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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



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

For the quarterly period ended June 30, 2007

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)

(425) 965-4000

---

(Registrants telephone number, including area code)



---

(Former name, former address and former fiscal year, if changed since last report)

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 is a large
accelerated filer, an accelerated filer, or a non- accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act). (Check one):

Large accelerated filer     ̈    Accelerated filer     ̈    Non-accelerated filer    x

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 July 23, 2007: 50,000 shares

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





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Table of Contents



|                                          |  |                                                         |  |                                                                                   |  |     
|----------------------------------------- |  | ------------------------------------------------------- |  | --------------------------------------------------------------------------------- |  | ----
|                                          |  |                                                         |  |                                                                                   |  | Page
|Part I. Financial Information (Unaudited) |  |                                                        
|                                          |  |                                                         | 
|                                          |  | Item 1.                                                 |  | Financial Statements                                                              |  |     
|                                          |  |                                                         |  | Condensed Consolidated Balance Sheets                                             |  | 1   
|                                          |  |                                                         |  | Condensed Consolidated Statements of Operations                                   |  | 2   
|                                          |  |                                                         |  | Condensed Consolidated Statements of Shareholders Equity andComprehensive Income |  | 3   
|                                          |  |                                                         |  | Condensed Consolidated Statements of Cash Flows                                   |  | 4   
|                                          |  |                                                         |  | Notes to Condensed Consolidated Financial Statements                              |  | 5   
|                                          |  |                                                         | 
|                                          |  | Item 2.                                                 |  | Managements Narrative Analysis of the Results of Operations                      |  | 11  
|                                          |  |                                                         | 
|                                          |  | Item 4.                                                 |  | Controls and Procedures                                                           |  | 14  
|                                          | 
|Part II. Other Information                |  |                                                        
|                                          |  |                                                         | 
|                                          |  | Item 1.                                                 |  | Legal Proceedings                                                                 |  | 15  
|                                          |  |                                                         | 
|                                          |  | Item 1A.                                                |  | Risk Factors                                                                      |  | 15  
|                                          |  |                                                         | 
|                                          |  | Item 6.                                                 |  | Exhibits                                                                          |  | 15  
|                                          |  |                                                        
|                                          |  | Report of Independent Registered Public Accounting Firm |  | 16                                                                               
|                                          |  |                                                        
|                                          |  | Signatures                                              |  | 17                                                                               



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##### Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Boeing Capital Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)



|                                                                                                |  |               |       |   |                  |   |       |  
|----------------------------------------------------------------------------------------------- |  | ------------- | ----- | - | ---------------- | - | ----- | -
|(Dollars in millions, except par value)                                                         |  | June 30, 2007 |       |   | December 31,2006 |  
|ASSETS                                                                                          |  |               |       |   |                  |   |       |  
|Cash and cash equivalents                                                                       |  | $             | 603   |   |                  | $ | 589   |  
|Receivables:                                                                                    |  |               |       |   |                  |   |       |  
|Finance leases                                                                                  |  |               | 2,514 |   |                  |   | 2,591 |  
|Notes and other                                                                                 |  |               | 831   |   |                  |   | 1,679 |  
|                                                                                                |  |               | 3,345 |   |                  |   | 4,270 |  
|Allowance for losses on receivables                                                             |  |               | (82   | ) |                  |   | (102  | )
|                                                                                                |  |               | 3,263 |   |                  |   | 4,168 |  
|Equipment under operating leases, net                                                           |  |               | 3,380 |   |                  |   | 3,352 |  
|Investments                                                                                     |  |               | 158   |   |                  |   | 153   |  
|Assets held for sale or re-lease, net                                                           |  |               | 114   |   |                  |   | 259   |  
|Other assets                                                                                    |  |               | 78    |   |                  |   | 63    |  
|                                                                                                |  | $             | 7,596 |   |                  | $ | 8,584 |  
|                                                                                                | 
|LIABILITIES AND SHAREHOLDERS EQUITY                                                            |  |               |       |   |                  |   |       |  
|Liabilities:                                                                                    |  |               |       |   |                  |   |       |  
|Accounts payable and accrued expenses                                                           |  | $             | 98    |   |                  | $ | 122   |  
|Other liabilities                                                                               |  |               | 361   |   |                  |   | 372   |  
|Accounts with Boeing                                                                            |  |               | 56    |   |                  |   | 31    |  
|Deferred income taxes                                                                           |  |               | 1,389 |   |                  |   | 1,356 |  
|Debt                                                                                            |  |               | 4,747 |   |                  |   | 5,590 |  
|                                                                                                |  |               | 6,651 |   |                  |   | 7,471 |  
|Shareholders equity:                                                                           |  |               |       |   |                  |   |       |  
|Common shares  $100 par value; authorized 100,000 shares; issued and outstanding 50,000 shares |  |               | 5     |   |                  |   | 5     |  
|Additional paid-in capital                                                                      |  |               | 936   |   |                  |   | 1,101 |  
|Accumulated other comprehensive income, net of tax                                              |  |               | 4     |   |                  |   | 7     |  
|Retained earnings                                                                               |  |               |      |   |                  |   |      |  
|                                                                                                |  |               | 945   |   |                  |   | 1,113 |  
|                                                                                                |  | $             | 7,596 |   |                  | $ | 8,584 |  
|                                                                                                | 

See Notes to Condensed Consolidated Financial Statements.



1



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##### Table of Contents

Boeing Capital Corporation and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)



|                                                                  |  |                            |      |                          |  |   |      |  |   |      |   |  |   |     
|----------------------------------------------------------------- |  | -------------------------- | ---- | ------------------------ |  | - | ---- |  | - | ---- | - |  | - | ----
|                                                                  |  | Three Months EndedJune 30, |      | Six Months EndedJune 30,
|(Dollars in millions)                                             |  |                            | 2007 |                          |  |   | 2006 |  |   | 2007 |   |  |   | 2006
|REVENUE                                                           |  |                            |      |                          |  |   |      |  |   |      |   |  |   |     
|Finance lease income                                              |  | $                          | 46   |                          |  | $ | 49   |  | $ | 92   |   |  | $ | 99  
|Interest income on notes receivable                               |  |                            | 37   |                          |  |   | 45   |  |   | 73   |   |  |   | 93  
|Operating lease income                                            |  |                            | 113  |                          |  |   | 127  |  |   | 230  |   |  |   | 255 
|Investment income                                                 |  |                            | 6    |                          |  |   | 2    |  |   | 12   |   |  |   | 8   
|Net gain on disposal of assets                                    |  |                            |     |                          |  |   | 11   |  |   |     |   |  |   | 10  
|Other income                                                      |  |                            | 7    |                          |  |   | 9    |  |   | 15   |   |  |   | 15  
|                                                                  |  |                            | 209  |                          |  |   | 243  |  |   | 422  |   |  |   | 480 
|EXPENSES                                                          |  |                            |      |                          |  |   |      |  |   |      |   |  |   |     
|Interest expense                                                  |  |                            | 76   |                          |  |   | 89   |  |   | 155  |   |  |   | 179 
|Depreciation expense                                              |  |                            | 54   |                          |  |   | 64   |  |   | 108  |   |  |   | 125 
|Provision for (recovery of) losses                                |  |                            | (10  | )                        |  |   | 3    |  |   | (18  | ) |  |   | 2   
|Operating expenses                                                |  |                            | 16   |                          |  |   | 17   |  |   | 29   |   |  |   | 31  
|Asset impairment expense                                          |  |                            | 2    |                          |  |   | 7    |  |   | 2    |   |  |   | 9   
|Other expense                                                     |  |                            | 1    |                          |  |   | 1    |  |   | 3    |   |  |   | 2   
|                                                                  |  |                            | 139  |                          |  |   | 181  |  |   | 279  |   |  |   | 348 
|Income from continuing operations before provision for income tax |  |                            | 70   |                          |  |   | 62   |  |   | 143  |   |  |   | 132 
|Provision for income tax                                          |  |                            | 26   |                          |  |   | 21   |  |   | 53   |   |  |   | 42  
|Income from continuing operations                                 |  |                            | 44   |                          |  |   | 41   |  |   | 90   |   |  |   | 90  
|Net gain on disposal of discontinued operations, net of tax       |  |                            | 1    |                          |  |   |     |  |   | 5    |   |  |   |    
|Net income                                                        |  | $                          | 45   |                          |  | $ | 41   |  | $ | 95   |   |  | $ | 90  
|                                                                 

See Notes to Condensed Consolidated Financial Statements.



2



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##### Table of Contents

Boeing Capital Corporation and Subsidiaries

Condensed Consolidated Statements of Shareholders Equity and
Comprehensive Income

(Unaudited)



|                                                                           |  |       |       |   |              |   |                          |  |   |                                            |   |  |                  |    |   |                     |   |     |   |  |   |     |  
|-------------------------------------------------------------------------- |  | ----- | ----- | - | ------------ | - | ------------------------ |  | - | ------------------------------------------ | - |  | ---------------- | -- | - | ------------------- | - | --- | - |  | - | --- | -
|(Dollars in millions)                                                      |  | Total |       |   | CommonShares |   | AdditionalPaid-InCapital |  |   | AccumulatedOtherComprehensiveIncome/(Loss) |   |  | RetainedEarnings |    |   | ComprehensiveIncome |  
|Balance at January 1, 2006                                                 |  | $     | 1,256 |   |              | $ | 5                        |  | $ | 1,242                                      |   |  | $                | 9  |   |                     | $ |    |   |  |   |     |  
|Non-cash capital contributions from Boeing                                 |  |       | 6     |   |              |   |                         |  |   | 6                                          |   |  |                  |   |   |                     |   |    |   |  |   |     |  
|Cash dividends to Boeing (including return of capital)                     |  |       | (232  | ) |              |   |                         |  |   | (142                                       | ) |  |                  |   |   |                     |   | (90 | ) |  |   |     |  
|Net income                                                                 |  |       | 90    |   |              |   |                         |  |   |                                           |   |  |                  |   |   |                     |   | 90  |   |  | $ | 90  |  
|Unrealized gain on derivative instruments, net of tax                      |  |       | 1     |   |              |   |                         |  |   |                                           |   |  |                  | 1  |   |                     |   |    |   |  |   | 1   |  
|Unrealized gain on investments and reclassification adjustment, net of tax |  |       | 21    |   |              |   |                         |  |   |                                           |   |  |                  | 21 |   |                     |   |    |   |  |   | 21  |  
|Balance at June 30, 2006                                                   |  | $     | 1,142 |   |              | $ | 5                        |  | $ | 1,106                                      |   |  | $                | 31 |   |                     | $ |    |   |  | $ | 112 |  
|                                                                           | 
|Balance at January 1, 2007                                                 |  | $     | 1,113 |   |              | $ | 5                        |  | $ | 1,101                                      |   |  | $                | 7  |   |                     | $ |    |   |  |   |     |  
|Non-cash capital contributions from Boeing                                 |  |       | 4     |   |              |   |                         |  |   | 4                                          |   |  |                  |   |   |                     |   |    |   |  |   |     |  
|Cash dividends to Boeing (including return of capital)                     |  |       | (264  | ) |              |   |                         |  |   | (169                                       | ) |  |                  |   |   |                     |   | (95 | ) |  |   |     |  
|Net income                                                                 |  |       | 95    |   |              |   |                         |  |   |                                           |   |  |                  |   |   |                     |   | 95  |   |  | $ | 95  |  
|Unrealized loss on investments, net of tax                                 |  |       | (3    | ) |              |   |                         |  |   |                                           |   |  |                  | (3 | ) |                     |   |    |   |  |   | (3  | )
|Balance at June 30, 2007                                                   |  | $     | 945   |   |              | $ | 5                        |  | $ | 936                                        |   |  | $                | 4  |   |                     | $ |    |   |  | $ | 92  |  
|                                                                           | 

See Notes to Condensed Consolidated Financial Statements.



3



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Boeing Capital Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)



|                                                                                  |  |                           |        |   |      |   |      |  
|--------------------------------------------------------------------------------- |  | ------------------------- | ------ | - | ---- | - | ---- | -
|                                                                                  |  | Six Months Ended June 30, |       
|(Dollars in millions)                                                             |  | 2007                      |        |   | 2006 |  
|OPERATING ACTIVITIES                                                              |  |                           |        |   |      |   |      |  
|Net income                                                                        |  | $                         | 95     |   |      | $ | 90   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                           |        |   |      |   |      |  
|Depreciation and amortization expense                                             |  |                           | 105    |   |      |   | 125  |  
|Net gain on disposal of assets                                                    |  |                           |       |   |      |   | (10  | )
|Provision for (recovery of) losses                                                |  |                           | (18    | ) |      |   | 2    |  
|Asset impairment expense                                                          |  |                           | 2      |   |      |   | 9    |  
|Share-based plans expense                                                         |  |                           | 4      |   |      |   | 6    |  
|Other non-cash adjustments related to discontinued operations                     |  |                           | (5     | ) |      |   |     |  
|Change in deferred income taxes                                                   |  |                           | 35     |   |      |   | 2    |  
|Change in assets and liabilities:                                                 |  |                           |        |   |      |   |      |  
|Other assets                                                                      |  |                           | 2      |   |      |   | (1   | )
|Accrued interest and rents                                                        |  |                           | 11     |   |      |   | 3    |  
|Accounts payable and accrued expenses                                             |  |                           | (25    | ) |      |   | (25  | )
|Other liabilities                                                                 |  |                           | (11    | ) |      |   | 24   |  
|Accounts with Boeing                                                              |  |                           | 22     |   |      |   | 116  |  
|Other                                                                             |  |                           |       |   |      |   | (1   | )
|Net cash provided by operating activities                                         |  |                           | 217    |   |      |   | 340  |  
|INVESTING ACTIVITIES                                                              |  |                           |        |   |      |   |      |  
|Proceeds from available-for-sale investments                                      |  |                           |       |   |      |   | 126  |  
|Purchase of equipment for operating leases                                        |  |                           |       |   |      |   | (61  | )
|Change in capitalizable costs in process                                          |  |                           | (21    | ) |      |   | (12  | )
|Proceeds from disposition of equipment and receivables                            |  |                           | 17     |   |      |   | 402  |  
|Principal payments of leases, notes and other receivables                         |  |                           | 917    |   |      |   | 231  |  
|Origination of leases, notes and other receivables                                |  |                           | (20    | ) |      |   | (18  | )
|Net cash provided by investing activities                                         |  |                           | 893    |   |      |   | 668  |  
|FINANCING ACTIVITIES                                                              |  |                           |        |   |      |   |      |  
|Repayment of debt                                                                 |  |                           | (832   | ) |      |   | (570 | )
|Payment of cash dividends (including return of capital)                           |  |                           | (264   | ) |      |   | (232 | )
|Repayment of note payable with Boeing Capital Services Corporation                |  |                           |       |   |      |   | (20  | )
|Net cash used in financing activities                                             |  |                           | (1,096 | ) |      |   | (822 | )
|Net increase in cash and cash equivalents                                         |  |                           | 14     |   |      |   | 186  |  
|Cash and cash equivalents at beginning of year                                    |  |                           | 589    |   |      |   | 297  |  
|Cash and cash equivalents at end of period                                        |  | $                         | 603    |   |      | $ | 483  |  
|                                                                                  | 
|NON-CASH INVESTING AND FINANCING ACTIVITIES:                                      |  |                           |        |   |      |   |      |  
|Net transfer to (from) assets held for sale or re-lease                           |  | $                         | (137   | ) |      | $ | 494  |  
|                                                                                  | 
|Net transfer from notes receivable                                                |  | $                         | (1     | ) |      | $ | (284 | )
|                                                                                  | 
|Net transfer to (from) equipment under operating leases                           |  | $                         | 138    |   |      | $ | (130 | )
|                                                                                  | 
|Net transfer to finance leases                                                    |  | $                         |       |   |      | $ | 41   |  
|                                                                                  | 
|Transfer from other assets                                                        |  | $                         |       |   |      | $ | (37  | )
|                                                                                  | 
|Transfer from accounts with Boeing                                                |  | $                         |       |   |      | $ | (84  | )
|                                                                                  | 
|Offsetting changes in fair value hedge derivatives                                |  | $                         | 12     |   |      | $ | 50   |  
|                                                                                  | 

See Notes to Condensed Consolidated Financial Statements.



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##### Table of Contents

Boeing Capital Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollars in millions)

Note 1 Basis of Presentation

Boeing Capital
Corporation (together with its subsidiaries, referred to as us, we, our or the Company) is an indirect wholly owned subsidiary of The Boeing Company (Boeing). We prepared the accompanying unaudited
condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. In our opinion all normal recurring adjustments necessary for a
fair presentation are reflected in the condensed consolidated financial statements. Operating results for the period ended June 30, 2007 are not necessarily indicative of the results for the full year. The condensed consolidated financial
statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our 2006 Annual Report on Form 10-K.

Note 2 Standards Issued and Not Yet Implemented

In February 2007, the Financial Accounting Standards
Board (FASB) issued Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial Liabilities  Including an amendment of FASB Statement No.115 (SFAS No. 159). SFAS
No. 159 permits us to choose to measure certain financial assets and liabilities at fair value that are not currently required to be measured at fair value (i.e. the Fair Value Option). Election of the Fair Value Option is made on an
instrument-by-instrument basis and is irrevocable. At the adoption date, unrealized gains and losses on financial assets and liabilities for which the Fair Value Option has been elected would be reported as a cumulative adjustment to beginning
retained earnings. If we elect the Fair Value Option for certain financial assets and liabilities, we will report unrealized gains and losses due to changes in their fair value in earnings at each subsequent reporting date. SFAS No. 159 is
effective as of January 1, 2008. We are currently evaluating the potential impact of adopting SFAS No. 159 on our consolidated financial statements.

Note 3 Transactions with Boeing

As an indirect 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 agreements allowing us to borrow under Boeings committed revolving
line of credit. We also have an uncommitted intercompany borrowing arrangement with Boeing under which we had no amounts outstanding at June 30, 2007.

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

There can be no assurances that these intercompany agreements and arrangements will not be terminated or modified by Boeing.

At June 30, 2007, we were the beneficiary under $2,449 of guarantees from Boeing which mitigates our risk with respect to portfolio assets
totaling $3,194.



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Intercompany guarantee amounts by aircraft type are summarized as follows:



|                                                    |  |                 |       |                   |   |                 |  |               |       |  |   |      
|--------------------------------------------------- |  | --------------- | ----- | ----------------- | - | --------------- |  | ------------- | ----- |  | - | -----
|                                                    |  | June 30, 2007   |       | December 31, 2006
|                                                    |  | GuaranteeAmount |       | CarryingValue     |   | GuaranteeAmount |  | CarryingValue
|717 (out of production)                             |  | $               | 1,826 |                   | $ | 2,441           |  | $             | 1,859 |  | $ | 2,489
|Out of production twin-aisle aircraft               |  |                 | 276   |                   |   | 359             |  |               | 285   |  |   | 370  
|Out of production single-aisle aircraft             |  |                 | 272   |                   |   | 272             |  |               | 280   |  |   | 280  
|Other, including other Boeing and regional aircraft |  |                 | 75    |                   |   | 122             |  |               | 239   |  |   | 285  
|                                                    |  | $               | 2,449 |                   | $ | 3,194           |  | $             | 2,663 |  | $ | 3,424
|                                                   

At June 30, 2007 and December 31, 2006, Accounts with Boeing included $123 and $141 for deferred
revenue associated with guarantee and subsidy settlements and terminations.

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



|                                                                      |  |      |     |   |      |   |    
|--------------------------------------------------------------------- |  | ---- | --- | - | ---- | - | ---
|                                                                      |  | 2007 |     |   | 2006
|Applied to income                                                     |  | $    | 35  |   |      | $ | 34 
|Net change in finance lease receivables                               |  |      |    |   |      |   | 96 
|Net change in deferred revenue                                        |  |      | (18 | ) |      |   |   
|Guarantees receivable from Boeing                                     |  |      | (15 | ) |      |   | 64 
|Net cash received under intercompany guarantee and subsidy agreements |  | $    | 2   |   |      | $ | 194
|                                                                     

For the six months ended June 30, 2007 and 2006, we recorded operating lease income from Boeing,
exclusive of guarantees and subsidies, of $18 and $27.

For the six months ended June 30, 2007 and 2006, we recorded new business volume of $20
and $158 related to aircraft and equipment manufactured by Boeing.

Note 4  Allowance for Losses on Receivables

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



|                                                           |  |      |      |   |      |   |      |              |  |   |      |   |  |   |      |  
|---------------------------------------------------------- |  | ---- | ---- | - | ---- | - | ---- | ------------ |  | - | ---- | - |  | - | ---- | -
|                                                           |  | 2007 |      |   | 2006 |   |      | 2007         |  |   | 2006 |  
|                                                           |  |      |      |   |      |   |      | Pro Forma(1) | 
|Allowance for losses on receivables at beginning of period |  | $    | 102  |   |      | $ | 101  |              |  | $ | 254  |   |  | $ | 274  |  
|Provision for (recovery of) losses                         |  |      | (18  | ) |      |   | 2    |              |  |   | (42  | ) |  |   | 2    |  
|Net write-offs                                             |  |      | (2   | ) |      |   | (1   | )            |  |   |     |   |  |   | (16  | )
|Allowance for losses on receivables at end of period       |  | $    | 82   |   |      | $ | 102  |              |  | $ | 212  |   |  | $ | 260  |  
|                                                           | 
|Allowance as a percentage of total receivables             |  |      | 2.5% |   |      |   | 2.3% |              |  |   | 6.6% |   |  |   | 5.9% |  



|(1) |  | Reconciles, on a pro forma basis, the changes in the allowance for losses on receivables for the
six months ended June 30, calculated in accordance with our accounting policy, if the impact of intercompany guarantees from Boeing were to be excluded. The exclusion of intercompany guarantees would increase the applicable exposure for various
receivables and would reduce the allowance for certain of our finance leases classified as operating leases by Boeing.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The carrying value
of impaired receivables consisted of the following:



|                                                        |  |               |     |                   |   |      
|------------------------------------------------------- |  | ------------- | --- | ----------------- | - | -----
|                                                        |  | June 30, 2007 |     | December 31, 2006
|Impaired receivables with specific impairment allowance |  | $             | 44  |                   | $ | 74   
|Impaired receivables with no specific allowance         |  |               | 252 |                   |   | 1,032
|Carrying value of impaired receivables                  |  | $             | 296 |                   | $ | 1,106
|                                                       

During the six months ended June 30, 2007, we received customer pre-payments in full of $765 on notes
receivable previously reported as impaired.



6



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##### Table of Contents

At June 30, 2007 and December 31, 2006, allowance for losses on impaired receivables was $14 and $20.

Non-Performing Assets

Non-performing assets (assets
either not earning income on an accrual basis or equipment without a purchase commitment or current contractual lease revenue) consisted of the following:



|                                                           |  |               |      |                   |   |     
|---------------------------------------------------------- |  | ------------- | ---- | ----------------- | - | ----
|                                                           |  | June 30, 2007 |      | December 31, 2006
|Assets placed on non-accrual status:                       |  |               |      |                   |   |     
|Receivables                                                |  | $             | 60   |                   | $ | 100 
|Equipment under operating leases, net                      |  |               | 206  |                   |   | 161 
|                                                           |  |               | 266  |                   |   | 261 
|Assets held for sale or re-lease, net                      |  |               | 1    |                   |   | 6   
|                                                           |  | $             | 267  |                   | $ | 267 
|                                                          
|Percent of non-performing receivables to total receivables |  |               | 1.8% |                   |   | 2.3%
|Percent of total non-performing assets to total portfolio  |  |               | 3.8% |                   |   | 3.3%

For the portfolio assets that were non-performing as of and during the six months ended June 30, 2007
and 2006, we recorded income of $8 and $11 based on cash received of $14 and $21.

Note 5 Income Tax

Effective January 1, 2007, we adopted FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48). FIN 48 prescribes 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. This interpretation also provides guidance on derecognition of income tax assets and liabilities,
classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods and income tax disclosures. The cumulative effect of
applying this interpretation did not result in any adjustment to retained earnings as of January 1, 2007.

In conjunction with the adoption of
FIN 48, we began recording income tax related interest expense and interest income in Income tax expense in our Condensed Consolidated Statements of Operations. In prior periods, such interest income or expense was recorded in Operating expense.
Penalties, if any, will be recorded as a component of Income tax expense. We did not incur any income tax related interest income, interest expense or penalties for the six months ended June 30, 2007 and 2006.

As of June 30, 2007 and January 1, 2007, we did not have any unrecognized tax benefits.

As of June 30, 2007 and January 31, 2007, we, as a subsidiary of Boeing, are subject to examination in the United States federal tax jurisdiction for the 2002-2006 tax years. We, either as a subsidiary of Boeing or as
a separate filing entity, are also subject to examination in various state and foreign jurisdictions for the years 2001-2006.

Note 6 Debt

Debt, including the net effects of interest rate swap revaluation adjustments and unamortized deferred debt costs,
consisted of the following:



|                                                             |  |               |       |                   |   |      
|------------------------------------------------------------ |  | ------------- | ----- | ----------------- | - | -----
|                                                             |  | June 30, 2007 |       | December 31, 2006
|3.25% - 7.64% fixed rate notes due through 2017              |  | $             | 4,440 |                   | $ | 5,263
|6.58% - 6.92% floating rate notes due through 2023 (1)       |  |               | 120   |                   |   | 119  
|4.84% - 7.78% non-recourse notes due through 2013 (1)        |  |               | 73    |                   |   | 76   
|4.39% - 8.25% capital lease obligations due through 2015 (1) |  |               | 114   |                   |   | 132  
|                                                             |  | $             | 4,747 |                   | $ | 5,590
|                                                            



|(1) |  | Interest rates on floating rate debt are the contractual interest rates at June 30, 2007.
|--- |  | -----------------------------------------------------------------------------------------



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##### Table of Contents

At June 30, 2007 and December 31, 2006, we had interest rate swaps, which effectively convert $1,530 and
$1,545 of debt from fixed rate to floating rate and $92 from floating rate to fixed rate.

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. As of and during the six months ended June 30, 2007, we were in compliance with these covenants.

Note 7 Commitments and Contingencies

Litigation

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

Restructurings and Restructuring Requests

From time to time, certain of our customers request a restructuring of their transactions with us. We have not reached agreement on any other restructuring
requests that would have a material adverse effect on our earnings, cash flows and/or financial position.

Commitments

At June 30, 2007, we and Boeing had unfunded financing commitments of $10,050, consisting of both firm and contingent contracts. 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. 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 and our commitments, the timing in which these commitments may be funded (based on estimated earliest
funding dates) is as follows:



|                           |  |       |       
|-------------------------- |  | ----- | ------
|                           |  | Total
|July through December 2007 |  | $     |      
|2008                       |  |       | 2,750 
|2009                       |  |       | 750   
|2010                       |  |       | 1,900 
|2011                       |  |       | 2,650 
|Thereafter                 |  |       | 2,000 
|                           |  | $     | 10,050
|                          



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##### Table of Contents

Note 8 Concentrations

Generally, each asset in our portfolio is backed by the value of the equipment that we have financed, the particular customers credit and, at times, other collateral or transactional features.
Additionally, our risk on certain transactions has been mitigated in part by transactional support provided by Boeing; that support itself is concentrated on the 717 aircraft in our portfolio.

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



|            |  |                |       |                      |      
|----------- |  | -------------- | ----- | -------------------- | -----
|            |  | June 30, 2007 
|            |  | Carrying Value |       | % of Total Portfolio
|AirTran     |  | $              | 1,562 |                      | 22.3%
|American    |  |                | 650   |                      | 9.3  
|Midwest     |  |                | 604   |                      | 8.6  
|Hawaiian    |  |                | 428   |                      | 6.1  
|Continental |  |                | 417   |                      | 6.0  
|            |  | $              | 3,661 |                      | 52.3%
|           



|         |  |                   |       |                      |      
|-------- |  | ----------------- | ----- | -------------------- | -----
|         |  | December 31, 2006
|         |  | Carrying Value    |       | % of Total Portfolio
|AirTran  |  | $                 | 1,592 |                      | 19.8%
|United   |  |                   | 749   |                      | 9.3  
|American |  |                   | 678   |                      | 8.4  
|Midwest  |  |                   | 617   |                      | 7.7  
|Hawaiian |  |                   | 434   |                      | 5.4  
|         |  | $                 | 4,070 |                      | 50.6%
|        

For the six months ended June 30, 2007 and 2006, AirTran Holdings, Inc. accounted for 15% and 14% of
our revenue. For the six months ended June 30, 2006, United Air Lines, Inc. accounted for 10% of our revenue.

Portfolio carrying values were
represented in the following regions:



|                  |  |                |       |                      |        |                |   |                      |  |       
|----------------- |  | -------------- | ----- | -------------------- | ------ | -------------- | - | -------------------- |  | ------
|                  |  | June 30, 2007  |       | December 31, 2006   
|                  |  | Carrying Value |       | % of Total Portfolio |        | Carrying Value |   | % of Total Portfolio
|United States (1) |  | $              | 5,106 |                      | 73.0%  |                | $ | 6,165                |  | 76.7% 
|Europe            |  |                | 1,075 |                      | 15.4   |                |   | 1,092                |  | 13.6  
|Asia/Australia    |  |                | 422   |                      | 6.0    |                |   | 471                  |  | 5.9   
|Latin America     |  |                | 304   |                      | 4.3    |                |   | 191                  |  | 2.4   
|Other             |  |                | 90    |                      | 1.3    |                |   | 115                  |  | 1.4   
|                  |  | $              | 6,997 |                      | 100.0% |                | $ | 8,034                |  | 100.0%
|                 



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



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##### Table of Contents

Portfolio carrying values were represented by the following product types:



|          |  |               |       |                   |   |      
|--------- |  | ------------- | ----- | ----------------- | - | -----
|          |  | June 30, 2007 |       | December 31, 2006
|717       |  | $             | 2,541 |                   | $ | 2,590
|757       |  |               | 1,111 |                   |   | 1,171
|MD-11     |  |               | 643   |                   |   | 660  
|767       |  |               | 633   |                   |   | 739  
|737       |  |               | 570   |                   |   | 588  
|747       |  |               | 438   |                   |   | 454  
|MD-80     |  |               | 367   |                   |   | 382  
|777       |  |               | 175   |                   |   | 718  
|Other (1) |  |               | 519   |                   |   | 732  
|          |  | $             | 6,997 |                   | $ | 8,034
|         



|(1) |  | Other includes stock, equipment and aircraft. Some of these aircraft are out of production, but are
supported by the manufacturer or other third party parts and service providers.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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



|               |  |               |   |  |                  
|-------------- |  | ------------- | - |  | -----------------
|               |  | June 30, 2007 |   |  | December 31, 2006
|2002 and newer |  | 41.2          | % |  | 38.7%            
|1997  2001    |  | 36.8          |   |  | 39.8             
|1992  1996    |  | 12.6          |   |  | 12.0             
|1991 and older |  | 9.4           |   |  | 9.5              
|               |  | 100.0         | % |  | 100.0%           
|              

Note 9 Discontinued Operations

On May 24, 2004, we entered into a purchase and sale agreement with General Electric Capital Corporation (GECC) to sell substantially all of the assets related to our Commercial Financial Services
business. The final asset sale closed on 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 as certain events of default and repossession.
The loss sharing arrangement provides that cumulative net losses (if any) are to be shared between us and GECC. The provisions effectively limit our exposure to any losses to $245. At June 30, 2007, our maximum exposure to loss associated with
the loss sharing arrangement was $221, for which we have accrued a liability of $71.

The reserve under the loss sharing arrangement, which is included in Other
liabilities, was as follows:



|                               |  |                                |    |   |                               |   |   
|------------------------------ |  | ------------------------------ | -- | - | ----------------------------- | - | --
|                               |  | Six Months Ended
June 30, 2007 |    |   | Six Months EndedJune 30, 2006
|Reserve at beginning of period |  | $                              | 78 |   |                               | $ | 81
|Reduction in reserve           |  |                                | (9 | ) |                               |   |  
|Payments received from GECC    |  |                                | 2  |   |                               |   | 9 
|Reserve at end of period       |  | $                              | 71 |   |                               | $ | 90
|                              



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##### Table of Contents

Item 2. Managements Narrative Analysis of the Results of Operations

Forward-Looking Information is Subject
to Risk and Uncertainty

Certain statements in this report may constitute forward-looking statements within the meaning of the
Private Litigation Reform Act of 1995. Words such as expects, intends, plans, projects, believes, estimates, and similar expressions are used to identify these forward-looking
statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Forward-looking statements are based upon assumptions as to future events that may not prove to be
accurate. Actual outcomes and results may differ materially from what is expressed or forecasted in these forward-looking statements. As a result, these statements speak only as of the date they were made and we undertake no obligation to publicly
update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Our actual results and future trends may differ materially depending on a variety of factors, including:



| |  |  | general economic conditions, which includes changes to fuel prices and business trends, particularly those affecting the airline industry (including air traffic growth
rates, the impact of bankruptcies or restructurings on certain commercial airline customers, and 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 provided to support the sale of Boeing products, transactional or
other support made available to us by Boeing and the ending of production of certain aircraft programs;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our ability to meet our current contractual obligations, including outstanding financing commitments;
| | - |  | -----------------------------------------------------------------------------------------------------



| |  |  | reduced lease rates as a result of competition in the used aircraft market;
| | - |  | ---------------------------------------------------------------------------



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



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



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



| |  |  | other risk factors listed from time to time in our filings with the Securities and Exchange Commission (SEC).
| | - |  | -------------------------------------------------------------------------------------------------------------

Please see Item 1A Risk Factors in this report and Item 1A Risk Factors of our Annual Report on Form 10-K for the year ended
December 31, 2006, for a description of risks and uncertainties that could cause our actual results to differ materially from the expectations reflected in our forward-looking statements.

Overview

During the six months ended June 30, 2007, we continued to
focus on supporting Boeings major businesses and managing our overall financial exposures.

At June 30, 2007, our portfolio consisted of
finance leases, notes and other receivables, equipment under operating leases, investments, and assets held for sale or re-lease. At June 30, 2007, we owned 300 commercial aircraft and four C-40 aircraft and had partial ownership or security
interest in an additional 58 aircraft, including those owned in Enhanced Equipment Trust Certificates (EETC) and other financing structures.



11



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##### Table of Contents

Our portfolio at June 30, 2007 decreased to $7.0 billion from $8.0 billion at December 31, 2006. The
following table summarizes the net change in our total portfolio:



|                                      |  |                                |        |   |                              |   |        |  
|------------------------------------- |  | ------------------------------ | ------ | - | ---------------------------- | - | ------ | -
|(Dollars in millions)                 |  | Six Months Ended
June 30, 2007 |        |   | Year Ended December 31, 2006 |  
|New business volume                   |  | $                              | 20     |   |                              | $ | 250    |  
|Net write-offs                        |  |                                | (2     | ) |                              |   | (9     | )
|Transfer of assets                    |  |                                |       |   |                              |   | 43     |  
|Asset impairment                      |  |                                | (2     | ) |                              |   | (53    | )
|Asset run off and pre-payments        |  |                                | (932   | ) |                              |   | (632   | )
|Asset dispositions                    |  |                                | (16    | ) |                              |   | (531   | )
|Depreciation and amortization expense |  |                                | (105   | ) |                              |   | (240   | )
|Net change in portfolio balance       |  | $                              | (1,037 | ) |                              | $ | (1,172 | )
|                                      | 

At June 30, 2007 and December 31, 2006, we had $114 million and $259 million of assets that were
held for sale or re-lease, of which $110 million and $253 million had firm contracts to be sold or placed on lease. Additionally, leases with a carrying value of approximately $60 million are scheduled to terminate in the next 12 months, and the
related aircraft are being remarketed, or the leases are being extended.

Our net income was $95 million for the six months ended June 30, 2007
compared with $90 million for the same period in 2006, an increase of $5 million.

Consolidated Results of Operations

Revenue

Revenue for the six months ended June 30, 2007 decreased $58
million, a decrease of 12% compared with the same period in 2006.

Interest income on notes receivable was $73 million for the six months ended
June 30, 2007, a decrease of 22% compared with the same period in 2006 primarily due to a decrease in the weighted average balance of our notes receivable as a result of the pre-payment of certain notes in 2007 and the sale of certain notes in
2006.

Operating lease income was $230 million for the six months ended June 30, 2007, a decrease of 10% compared with the same period in 2006
primarily due to a decrease in the weighted average balance of equipment under operating leases due to the sale of certain aircraft during 2006.

Expenses

Expenses decreased $69 million for the six months ended June 30, 2007, a decrease of 20% compared with the same period in 2006.

Interest expense was $155 million for the six months ended June 30, 2007, a decrease of 13% compared with the same period in 2006 primarily due to a decrease
in the balance of debt outstanding as a result of scheduled debt repayments.

Depreciation expense was $108 million for the six months ended
June 30, 2007, a decrease of 14% compared with the same period in 2006 primarily due to a decrease of $12 million resulting from the decrease in the depreciable balance of equipment under operating leases and a decrease of $5 million resulting
from the change in our intention to hold or dispose of equipment before the end of its economic useful life.

Provision for (recovery of) losses
reflected a recovery of $18 million for the six months ended June 30, 2007 compared with a provision of $2 million for the same period in 2006. During the six months ended June 30, 2007 and 2006, we adjusted the allowance for losses on
notes and finance lease receivables to a level we deemed adequate to cover probable losses.

Provision for income tax was $53 million for the six
months ended June 30, 2007, an increase of 26% compared with same period in 2006, primarily due to an increase in the effective income tax rate as a result of the repeal of Foreign Sales Corporation and Extraterritorial Income Benefits and a
benefit from Boeing under our intercompany tax sharing agreement in the first six months of 2006 which did not occur in the first six months of 2007.



12



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##### Table of Contents

Gain on disposal of discontinued operations, net of tax, was $5 million for the six months ended June 30,
2007, due to a reduction in our expected losses under our loss sharing arrangement with General Electric Capital Corporation related to the sale of certain assets of our Commercial Financial Services business in 2004.

Liquidity and Capital Resources

Our total cash and cash equivalents were
$603 million at June 30, 2007, an increase from $589 million at December 31, 2006. The following is a summary of the change in our cash and cash equivalents for the six months ended June 30:



|                                          |  |      |        |   |      |   |      |  
|----------------------------------------- |  | ---- | ------ | - | ---- | - | ---- | -
|(Dollars in millions)                     |  | 2007 |        |   | 2006 |  
|Net cash provided by operating activities |  | $    | 217    |   |      | $ | 340  |  
|Net cash provided by investing activities |  |      | 893    |   |      |   | 668  |  
|Net cash used in financing activities     |  |      | (1,096 | ) |      |   | (822 | )
|Net increase in cash and cash equivalents |  | $    | 14     |   |      | $ | 186  |  
|                                          | 

Operating activities

During the six months ended June 30, 2007, net cash provided by operating activities included net income from operations of $95 million. We had net adjustments for non-cash items of $123 million which primarily related to depreciation
expense. We also had a net decrease in our net operating assets and liabilities of $1 million.

During the six months ended June 30, 2006, net
cash provided by operating activities included net income from operations of $90 million. We had adjustments for non-cash items of $134 million, which primarily related to depreciation expense. We also had an increase in our net operating assets and
liabilities of $116 million, which included $45 million for guarantee and subsidy settlements with Boeing, $13 million for unearned lease income from Boeing and $35 million for income taxes.

Investing activities

During the six months ended June 30, 2007, net
cash provided by investing activities included $917 million relating to customer pre-payments of certain notes receivable and asset run off.

During
the six months ended June 30, 2006, net cash provided by investing activities included $197 million primarily from the sale of an aircraft and the sale of certain of our investments, $297 million from the sale of certain notes receivable and
$96 million received from Boeing associated with the net change in finance lease receivable and a partial settlement of a guarantee on 24 717 aircraft.

Financing
activities

During the six months ended June 30, 2007, net cash used for financing activities included scheduled debt repayments of $832
million and cash dividends (including return of capital) to Boeing of $264 million.

During the six months ended June 30, 2006, we made
scheduled debt repayments of $590 million and cash dividends (including return of capital) to Boeing of $232 million.

Outstanding debt at
June 30, 2007 and December 31, 2006 was $4.7 billion and $5.6 billion. During the six months ended June 30, 2007 we had no commercial paper borrowings outstanding. Our leverage (ratio of debt to equity) at June 30, 2007 and
December 31, 2006 was 5.0-to-1.

We have liquidity requirements, primarily to fund financing commitments, meet debt obligations and fund our
operating expenses. In the near term, we believe our cash from operations and other receipts from our portfolio, which may include asset sales and securitizations, will be sufficient to satisfy existing commitments and plans. To the extent we
require financial flexibility to meet potential business funding requirements we also have the ability to issue commercial paper and other debt, obtain funding from Boeing or limit new business volume.



13



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##### Table of Contents

We believe we have adequate borrowing capacity. We have $1.5 billion available under Boeings committed
revolving bank credit line agreements that serve as back-up liquidity for the issuance of commercial paper and general corporate purposes. In addition, we have a Support Agreement with Boeing that includes a liquidity maintenance provision. Under
this provision, 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.

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



| |  |  | a severe or prolonged downturn in the economy,
| | - |  | ----------------------------------------------

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

| |  |  | disruptions or declines 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 equity ratio, in light of the risks in our business. These risks include, among others, the exposure to our portfolio from unfavorable market
conditions affecting our customers or our ability to access the global capital markets.

Credit Ratings

Our access to capital at rates that allow for a reasonable return on new business can be affected by ratings of our debt by credit rating agencies. As a wholly
owned finance company, our credit ratings are closely tied to those of Boeing due to the Support Agreement entered into between Boeing and us in December 2003 and transactional support and guarantees. Our ratings and spreads could be impacted
positively or negatively by changing perceptions of Boeing, the airline industry, the defense industry or of Boeings competitive positions in them. It is possible that these changes could affect our access to the capital markets. We believe
our access to the capital markets is adequate.

We have the following credit ratings as of the filing date of this report:



|           |  |                   |  |                          |  |              
|---------- |  | ----------------- |  | ------------------------ |  | -------------
|Debt       |  | Standard & Poors |  | Moodys InvestorsService |  | Fitch Ratings
|Short-term |  | A-1               |  | P-1                      |  | F-1          
|Senior     |  | A+                |  | A2                       |  | A+           

Standards Issued and Not Yet Implemented

See Note 2 for discussion of Standards Issued and Not Yet Implemented.

Item 4. Controls and Procedures



|(a) |  | Evaluation of Disclosure Controls and Procedures
|--- |  | ------------------------------------------------

Our
principal executive officer and principal financial officer, based on their evaluation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report
on Form 10-Q, have concluded that our disclosure controls and procedures are effective for ensuring that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms.



|(b) |  | Changes in Internal Controls over Financial Reporting
|--- |  | -----------------------------------------------------

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



14



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##### Table of Contents

PART II. OTHER INFORMATION

Item 1. 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 1A. Risk Factors

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. In the event we pursue any such actions our future earnings could be impacted.

Item 6. Exhibits



|A. |  | Exhibits
|-- |  | --------



|             |  |                                                                                                                                                                                                                                                                             
|------------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 15   |  | Letter From Independent Registered Public Accounting Firm Regarding Unaudited Interim Financial Information.                                                                                                                                                                
|             | 
|Exhibit 31.1 |  | Certification of President pursuant to Rules 13a-15(e) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.                                                                                                        
|             | 
|Exhibit 31.2 |  | Certification of Chief Financial Officer pursuant to Rules 13a-15(e) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.                                                                                          
|             | 
|Exhibit 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.              
|             | 
|Exhibit 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.



15



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##### Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholder of

Boeing Capital Corporation

Renton, Washington

We have reviewed the accompanying condensed consolidated balance sheet of Boeing Capital Corporation and subsidiaries (the Company) as of June 30,
2007, and the related condensed consolidated statements of operations for the three-month and six-month periods ended June 30, 2007 and 2006, and of shareholders equity and comprehensive income, and of cash flows for the six-month periods
ended June 30, 2007 and 2006. These interim financial statements are the responsibility of the Companys management.

We conducted our
reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible
for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion
regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any
material modifications that should be made to such condensed consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of
Boeing Capital Corporation and subsidiaries as of December 31, 2006, and the related consolidated statements of operations, shareholders equity and comprehensive income, and cash flows for the year then ended (not presented herein); and
in our report dated February 15, 2007, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31,
2006, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ DELOITTE & TOUCHE LLP

Seattle, Washington

July 24, 2007



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##### Table of Contents

Signatures

Pursuant to the requirements 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                                                                                  
|              | 
|July 25, 2007 |  | /s/ RUSSELL A. EVANS                                                                                        
|              |  | Russell A. Evans                                                                                            
|              |  | Vice President and Chief Financial Officer (Principal Financial Officer) and Registrants Authorized Officer
|              | 
|July 25, 2007 |  | /s/ KEVIN J. MURPHY                                                                                         
|              |  | Kevin J. Murphy                                                                                             
|              |  | Controller (Principal Accounting Officer)                                                                   



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