash provided by operating activities            |  | $    | 273  |   |      | $ | 332  |  
|Net cash provided by (used in) investing activities  |  |      | 309  |   |      |   | (414 | )
|Net cash provided by (used in) financing activities  |  |      | (753 | ) |      |   | 373  |  
|Net increase (decrease) in cash and cash equivalents |  | $    | (171 | ) |      | $ | 291  |  
|                                                     | 



Operating activities



During 2010, net cash provided by operating activities included net income from operations of $92 million. We had net adjustments for non-cash items of $214 million, which primarily related to depreciation expense.
We also had a net decrease in cash due to changes in assets and liabilities of $33 million.



During 2009, net cash provided by operating activities included net income from operations of $57 million. We had net adjustments for non-cash items of $261 million, which primarily related to depreciation expense
and asset impairment and other related charges. We also had a net increase in cash due to changes in assets and liabilities of $14 million.



Investing activities



During 2010, net cash provided by investing activities included payments of leases, notes and other receivables of $612 million, which included
early payments from customers, and proceeds from sale of aircraft of $126 million, primarily offset by the net purchase of $400 million in short-term investments.



During 2009, net cash used in investing activities included the
purchase of $500 million in short-term investments and $72 million related to the origination of leases, notes and other receivables net of repayments, partially offset by an increase in cash of $220 million from sale of aircraft.



Financing activities



During 2010 and 2009, we made debt repayments of $645 million and $728 million (including $200 million of intercompany
debt) and paid dividends (including return of capital) of $108 million and $93 million. In 2009, net cash provided by financing activities included $994 million of net proceeds from our debt issuances and $200 million of intercompany borrowings
from Boeing.



Outstanding debt at December 31, 2010 and
2009 was $3.4 billion and $4.1 billion, of which $801 million (including $3 million due to interest rate swaps) will be due during 2011. During 2010 and 2009, we had no commercial paper borrowings outstanding. Our leverage (ratio of Debt to
Shareholders equity) at December 31, 2010 and 2009 was 5.0-to-1 and 5.8-to-1, respectively.



9



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We require liquidity, primarily to fund financing commitments, meet debt obligations and fund our
operating expenses. Financing commitments made by us and Boeing totaled $9.9 billion as of December 31, 2010. We anticipate that a significant portion of these commitments will not be exercised due to alternative financing sources we expect to
be available to our customers. We expect that any future borrowing needs would be met by issuing commercial paper or term debt, or obtaining funding from Boeing. There can be no assurance that the cost or availability of funding sources to us will
not be adversely impacted in the future.



As of
December 31, 2010, we have $4.0 billion remaining under our $5.0 billion Securities and Exchange Commission (SEC) shelf registration statement for issuance of debt securities. During 2009, we established under the registration statement a $750
million medium-term notes program and a $750 million retail notes program. We have not issued any securities under those programs. The availability of such funding under those programs or otherwise pursuant to our SEC registration statement will
depend on investor demand and market conditions.



We believe
we have adequate borrowing capacity. We have $1.5 billion available under Boeings committed revolving credit line agreements for general corporate purposes. In addition, we have a support agreement with Boeing under which Boeing has committed
to make contributions to us if our fixed-charge coverage ratio, as defined in the support agreement, falls below 1.05-to-1 on a four-quarter rolling basis.



For a discussion of our liquidity and debt programs, see Item 8. Financial Statements and Supplementary Data, Note 8.



Risks that could affect our sources of liquidity include among others,



| |  |  | a downturn in the economy,
| | - |  | --------------------------

| |  |  | significant restructurings, defaults or bankruptcies by airlines,
| | - |  | -----------------------------------------------------------------

| |  |  | disruptions in the global capital markets, and
| | - |  | ----------------------------------------------

| |  |  | a decrease in our and/or Boeings credit ratings and/or financial performance.
| | - |  | ------------------------------------------------------------------------------



We continually assess our leverage, as measured by our Debt to Shareholders equity ratio, in light of the risks in
our business, including those set forth in Item 1A. Risk Factors.



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 December 31, 2010, as well as
at each quarter end during the year, we were in compliance with these covenants.



Off-Balance Sheet Arrangements



We are a party to off-balance sheet arrangements as defined by the SEC, consisting of variable interests in unconsolidated entities. For discussion of these arrangements, see Item 8. Financial Statements
and Supplementary Data, Note 13.



10



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##### Table of Contents

Disclosures About Contractual Obligations and Commercial Commitments



The following table summarizes our contractual obligations to make
future payments, as well as an estimate of the timing in which we expect to satisfy these obligations at December 31, 2010:



Contractual Obligations



|                             |  |       |       |  |                        |   |     |            |  |   |            |  |  |                  |     |  |  |   |     | 
|---------------------------- |  | ----- | ----- |  | ---------------------- | - | --- | ---------- |  | - | ---------- |  |  | ---------------- | --- |  |  | - | --- | 
|                             |  |       |       |  | Payments due by period |  
|(Dollars in millions)        |  | Total |       |  | 2011                   |   |     | 2012-
2013 |  |   | 2014-
2015 |  |  | 2016-
Thereafter |    
|Debt(1)                      |  | $     | 3,353 |  |                        | $ | 788 |            |  | $ | 1,510      |  |  | $                | 520 |  |  | $ | 535 | 
|Capital lease obligations(1) |  |       | 52    |  |                        |   | 10  |            |  |   | 20         |  |  |                  | 22  |  |  |   |    | 
|Interest(2)                  |  |       | 481   |  |                        |   | 134 |            |  |   | 155        |  |  |                  | 71  |  |  |   | 121 | 
|Purchase obligations(3)      |  |       | 29    |  |                        |   | 9   |            |  |   | 20         |  |  |                  |    |  |  |   |    | 
|                             |  | $     | 3,915 |  |                        | $ | 941 |            |  | $ | 1,705      |  |  | $                | 613 |  |  | $ | 656 | 
|                             | 



|(1) |  | Debt and Capital lease obligations reflect principal payments.
|--- |  | --------------------------------------------------------------



|(2) |  | Interest includes the effect of our interest rate swaps. We have assumed LIBOR forward rates at December 31, 2010 on floating rate debt.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------



|(3) |  | Purchase obligations due in 2011 includes $1 million which is covered by our guarantees from Boeing.
|--- |  | ----------------------------------------------------------------------------------------------------



We expect to meet our existing obligations through internally generated
cash flows and from future borrowings.



The following table
summarizes our commercial commitments outstanding at December 31, 2010:



Commercial Commitments



|                            |  |       |  |                         |  |            |  |            |  |                 
|--------------------------- |  | ----- |  | ----------------------- |  | ---------- |  | ---------- |  | ----------------
|                            |  |       |  | Total Amounts Committed
|(Dollars in millions)       |  | Total |  | 2011                    |  | 2012- 2013 |  | 2014- 2015 |  | 2016- Thereafter
|                            |  |       |  |                         | 
|Financing commitments(1)(2) |  | $345  |  | $163                    |  | $182       |  | $         |  | $              
|                           



|(1) |  | Represents our commitments to provide leasing and other financing based on estimated earliest potential funding dates.
|--- |  | ----------------------------------------------------------------------------------------------------------------------



|(2) |  | Does not reflect the revision of the 787 program schedule announced in January 2011.
|--- |  | ------------------------------------------------------------------------------------



In addition to our financing commitments of $345 million at
December 31, 2010, Boeing had unfunded financing commitments of $9.5 billion, 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. Based on historical experience and anticipated capital market acceptance of Boeing aircraft covered by Boeings and our current commitments, we
anticipate that a significant portion of these commitments will not be exercised by the customer or will expire without being fully drawn upon. However, there can be no assurance 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. If there were requirements to fund



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all Boeing commitments, the timing in which these commitments may be funded (based on estimated earliest potential funding dates as of December 31, 2010) is as follows:



|              |  |       |       | 
|------------- |  | ----- | ----- | 
|              |  | Total |      
|2011(1)       |  | $     | 1,071 | 
|2012(1)       |  |       | 940   | 
|2013(1)       |  |       | 913   | 
|2014(1)       |  |       | 1,283 | 
|2015(1)       |  |       | 1,492 | 
|Thereafter(1) |  |       | 3,821 | 
|              |  | $     | 9,520 | 
|              | 



|(1) |  | Does not reflect the revision of the 787 program schedule announced in January 2011.
|--- |  | ------------------------------------------------------------------------------------



Critical Accounting Estimates



For the discussion on our accounting policies, see Item 8.
Financial Statements and Supplementary Data, Note 1. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make assumptions and estimates
that directly affect the amounts reported in the Consolidated Financial Statements. Each of these assumptions is subject to uncertainties and changes in those assumptions or judgments can affect our results of operations. The accounting policies
below are those we believe are the most critical to the preparation of our financial statements and require significant judgment and estimation. Actual results may differ from these estimates.



Impairment Review for Equipment under Operating Leases and Held for Re-lease



We evaluate equipment under operating lease or assets held for
re-lease for impairment at least annually, and also when events or changes in circumstances indicate that the expected undiscounted cash flow from the equipment may be less than the carrying value. We use various assumptions when determining the
expected undiscounted cash flow including our intentions for how long we will hold equipment subject to operating lease before we sell the equipment, expected future lease rates, lease terms, residual value of the aircraft or equipment, periods in
which the asset may be held in preparation for a follow-on lease, maintenance costs, remarketing costs and the remaining economic life of the asset. When we determine that impairment is indicated for an asset, the amount of the asset impairment
expense recorded is the excess of the carrying value less residual value guarantees, if applicable, over the fair value of the asset.



Had future lease rates on assets evaluated for impairment been 10% lower, we estimate that we would have incurred additional impairment expense of
$20 million for the year ended December 31, 2010.



Allowance for
Losses on Receivables



The allowance for losses on
receivables is a valuation account used to provide for potential impairment of receivables in our portfolio. The balance represents an estimate of probable but unconfirmed losses in the receivables portfolio. The estimate is based on many
qualitative and quantitative factors, including historical loss experience, collateral values, intercompany guarantees and results of individual credit and collectability reviews. The adequacy of the allowance is assessed quarterly.



Three primary factors influencing the level of our allowance are
customer credit ratings, collateral values and default rates. If each customers credit rating were upgraded or downgraded by one major rating category at December 31, 2010, the allowance would have decreased by $42 million or increased by
$88 million. If the collateral values were 20% higher or lower at December 31, 2010, the allowance would have decreased by $33 million or increased by $24 million. If the cumulative default rates used for each rating category were increased or
decreased by 1%, the allowance would have increased by $2 million or decreased by $2 million.



12



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##### Table of Contents

Residual Values



Equipment under operating leases and assets held for sale or re-lease are carried at cost less accumulated depreciation and are depreciated to
estimated residual value using the straight-line method over the period that we project we will hold the asset for lease. Estimates used in determining residual values significantly impact the amount and timing of depreciation expense for equipment
under operating leases and assets held for sale or re-lease. If the estimated residual values declined 20% at December 31, 2010, we estimate that we would have incurred additional impairment expense of $31 million for the year ended December 31,
2010, and a future cumulative pre-tax earnings reduction of approximately $132 million recognized over the remaining depreciable periods, of which approximately $30 million would be recognized in 2011.



Direct finance leases are recorded at inception as the net investment
representing the aggregate future minimum lease payments, estimated residual value of the leased equipment and deferred incremental direct costs less unearned income. Declines in estimated residual value that are deemed other than temporary are
recognized in the period in which the decline occurs. If the estimated residual values declined 20% at December 31, 2010, we estimate that we would have reduced pre-tax income by $17 million for the year ended December 31, 2010.



Additional Disclosures Regarding Allowance for Losses on Receivables and
Asset Impairment Expense



The following tables
reconcile the changes in the allowance for losses on receivables and asset impairment expense for the years ended December 31, 2010 and 2009. Column 3 presents this information, calculated in accordance with our accounting policy (see
Item 8. Financial Statements and Supplementary Data, Note 1), if the impact of intercompany guarantees from Boeing were excluded. The exclusion of the net impact of intercompany guarantees shown in column 2 would increase the
applicable exposure for various receivables and would increase asset impairment expense. Management believes that the presentation of this information provides more complete information on the effect of intercompany guarantees provided by Boeing.



|                                                         |  |                     |      |  |                                            |   |     |                                          |  |   |       | 
|-------------------------------------------------------- |  | ------------------- | ---- |  | ------------------------------------------ | - | --- | ---------------------------------------- |  | - | ----- | 
|(Dollars in millions)                                    |  | (1)                 |      |  | (2)                                        |   |     | (3)                                      | 
|2010                                                     |  | Allowancefor losses |      |  | Impact ofintercompanyguaranteesfrom Boeing |   |     | Allowanceexcludingintercompanyguarantees | 
|Allowance for losses on receivables at beginning of year |  | $                   | 71   |  |                                            | $ | 231 |                                          |  | $ | 302   | 
|Provision for losses                                     |  |                     | 16   |  |                                            |   | 35  |                                          |  |   | 51    | 
|Write-offs                                               |  |                     | (1)  |  |                                            |   |    |                                          |  |   | (1)   | 
|Recovery of write-offs                                   |  |                     | 1    |  |                                            |   |    |                                          |  |   | 1     | 
|Allowance for losses on receivables at end of year       |  | $                   | 87   |  |                                            | $ | 266 |                                          |  | $ | 353   | 
|                                                         | 
|Allowance as a percentage of total receivables           |  |                     | 3.8% |  |                                            |   |     |                                          |  |   | 15.5% | 
|                                                         |  |                     |     
|2009                                                     |  |                     |      |  |                                            |   |     |                                          |  |   |       | 
|Allowance for losses on receivables at beginning of year |  | $                   | 59   |  |                                            | $ | 210 |                                          |  | $ | 269   | 
|Provision for losses                                     |  |                     | 23   |  |                                            |   | 21  |                                          |  |   | 44    | 
|Write-offs                                               |  |                     | (12) |  |                                            |   |    |                                          |  |   | (12)  | 
|Recovery of write-offs                                   |  |                     | 1    |  |                                            |   |    |                                          |  |   | 1     | 
|Allowance for losses on receivables at end of year       |  | $                   | 71   |  |                                            | $ | 231 |                                          |  | $ | 302   | 
|                                                         | 
|Allowance as a percentage of total receivables           |  |                     | 2.5% |  |                                            |   |     |                                          |  |   | 10.5% | 



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|                         |  |                        |    |  |                                            |   |    |                                           |  |   |     | 
|------------------------ |  | ---------------------- | -- |  | ------------------------------------------ | - | -- | ----------------------------------------- |  | - | --- | 
|(Dollars in millions)    |  | (1)                    |    |  | (2)                                        |   |    | (3)                                       | 
|2010                     |  | Assetimpairmentexpense |    |  | Impact ofintercompanyguaranteesfrom Boeing |   |    | Impairmentexcludingintercompanyguarantees | 
|Asset impairment expense |  | $                      | 51 |  |                                            | $ | 92 |                                           |  | $ | 143 | 
|                         | 
|2009                     |  |                        |    |  |                                            |   |    |                                           |  |   |     | 
|Asset impairment expense |  | $                      | 75 |  |                                            | $ |   |                                           |  | $ | 75  | 
|                         | 



Item 7A. Quantitative and Qualitative Disclosures about Market Risk



A key function of a finance company is to manage market risk. One of our principal sources of market risk relates to interest rate changes. Exposure
to this risk is managed by generally matching the profile of our liabilities with that of our assets in relation to amount and terms such as expected maturities and fixed versus floating interest rates. Interest rate derivatives are tools used to
assist with this matching and are not used for speculative purposes or trading. Matching is a dynamic process affected by changes in our assets that may require adjusting our liabilities and/or derivatives.



In order to properly manage our sensitivity to changes in interest
rates, we measure the potential impact of interest rate changes on our pre-tax earnings over the next 12 months. In our analysis, we include balance sheet instruments whose income or interest expense would be impacted by changes in interest rates,
which consists of Cash and cash equivalents, Short-term investments, Receivables, and Debt. For the purposes of our analysis, we assume that the level of floating rate assets and debt (including the impact of derivatives) remain unchanged from year
end 2010 and that they are all subject to immediate re-pricing. As of December 31, 2010, the impact over the next 12 months of a 100 basis point immediate and sustained rise in interest rates would be a $5 million increase to pre-tax
earnings.



This analysis does not necessarily represent our
current outlook of future market interest rate movements, nor does it consider any actions management could undertake in response to changes in interest rates. Accordingly, no assurance can be given that actual results would be consistent with our
sensitivity analysis.



Additional risks include credit risk
and residual value risk, which are discussed in Item 7. Critical Accounting Estimates.



Item 8. Financial Statements and Supplementary Data



The following pages include our Consolidated Financial Statements as described in Item 15 (a)1 and (a)2 of Part IV herein.



14



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Report of Independent Registered Public Accounting Firm



To the Board of Directors and Shareholder of

Boeing Capital Corporation

Renton, Washington



We have audited the accompanying consolidated balance sheets of Boeing
Capital Corporation and subsidiaries (the Company) as of December 31, 2010 and 2009, and the related consolidated statements of operations, shareholders equity and comprehensive income, and cash flows for each of the three
years in the period ended December 31, 2010. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.



We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.



In
our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Boeing Capital Corporation and subsidiaries as of December 31, 2010 and 2009, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 2010, in conformity with accounting principles generally accepted in the United States of America.



/s/ DELOITTE & TOUCHE LLP



Seattle, Washington

February 9, 2011



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##### Table of Contents

Boeing Capital Corporation and Subsidiaries



Consolidated Balance Sheets



|                                                                                                |  |              |       |   |      |   |       |  
|----------------------------------------------------------------------------------------------- |  | ------------ | ----- | - | ---- | - | ----- | -
|                                                                                                |  | December 31, |      
|(Dollars in millions, except par value)                                                         |  | 2010         |       |   | 2009 |  
|ASSETS                                                                                          |  |              |       |   |      |   |       |  
|Cash and cash equivalents                                                                       |  | $            | 425   |   |      | $ | 596   |  
|Short-term investments                                                                          |  |              | 900   |   |      |   | 500   |  
|Receivables:                                                                                    |  |              |       |   |      |   |       |  
|Finance leases                                                                                  |  |              | 1,907 |   |      |   | 2,024 |  
|Notes and other                                                                                 |  |              | 375   |   |      |   | 865   |  
|                                                                                                |  |              | 2,282 |   |      |   | 2,889 |  
|Allowance for losses on receivables                                                             |  |              | (87   | ) |      |   | (71   | )
|                                                                                                |  |              | 2,195 |   |      |   | 2,818 |  
|Equipment under operating leases, net                                                           |  |              | 1,821 |   |      |   | 2,368 |  
|Investments                                                                                     |  |              | 8     |   |      |   | 24    |  
|Assets held for sale or re-lease, net                                                           |  |              | 583   |   |      |   | 385   |  
|Other assets                                                                                    |  |              | 54    |   |      |   | 83    |  
|                                                                                                |  | $            | 5,986 |   |      | $ | 6,774 |  
|                                                                                                | 
|LIABILITIES AND SHAREHOLDERS EQUITY                                                            |  |              |       |   |      |   |       |  
|Liabilities:                                                                                    |  |              |       |   |      |   |       |  
|Accounts payable and accrued expenses                                                           |  | $            | 88    |   |      | $ | 83    |  
|Other liabilities                                                                               |  |              | 328   |   |      |   | 380   |  
|Accounts with Boeing                                                                            |  |              | 66    |   |      |   | 85    |  
|Deferred income taxes                                                                           |  |              | 1,371 |   |      |   | 1,452 |  
|Debt                                                                                            |  |              | 3,446 |   |      |   | 4,075 |  
|                                                                                                |  |              | 5,299 |   |      |   | 6,075 |  
|Shareholders equity:                                                                           |  |              |       |   |      |   |       |  
|Common shares  $100 par value; authorized 100,000 shares; issued and outstanding 50,000 shares |  |              | 5     |   |      |   | 5     |  
|Additional paid-in capital                                                                      |  |              | 682   |   |      |   | 696   |  
|Accumulated other comprehensive income (loss), net of tax                                       |  |              |      |   |      |   | (2    | )
|Retained earnings                                                                               |  |              |      |   |      |   |      |  
|                                                                                                |  |              | 687   |   |      |   | 699   |  
|                                                                                                |  | $            | 5,986 |   |      | $ | 6,774 |  
|                                                                                                | 



See Notes to Consolidated Financial Statements.



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Boeing Capital Corporation and Subsidiaries



Consolidated Statements of Operations



|                                                                   |  |                          |     |   |      |   |     |      |  |   |     |  
|------------------------------------------------------------------ |  | ------------------------ | --- | - | ---- | - | --- | ---- |  | - | --- | -
|                                                                   |  | Years Ended December 31, |    
|(Dollars in millions)                                              |  | 2010                     |     |   | 2009 |   |     | 2008 | 
|REVENUE                                                            |  |                          |     |   |      |   |     |      |  |   |     |  
|Finance lease income                                               |  | $                        | 139 |   |      | $ | 144 |      |  | $ | 163 |  
|Interest income on notes receivable                                |  |                          | 76  |   |      |   | 75  |      |  |   | 56  |  
|Operating lease income                                             |  |                          | 384 |   |      |   | 404 |      |  |   | 457 |  
|Investment income                                                  |  |                          | 5   |   |      |   | 1   |      |  |   | 3   |  
|Net loss on disposal of assets                                     |  |                          | (2  | ) |      |   |    |      |  |   |    |  
|Other income                                                       |  |                          | 37  |   |      |   | 36  |      |  |   | 24  |  
|                                                                   |  |                          | 639 |   |      |   | 660 |      |  |   | 703 |  
|EXPENSES                                                           |  |                          |     |   |      |   |     |      |  |   |     |  
|Interest expense                                                   |  |                          | 160 |   |      |   | 175 |      |  |   | 223 |  
|Depreciation expense                                               |  |                          | 200 |   |      |   | 207 |      |  |   | 220 |  
|Provision for (recovery of) losses                                 |  |                          | 16  |   |      |   | 23  |      |  |   | (4  | )
|Operating expenses                                                 |  |                          | 48  |   |      |   | 45  |      |  |   | 50  |  
|Asset impairment expense                                           |  |                          | 51  |   |      |   | 75  |      |  |   | 35  |  
|Other expense                                                      |  |                          | 12  |   |      |   | 9   |      |  |   | 17  |  
|                                                                   |  |                          | 487 |   |      |   | 534 |      |  |   | 541 |  
|Income from continuing operations before provision for income tax  |  |                          | 152 |   |      |   | 126 |      |  |   | 162 |  
|Provision for income tax                                           |  |                          | 56  |   |      |   | 46  |      |  |   | 60  |  
|Income from continuing operations                                  |  |                          | 96  |   |      |   | 80  |      |  |   | 102 |  
|Net gain (loss) on disposal of discontinued operations, net of tax |  |                          | (4  | ) |      |   | (23 | )    |  |   | 18  |  
|Net income                                                         |  | $                        | 92  |   |      | $ | 57  |      |  | $ | 120 |  
|                                                                   | 



See Notes to Consolidated Financial Statements.



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##### Table of Contents

Boeing Capital Corporation and Subsidiaries



Consolidated Statements of Shareholders Equity and
Comprehensive Income



|                                                                               |  |       |      |   |              |   |   |                          |  |   |                                            |   |  |                  |    |   |                     |   |      |   |  |   |     |  
|------------------------------------------------------------------------------ |  | ----- | ---- | - | ------------ | - | - | ------------------------ |  | - | ------------------------------------------ | - |  | ---------------- | -- | - | ------------------- | - | ---- | - |  | - | --- | -
|(Dollars in millions, except statedvalue)                                      |  | Total |      |   | CommonShares |   |   | AdditionalPaid-InCapital |  |   | AccumulatedOtherComprehensiveIncome (Loss) |   |  | RetainedEarnings |    |   | ComprehensiveIncome |  
|Balance at December 31, 2007                                                   |  | $     | 865  |   |              | $ | 5 |                          |  | $ | 861                                        |   |  | $                | (1 | ) |                     | $ |     |   |  | $ | 155 |  
|Non-cash capital contributions from Boeing                                     |  |       | 3    |   |              |   |  |                          |  |   | 3                                          |   |  |                  |   |   |                     |   |     |   |  |   |     |  
|Cash dividends to Boeing (including return of capital)                         |  |       | (254 | ) |              |   |  |                          |  |   | (134                                       | ) |  |                  |   |   |                     |   | (120 | ) |  |   |     |  
|Net income                                                                     |  |       | 120  |   |              |   |  |                          |  |   |                                           |   |  |                  |   |   |                     |   | 120  |   |  | $ | 120 |  
|Reclassification adjustment for gain realized on investments, net of tax of $1 |  |       | 1    |   |              |   |  |                          |  |   |                                           |   |  |                  | 1  |   |                     |   |     |   |  |   | 1   |  
|Unrealized loss on derivative instruments, net of tax of $1                    |  |       | (1   | ) |              |   |  |                          |  |   |                                           |   |  |                  | (1 | ) |                     |   |     |   |  |   | (1  | )
|Unrealized loss on investments, net of tax of $1                               |  |       | (2   | ) |              |   |  |                          |  |   |                                           |   |  |                  | (2 | ) |                     |   |     |   |  |   | (2  | )
|Balance at December 31, 2008                                                   |  | $     | 732  |   |              | $ | 5 |                          |  | $ | 730                                        |   |  | $                | (3 | ) |                     | $ |     |   |  | $ | 118 |  
|                                                                               | 
|Non-cash capital contributions from Boeing                                     |  |       | 2    |   |              |   |  |                          |  |   | 2                                          |   |  |                  |   |   |                     |   |     |   |  |   |     |  
|Cash dividends to Boeing (including return of capital)                         |  |       | (93  | ) |              |   |  |                          |  |   | (36                                        | ) |  |                  |   |   |                     |   | (57  | ) |  |   |     |  
|Net income                                                                     |  |       | 57   |   |              |   |  |                          |  |   |                                           |   |  |                  |   |   |                     |   | 57   |   |  | $ | 57  |  
|Unrealized gain on derivative instruments, net of tax of $1                    |  |       | 2    |   |              |   |  |                          |  |   |                                           |   |  |                  | 2  |   |                     |   |     |   |  |   | 2   |  
|Unrealized loss on investments, net of tax(1)                                  |  |       | (1   | ) |              |   |  |                          |  |   |                                           |   |  |                  | (1 | ) |                     |   |     |   |  |   | (1  | )
|Balance at December 31, 2009                                                   |  | $     | 699  |   |              | $ | 5 |                          |  | $ | 696                                        |   |  | $                | (2 | ) |                     | $ |     |   |  | $ | 58  |  
|                                                                               | 
|Non-cash capital contributions from Boeing                                     |  |       | 2    |   |              |   |  |                          |  |   | 2                                          |   |  |                  |   |   |                     |   |     |   |  |   |     |  
|Cash dividends to Boeing (including return of capital)                         |  |       | (108 | ) |              |   |  |                          |  |   | (16                                        | ) |  |                  |   |   |                     |   | (92  | ) |  |   |     |  
|Net income                                                                     |  |       | 92   |   |              |   |  |                          |  |   |                                           |   |  |                  |   |   |                     |   | 92   |   |  | $ | 92  |  
|Reclassification adjustment for gain realized on investments, net of tax of $1 |  |       | (2   | ) |              |   |  |                          |  |   |                                           |   |  |                  | (2 | ) |                     |   |     |   |  |   | (2  | )
|Unrealized gain on investments, net of tax of $1                               |  |       | 4    |   |              |   |  |                          |  |   |                                           |   |  |                  | 4  |   |                     |   |     |   |  |   | 4   |  
|Balance at December 31, 2010                                                   |  | $     | 687  |   |              | $ | 5 |                          |  | $ | 682                                        |   |  | $                |   |   |                     | $ |     |   |  | $ | 94  |  
|                                                                               | 



|(1) |  | At December 31, 2009, the tax amount related to the unrealized loss on investments was less than $1.
|--- |  | ----------------------------------------------------------------------------------------------------



We have authorized 100,000 shares of Series A preferred stock with no
par value and a $5,000 stated value. No shares were issued and outstanding at December 31, 2010, 2009 and 2008.



See Notes to Consolidated Financial Statements.



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Boeing Capital Corporation and Subsidiaries



Consolidated Statements of Cash Flows



|                                                                                  |  |                          |        |   |      |   |      |      |  |   |      |  
|--------------------------------------------------------------------------------- |  | ------------------------ | ------ | - | ---- | - | ---- | ---- |  | - | ---- | -
|                                                                                  |  | Years Ended December 31, |       
|(Dollars in millions)                                                             |  | 2010                     |        |   | 2009 |   |      | 2008 | 
|OPERATING ACTIVITIES                                                              |  |                          |        |   |      |   |      |      |  |   |      |  
|Net income                                                                        |  | $                        | 92     |   |      | $ | 57   |      |  | $ | 120  |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                          |        |   |      |   |      |      |  |   |      |  
|Non-cash items:                                                                   |  |                          |        |   |      |   |      |      |  |   |      |  
|Depreciation and amortization expense                                             |  |                          | 192    |   |      |   | 198  |      |  |   | 215  |  
|Net loss on disposal of assets                                                    |  |                          | 2      |   |      |   |     |      |  |   |     |  
|Provision for (recovery of) losses                                                |  |                          | 16     |   |      |   | 23   |      |  |   | (4   | )
|Net gain on investments and derivative instruments                                |  |                          | (4     | ) |      |   | (8   | )    |  |   | (10  | )
|Asset impairment expense and other charges                                        |  |                          | 85     |   |      |   | 91   |      |  |   | 35   |  
|Share-based plans expense                                                         |  |                          | 2      |   |      |   | 2    |      |  |   | 3    |  
|Adjustments related to discontinued operations, net of tax                        |  |                          | 4      |   |      |   | 23   |      |  |   | (18  | )
|Change in deferred income taxes                                                   |  |                          | (83    | ) |      |   | (68  | )    |  |   | 126  |  
|Change in assets and liabilities:                                                 |  |                          |        |   |      |   |      |      |  |   |      |  
|Other assets                                                                      |  |                          | 19     |   |      |   | (16  | )    |  |   | 32   |  
|Accrued interest and rents                                                        |  |                          | 1      |   |      |   | 3    |      |  |   | 16   |  
|Accounts payable and accrued expenses                                             |  |                          | 5      |   |      |   | 5    |      |  |   | (17  | )
|Other liabilities                                                                 |  |                          | (41    | ) |      |   | (57  | )    |  |   | 73   |  
|Accounts with Boeing                                                              |  |                          | (17    | ) |      |   | 79   |      |  |   | (22  | )
|Net cash provided by operating activities                                         |  |                          | 273    |   |      |   | 332  |      |  |   | 549  |  
|INVESTING ACTIVITIES                                                              |  |                          |        |   |      |   |      |      |  |   |      |  
|Purchase of short-term investments                                                |  |                          | (1,300 | ) |      |   | (500 | )    |  |   |     |  
|Proceeds from maturities of short-term investments                                |  |                          | 900    |   |      |   |     |      |  |   |     |  
|Purchase of investment                                                            |  |                          |       |   |      |   |     |      |  |   | (1   | )
|Proceeds from available-for-sale investments                                      |  |                          | 25     |   |      |   | 1    |      |  |   | 136  |  
|Purchase of equipment for operating leases                                        |  |                          |       |   |      |   |     |      |  |   | (10  | )
|Payment for capitalizable costs in process                                        |  |                          | (54    | ) |      |   | (63  | )    |  |   | (26  | )
|Proceeds from disposition of equipment and receivables                            |  |                          | 126    |   |      |   | 220  |      |  |   | 69   |  
|Payments of leases, notes and other receivables                                   |  |                          | 612    |   |      |   | 608  |      |  |   | 178  |  
|Origination of leases, notes and other receivables                                |  |                          |       |   |      |   | (680 | )    |  |   | (90  | )
|Net cash provided by (used in) investing activities                               |  |                          | 309    |   |      |   | (414 | )    |  |   | 256  |  
|FINANCING ACTIVITIES                                                              |  |                          |        |   |      |   |      |      |  |   |      |  
|Proceeds from issuance of debt                                                    |  |                          |       |   |      |   | 994  |      |  |   |     |  
|Proceeds from intercompany borrowing                                              |  |                          |       |   |      |   | 200  |      |  |   |     |  
|Repayment of debt (including intercompany)                                        |  |                          | (645   | ) |      |   | (728 | )    |  |   | (709 | )
|Payment of dividends (including return of capital)                                |  |                          | (108   | ) |      |   | (93  | )    |  |   | (254 | )
|Net cash provided by (used in) financing activities                               |  |                          | (753   | ) |      |   | 373  |      |  |   | (963 | )
|Net increase (decrease) in cash and cash equivalents                              |  |                          | (171   | ) |      |   | 291  |      |  |   | (158 | )
|Cash and cash equivalents at beginning of year                                    |  |                          | 596    |   |      |   | 305  |      |  |   | 463  |  
|Cash and cash equivalents at end of year                                          |  | $                        | 425    |   |      | $ | 596  |      |  | $ | 305  |  
|                                                                                  | 
|NON-CASH INVESTING AND FINANCING ACTIVITIES:                                      |  |                          |        |   |      |   |      |      |  |   |      |  
|Net transfer to (from) assets held for sale or re-lease                           |  | $                        | 324    |   |      | $ | (68  | )    |  | $ | 629  |  
|Net transfer to notes receivable                                                  |  | $                        | 24     |   |      | $ | 9    |      |  | $ |     |  
|Net transfer to (from) equipment under operating leases                           |  | $                        | (283   | ) |      | $ | 150  |      |  | $ | (553 | )
|Net transfer to (from) finance leases                                             |  | $                        | 6      |   |      | $ | (6   | )    |  | $ | (20  | )
|Transfer from other assets                                                        |  | $                        | (71    | ) |      | $ | (98  | )    |  | $ | (56  | )
|Transfer from accounts with Boeing                                                |  | $                        |       |   |      | $ | (6   | )    |  | $ |     |  
|Transfer to investments                                                           |  | $                        |       |   |      | $ | 19   |      |  | $ |     |  
|(Increase)/decrease in debt due to fair value hedge derivatives                   |  | $                        | (26    | ) |      | $ | 34   |      |  | $ | (40  | )
|                                                                                  | 



See Notes to Consolidated Financial Statements.



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Boeing Capital Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Dollars in millions)



Note 1
Summary of Significant Accounting Policies



OrganizationBoeing Capital Corporation (together with its subsidiaries, referred to as us, we, our, BCC or the Company) is a wholly owned
subsidiary of The Boeing Company (Boeing). The Company was incorporated in Delaware in 1968. In the commercial aircraft market, we facilitate, arrange, structure and provide selective financing solutions for Boeings Commercial Airplanes
customers. In the space and defense markets, we primarily arrange and structure financing solutions for Boeings Defense, Space & Security customers.



Principles of ConsolidationThe accompanying Consolidated
Financial Statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.



Use of Estimates The preparation of financial statements in
conformity with accounting principles generally accepted in the United States of America requires management to make assumptions and estimates that directly affect the amounts reported in the Consolidated Financial Statements. Significant estimates
for which changes in the near term are considered reasonably possible and that may have a material impact on the financial statements are disclosed in these notes to the Consolidated Financial Statements.



Cash and Cash Equivalents Cash and cash equivalents consist
of highly liquid investments, such as time deposits and money market instruments, which have original maturities of less than three months.



Short-Term Investments Short-term investments consist of liquid investments such as time deposits, which have original maturities
greater than three months, but less than one year.



PortfolioOur portfolio consists of direct finance leases, leveraged leases, notes and other receivables, equipment under operating leases,
investments and assets held for sale or re-lease.



Direct Finance Leases At lease inception, we record an asset (net investment) representing the aggregate future minimum lease payments, estimated residual value of the leased equipment, and deferred
incremental direct costs less unearned income. Income is recognized over the life of the lease to approximate a level rate of return on the net investment. Residual values, which are periodically reviewed, represent the estimated amount we expect to
receive at lease termination from the disposition of the leased equipment. Actual residual values realized could differ from these estimates. Declines in estimated residual value that are deemed other than temporary are recognized in the period in
which the decline occurs as a reduction to Finance lease income.



Leveraged LeasesDirect finance leases that are financed by non-recourse borrowings and meet certain criteria are classified as leveraged leases. For leveraged leases, aggregate rental receivables are
reduced by the related non-recourse debt service obligation including interest (net rental receivables). The difference of the net rental receivables and the cost of the asset less estimated residual value at the end of the lease term is recorded as
unearned income. Unearned income is recognized over the life of the lease at a constant rate of return applied to any positive net investment, which includes the effect of deferred income taxes.



Notes and Other ReceivablesNotes
receivable are recorded net of any unamortized deferred fees and incremental direct costs. Interest income and amortization of any fees are recorded ratably over the related term of the note.



Equipment Under Operating Leases, Net of Accumulated DepreciationEquipment under operating
leases is recorded at cost and depreciated over the period that we project that we will hold the asset to an estimated residual value, using the straight-line method. We periodically review our estimates of residual value and recognize forecasted
changes by prospectively adjusting depreciation expense. Revenue on the leased equipment is recorded using the straight-line method over the term of the lease. Operating lease income may include amounts due to intercompany guarantees and subsidies,
including amounts associated with equipment classified as assets held for sale or re-lease.



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Investments Available-for-sale debt securities in the form of Enhanced
Equipment Trust Certificates (EETCs) are recorded at their fair values, with unrealized gains and losses reported as part of Accumulated other comprehensive income (loss) (AOCI) on the Consolidated Balance Sheets. Available-for-sale equity
securities are recorded at fair value using quoted prices in active markets for identical assets. Unrealized gains (losses) are recorded in Accumulated other comprehensive income (loss).



Assets Held for Sale or Re-lease, Net of Accumulated DepreciationWhen aircraft collateral
related to a finance lease or note receivable is repossessed, returned in satisfaction of the receivable or returned at the end of the finance lease and when aircraft are made available for sale, the asset is carried at the lower of cost or
estimated fair value less costs to sell. We calculate a median collateral value from multiple third party aircraft value publications based on the type and age of the aircraft to estimate the fair value of aircraft. Under certain circumstances, we
adjust values based on the attributes of the specific aircraft or equipment, usually when the features or use of the aircraft vary significantly from the more generic aircraft attributes covered by outside publications, or based on the expected net
sales price for the aircraft. Aircraft assets held for re-lease are carried at cost less accumulated depreciation and depreciated over the remaining period that we project that we will hold the asset to an estimated residual value, on a
straight-line basis.



Impairment Review for Equipment
Under Operating Leases and Assets Held for Re-leaseWe evaluate equipment under operating lease or assets held for re-lease for impairment at least annually, and also when events or changes in circumstances indicate that the expected
undiscounted cash flows from the equipment may be less than the carrying value. We use various assumptions when determining the expected undiscounted cash flows including our intentions for how long we will hold equipment subject to operating lease
before we sell the equipment, expected future lease rates, lease terms, residual value of the aircraft or equipment, periods in which the asset may be held in preparation for a follow-on lease, maintenance costs, remarketing costs, and the remaining
economic life of the asset.



When we determine that
impairment is indicated for an asset, the amount of the asset impairment expense recorded is the excess of the carrying value less asset value guarantees, if applicable, over the fair value of the asset.



Allowance for Losses on ReceivablesWe record the potential
impairment of receivables in our portfolio in a valuation account, the balance of which is an accounting estimate of probable but unconfirmed losses in the receivables portfolio. We have one portfolio segment that consists of direct finance leases
and leverage leases (Finance leases) and notes receivable (Notes and other). The risk characteristics of this portfolio segment relate primarily to collateral exposure and can be segregated by class between out-of-production aircraft and other
(including in-production aircraft). Generally, out-of-production aircraft have had greater percentage decreases in collateral value than those associated with in-production aircraft. Declines in collateral value impact our collateral exposure, a
significant driver of our allowance for losses. The methods for monitoring and assessing credit risk are the same for both types of receivables. The allowance for losses on receivables relates to two components of receivables: (a) specifically
identified receivables that are evaluated individually for impairment and (b) all other receivables.



We review all receivables for impairment and determine a receivable is impaired when, based on current information and events, it is probable that
we will be unable to collect amounts due according to the original contractual terms of the receivable agreement, without regard to any subsequent restructurings. Factors considered in assessing collectability include, but are not limited to, a
customers extended delinquency, requests for restructuring and filings for bankruptcy. We determine a specific impairment allowance based on the difference between the carrying value of the receivable and the estimated fair value of the
related collateral, taking into account Boeing and other guarantees. A receivable determined to be uncollectible is written-off against the allowance.



We review the adequacy of the allowance attributable to the remaining receivables (after excluding receivables subject to a specific impairment
allowance) by assessing both the collateral exposure and the applicable cumulative default rate. Collateral exposure for a particular receivable is the excess of the carrying value of the receivable over the fair value of the related collateral
taking into account Boeing and other guarantees. A receivable with an estimated fair value in excess of the carrying value is considered to



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have no collateral exposure. The applicable cumulative default rate is determined using two components: customer credit ratings and weighted average remaining contract term. Internally assigned
credit ratings, our credit quality indicator, are determined for each customer in the portfolio. Those ratings are reviewed quarterly and updated based upon public information and information obtained directly from our customers.



We have entered into agreements with certain customers that entitle us
to look beyond the specific collateral underlying the receivable for purposes of determining the collateral exposure as described above. Should the proceeds from the sale of the underlying collateral asset resulting from a default condition be
insufficient to cover the carrying value of our receivable (creating a shortfall condition), these agreements would, for example, permit us to take the actions necessary to sell or retain certain other assets in which the customer has an equity
interest and use the proceeds to cover the shortfall.



Each
quarter, we review customer credit ratings, published historical credit default rates for different rating categories, Boeing and other guarantees (if applicable), multiple third party aircraft value publications, and the general state of the
economy and airline industry as a basis to validate the reasonableness of the allowance for losses on receivables. There can be no assurance that actual results will not differ from estimates or that the consideration of these factors in the future
will not result in an increase or decrease to the allowance for losses on receivables.



Non-accrual ReceivablesIncome recognition on an accrual basis is generally suspended for leases and notes and other receivables at the date when a full recovery of income and principal, including the
effect of intercompany guarantees, become doubtful. We also typically place accounts greater than 90 days past due on non-accrual status. A receivable is considered past due when one or more payments are not received in full by its contractual due
date. Income recognition on accrual basis is resumed when leases or notes and other receivables become contractually current and performance is demonstrated to be resumed. Cash received while on non-accrual is applied first to the principal balance
due until our receivables are made current.



Derivative
Financial InstrumentsAll derivative instruments are recognized in the financial statements and measured at fair value regardless of the purpose or intent for holding them. We record our interest rate swaps at fair value based on a
discounted cash flow analysis. For derivatives designated as hedges of the exposure to changes in fair value of the recognized asset or liability or a firm commitment (referred to as fair value hedges), the gain or loss is recognized in earnings in
the period of change together with an offsetting loss or gain on the hedged item attributable to the risk being hedged. The effect of this accounting is to reflect in earnings the extent to which the hedge is not effective in achieving offsetting
changes in fair value. For our cash flow hedges, all of which are related to debt, the effective portion of the derivatives gain or loss is initially reported in shareholders equity (as a component of AOCI) and is subsequently
reclassified into income, as an increase or decrease to interest expense, in the same period or periods during which the hedged forecasted transaction affects income. The ineffective portion of the gain or loss is reported in earnings immediately.
We may also hold certain instruments for economic purposes that do not qualify for hedge accounting treatment. For these derivative instruments, the changes in their fair value are recorded in Other income.



Income TaxOur operations are included in the consolidated
federal income tax return of Boeing. Under an agreement with Boeing, we pay or receive our allocated share of income taxes or credits.



Federal, state and foreign income taxes are computed at current tax rates, less tax credits. Taxes are adjusted both for items that do not have tax
consequences and for the cumulative effect of any changes in tax rates from those previously used to determine deferred tax assets or liabilities. Tax provisions include amounts that are currently payable, plus changes in deferred tax assets and
liabilities that arise because of temporary differences between the time when items of income and expense are recognized for financial reporting and income tax purposes. The current provision for state income tax is based on an agreed upon rate and
paid to Boeing. The state income tax deferred asset or liability is carried on Boeings Consolidated Financial Statements.



The accounting for uncertainty in income taxes requires a more-likely-than-not threshold for financial statement recognition and measurement of a
tax position taken or expected to be taken in a tax return. We record income tax related interest expense and interest income in the Provision for income tax in our Consolidated Statements of Operations. Tax-related interest and penalties, if any,
are recorded as a component of income tax expense.



22



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Note 2 Relationship and 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 arrangements will not be terminated or modified by us or Boeing.



Support Agreement



We have a support agreement dated December 23, 2003 with Boeing with these principal features:



| |  |  | Boeing will maintain 51% or greater ownership of us,
| | - |  | ----------------------------------------------------

| |  |  | Boeing will make contributions to us if our fixed-charge coverage ratio falls below 1.05-to-1 on a four-quarter rolling basis, and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------

| |  |  | Boeing will make contributions to us, if needed, to maintain our tangible net worth at a level of at least $50.
| | - |  | ---------------------------------------------------------------------------------------------------------------



The support agreement may not be modified or terminated unless
(a) the holders of at least two-thirds of the aggregate principal amount of our debt then outstanding consent or (b) the modification or termination does not adversely affect the credit ratings of our debt (as determined by each of
Moodys, Standard & Poors, and Fitch that rates our debt at the time of the modification or termination). Debt for purposes of the support agreement means all present or future indebtedness of BCC for borrowed money,
evidenced by bonds, debentures, notes or similar instruments, excluding intercompany indebtedness. The support agreement is not a guarantee of any of our indebtedness, and is not directly enforceable against Boeing by third parties. The holders of
more than 50% of the aggregate principal amount of all our debt have the right to demand that we enforce our rights with respect to the obligations of Boeing listed above.



Intercompany Credit Arrangements



The 364-day credit facility between Boeing and its banks was renewed
on November 12, 2010, and Boeings five-year credit facility expiring in 2012 remains outstanding. Boeing has allocated $500 of the $2,376 364-day line and $1,000 of the $2,000 five-year revolving credit line expiring in 2012 exclusively
to BCC. Both the 364-day and 5-year credit facilities have a one-year term out option which allows the borrower to extend the maturity of any borrowings one year beyond the aforementioned expiration dates. At December 31, 2010 and 2009, we had
no amounts outstanding under these credit facilities. Any borrowings by us under these agreements will be guaranteed by Boeing.



No amounts were outstanding under our intercompany borrowing and lending arrangement with Boeing at December 31, 2010 and 2009. For the year
ended December 31, 2009, total interest paid to and received from Boeing was insignificant.



Federal Income Tax



Our operations are included in the consolidated federal income tax return of Boeing. Our tax sharing agreement with Boeing provides that so long as
consolidated federal tax returns are filed, Boeing will pay us, or we will pay Boeing, as appropriate, an amount equal to the BCCs taxable income or loss times the statutory tax rate applicable to Boeing. Under this agreement an intercompany
payable/receivable is recorded when federal income taxes are due or federal income tax benefits are generated.



23



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Intercompany Transactions



We are the beneficiary of certain intercompany guarantees and other
subsidies from Boeing in respect of specific financing transactions we undertake.



Intercompany guarantees primarily relate to residual value guarantees, first loss deficiency guarantees and rental loss guarantees. Residual value guarantees cover a specified asset value at the end of a lease
agreement in the event of a decline in market value of the financed aircraft. We typically call on intercompany residual value guarantees upon recognition of an other-than-temporary decline in residual value of direct finance leases. We recognize
the benefit of the guarantee through Finance lease income. First loss deficiency guarantees cover a specified portion of our losses on aircraft that we finance in the event of a loss upon disposition of the aircraft following a default by the
lessee. Rental loss guarantees are full or partial guarantees covering us against the lessees failure to pay rent under the lease agreement or our inability to re-lease these aircraft at or above a specified rent level.



Due to intercompany guarantees from Boeing, our accounting
classification of certain third party leases may differ from the accounting classification in Boeings Consolidated Financial Statements. As a result of these intercompany guarantees, the required balance for the allowance for losses on
receivables and the required provision for losses we recognized have been mitigated. Receipts under Boeing guarantees would be net of realization of underlying residual values, partial rent receipts, re-lease rental receipts or other mitigating
value received. We also have subsidy agreements which typically cover us for the difference between the contractual rate and the rate required by us.



At December 31, 2010, we were the beneficiary under $1,749 of guarantees from Boeing which mitigates our risk with respect to portfolio assets
totaling $2,326.



Intercompany guarantee amounts by aircraft
type are summarized as follows at December 31:



|                                        |  |                 |       |  |               |   |       |                 |  |   |               |  |  |   |       | 
|--------------------------------------- |  | --------------- | ----- |  | ------------- | - | ----- | --------------- |  | - | ------------- |  |  | - | ----- | 
|                                        |  | 2010            |       |  | 2009          |  
|                                        |  | GuaranteeAmount |       |  | CarryingValue |   |       | GuaranteeAmount |  |   | CarryingValue | 
|717 (out of production)                 |  | $               | 1,586 |  |               | $ | 2,099 |                 |  | $ | 1,637         |  |  | $ | 2,179 | 
|Out of production single-aisle aircraft |  |                 | 66    |  |               |   | 66    |                 |  |   | 167           |  |  |   | 167   | 
|Out of production twin-aisle aircraft   |  |                 | 51    |  |               |   | 71    |                 |  |   | 78            |  |  |   | 113   | 
|Other, including other Boeing aircraft  |  |                 | 46    |  |               |   | 90    |                 |  |   | 47            |  |  |   | 91    | 
|                                        |  | $               | 1,749 |  |               | $ | 2,326 |                 |  | $ | 1,929         |  |  | $ | 2,550 | 
|                                        | 



At December 31, 2010 and 2009, Accounts with Boeing included $47 and $69 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 years ended December 31:



|                                    |  |      |    |     |      |   |    |      |  |   |    |  
|----------------------------------- |  | ---- | -- | --- | ---- | - | -- | ---- |  | - | -- | -
|                                    |  | 2010 |    |     | 2009 |   |    | 2008 | 
|Finance lease income                |  | $    | 19 |     |      | $ | 7  |      |  | $ | (3 | )
|Interest income on notes receivable |  |      | 13 | (1) |      |   | 3  |      |  |   | 3  |  
|Operating lease income              |  |      | 50 |     |      |   | 46 |      |  |   | 60 |  
|Net loss on disposal of assets      |  |      | 9  |     |      |   |   |      |  |   |   |  
|Asset impairment expense            |  |      | 7  |     |      |   |   |      |  |   |   |  
|                                    |  | $    | 98 |     |      | $ | 56 |      |  | $ | 60 |  
|                                    | 



|(1) |  | During 2010 the prepayment of third party notes receivable totaling $163 was facilitated through Boeing. Included in interest income on notes receivable is
$10 attributable to this prepayment.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Additionally, under the terms of the intercompany guarantee agreements, for the years ended
December 31, 2010, 2009 and 2008, Boeing recorded charges of $87, $12, and $20, respectively, related to asset impairment and accrued expenses and $34, $21 and $88 respectively, related to provision for (recovery of) losses.



For the years ended December 31, 2010, 2009 and 2008, we recorded
operating lease income from Boeing, exclusive of guarantees and subsidies of $6, $20 and $30, respectively. During 2010 and 2009, we sold C-40 aircraft at their carrying value to Boeing at lease expiration for $26 and $28.



For the years ended December 31, 2010, 2009 and 2008, we recorded
new business volume of $39, $618 and $50, respectively, related to Boeing aircraft, equipment or services we purchased or financed.



Other Intercompany Transactions



Accounts with Boeing consisted of the following at December 31:



|                           |  |      |    |  |      |   |    | 
|-------------------------- |  | ---- | -- |  | ---- | - | -- | 
|                           |  | 2010 |    |  | 2009 |  
|Federal income tax payable |  | $    | 34 |  |      | $ | 27 | 
|Other payable              |  |      | 32 |  |      |   | 58 | 
|                           |  | $    | 66 |  |      | $ | 85 | 
|                           | 



For the years ended December 31, 2010 and 2009, we paid dividends (including return of capital) totaling $108 and $93.



We also receive support services from Boeing. Eligible employees are members of Boeings defined benefit pension plans, insurance plans,
savings plan and executive compensation programs. Boeing generally charges us with the actual costs of these plans attributable to our employees and these expenses are reflected in Operating expenses. For each of the years ended December 31,
2010, 2009 and 2008, the charge for these services was $19, $11, and $12.



Note 3 Investment in Receivables



The investment in receivables consisted of the following at December 31:



|                                                           |  |      |       |   |      |   |        |  
|---------------------------------------------------------- |  | ---- | ----- | - | ---- | - | ------ | -
|                                                           |  | 2010 |       |   | 2009 |  
|Investment in finance leases:                              |  |      |       |   |      |   |        |  
|Direct finance leases:                                     |  |      |       |   |      |   |        |  
|Minimum lease payments                                     |  | $    | 2,169 |   |      | $ | 2,391  |  
|Estimated residual value                                   |  |      | 587   |   |      |   | 645    |  
|Unearned income and deferred net incremental direct costs  |  |      | (991  | ) |      |   | (1,169 | )
|Leveraged leases(1):                                       |  |      |       |   |      |   |        |  
|Minimum lease payments                                     |  |      | 698   |   |      |   | 756    |  
|Less principal and interest payable on non-recourse debt   |  |      | (459  | ) |      |   | (502   | )
|Estimated residual value                                   |  |      | 32    |   |      |   | 32     |  
|Unearned income and deferred net incremental direct costs  |  |      | (129  | ) |      |   | (129   | )
|Total investment in finance leases                         |  |      | 1,907 |   |      |   | 2,024  |  
|Investment in notes and other:                             |  |      |       |   |      |   |        |  
|Principal                                                  |  |      | 375   |   |      |   | 868    |  
|Accrued interest                                           |  |      | 2     |   |      |   | 5      |  
|Unamortized deferred fees and net incremental direct costs |  |      | (2    | ) |      |   | (8     | )
|Total notes and other                                      |  |      | 375   |   |      |   | 865    |  
|Total investment in finance leases and notes and other     |  |      | 2,282 |   |      |   | 2,889  |  
|Less allowance for losses on receivables                   |  |      | (87   | ) |      |   | (71    | )
|                                                           |  | $    | 2,195 |   |      | $ | 2,818  |  
|                                                           | 
|Receivables balance individually evaluated for impairment  |  | $    |      |   |      | $ | 145    |  
|Receivables balance collectively evaluated for impairment  |  | $    | 2,282 |   |      | $ | 2,744  |  



|(1) |  | For the years ended December 31, 2010 and 2009, net investment in leveraged leases, less deferred income taxes of $223 and $238, was $(81) and $(81).
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------



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Scheduled minimum lease payments on finance leases and scheduled principal payments on Notes and other
receivables are as follows for the years ended December 31:



|                  |  |      |     |  |      |   |     |      |  |   |      |  |  |      |     |  |            |   |     |  |  |   |       | 
|----------------- |  | ---- | --- |  | ---- | - | --- | ---- |  | - | ---- |  |  | ---- | --- |  | ---------- | - | --- |  |  | - | ----- | 
|                  |  | 2011 |     |  | 2012 |   |     | 2013 |  |   | 2014 |  |  | 2015 |     |  | Thereafter |  
|Finance
leases(1) |  | $    | 223 |  |      | $ | 284 |      |  | $ | 233  |  |  | $    | 225 |  |            | $ | 220 |  |  | $ | 1,223 | 
|Notes and other   |  | $    | 151 |  |      | $ | 94  |      |  | $ | 58   |  |  | $    | 21  |  |            | $ | 26  |  |  | $ | 25    | 



|(1) |  | Includes both direct finance leases and leveraged leases (less principal and interest payable on non-recourse debt).
|--- |  | --------------------------------------------------------------------------------------------------------------------



Note 4 Allowance for Losses on Receivables



The following table reconciles the activity in the
allowance for losses on receivables at December 31:



|                                                                          |  |      |     |   |      |   |     |      |  |   |     |  
|------------------------------------------------------------------------- |  | ---- | --- | - | ---- | - | --- | ---- |  | - | --- | -
|                                                                          |  | 2010 |     |   | 2009 |   |     | 2008 | 
|Allowance for losses on receivables at beginning of year                  |  | $    | 71  |   |      | $ | 59  |      |  | $ | 74  |  
|Provision for (recovery of) losses                                        |  |      | 16  |   |      |   | 23  |      |  |   | (4  | )
|Write-offs                                                                |  |      | (1  | ) |      |   | (12 | )    |  |   | (11 | )
|Recovery of write-offs                                                    |  |      | 1   |   |      |   | 1   |      |  |   |    |  
|Allowance for losses on receivables at end of year                        |  | $    | 87  |   |      | $ | 71  |      |  | $ | 59  |  
|                                                                          | 
|Allowance as a percentage of total receivables                            |  |      | 3.8 | % |      |   | 2.5 | %    |  |   | 2.1 | %
|                                                                          |  |      |    
|Allowance for losses on receivables specifically evaluated for impairment |  | $    |    |   |      | $ |    |      |  | $ | 8   |  
|Allowance for losses on receivables collectively evaluated for impairment |  | $    | 87  |   |      | $ | 71  |      |  | $ | 51  |  



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. Credit risk profile by internally assigned creditworthiness category for our receivables consisted of the following at December 31:



|                     |  |                           |       |  |               |   |     |       |  |   |                           |  |  |               |       |  |       |   |     |  |  |   |       | 
|-------------------- |  | ------------------------- | ----- |  | ------------- | - | --- | ----- |  | - | ------------------------- |  |  | ------------- | ----- |  | ----- | - | --- |  |  | - | ----- | 
|                     |  | 2010                      |       |  | 2009          |  
|Rating categories    |  | Out-of-ProductionAircraft |       |  | OtherAircraft |   |     | Total |  |   | Out-of-ProductionAircraft |  |  | OtherAircraft |       |  | Total |  
|B                    |  | $                         | 135   |  |               | $ | 72  |       |  | $ | 207                       |  |  | $             | 303   |  |       | $ | 207 |  |  | $ | 510   | 
|CCC                  |  |                           | 1,658 |  |               |   | 417 |       |  |   | 2,075                     |  |  |               | 1,763 |  |       |   | 616 |  |  |   | 2,379 | 
|Total carrying value |  | $                         | 1,793 |  |               | $ | 489 |       |  | $ | 2,282                     |  |  | $             | 2,066 |  |       | $ | 823 |  |  | $ | 2,889 | 
|                     | 



At December 31, 2010 and 2009, all of our receivables were related to customers we believe have less than investment-grade credit. We utilize default rates as one of the factors in determining our allowance
for losses. At December 31, 2010, we applied default rates that averaged 11% and 50% for customers with internally assigned B and CCC ratings.



Impaired Receivables



At December 31, 2010, we had no impaired receivables. At December 31, 2009, the carrying value and the unpaid principal balance, for
out-of-production aircraft were $145.



26



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The following table details our average recorded investment and the related income recognized on the
impaired receivables segregated by class for the years ended December 31:



|                           |  |                       |     |  |                     |   |    | 
|-------------------------- |  | --------------------- | --- |  | ------------------- | - | -- | 
|2010                       |  | AverageCarrying Value |     |  | IncomeRecognized(1) |  
|Out-of-production aircraft |  | $                     | 88  |  |                     | $ | 9  | 
|Other aircraft             |  |                       |    |  |                     |   |   | 
|Total                      |  | $                     | 88  |  |                     | $ | 9  | 
|                           | 
|2009                       |  |                       |     |  |                     |   |    | 
|Out-of-production aircraft |  | $                     | 162 |  |                     | $ | 9  | 
|Other aircraft             |  |                       |    |  |                     |   |   | 
|Total                      |  | $                     | 162 |  |                     | $ | 9  | 
|                           | 
|2008                       |  |                       |     |  |                     |   |    | 
|Out-of-production          |  | $                     | 191 |  |                     | $ | 11 | 
|Other aircraft             |  |                       | 6   |  |                     |   | 3  | 
|Total                      |  | $                     | 197 |  |                     | $ | 14 | 
|                           | 



|(1) |  | For the years ended December 31, 2010, 2009 and 2008, of the income recognized we received in cash $9, $9 and $14, respectively.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------



Past Due Receivables



As of December 31, 2010, we had no past due receivables. As of
December 31, 2009, total past due receivables was $1 related to other aircraft which was greater than 90 days.



At December 31, 2010, we had no accrued income on receivables with amounts past due greater than 90 days.



Non-Performing Assets



Non-performing assets (assets not earning income on an accrual basis) consisted of the following at December 31:



|                                                          |  |      |     |   |      |   |     |    
|--------------------------------------------------------- |  | ---- | --- | - | ---- | - | --- | ---
|                                                          |  | 2010 |     |   | 2009 |  
|Assets placed on non-accrual status:                      |  |      |     |   |      |   |     |    
|Equipment under operating leases, net                     |  | $    | 29  |   |      | $ | 86  | (1)
|Assets held for sale or re-lease, net(1) (2)              |  |      | 43  |   |      |   | 114 |    
|                                                          |  | $    | 72  |   |      | $ | 200 |    
|                                                          | 
|Percent of total non-performing assets to total portfolio |  |      | 1.5 | % |      |   | 3.5 | %  



|(1) |  | At December 31, 2009, equipment under operating leases of $295 are not included in non-performing assets due to intercompany guarantees provided by
Boeing. At December 31, 2010 and 2009, assets held for sale or re-lease of $540 and $271 are not included in non-performing assets due to intercompany guarantees provided by Boeing.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) |  | At December 31, 2010 and 2009, non-performing assets held for sale or re-lease of $28 and $74 had either a purchase or lease commitment.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------



27



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Note 5 Equipment Under Operating Leases, Net of Accumulated Depreciation



Equipment under operating leases, net of accumulated
depreciation, consisted of the following at December 31:



|                               |  |      |       |   |      |   |       |  
|------------------------------ |  | ---- | ----- | - | ---- | - | ----- | -
|                               |  | 2010 |       |   | 2009 |  
|Cost                           |  | $    | 2,830 |   |      | $ | 3,330 |  
|Advanced rent receipts, net(1) |  |      | (31   | ) |      |   | (33   | )
|Accumulated depreciation       |  |      | (978  | ) |      |   | (929  | )
|                               |  | $    | 1,821 |   |      | $ | 2,368 |  
|                               | 



|(1) |  | Advanced rent receipts, net is the total cash received for all operating leases in excess of the total operating lease income recognized to date.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------



Scheduled minimum lease payments to be
received under the non-cancelable portion of operating leases are as follows at December 31, 2010:



|                 |  |      |     |  |      |   |     |      |  |   |      |  |  |      |     |  |            |   |     |  |  |   |     | 
|---------------- |  | ---- | --- |  | ---- | - | --- | ---- |  | - | ---- |  |  | ---- | --- |  | ---------- | - | --- |  |  | - | --- | 
|                 |  | 2011 |     |  | 2012 |   |     | 2013 |  |   | 2014 |  |  | 2015 |     |  | Thereafter |  
|Operating leases |  | $    | 281 |  |      | $ | 220 |      |  | $ | 173  |  |  | $    | 130 |  |            | $ | 117 |  |  | $ | 184 | 



Note 6 Investments



Our investments in available-for-sale debt and marketable equity securities consisted of the following:



|                                |  |               |    |  |                     |   |   |                     |  |   |           |   |  |   |    | 
|------------------------------- |  | ------------- | -- |  | ------------------- | - | - | ------------------- |  | - | --------- | - |  | - | -- | 
|December 31, 2010               |  | AmortizedCost |    |  | GrossUnrealizedGain |   |   | GrossUnrealizedLoss |  |   | FairValue |  
|Available-for-sale investments: |  |               |    |  |                     |   |   |                     |  |   |           |   |  |   |    | 
|Marketable equity securities    |  | $             | 1  |  |                     | $ |  |                     |  | $ |          |   |  | $ | 1  | 
|EETC                            |  |               | 5  |  |                     |   |  |                     |  |   |          |   |  |   | 5  | 
|Total                           |  | $             | 6  |  |                     | $ |  |                     |  | $ |          |   |  | $ | 6  | 
|                                | 
|                                |  |               |    | 
|December 31, 2009               |  |               |    |  |                     |   |   |                     |  |   |           |   |  |   |    | 
|Available-for-sale investments: |  |               |    |  |                     |   |   |                     |  |   |           |   |  |   |    | 
|Marketable equity securities    |  | $             | 20 |  |                     | $ | 1 |                     |  | $ | (4        | ) |  | $ | 17 | 
|EETC(1)                         |  |               | 6  |  |                     |   |  |                     |  |   | (1        | ) |  |   | 5  | 
|Total                           |  | $             | 26 |  |                     | $ | 1 |                     |  | $ | (5        | ) |  | $ | 22 | 
|                                | 



|(1) |  | At December 31, 2009 the EETC had been in a continuous unrealized loss position for more than 12 months.
|--- |  | --------------------------------------------------------------------------------------------------------



During 2010, we sold certain available-for-sale marketable equity
securities for total proceeds of $24 and recognized investment income of $4.



The contractual maturities of available-for-sale debt securities at December 31, 2010, were as follows:



|                           |  |      |   |  |            |   |   | 
|-------------------------- |  | ---- | - |  | ---------- | - | - | 
|                           |  | Cost |   |  | Fair
Value |  
|Due in one year or less    |  | $    | 1 |  |            | $ | 1 | 
|Due from one to five years |  |      | 3 |  |            |   | 3 | 
|Due from five to ten years |  |      | 1 |  |            |   | 1 | 
|Total                      |  | $    | 5 |  |            | $ | 5 | 
|                           | 



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Note 7 Income Tax



The components of the provision (benefit) for tax on income were as follows at December 31:



|          |  |      |     |   |      |   |     |      |  |   |     |  
|--------- |  | ---- | --- | - | ---- | - | --- | ---- |  | - | --- | -
|          |  | 2010 |     |   | 2009 |   |     | 2008 | 
|Current:  |  |      |     |   |      |   |     |      |  |   |     |  
|Federal   |  | $    | 135 |   |      | $ | 110 |      |  | $ | (52 | )
|State     |  |      | 4   |   |      |   | 4   |      |  |   | 5   |  
|          |  |      | 139 |   |      |   | 114 |      |  |   | (47 | )
|Deferred: |  |      |     |   |      |   |     |      |  |   |     |  
|Federal   |  |      | (83 | ) |      |   | (68 | )    |  |   | 107 |  
|          |  | $    | 56  |   |      | $ | 46  |      |  | $ | 60  |  
|          | 



The tax impact of temporary differences constitute our net deferred income tax liability. The components of the net deferred income tax liability consisted of the following at December 31:



|                                                     |  |      |        |   |      |   |        |  
|---------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|                                                     |  | 2010 |        |   | 2009 |  
|Deferred tax assets:                                 |  |      |        |   |      |   |        |  
|Allowance for losses on receivables                  |  | $    | 147    |   |      | $ | 142    |  
|Other                                                |  |      | 33     |   |      |   | 33     |  
|                                                     |  |      | 180    |   |      |   | 175    |  
|Deferred tax liabilities:                            |  |      |        |   |      |   |        |  
|Leased assets                                        |  |      | (1,551 | ) |      |   | (1,627 | )
|Other                                                |  |      |       |   |      |   | (1     | )
|                                                     |  |      | (1,551 | ) |      |   | (1,628 | )
|                                                     |  |      | (1,371 | ) |      |   | (1,453 | )
|Deferred tax on accumulated other comprehensive loss |  |      |       |   |      |   | 1      |  
|Net deferred tax liability                           |  | $    | (1,371 | ) |      | $ | (1,452 | )
|                                                     | 



Income tax computed at the United States federal income tax rate and the provision for tax on income differ as follows for the years ended December 31:



|                                               |  |      |    |  |      |  |      |      |  |   |    |  |  |  |      |   |  |   |    |  |  |  |      |  
|---------------------------------------------- |  | ---- | -- |  | ---- |  | ---- | ---- |  | - | -- |  |  |  | ---- | - |  | - | -- |  |  |  | ---- | -
|                                               |  | 2010 |    |  | 2009 |  |      | 2008 | 
|Tax computed at federal statutory rate         |  | $    | 53 |  |      |  | 35.0 | %    |  | $ | 44 |  |  |  | 35.0 | % |  | $ | 57 |  |  |  | 35.0 | %
|State income taxes, net of federal tax benefit |  |      | 3  |  |      |  | 1.8  |      |  |   | 2  |  |  |  | 1.5  |   |  |   | 3  |  |  |  | 2.0  |  
|                                               |  | $    | 56 |  |      |  | 36.8 | %    |  | $ | 46 |  |  |  | 36.5 | % |  | $ | 60 |  |  |  | 37.0 | %
|                                               | 



Our tax return is currently being examined by the Internal Revenue Service (IRS) for the years 2007-2008 as part of the IRS review of the Boeing consolidated tax return and Boeing has filed appeals with the IRS for
years 2004-2006. During the fourth quarter, Boeing settled its appeal for 1998-2003. We are also subject to examination in major state and international jurisdictions for the years 2001-2010.



Pursuant to our tax sharing agreement with Boeing, we made payments
with respect to tax obligations to Boeing of $99 and $83 in 2010 and 2009, respectively and we received payments with respect to tax benefits from Boeing of $17 in 2008. In 2010 and 2009, we did not receive or make income tax payments from or to
other federal, state and foreign tax agencies. We received income tax payments of $1 from other federal, state and foreign tax agencies in 2008.



As of December 31, 2010 and 2009, we did not have any unrecognized tax benefits.



For the years ended December 31, 2010, 2009 and 2008, we did not incur any income tax related interest income,
interest expense or penalties.



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Note 8 Debt and Credit Agreements



The carrying value of debt, including the net effect of interest rate
swap revaluation adjustments and unamortized deferred debt costs, consisted of the following at December 31:



|                                                                |  |      |       |  |      |   |       | 
|--------------------------------------------------------------- |  | ---- | ----- |  | ---- | - | ----- | 
|(Interest rates are the contractual rates at December 31, 2010) |  | 2010 |       |  | 2009 |  
|3.25%  7.58% fixed rate notes due through 2019                 |  | $    | 3,314 |  |      | $ | 3,927 | 
|1.53%  floating rate notes due through 2023                    |  |      | 25    |  |      |   | 25    | 
|1.37%  5.79% non-recourse notes due through 2013               |  |      | 55    |  |      |   | 61    | 
|0.92%  capital lease obligations due through 2015              |  |      | 52    |  |      |   | 62    | 
|                                                                |  | $    | 3,446 |  |      | $ | 4,075 | 
|                                                                | 



At December 31, 2010 and 2009, we had interest rate swaps which effectively convert debt of $875 and $1,475 from fixed rate to floating rate. During 2010 we terminated $250 of interest rate swaps in order to
improve our expected alignment between fixed and floating rate assets and liabilities. An additional $350 of swaps matured as scheduled concurrently with corresponding debt maturities.



On October 30, 2008 we filed a public shelf registration for up to $5,000 of debt securities with the Securities and
Exchange Commission (SEC) that became effective on November 12, 2008. Following the issuance of an aggregate principal amount of indebtedness of $1,000 under the registration statement in 2009, $4,000 remains available for potential debt
issuance. The availability of funding under the shelf registration statement is dependent on investor demand and market conditions.



We have a $1,500 Commercial Paper (CP) program that serves as a potential source of short-term liquidity subject to market conditions. Throughout
2010 and at December 31, 2010, there were no amounts outstanding under the CP program.



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 December 31, 2010, as well as
at each quarter end during the year, we were in compliance with these covenants.



At December 31, 2010, $107 of our debt (non-recourse notes and capital lease obligations) was collateralized by portfolio assets and underlying equipment totaling $186.



Scheduled principal payments for debt and capital lease obligations are
as follows at December 31:



|           |  |      |       |  |                          |   |    | 
|---------- |  | ---- | ----- |  | ------------------------ | - | -- | 
|           |  | Debt |       |  | Capital LeaseObligations |  
|2011       |  | $    | 788   |  |                          | $ | 10 | 
|2012       |  |      | 868   |  |                          |   | 10 | 
|2013       |  |      | 642   |  |                          |   | 10 | 
|2014       |  |      | 515   |  |                          |   | 11 | 
|2015       |  |      | 5     |  |                          |   | 11 | 
|Thereafter |  |      | 535   |  |                          |   |   | 
|           |  | $    | 3,353 |  |                          | $ | 52 | 
|           | 



In 2010, 2009 and 2008, interest payments were $174, $188 and $231, respectively.



Note 9 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 December 31, 2010 do not require collateral or other security from either party.



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Fair Value Hedges



Interest rate swaps, under which we agree to pay variable rates of interest, are designated as fair value hedges of fixed-rate debt. For our fair
value hedges that qualify for hedge accounting treatment we use the short-cut method and thus there are no gains or losses recognized due to hedge ineffectiveness. Unrealized gains or losses from changes in the value of fair value hedges are offset
by changes in the fair value of the hedged underlying debt.



For the years ended December 31, 2010, 2009 and 2008, we recorded $12, $12 and $9, respectively, of income related to the amortized basis
adjustment of certain terminated swaps as a reduction of Interest expense.



Cash Flow Hedges



Interest rate swap contracts under which we agree to pay a fixed rate of interest are designated as cash flow hedges of variable-rate debt
obligations.



At times, we may hold cash flow hedges that
qualify for hedge accounting treatment for which we use the short-cut method, and thus there are no gains or losses recognized due to hedge ineffectiveness. We record unrealized gains or losses from changes in the fair value of cash flow hedges in
AOCI.



Other Derivative Instruments



At times, we may hold certain derivatives that do not receive hedge
accounting treatment. These may include interest rate derivatives as well as warrants. During 2010 we did not hold derivatives that did not qualify for hedge accounting treatment. For the years ended December 31, 2009 and 2008, we recognized
gains of $9 and $1 in Other income related to warrants to purchase common stock of an unaffiliated third party.



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



|                                                                    |  |              |    |  |                   |   |     |  
|------------------------------------------------------------------- |  | ------------ | -- |  | ----------------- | - | --- | -
|December 31, 2010                                                   |  | Other Assets |    |  | Other Liabilities |  
|Derivatives designated as hedging instruments  Interest rate swaps |  | $            | 24 |  |                   | $ |    |  
|                                                                    | 
|                                                                    |  |             
|December 31, 2009                                                   |  |              |    |  |                   |   |     |  
|Derivatives designated as hedging instruments  Interest rate swaps |  | $            | 32 |  |                   | $ | (17 | )
|                                                                    | 



The notional amount of our interest rate swaps is disclosed inNote 8  Debt.



For the year ended December 31, 2010, we did not hold any derivatives in cash flow hedging relationships, resulting in no effect to AOCI or the
Statement of Operations.



For the year ended
December 31, 2009, we recognized a gain in AOCI of $3 related to our interest rate swaps in cash flow hedging relationships. In addition, for the year ended December 31, 2009 we reclassified $2 from AOCI into interest expense.



Note 10 Maintenance Payment Liability



Cash collected from lessees under the terms of the lease agreements
for future maintenance of aircraft are recorded as maintenance payment liabilities. Maintenance payment liabilities are attributable to specific aircraft leases. Upon occurrence of a qualified maintenance event, the lessee requests reimbursement and
upon disbursement of the funds, the liability is relieved. The balance, which is included in Other liabilities, was $172 and $191 as of December 31, 2010 and 2009.



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To the extent that no maintenance obligation relating to an aircraft remains, the balance is
recognized as Other income. For the years ended December 31, 2010, 2009 and 2008 we recorded income of $17, $11 and $3, respectively.



Note 11 Share-Based Plans Expense



Share-based plans expense principally relates to stock options. Share-based plans expense is included in Operating expenses since it is incentive
compensation issued primarily to our executives. The fair value of stock options was estimated using the Black-Scholes option-pricing model.



For the years ended December 31, 2010, 2009 and 2008 we recorded $2, $2 and $3 attributable to share-based plans expense.



Note 12 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.



Bankruptcies



In August 2010, Compania Mexicana de Aviacion S.A. de C.V. (Mexicana) filed for bankruptcy protection in Mexico and in the United States. At the
time of those filings, we had leased 19 717 aircraft to Aevovías Caribe S.A. de C.V. (Click), an affiliate of Mexicana, and six additional 717 aircraft were scheduled for delivery to Click under executed leases. On August 27, 2010, we
served Click a notice of termination of all 25 leases as a result of non-payment. On or about August 28, 2010, Click ceased flight operations. In September 2010, Click filed for bankruptcy protection. We have recovered all of the aircraft that
had been delivered to Click. As a result of guarantees from Boeing that limit our risk for non-payment under the leases, we do not expect that the bankruptcy will 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 December 31, 2010, 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



At December 31, 2010, we and Boeing had unfunded financing
commitments of $9,865, 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. Based on historical experience and anticipated capital market acceptance of Boeing aircraft covered by Boeings and our current commitments, we anticipate that a significant portion of these commitments
will not be exercised by the customer or will expire without being fully drawn upon. However, there can be no assurance 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



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and our commitments, the timing in which these commitments may be funded (based on estimated earliest potential funding dates as of December 31, 2010) is as follows:



|              |  |       |       | 
|------------- |  | ----- | ----- | 
|              |  | Total |      
|2011(1)       |  | $     | 1,234 | 
|2012(1)       |  |       | 1,080 | 
|2013(1)       |  |       | 955   | 
|2014(1)       |  |       | 1,283 | 
|2015(1)       |  |       | 1,492 | 
|Thereafter(1) |  |       | 3,821 | 
|              |  | $     | 9,865 | 
|              | 



|(1) |  | Does not reflect the revision of the 787 program schedule announced in January 2011.
|--- |  | ------------------------------------------------------------------------------------



Note 13 Off-Balance Sheet Arrangements



We are a party to off-balance sheet arrangements consisting of
variable interests in unconsolidated entities.



We have an
investment in the form of an EETC which was acquired in 1999. EETCs are interests in a trust that passively holds investments in aircraft or pools of aircraft. EETCs provide investors with a collateral position in the related assets and tranched
rights to cash flows from a financial instrument. Our investment in the form of EETC does not require consolidation. At December 31, 2010, our maximum exposure to economic loss from our EETC is $5.



Note 14 Fair Value Measurements



The following tables present our assets and liabilities that are
measured at fair value on a recurring basis, as of December 31, and are categorized using the three levels of fair value hierarchy.



|                                |  |       |     |   |                                                              |   |    |                                             |  |   |                                        |   |  |   |   | 
|------------------------------- |  | ----- | --- | - | ------------------------------------------------------------ | - | -- | ------------------------------------------- |  | - | -------------------------------------- | - |  | - | - | 
|December 31, 2010               |  | Total |     |   | Quoted Prices inActive Markets forIdentical Assets
(Level 1) |   |    | Significant OtherObservableInputs (Level 2) |  |   | SignificantUnobservableInputs(Level 3) |  
|Assets                          |  |       |     |   |                                                              |   |    |                                             |  |   |                                        |   |  |   |   | 
|Available-for-sale investments: |  |       |     |   |                                                              |   |    |                                             |  |   |                                        |   |  |   |   | 
|Marketable equity securities    |  | $     | 1   |   |                                                              | $ | 1  |                                             |  | $ |                                       |   |  | $ |  | 
|EETC                            |  |       | 5   |   |                                                              |   |   |                                             |  |   |                                       |   |  |   | 5 | 
|Interest rate swaps             |  |       | 24  |   |                                                              |   |   |                                             |  |   | 24                                     |   |  |   |  | 
|Total                           |  | $     | 30  |   |                                                              | $ | 1  |                                             |  | $ | 24                                     |   |  | $ | 5 | 
|                                | 
|                                |  |       |     |  
|December 31, 2009               |  |       |     |   |                                                              |   |    |                                             |  |   |                                        |   |  |   |   | 
|Assets                          |  |       |     |   |                                                              |   |    |                                             |  |   |                                        |   |  |   |   | 
|Available-for-sale investments: |  |       |     |   |                                                              |   |    |                                             |  |   |                                        |   |  |   |   | 
|Marketable equity securities    |  | $     | 17  |   |                                                              | $ | 17 |                                             |  | $ |                                       |   |  | $ |  | 
|EETC                            |  |       | 5   |   |                                                              |   |   |                                             |  |   |                                       |   |  |   | 5 | 
|Interest rate swaps             |  |       | 32  |   |                                                              |   |   |                                             |  |   | 32                                     |   |  |   |  | 
|Total                           |  | $     | 54  |   |                                                              | $ | 17 |                                             |  | $ | 32                                     |   |  | $ | 5 | 
|                                | 
|                                |  |       |     |  
|Liabilities                     |  |       |     |   |                                                              |   |    |                                             |  |   |                                        |   |  |   |   | 
|Interest rate swaps             |  | $     | (17 | ) |                                                              | $ |   |                                             |  | $ | (17                                    | ) |  | $ |  | 
|Total                           |  | $     | (17 | ) |                                                              | $ |   |                                             |  | $ | (17                                    | ) |  | $ |  | 
|                                | 



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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.



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.



Warrants. The fair
value of warrants is determined using a third party options model. Principal inputs to the model include stock price, volatility and time to expiry. Unrealized gains (losses) are recorded in Other income.



The following tables present a reconciliation of Level 3 assets
measured at fair value on a recurring basis for the years ended December 31.



|         |  |                            |    |  |                                  |   |   |                                            |  |   |                                 |  |  |                   |     |   |                           |   |   |  |  |   |   | 
|-------- |  | -------------------------- | -- |  | -------------------------------- | - | - | ------------------------------------------ |  | - | ------------------------------- |  |  | ----------------- | --- | - | ------------------------- | - | - |  |  | - | - | 
|2010     |  | Fair ValueBeginningof Year |    |  | UnrealizedGainsIncludedin Income |   |   | AccumulatedOtherComprehensiveIncome (Loss) |  |   | Purchases,Sales, andSettlements |  |  | TransfersIn (Out) |     |   | Fair Valueat End ofPeriod |  
|Assets   |  |                            |    |  |                                  |   |   |                                            |  |   |                                 |  |  |                   |     |   |                           |   |   |  |  |   |   | 
|EETC     |  | $                          | 5  |  |                                  | $ |  |                                            |  | $ | 1                               |  |  | $                 | (1  | ) |                           | $ |  |  |  | $ | 5 | 
|Total    |  | $                          | 5  |  |                                  | $ |  |                                            |  | $ | 1                               |  |  | $                 | (1  | ) |                           | $ |  |  |  | $ | 5 | 
|         | 
|2009     |  |                            |    |  |                                  |   |   |                                            |  |   |                                 |  |  |                   |     |   |                           |   |   |  |  |   |   | 
|Assets   |  |                            |    |  |                                  |   |   |                                            |  |   |                                 |  |  |                   |     |   |                           |   |   |  |  |   |   | 
|EETC     |  | $                          | 5  |  |                                  | $ |  |                                            |  | $ | 2                               |  |  | $                 | (2  | ) |                           | $ |  |  |  | $ | 5 | 
|Warrants |  |                            | 10 |  |                                  |   | 9 |                                            |  |   |                                |  |  |                   | (19 | ) |                           |   |  |  |  |   |  | 
|Total    |  | $                          | 15 |  |                                  | $ | 9 |                                            |  | $ | 2                               |  |  | $                 | (21 | ) |                           | $ |  |  |  | $ | 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 years ended December 31,
and the carrying value and asset classification of the related assets still held as of December 31:



|                                    |  |               |     |  |             |   |     |               |  |   |             |  |  |   |     |  
|----------------------------------- |  | ------------- | --- |  | ----------- | - | --- | ------------- |  | - | ----------- |  |  | - | --- | -
|                                    |  | 2010          |     |  | 2009        |  
|                                    |  | CarryingValue |     |  | TotalLosses |   |     | CarryingValue |  |   | TotalLosses | 
|Assets                              |  |               |     |  |             |   |     |               |  |   |             |  |  |   |     |  
|Receivables(1)                      |  | $             |    |  |             | $ |    |               |  | $ | 1           |  |  | $ | (6  | )
|Equipment under operating leases(2) |  |               | 111 |  |             |   | (54 | )             |  |   | 164         |  |  |   | (57 | )
|Assets held for sale or re-lease(2) |  |               |    |  |             |   | (4  | )             |  |   | 35          |  |  |   | (18 | )
|Total                               |  | $             | 111 |  |             | $ | (58 | )             |  | $ | 200         |  |  | $ | (81 | )
|                                    | 



|(1) |  | Represents carrying value and related write downs of receivables which were based on the fair value for the related aircraft collateral.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------



|(2) |  | Represents carrying value and related write downs which were based on the fair value for the related aircraft. For the year ended December 31, 2010,
losses on equipment under operating leases includes $7 which were offset by intercompany guarantees.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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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 as of December 31:



|                                          |  |                |        |   |            |   |        |                |  |   |            |   |  |   |        |  
|----------------------------------------- |  | -------------- | ------ | - | ---------- | - | ------ | -------------- |  | - | ---------- | - |  | - | ------ | -
|                                          |  | 2010           |        |   | 2009       |  
|                                          |  | Carrying
Value |        |   | Fair
Value |   |        | Carrying
Value |  |   | Fair
Value |  
|Assets                                    |  |                |        |   |            |   |        |                |  |   |            |   |  |   |        |  
|Notes and other                           |  | $              | 375    |   |            | $ | 395    |                |  | $ | 865        |   |  | $ | 892    |  
|Liabilities                               |  |                |        |   |            |   |        |                |  |   |            |   |  |   |        |  
|Debt, excluding capital lease obligations |  | $              | (3,394 | ) |            | $ | (3,528 | )              |  | $ | (4,013     | ) |  | $ | (4,197 | )
|                                          |  |                |        |  
|Off-Balance Sheet Arrangements            |  |                |        |   |            |   |        |                |  |   |            |   |  |   |        |  
|Guarantor obligations from us             |  | $              |       |   |            | $ |       |                |  | $ | (3         | ) |  | $ | (3     | )



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 December 31, 2010 and 2009 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 value of fixed rate notes is 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.



Guarantees. For residual value guarantees where we are the
guarantor, the carrying value approximates fair value.



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.



Note 15 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 at December 31:



|            |  |                |       |  |                      |  |      |  
|----------- |  | -------------- | ----- |  | -------------------- |  | ---- | -
|            |  | 2010           |      
|            |  | Carrying
Value |       |  | % of Total
Portfolio | 
|AirTran     |  | $              | 1,364 |  |                      |  | 29.0 | %
|Continental |  |                | 447   |  |                      |  | 9.5  |  
|American    |  |                | 426   |  |                      |  | 9.1  |  
|Hawaiian    |  |                | 422   |  |                      |  | 9.0  |  
|Korean      |  |                | 172   |  |                      |  | 3.7  |  
|            |  | $              | 2,831 |  |                      |  | 60.3 | %
|            | 
|            |  |                |       | 



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|            |  |                |       |  |                      |  |      |  
|----------- |  | -------------- | ----- |  | -------------------- |  | ---- | -
|            |  | 2009           |      
|            |  | Carrying
Value |       |  | % of Total
Portfolio | 
|AirTran     |  | $              | 1,573 |  |                      |  | 27.8 | %
|American    |  |                | 517   |  |                      |  | 9.1  |  
|Continental |  |                | 450   |  |                      |  | 8.0  |  
|Hawaiian    |  |                | 449   |  |                      |  | 7.9  |  
|Mexicana    |  |                | 295   |  |                      |  | 5.2  |  
|            |  | $              | 3,284 |  |                      |  | 58.0 | %
|            | 



For the years ended December 31, 2010 and 2009, AirTran Holdings, Inc. accounted for 18% and 20% of our revenue.



Portfolio carrying values were represented in the following regions at December 31:



|                 |  |                |       |  |                      |  |       |                |  |   |                      |  |  |  |       |  
|---------------- |  | -------------- | ----- |  | -------------------- |  | ----- | -------------- |  | - | -------------------- |  |  |  | ----- | -
|                 |  | 2010           |       |  | 2009                 | 
|                 |  | Carrying
Value |       |  | % of Total
Portfolio |  |       | Carrying
Value |  |   | % of Total
Portfolio | 
|United
States(1) |  | $              | 3,604 |  |                      |  | 76.8  | %              |  | $ | 4,073                |  |  |  | 71.9  | %
|Europe           |  |                | 619   |  |                      |  | 13.2  |                |  |   | 762                  |  |  |  | 13.4  |  
|Asia/Australia   |  |                | 280   |  |                      |  | 5.9   |                |  |   | 319                  |  |  |  | 5.6   |  
|Latin America    |  |                | 89    |  |                      |  | 1.9   |                |  |   | 394                  |  |  |  | 7.0   |  
|Other            |  |                | 102   |  |                      |  | 2.2   |                |  |   | 118                  |  |  |  | 2.1   |  
|                 |  | $              | 4,694 |  |                      |  | 100.0 | %              |  | $ | 5,666                |  |  |  | 100.0 | %
|                 | 



|(1) |  | United States includes assets held for sale or re-lease that may be physically located in another region.
|--- |  | ---------------------------------------------------------------------------------------------------------



Revenue by geographic region was as follows for the years ended
December 31:



|               |  |      |     |  |      |   |     |      |  |   |     | 
|-------------- |  | ---- | --- |  | ---- | - | --- | ---- |  | - | --- | 
|               |  | 2010 |     |  | 2009 |   |     | 2008 | 
|United States  |  | $    | 409 |  |      | $ | 430 |      |  | $ | 446 | 
|Europe         |  |      | 128 |  |      |   | 138 |      |  |   | 152 | 
|Asia/Australia |  |      | 45  |  |      |   | 51  |      |  |   | 56  | 
|Latin America  |  |      | 41  |  |      |   | 30  |      |  |   | 39  | 
|Other          |  |      | 16  |  |      |   | 11  |      |  |   | 10  | 
|               |  | $    | 639 |  |      | $ | 660 |      |  | $ | 703 | 
|               | 



Portfolio carrying values were represented by the following product types at December 31:



|         |  |      |       |  |      |   |       | 
|-------- |  | ---- | ----- |  | ---- | - | ----- | 
|         |  | 2010 |       |  | 2009 |  
|717      |  | $    | 2,163 |  |      | $ | 2,277 | 
|757      |  |      | 720   |  |      |   | 902   | 
|737      |  |      | 386   |  |      |   | 559   | 
|767      |  |      | 383   |  |      |   | 474   | 
|MD-11(1) |  |      | 359   |  |      |   | 401   | 
|747      |  |      | 256   |  |      |   | 343   | 
|MD-80    |  |      | 200   |  |      |   | 231   | 
|777      |  |      | 47    |  |      |   | 147   | 
|Other(2) |  |      | 180   |  |      |   | 332   | 
|         |  | $    | 4,694 |  |      | $ | 5,666 | 
|         | 



|(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.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

Our aircraft portfolio by vintage, based on carrying value (excluding investments and pooled assets),
are categorized as follows at December 31:



|               |  |      |       |   |      |  |       |  
|-------------- |  | ---- | ----- | - | ---- |  | ----- | -
|               |  | 2010 |       |   | 2009 | 
|2006 and newer |  |      | 3.8   | % |      |  | 6.6   | %
|2001 - 2005    |  |      | 64.1  |   |      |  | 60.5  |  
|1996 - 2000    |  |      | 20.0  |   |      |  | 18.8  |  
|1995 and older |  |      | 12.1  |   |      |  | 14.1  |  
|               |  |      | 100.0 | % |      |  | 100.0 | %
|               | 



Note 16 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 December 31, 2010, our maximum future cash exposure
to losses associated with the loss sharing arrangement was $232 for which we have accrued a liability of $82.



The following table reconciles the reserve under the loss sharing arrangement, which is included in Other liabilities for the years ended
December 31:



|                                      |  |      |    |   |      |   |    | 
|------------------------------------- |  | ---- | -- | - | ---- | - | -- | 
|                                      |  | 2010 |    |   | 2009 |  
|Reserve at beginning of period        |  | $    | 77 |   |      | $ | 39 | 
|Increase in reserve                   |  |      | 7  |   |      |   | 36 | 
|Payments received from (paid to) GECC |  |      | (2 | ) |      |   | 2  | 
|Reserve at end of period              |  | $    | 82 |   |      | $ | 77 | 
|                                      | 



Operating results of the discontinued operations were as follows for the years ended December 31:



|                                                                   |  |      |    |   |      |   |     |      |  |   |    | 
|------------------------------------------------------------------ |  | ---- | -- | - | ---- | - | --- | ---- |  | - | -- | 
|                                                                   |  | 2010 |    |   | 2009 |   |     | 2008 | 
|Net gain (loss) on disposal of discontinued operations             |  | $    | (7 | ) |      | $ | (36 | )    |  | $ | 29 | 
|Provision (benefit) for income tax                                 |  |      | (3 | ) |      |   | (13 | )    |  |   | 11 | 
|Net gain (loss) on disposal of discontinued operations, net of tax |  | $    | (4 | ) |      | $ | (23 | )    |  | $ | 18 | 
|                                                                   | 



Note 17 Quarterly Financial Information (Unaudited)



|                                  |  |                    |     |  |         |   |     |              |  |   |             |  |  |   |     |  
|--------------------------------- |  | ------------------ | --- |  | ------- | - | --- | ------------ |  | - | ----------- |  |  | - | --- | -
|                                  |  | Three Months Ended |    
|                                  |  | March 31           |     |  | June 30 |   |     | September 30 |  |   | December 31 | 
|2010                              |  |                    |     |  |         |   |     |              |  |   |             |  |  |   |     |  
|Revenue                           |  | $                  | 162 |  |         | $ | 162 |              |  | $ | 170         |  |  | $ | 145 |  
|Income from continuing operations |  | $                  | 29  |  |         | $ | 35  |              |  | $ | 28          |  |  | $ | 4   |  
|Net income                        |  | $                  | 29  |  |         | $ | 33  |              |  | $ | 28          |  |  | $ | 2   |  
|                                  |  |                    |     | 
|2009                              |  |                    |     |  |         |   |     |              |  |   |             |  |  |   |     |  
|Revenue                           |  | $                  | 163 |  |         | $ | 167 |              |  | $ | 166         |  |  | $ | 164 |  
|Income from continuing operations |  | $                  | 23  |  |         | $ | 23  |              |  | $ | 24          |  |  | $ | 10  |  
|Net income                        |  | $                  | 18  |  |         | $ | 24  |              |  | $ | 20          |  |  | $ | (5  | )
|                                  | 



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##### Table of Contents

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure



None.



Item 9A. Controls and Procedures



(a) Evaluation of Disclosure Controls and Procedures



Our principal executive officer and principal financial officer have
evaluated our disclosure controls and procedures as of December 31, 2010 and have concluded that these disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or
submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Commissions rules and forms and is accumulated and communicated to our management, including
the President and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.



(b) Managements Annual Report on Internal Control over Financial Reporting.



Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange
Act Rules 13a-15(f). Our management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control  Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on this evaluation under the framework in Internal Control  Integrated Framework, our management concluded that our internal control over financial reporting was effective as of December 31,
2010.



This annual report does not include an attestation
report of the companys registered public accounting firm regarding internal control over financial reporting. Managements report was not subject to attestation by the companys registered public accounting firm pursuant to the
Dodd-Frank Wall Street Reform and Consumer Protection Act, which exempts non-accelerated filers from Section 404(b) of the Sarbanes-Oxley Act of 2002.



(c) Changes in Internal Control over Financial Reporting



There were no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected,
or are reasonably likely to materially affect, our internal control over financial reporting.



Item 9B. Other Information



None.



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##### Table of Contents

PART III



Item 10. Directors, Executive Officers and Corporate
Governance



Omitted pursuant to General Instruction
I(2)(c) of Form 10-K.



Item 11. Executive
Compensation



Omitted pursuant to General Instruction
I(2)(c) of Form 10-K.



Item 12. Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters



Omitted pursuant to General Instruction I(2)(c) of Form 10-K.



Item 13. Certain Relationships and Related Transactions, and Director Independence



Omitted pursuant to General Instruction I(2)(c) of Form 10-K.



Item 14. Principal Accounting Fees and Services



The following table sets forth the aggregate fees
billed to us by Deloitte & Touche LLP, our independent auditor, in 2010 and 2009:



|                                              |  |      |     |  |      |   |     | 
|--------------------------------------------- |  | ---- | --- |  | ---- | - | --- | 
|Services Rendered / Fees(Dollars in millions) |  | 2010 |     |  | 2009 |  
|Audit fees(1)                                 |  | $    | 1.9 |  |      | $ | 2.1 | 
|                                              | 



|(1) |  | For professional services rendered for the audit of our 2010 and 2009 annual financial statements, the reviews of the financial statements included in our
Forms 10-Q for fiscal years 2010 and 2009, fees for issuance of consents related to Securities and Exchange Commission filings and other statutory audits.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



As a wholly owned subsidiary of The Boeing Company, audit and non-audit
services provided by our independent auditor are subject to Boeings Audit Committee pre-approval policies and procedures. The Committee pre-approved all services provided by, and all fees of, our independent auditor.



39



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##### Table of Contents

PART IV



Item 15. Exhibits, Financial Statement Schedules



|          |  |                                                                                                                                                                                                                   
|--------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a)    1. |  | Financial Statements                                                                                                                                                                                              
|          | 
|          |  | All Consolidated Financial Statements of the Company as set forth under Item 8 of this Annual Report on Form 10-K.                                                                                                
|          | 
|2.        |  | Financial Statement Schedule                                                                                                                                                                                      
|          | 
|          |  | None.                                                                                                                                                                                                             
|          | 
|3.        |  | Exhibits                                                                                                                                                                                                          
|          | 
|3.1       |  | Restated Certificate of Incorporation of the Company dated June 29, 1989, incorporated herein by reference to Exhibit 3.1 to our Form 10-K for the year ended
December 31, 1993.                                  
|          | 
|3.2       |  | Certificate of Amendment of the Restated Certificate of Incorporation of the Company dated August 11, 1997, incorporated herein by reference to Exhibit 3(i) to our
Form 10-Q, for the period ended June 30, 1997.
|          | 
|3.3       |  | By-Laws of the Company dated July 22, 1993, incorporated herein by reference to Exhibit 3.2 to our Form 10-K for the year ended December 31, 1993.                                                                
|          | 
|4.1       |  | First Supplemental Indenture, dated June 12, 1995, between the Company and Bankers Trust Company, incorporated herein by reference to Exhibit 4(b) to our Form S-3
Registration Statement (File No. 33-58989).    
|          | 
|4.2       |  | Indenture, dated April 15, 1987, incorporated herein by reference to Exhibit 4 to our Form S-3 Registration Statement (File
No. 33-26674).                                                                        
|          | 
|4.3       |  | Senior Indenture, dated August 31, 2000, incorporated by reference to Exhibit 4(a) to our Amendment No. 2 to Form S-3 Registration Statement, dated
August 30, 2000(File No. 333-82391).                          
|          | 
|4.4       |  | Subordinated Indenture, dated August 31, 2000, incorporated by reference to Exhibit 4(b) to our Amendment No. 2 to Form S-3 Registration Statement, dated
August 30, 2000 (File No. 333-82391).                   
|          | 
|4.5       |  | Form of Series X Senior Fixed Rate Medium-Term Note, incorporated herein by reference to Exhibit 4(e) to our Form S-3 Registration Statement (File
No. 33-58989).                                                 
|          | 
|4.6       |  | Form of Series X Senior Floating Rate Medium-Term Note, incorporated herein by reference to Exhibit 4(h) to our Form S-3 Registration Statement (File
No. 33-58989).                                              
|          | 
|4.7       |  | Form of Series X Senior Fixed Rate Medium-Term Note, incorporated by reference to Exhibit 4(e) to our Form S-3 Registration Statement (File
No. 333-37635).                                                       
|          | 
|4.8       |  | Form of Series X Senior Floating Rate Medium-Term Note, incorporated by reference to Exhibit 4(g) to our Form S-3 Registration Statement (File
No. 333-37635).                                                    
|          | 
|4.9       |  | Form of Series XI Senior Fixed Rate Medium-Term Note, incorporated by reference to Exhibit 4(c) to our Form S-3 Registration Statement (File
No. 333-82391).                                                      
|          | 
|4.10      |  | Form of Series XI Senior Floating Rate Medium-Term Note, incorporated by reference to Exhibit 4(e) to our Form S-3 Registration Statement (File
No. 333-82391).                                                   
|          | 
|4.11      |  | Form of Senior Medium-Term Note, Series XII (Fixed Rate), incorporated by reference to Exhibit 4(a) to our Form 8-K filed September 4, 2009.                                                                      
|          | 
|4.12      |  | Form of Senior Medium-Term Note, Series XII (Floating Rate), incorporated by reference to Exhibit 4(b) to our Form 8-K filed September 4, 2009.                                                                   
|          | 
|4.13      |  | Form of Subordinated Medium-Term Note, Series XII (Fixed Rate), incorporated by reference to Exhibit 4(c) to our Form 8-K filed September 4,
2009.                                                                



40



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##### Table of Contents

|     |  |                                                                                                                                                      
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------
|4.14 |  | Form of Subordinated Medium-Term Note, Series XII (Floating Rate), incorporated by reference to Exhibit 4(d) to our Form 8-K filed September 4,
2009.
|     | 
|4.15 |  | Form of InterNote® (Fixed Rate),
incorporated by reference to Exhibit 4(e) to our Form 8-K filed September 4, 2009.                                  
|     | 
|4.16 |  | Form of InterNote® (Floating Rate),
incorporated by reference to Exhibit 4(f) to our Form 8-K filed September 4, 2009.                               



Pursuant to Item 601(b)(4)(iii) of Regulation S-K, we are not filing certain instruments with respect to our debt, as the total amount of
securities currently provided for under each of such instruments does not exceed 10 percent of our total assets on a consolidated basis. We hereby agree to furnish a copy of any such instrument to the Securities and Exchange Commission upon request.



|     |  |                                                                                                                                                                                                                                                                                                                                    
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1 |  | 364-Day Credit Agreement dated as of November 12, 2010, between Boeing and the banks listed therein, incorporated by reference to Exhibit 10.1 to The Boeing Company
Form 8-K dated November 12, 2010 (File No. 001-00442).                                                                                                        
|     | 
|10.2 |  | Five-Year Credit Agreement dated as of November 16, 2007, between Boeing and the banks listed therein, incorporated by reference to Exhibit 10(ii) to The Boeing
Company Form 10-K filed February 15, 2008 (File No. 001-00442).                                                                                                   
|     | 
|10.3 |  | Borrower Subsidiary Letter dated November 12, 2010 relating to 364-Day Credit Agreement, incorporated by reference to Exhibit 10.2 to our Form 8-K dated November 12,
2010.                                                                                                                                                        
|     | 
|10.4 |  | Borrower Subsidiary Letter dated November 14, 2008 relating to Five-Year Credit Agreement, incorporated by reference to Exhibit 10.3 to our Form 8-K filed November 20,
2008.                                                                                                                                                      
|     | 
|10.5 |  | Letter agreement relating to the 364-Day Credit Agreement and the Five-Year Credit Agreement, dated November 12, 2010, between Boeing and us, incorporated by reference to
Exhibit 10.3 to our Form 8-K dated November 12, 2010.                                                                                                   
|     | 
|10.6 |  | Support Agreement, dated December 23, 2003, by and between us and Boeing, incorporated herein by reference to Exhibit 99.1 to our Form 8-K filed December 24,
2003.                                                                                                                                                                
|     | 
|10.7 |  | Purchase and Sale Agreement dated May 24, 2004, among Boeing Capital Corporation, BCC Equipment Leasing Corporation, McDonnell Douglas Overseas Finance Corporation,
Boeing Capital Loan Corporation and General Electric Capital Corporation, incorporated herein by reference to Exhibit 10.1 to our 8-K dated June 24, 2004.    
|     | 
|10.8 |  | Amendment and Joint Waiver dated May 31, 2004, among Boeing Capital Corporation, BCC Equipment Leasing Corporation, McDonnell Douglas Overseas Finance Corporation,
Boeing Capital Loan Corporation and General Electric Capital Corporation, incorporated herein by reference to Exhibit 10.2 to our Form 8-K dated June 24, 2004.
|     | 
|12   |  | Computation of Ratio of Earnings to Fixed Charges.                                                                                                                                                                                                                                                                                 
|     | 
|23   |  | Consent of Independent Registered Public Accounting Firm.                                                                                                                                                                                                                                                                          
|     | 
|31.1 |  | Certification of President pursuant to Rules 13a-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.                                                                                                                                                                  
|     | 
|31.2 |  | Certification of Chief Financial Officer pursuant to Rules 13a-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.                                                                                                                                                    
|     | 
|32.1 |  | Certification of President pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. This document is being
furnished in accordance with Securities and Exchange Commission Release Nos. 33-8212 and 34-47551.                                                                     
|     | 
|32.2 |  | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. This document
is being furnished in accordance with Securities and Exchange Commission Release Nos. 33-8212 and 34-47551.                                                       



41



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##### Table of Contents

Signatures



Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                 |  |                                                                                                             
|---------------- |  | ------------------------------------------------------------------------------------------------------------
|                 |  | Boeing Capital Corporation                                                                                  
|                 | 
|February 9, 2011 |  | /s/ KELVIN E. COUNCIL                                                                                       
|                 |  | Kelvin E. Council                                                                                           
|                 |  | Vice President and Chief Financial Officer
(Principal Financial Officer) and Registrants Authorized
Officer
|                 | 
|February 9, 2011 |  | /s/ KEVIN J. MURPHY                                                                                         
|                 |  | Kevin J. Murphy                                                                                             
|                 |  | Controller (Principal Accounting Officer)                                                                   



Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.



|                 |  |                                                                     
|---------------- |  | --------------------------------------------------------------------
|                 |  | Boeing Capital Corporation                                          
|                 | 
|February 9, 2011 |  | /s/ JAMES A. BELL                                                   
|                 |  | James A. Bell Chairman and
Director                                 
|                 | 
|February 9, 2011 |  | /s/ MICHAEL J. CAVE                                                 
|                 |  | Michael J. Cave President and Director (Principal
Executive Officer)
|                 | 
|February 9, 2011 |  | /s/ DAVID A. DOHNALEK                                               
|                 |  | David A. Dohnalek Director                                          
|                 | 
|February 9, 2011 |  | /s/ J. MICHAEL LUTTIG                                               
|                 |  | J. Michael Luttig
Director                                          



42