United States
                       Securities and Exchange Commission
                             Washington, D.C. 20549

---------------------------------------------------------------------------

                                    Form 10-Q



|X|      Quarterly Report pursuant to Section 13 or 15(d) of the Securities 
         Exchange Act of 1934

         For the quarterly period ended March 31, 1999

                                       OR

|_|      Transition Report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934

         For the transition period from ________________ to _________________


---------------------------------------------------------------------------


                           BOEING CAPITAL CORPORATION
             (Exact name of registrant as specified in its charter)

---------------------------------------------------------------------------

             Delaware                    95-2564584              0-10795
(State or other jurisdiction of      (I.R.S. Employer      (Commission File No.)
Incorporation or Organization)      Identification No.)

     4060 Lakewood Boulevard, 6th Floor - Long Beach, California 90808-1700
                    (Address of principal executive offices)

                                 (562) 627-3000
              (Registrant's telephone number, including area code)

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,  and (2) has been subject to such filing  requirements
for the past 90 days. Yes |X| No |_|


Common shares outstanding at May 12, 1999:                        50,000 shares

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


<PAGE>


                                     Part I

Item 1.       Financial Statements

Boeing Capital Corporation and Subsidiaries
Consolidated Balance Sheets

<TABLE>
                                                                               March 31,       December 31,
(Dollars in millions, except stated value and par value)                         1999              1998
---------------------------------------------------------------------------------------------------------------
                                                                              (Unaudited)
ASSETS
    Financing receivables:
<S>                                                                        <C>               <C>            
      Investment in finance leases                                         $       1,393.3   $       1,365.0
      Notes receivable                                                               566.9             545.7
                                                                           ------------------------------------
                                                                                   1,960.2           1,910.7
      Allowance for losses on financing receivables                                  (58.4)            (62.1)
                                                                           ------------------------------------
                                                                                   1,901.8           1,848.6
    Cash and cash equivalents                                                          8.3              20.3
    Equipment under operating leases, net                                            860.9             889.2
    Equipment held for sale or re-lease                                               59.2              62.3
    Other assets                                                                      53.5              41.0
                                                                           ------------------------------------
                                                                           $       2,883.7   $       2,861.4
                                                                           ====================================

LIABILITIES AND SHAREHOLDER'S EQUITY
    Short-term notes payable                                               $         221.4   $         236.7
    Accounts payable and accrued expenses                                             18.7              35.6
    Accounts with Boeing and BCSC                                                     11.9               6.7
    Other liabilities                                                                 94.7              84.8
    Deferred income taxes                                                            386.2             383.3
    Long-term debt:
      Senior                                                                       1,716.4           1,678.7
      Subordinated                                                                    44.9              54.9
                                                                           ------------------------------------
                                                                                   2,494.2           2,480.7
                                                                           ------------------------------------

    Commitments and contingencies - Note 3

    Shareholder's equity:
      Preferred stock - no par value; authorized 100,000 shares:
        Series A; $5,000 stated value; authorized, issued and
        outstanding 10,000 shares                                                     50.0              50.0
      Common stock - $100 par value; authorized 100,000 shares;
        issued and outstanding 50,000 shares                                           5.0               5.0
      Capital in excess of par value                                                  89.5              89.5
      Income retained for growth                                                     245.0             236.2
                                                                           ------------------------------------
                                                                                     389.5             380.7
                                                                           ------------------------------------
                                                                           $       2,883.7   $       2,861.4
                                                                           ====================================
</TABLE>

See notes to consolidated financial statements.


<PAGE>


Boeing Capital Corporation and Subsidiaries
Consolidated Statements of Income and Income Retained for Growth
(Unaudited)

<TABLE>
                                                                                   Three months ended
                                                                                        March 31,
(Dollars in millions)                                                            1999              1998
---------------------------------------------------------------------------------------------------------------

OPERATING INCOME
<S>                                                                        <C>               <C>          
    Finance lease income                                                   $       29.2      $        31.9
    Interest income on notes receivable                                            12.6                6.7
    Operating lease income, net of depreciation expense                            16.7               17.6
    Net gain on disposal or re-lease of assets                                      7.4                4.8
    Other                                                                           0.4                0.5
                                                                           ------------------------------------
                                                                                   66.3               61.5
                                                                           ------------------------------------

EXPENSES
    Interest expense                                                               33.0               32.5
    Provision for losses                                                            1.7                2.7
    Operating expenses                                                              2.4                2.6
    Other                                                                           0.4                3.0
                                                                           ------------------------------------
                                                                                   37.5               40.8
                                                                           ------------------------------------
Income before provision for income taxes                                           28.8               20.7
Provision for income taxes                                                         11.1                7.6
                                                                           ------------------------------------
Net income                                                                         17.7               13.1
Income retained for growth at beginning of year                                   236.2              208.6
Dividends                                                                          (8.9)             (11.2)
                                                                           ------------------------------------
Income retained for growth at end of period                                $      245.0      $       210.5
                                                                           ====================================
</TABLE>

See notes to consolidated financial statements.


<PAGE>


Boeing Capital Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)

<TABLE>
                                                                                   Three months ended
                                                                                        March 31,
(Dollars in millions)                                                            1999              1998
---------------------------------------------------------------------------------------------------------------

OPERATING ACTIVITIES
<S>                                                                        <C>               <C>          
    Net income                                                             $        17.7     $        13.1
    Adjustments to reconcile net income to net cash provided by
       (used in) operating activities:
         Depreciation expense - equipment under operating leases                    19.2              18.4
         Net gain on disposal or re-lease of assets                                 (7.4)             (4.8)
         Provision for losses                                                        1.7               2.7
         Change in assets and liabilities:
           Accounts with Boeing and BCSC                                             5.2               9.2
           Other assets                                                            (12.5)            (23.6)
           Accounts payable and accrued expenses                                   (17.8)            (28.3)
           Other liabilities                                                         9.9               5.1
           Deferred income taxes                                                     2.9               6.5
         Other, net                                                                 (1.1)              0.4
                                                                           ------------------------------------
                                                                                    17.8              (1.3)
                                                                           ------------------------------------
INVESTING ACTIVITIES
    Net change in short-term notes and leases receivable                           (23.9)              -
    Purchase of equipment for operating leases                                      (8.5)             (6.8)
    Proceeds from disposition of equipment, notes and
       leases receivable                                                            48.7              39.5
    Collection of notes and leases receivable                                       64.7              54.5
    Acquisition of notes and leases receivable                                    (115.0)            (97.6)
                                                                           ------------------------------------
                                                                                   (34.0)            (10.4)
                                                                           ------------------------------------

FINANCING ACTIVITIES
    Net change in short-term borrowings                                            (15.3)              7.9
    Debt having maturities more than 90 days:
       Proceeds                                                                     79.0              75.0
       Repayments                                                                  (51.5)            (72.3)
    Payment of cash dividends                                                       (8.0)            (10.3)
                                                                           ------------------------------------
                                                                                     4.2               0.3
                                                                           ------------------------------------
Net decrease in cash and cash equivalents                                          (12.0)            (11.4)
Cash and cash equivalents at beginning of year                                      20.3              39.1
                                                                           ------------------------------------
Cash and cash equivalents at end of period                                 $         8.3     $        27.7
                                                                           ====================================
</TABLE>

See notes to consolidated financial statements.



<PAGE>


Boeing Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements
March 31,1999
(Unaudited)


Note 1 -- Basis of Presentation

Boeing Capital Corporation (formerly McDonnell Douglas Finance Corporation) (the
"Company") is a wholly-owned  subsidiary of Boeing Capital Services  Corporation
("BCSC"), a wholly-owned subsidiary of McDonnell Douglas Corporation ("McDonnell
Douglas"),  which in turn is wholly-owned by The Boeing Company ("Boeing").  The
accompanying  unaudited  consolidated financial statements have been prepared by
the Company in accordance  with  generally  accepted  accounting  principles 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 footnotes required by generally accepted accounting  principles for complete
financial  statements.  In  the  opinion  of  management  of  the  Company,  the
accompanying   consolidated   financial   statements   reflect  all  adjustments
(consisting of normal recurring  accruals) which are necessary to present fairly
the  consolidated  balance  sheets and the related  consolidated  statements  of
income and income  retained  for growth and cash flows for the  interim  periods
presented.  Operating  results for the three-month  period ended March 31, 1999,
are not necessarily  indicative of the results that may be expected for the year
ended December 31, 1999. The statements  should be read in conjunction  with the
notes to the consolidated  financial  statements  included in the Company's Form
10-K for the year ended December 31, 1998.


Note 2 -- Credit Agreements and Long-Term Debt

The  provisions  of various  credit and debt  agreements  require the Company to
maintain a minimum net worth,  restrict  indebtedness,  and limit cash dividends
and other distributions.  Under the most restrictive provision, $49.5 million of
the  Company's  income  retained for growth was available for dividends at March
31, 1999.


Note 3 -- Commitments and Contingencies

On November 1, 1996, The Allen Austin Harris Group, Inc. (the "Plaintiff") filed
a complaint in the Superior Court of the State of California, County of Alameda,
against the Company,  McDonnell  Douglas,  McDonnell  Douglas Aerospace - Middle
East  Limited  and  the  Selah  Group,  Inc.  (collectively  referred  to as the
"Defendants"). The Plaintiff, which had hoped to establish a manufacturing plant
abroad  with  various  assistance  from the  Defendants,  seeks  more than $57.0
million in alleged  damages  (primarily  consisting  of lost  profits)  based on
various theories. The Company believes it has meritorious defenses to all of the
Plaintiff's  allegations,  but is unable to determine at this stage of discovery
if the litigation will have any future material  adverse effect on the Company's
earnings, cash flow or financial position.

The  Company is a party to  litigation  in the  United  States  District  Court,
Southern District of Florida,  entitled  McDonnell  Douglas Finance  Corporation
adv. Aviaco International Leasing, Inc., Aviaco Traders International,  Inc. and
Craig  L.  Dobbin  with  Related  Counter-Claims  (collectively  referred  to as
"Aviaco").  The  foregoing  litigation  arose  out of an action  brought  by the
Company  in July 1991  seeking  remedies  on account  of  defaults  by the other
parties to the  litigation  under loan and related  documents  involving a $17.9
million loan made by the Company.  In January 1994, in response to the Company's
foreclosure  of two aircraft and a related  aircraft lease  agreement  which had
been collateral for the loan, Aviaco filed a counter-claim  against the Company,
asserting nine claims for alleged damages relating to the Company's  foreclosure
based on various tort and contractual theories.

The case  proceeded to jury trial on the three of nine claims which survived the
Company's  Motion for Summary  Judgment.  The case was  submitted to the jury on
October 16, 1997.  On October 17, 1997,  the jury returned a verdict in favor of
Aviaco awarding  aggregate  damages of  approximately  $12.2 million,  including
damages of  approximately  $10.0 million for the failure to exercise  reasonable
care with regard to the related lease agreement.

In December  1997,  the Company  filed a Motion for Judgment as a Matter of Law,
arguing, inter alia, to set aside the $10.0 million award as not being supported
by the record  evidence or by  applicable  law. On February 13, 1998,  the Judge
ruled in favor of the Company and set aside the $10.0 million award.

On March 2, 1998, the Judge entered a Final Judgment  against the Company in the
aggregate amount,  including prejudgment interest, of approximately $2.8 million
with post judgment  interest thereon at the rate of 5.42% per annum.  Aviaco has
appealed  the Final  Judgment  to the United  States  Court of  Appeals  for the
Eleventh Circuit. Taking into account amounts reserved for this litigation,  the
Company  does not expect such  litigation  to have any future  material  adverse
effect on its earnings, cash flow or financial position.

A number of legal  proceedings  and  claims are  pending  or have been  asserted
against  the  Company,  many of which are  covered by third  parties,  including
insurance  companies.  The  Company  believes  that the  final  outcome  of such
proceedings and claims will not have a material  adverse effect on its earnings,
cash flow or financial position.

Trans World Airlines,  Inc. ("TWA")  accounted for $160.0 million (5.7% of total
Company portfolio) and $163.3 million (5.8% of total Company portfolio) at March
31, 1999, and December 31, 1998,  respectively.  TWA faces significant financial
and operational challenges and, until recently,  operated under a reorganization
plan confirmed by the United States Bankruptcy Court in 1995.  McDonnell Douglas
provides  guaranties  to the Company for  certain  obligations  of TWA under the
various  lease  agreements  between the Company and TWA. At March 31, 1999,  the
maximum  aggregate  coverage under such guaranties was $32.6 million.  As of the
date hereof, TWA is current on its obligations to the Company.  If, however, TWA
were to default on its  obligations  to the Company,  this could have a material
adverse effect on the Company's earnings, cash flow or financial position.

World  Airways,  Inc.  ("World")  accounted  for $174.7  million  (6.2% of total
Company portfolio) and $176.4 million (6.3% of total Company portfolio) at March
31, 1999 and December 31, 1998,  respectively.  World experienced losses in 1998
and its cash  balances  have fallen to relatively  low levels.  Also,  Worldcorp
Inc.,  the majority  owner of World,  has recently made a  "prepackaged"  filing
under Chapter 11 of the U.S. bankruptcy code. With respect to the existing lease
agreements  between World and the Company,  World has requested that the Company
consider a reduction in rentals, elimination of maintenance reserve payments and
conversion of the subject two MD-11 aircraft to a freighter  configuration.  The
Company  is  studying  these  requests  and has  concluded  that  any  resulting
restructuring of these lease  transactions,  taking into account a guaranty from
McDonnell  Douglas,  is not  expected to have a material  adverse  effect on the
Company's earnings, cash flow or financial position.

On June 26,  1998,  Federal  Express  Corporation  ("FedEx")  gave notice to the
Company of its intention to terminate early (in late 1999) two lease  agreements
covering MD-11 freighter  aircraft which FedEx leases from the Company.  Even if
the leases are in fact  terminated  early,  the Company does not  anticipate any
material adverse effect on its earnings,  cash flow or financial position taking
into account current demand for the aircraft,  a guaranty from McDonnell Douglas
and certain other contractual  rights including payments due to the Company upon
early termination.

The Company had leased six Embraer EMB-120  aircraft to Westair.  As a result of
Westair's  cessation of operations at the end of May 1998, the lease  agreements
for such  aircraft have been  terminated  and the aircraft have been returned to
the Company.  The Company has been remarketing  these aircraft (along with other
used  EMB-120s it holds for sale or lease).  Although the market for EMB-120s is
currently weak, the Company does not expect this  transaction to have a material
adverse effect on the Company's earnings, cash flow or financial position.

In July 1998, the Company  terminated early a lease agreement  covering one used
DC-10-30  aircraft.  The  Company has  repossessed  such  aircraft  and has been
remarketing it in a currently weak market for this type of aircraft. Taking into
account a guaranty from McDonnell  Douglas,  this transaction is not expected to
have a material adverse effect on the Company's earnings, cash flow or financial
position.

The  Company has a $50.0  million  used  aircraft  purchase  bridge  facility to
AirTran Airlines ("AirTran").  This facility expires upon delivery to AirTran of
the first scheduled new Boeing 717-200 aircraft,  presently expected to occur in
1999.  Borrowings  under this  agreement  must be repaid within 180 days and the
interest rate is based on the London  Interbank  Offering Rate ("LIBOR").  There
were no amounts  outstanding  under this agreement at March 31, 1999 or December
31, 1998.

At March 31,  1999,  the Company had  commitments  to provide  leasing and other
financing totaling $75.0 million.

In conjunction with prior asset  dispositions and certain  guaranties,  at March
31, 1999, the Company was subject to a maximum recourse of $50.7 million.  Based
on trends to date,  any losses  related to such exposure are not expected by the
Company to be significant.

The Company  leases  aircraft  under capital leases which have been subleased to
others.  At March 31, 1999,  the Company had  guaranteed  the  repayment of $4.8
million in capital lease obligations associated with a 50% partner.


Item 2.       Management's Analysis of Results of Operations

-------------------------------------------------------------------------------
Forward-Looking Information Is Subject to Risk and Uncertainty

From  time to  time,  the  Company  may make  certain  statements  that  contain
projections  or  "forward-looking"   information  (as  defined  in  the  Private
Securities  Litigation  Reform Act of 1995) that involve  risk and  uncertainty.
Certain statements in this Form 10-Q,  particularly those in Note 3 of the Notes
to Consolidated Financial Statements, Item 2 of Part I and Items 1 and 5 of Part
II,  may  contain  forward-looking  information.  The  subject  matter  of  such
statements may include, but not be limited to, the effects on the Company of the
Boeing-McDonnell  Douglas merger and the Year 2000 date  conversion,  as well as
future  earnings,  costs,  expenditures,  losses,  residual  values and  various
business   environment   trends.   In  addition  to  those   contained   herein,
forward-looking  statements  and  projections  may be made by  management of the
Company orally or in writing including,  but not limited to, various sections of
the Company's  filings with the  Securities  and Exchange  Commission  under the
Securities Act of 1933 and the Securities Exchange Act of 1934.

Actual results and trends in the future may differ materially from projections 
depending on a variety of factors including, but not limited to, the effects on 
the Company of the Boeing-McDonnell Douglas merger and the Company's
relationship with Boeing, as well as strategic decisions relating to the Company
to be made by Boeing, the capital equipment requirements of United States and 
foreign businesses, capital availability and cost, changes in law and tax 
benefits, the tax position of Boeing (including the applicability of the 
alternative minimum tax), competition from other financial institutions, the 
Company's successful execution of internal operating plans and Year 2000
date  conversion  plans,  the  impact  of  Year  2000  issues  on the  Company's
customers,  vendors and service  providers,  defaults by  customers,  regulatory
uncertainties and legal proceedings.
-------------------------------------------------------------------------------


Interest on notes receivable increased $5.9 million (88.1%) from the first three
months of 1998, primarily attributable to a $255.1 million net increase in notes
receivable between March 31, 1998 and 1999.

Gain on disposal or re-lease of assets  increased $2.6 million  (54.2%) from the
first  three  months  of  1998,  primarily  attributable  to  sales  within  the
commercial equipment leasing and financing portfolio.

Provision for losses  decreased $1.0 million (37.0%) from the first three months
of 1998, primarily  attributable to the Company's  determination that additional
provisions  for losses  were not  necessary  or  appropriate  during the current
period given the valuation and assessment of the portfolio.

Other expenses decreased $2.6 million (86.7%) compared to the first three months
of 1998,  primarily  attributable to maintenance  expenses of approximately $2.0
million  incurred  in the first  three  months of 1998 on an  aircraft  that was
repossessed in March of 1997.

Year 2000 Date Conversion

The Year 2000 issue exists because many computer  systems and  applications  use
two-digit date fields to designate a year.  When the century date change occurs,
date-sensitive  systems may recognize the year 2000 as 1900, or not at all. This
inability  to  recognize  or properly  treat the Year 2000 may cause  systems to
process financial and operational information incorrectly.

The Company has assessed  (and  continues to  re-assess)  the impact of the Year
2000 issue on its information  technology  ("IT") systems.  In 1996, the Company
initiated a conversion from its existing lease administration system to programs
that  the  Company  has  been  advised  are  Year  2000  compliant.  This  lease
administration  conversion  project  has not yet  been  completed  although  the
majority of the tasks involved in such project have been  accomplished and it is
expected  that the project  will be  completed  approximately  at the end of the
second quarter of 1999. If such conversion  project is not completed  before the
end of  1999,  the  Company's  operations  could  be  adversely  and  materially
affected.  The Company has begun to develop a contingency  plan for the possible
unavailability  of its new lease  administration  system.  This plan essentially
involves the  remediation,  if necessary,  of the existing lease  administration
system.  The  Company  will  commence  the  conversion  of  its  general  ledger
accounting  system,  by approximately  the end of the second quarter,  to a Year
2000 compliant system, which is expected to be operational in the fourth quarter
of 1999.  Failure to  successfully  implement  the  conversion  of the Company's
general ledger system before year-end could  materially and adversely affect the
Company's operations.  With respect to the Company's other IT systems other than
its lease  administration  system,  the Company  intends to develop  contingency
plans during 1999 relating to possible Year 2000 problems to the extent it deems
necessary  and  appropriate,  taking  into  account  the  advice of its  outside
consultants,  who are expected to complete their analysis  approximately  at the
end of the third quarter of 1999.

Although  the  Company  does not  consider  it likely  that  Year 2000  problems
inherent within its IT systems will result in significant  operational problems,
the  possibility of such problems cannot be discounted at this time. The Company
has retained outside consultants to assist in its ongoing assessment and testing
of its computer system's vulnerability to Year 2000 problems.

With respect to non-IT systems, the Company has assessed and continues to assess
the  impact of Year 2000  issues on these  systems.  The  Company  has  retained
outside  consultants  to assist in its ongoing  assessment of possible Year 2000
problems relating to non-IT systems.

The  total  cost of the  Year  2000  project  to date has  been  funded  through
operating cash flows and has not had a material  adverse effect on the Company's
earnings,  cash flow or financial  position.  Based on information  available to
date,  the cost of the Year  2000  project,  including  any  remediation  of the
Company's IT and non-IT  systems (but  excluding the cost of converting to a new
lease administration system, a project initiated in 1996 to accomplish a Company
goal of increasing  productivity  irrespective  of the Year 2000 issue),  is not
expected to have a material adverse effect on the Company's earnings,  cash flow
or financial position.

No  assurance  can be given that Year 2000  problems of third  parties  (such as
vendors,  customers and other financial institutions with which the Company does
business)  will not  materially  impact  operations  or operating  results.  The
Company is assessing the Year 2000 readiness of such third parties whose lack of
Year 2000  readiness  could result in a material  adverse impact on the Company.
The Company has identified and sent inquiries to certain  significant  customers
and other  significant  third parties  regarding their Year 2000 readiness.  The
Company  has not  received  a  response  from  most of such  third  parties  and
therefore  is not in a  position  to assess  their  Year 2000  readiness  or the
likelihood  that their lack of readiness will have a material  adverse effect on
the Company. The Company expects this assessment will continue throughout 1999.

This entire discussion of Year 2000 issues contains forward-looking  information
which is subject to uncertainty  and risk. See  "Forward-Looking  Information is
Subject to Risk and Uncertainty" at the outset of this Item 2.


                                     Part II

Item 1.       Legal Proceedings

On November 1, 1996, The Allen Austin Harris Group, Inc. (the "Plaintiff") filed
a complaint in the Superior Court of the State of California, County of Alameda,
against the Company,  McDonnell  Douglas,  McDonnell  Douglas Aerospace - Middle
East  Limited  and  the  Selah  Group,  Inc.  (collectively  referred  to as the
"Defendants"). The Plaintiff, which had hoped to establish a manufacturing plant
abroad  with  various  assistance  from the  Defendants,  seeks  more than $57.0
million in alleged  damages  (primarily  consisting  of lost  profits)  based on
various theories. The Company believes it has meritorious defenses to all of the
Plaintiff's  allegations,  but is unable to determine at this stage of discovery
if the litigation will have any future material  adverse effect on the Company's
earnings, cash flow or financial position.

The  Company is a party to  litigation  in the  United  States  District  Court,
Southern District of Florida,  entitled  McDonnell  Douglas Finance  Corporation
adv. Aviaco International Leasing, Inc., Aviaco Traders International,  Inc. and
Craig  L.  Dobbin  with  Related  Counter-Claims  (collectively  referred  to as
"Aviaco").  The  foregoing  litigation  arose  out of an action  brought  by the
Company  in July 1991  seeking  remedies  on account  of  defaults  by the other
parties to the  litigation  under loan and related  documents  involving a $17.9
million loan made by the Company.  In January 1994, in response to the Company's
foreclosure  of two aircraft and a related  aircraft lease  agreement  which had
been collateral for the loan, Aviaco filed a counter-claim  against the Company,
asserting nine claims for alleged damages relating to the Company's  foreclosure
based on various tort and contractual theories.

The case  proceeded to jury trial on the three of nine claims which survived the
Company's  Motion for Summary  Judgment.  The case was  submitted to the jury on
October 16, 1997.  On October 17, 1997,  the jury returned a verdict in favor of
Aviaco awarding  aggregate  damages of  approximately  $12.2 million,  including
damages of  approximately  $10.0 million for the failure to exercise  reasonable
care with regard to the related lease agreement.

In December  1997,  the Company  filed a Motion for Judgment as a Matter of Law,
arguing, inter alia, to set aside the $10.0 million award as not being supported
by the record  evidence or by  applicable  law. On February 13, 1998,  the Judge
ruled in favor of the Company and set aside the $10.0 million award.

On March 2, 1998, the Judge entered a Final Judgment  against the Company in the
aggregate amount,  including prejudgment interest, of approximately $2.8 million
with post judgment  interest thereon at the rate of 5.42% per annum.  Aviaco has
appealed  the Final  Judgment  to the United  States  Court of  Appeals  for the
Eleventh Circuit. Taking into account amounts reserved for this litigation,  the
Company  does not expect such  litigation  to have any future  material  adverse
effect on its earnings, cash flow or financial position.

A number of legal  proceedings  and  claims are  pending  or have been  asserted
against  the  Company,  many of which are  covered by third  parties,  including
insurance  companies.  The  Company  believes  that the  final  outcome  of such
proceedings and claims will not have a material  adverse effect on its earnings,
cash flow or financial position.


Item 2.       Changes in Securities and Use of Proceeds

Omitted pursuant to instruction H(2).


Item 3.       Defaults Upon Senior Securities

Omitted pursuant to instruction H(2).


Item 4.       Submission of Matters to a Vote of Security Holders

Omitted pursuant to instruction H(2).


Item 5.       Other Information

Summarized below is information on the effects of the  Boeing-McDonnell  Douglas
merger,  portfolio  balances,  new business  volume,  analysis of allowance  for
losses on  financing  receivables  and credit loss  experience,  and  receivable
write-offs, net of recoveries by segment.

The Effects of the Boeing-McDonnell Douglas Merger

On August 1, 1997, the Boeing-McDonnell  Douglas merger was consummated pursuant
to an Agreement and Plan of Merger dated as of December 14, 1996,  among Boeing,
West  Acquisition  Corp.,  a  wholly-owned  subsidiary  of Boeing  ("Sub"),  and
McDonnell  Douglas  (the  "Merger  Agreement").  Under the  terms of the  Merger
Agreement,  Sub was  merged  into  McDonnell  Douglas,  with  McDonnell  Douglas
surviving as a wholly-owned subsidiary of Boeing.

Boeing is actively  conducting a review of the  operations  of the Company.  The
many  possible  ramifications  of strategic  decisions to be made by Boeing with
respect  to  the  Company  are  currently  unknown  and,  therefore,  cannot  be
quantified at this time.


Portfolio Balances

Portfolio balances for the Company's financial reporting segments are summarized
as follows:

<TABLE>
                                                                               March 31,       December 31,
(Dollars in millions)                                                            1999              1998
--------------------------------------------------------------------------------------------------------------
Aircraft Financing
  Boeing/McDonnell Douglas aircraft financing
<S>                                                                        <C>               <C>          
      Finance leases                                                       $       792.6     $       803.3
      Operating leases                                                             502.9             513.3
      Notes receivable                                                              82.1              82.9
                                                                           -----------------------------------
                                                                                 1,377.6           1,399.5
                                                                           -----------------------------------
  Other commercial aircraft financing
      Finance leases                                                               129.3             131.6
      Operating leases                                                              25.9              30.4
      Notes receivable                                                              12.1              12.0
                                                                           -----------------------------------
                                                                                   167.3             174.0
                                                                           -----------------------------------
Commercial Equipment Leasing and Financing
    Finance leases                                                                 471.4             430.1
    Operating leases                                                               332.1             345.5
    Notes receivable                                                               472.1             449.4
                                                                           -----------------------------------
                                                                                 1,275.6           1,225.0
                                                                           -----------------------------------
Other                                                                                0.6               1.4
                                                                           ------------------------------------
                                                                           $     2,821.1     $     2,799.9
                                                                           ===================================
</TABLE>


New Business Volume

New business volume is summarized as follows:
<TABLE>
                                                                                   Three months ended
                                                                                      March 31,
(Dollars in millions)                                                            1999              1998
--------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>               <C>        
Other commercial aircraft financing                                        $        -        $      13.5
Commercial equipment leasing and financing                                        122.1             76.8
                                                                           -----------------------------------
                                                                           $      122.1      $      90.3
                                                                           ===================================
</TABLE>


Analysis of Allowance for Losses on Financing Receivables and Credit Loss
Experience

<TABLE>
                                                                               March 31,       December 31,
(Dollars in millions)                                                            1999              1998
--------------------------------------------------------------------------------------------------------------

<S>                                                                        <C>                 <C>
Allowance for losses on financing receivables at beginning
    of year                                                                $      62.1         $   55.9
Provision for losses                                                               1.7              7.4
Write-offs, net of recoveries                                                     (5.4)            (2.5)
Other                                                                               -               1.3
                                                                           ------------------------------------
Allowance for losses on financing receivables at end of
    period                                                                 $      58.4         $   62.1
                                                                           ===================================

Allowance as a percentage of total receivables                                    3.0%             3.3%

Net write-offs as percent of average receivables                                  0.3%             0.1%

More than 90 days delinquent:
    Amount of delinquent installments                                      $       0.4          $   0.5
    Total receivables due from delinquent obligors                                 1.8              6.7
    Total receivables due from delinquent obligors
       as a percentage of total receivables                                       0.1%             0.4%
</TABLE>

Receivable Write-offs, Net of Recoveries by Segment

Commercial aircraft financing had no net write-offs of receivables for the three
months ended March 31, 1999 or 1998.  Commercial equipment leasing and financing
had net  write-offs  of $5.4 million and net  recoveries of $0.2 million for the
three months ended March 31, 1999 and 1998, respectively.


Item 6.       Exhibits and Reports on Form 8-K

A.    Exhibits

         Exhibit 12 Computation of Ratio of Income to Fixed Charges.

         Exhibit 27 Financial Data Schedule.

B.    Reports on Form 8-K

     None.



<PAGE>



                                   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,  its principal  financial  officer and by its principal  accounting
officer, thereunto duly authorized.



                               Boeing Capital Corporation


May 12, 1999                   /S/ STEVEN W. VOGEDING
                               __________________________________ 
                               Steven W. Vogeding
                               Vice President and Chief Financial
                               Officer (Principal Financial Officer) and
                               Registrant's Authorized Officer




                               /S/ MAURA R. MIZUGUCHI
                               __________________________________ 
                               Maura R. Mizuguchi
                               Controller (Principal Accounting Officer)