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

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                                    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 June 30, 2000

                                       OR

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

         For the transition period from ________________ to _________________


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                           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.)

            500 Naches Ave., SW, 3rd Floor - Renton, Washington 98055
                    (Address of principal executive offices)
                                 (425) 393-2914
              (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 August 14, 2000:                    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
<TABLE>
<CAPTION>

Boeing Capital Corporation and Subsidiaries
Consolidated Balance Sheets
                                                                                        June 30,        December 31,
(Dollars in millions, except stated value and par value)                                  2000              1999
------------------------------------------------------------------------------------------------------------------------
                                                                                      (Unaudited)
ASSETS
    Financing receivables:
<S>                                                                                 <C>              <C>
      Investment in finance leases                                                  $       1,628.9  $        1,372.8
      Notes receivable                                                                      1,135.7             708.0
                                                                                    ------------------------------------
                                                                                            2,764.6           2,080.8
      Allowance for losses on financing receivables                                          (146.1)            (60.7)
                                                                                    ------------------------------------
                                                                                            2,618.5           2,020.1
   Cash and cash equivalents                                                                   41.1              26.9
    Equipment under operating leases, net                                                   1,475.5             828.2
    Equipment held for sale or re-lease                                                        54.9              66.0
    Accounts due from Boeing and BCSC                                                           5.1               2.6
    Other assets                                                                               90.0              99.8
                                                                                    ------------------------------------
                                                                                    $       4,285.1  $        3,043.6
                                                                                    ====================================

LIABILITIES AND SHAREHOLDER'S EQUITY
    Short-term notes payable                                                        $         520.1  $          271.0
    Accounts payable and accrued expenses                                                      38.0              38.5
    Other liabilities                                                                         129.9              96.5
    Deferred income taxes                                                                     442.0             427.5
    Long-term debt:
      Senior                                                                                1,696.1           1,741.8
      Intercompany                                                                            858.5               -
      Subordinated                                                                             44.9              44.9
                                                                                    ------------------------------------
                                                                                            3,729.5           2,620.2
                                                                                    ------------------------------------

    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                                                          184.6              89.5
      Income retained for growth                                                              316.0             278.9
                                                                                    ------------------------------------
                                                                                              555.6             423.4
                                                                                    ------------------------------------
                                                                                    $       4,285.1  $        3,043.6
                                                                                    ====================================
See notes to consolidated financial statements.
</TABLE>


<PAGE>


<TABLE>
<CAPTION>

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

                                                            Three months ended                 Six months ended
                                                                 June 30,                          June 30,
(Dollars in millions)                                      2000            1999             2000              1999
-------------------------------------------------------------------------------------------------------------------------

REVENUES
<S>                                                    <C>              <C>              <C>            <C>
    Finance lease income                               $       36.6     $      28.8      $      69.4    $       58.0
    Interest income on notes receivable                        27.9            12.7             54.8            25.3
    Operating lease income, net of depreciation
       expense                                                 31.7            16.6             63.1            33.3
    Net gain on disposal or re-lease of assets                  5.0             6.4              8.1            13.8
    Other                                                       3.5             0.6              4.0             1.0
                                                      -------------------------------------------------------------------
                                                              104.7            65.1            199.4           131.4
                                                      -------------------------------------------------------------------

EXPENSES
    Interest expense                                           53.0            31.5            109.1            64.5
    Provision for losses                                        2.5             1.9              4.8             3.6
    Operating expenses                                          8.3             2.7             15.7             5.1
    Other                                                       7.6             4.7              8.4             5.1
                                                      -------------------------------------------------------------------
                                                               71.4            40.8            138.0            78.3
                                                      -------------------------------------------------------------------
Income before provision for income taxes                       33.3            24.3             61.4            53.1
Provision for income taxes                                     12.2             9.1             22.5            20.2
                                                      -------------------------------------------------------------------
Net income                                                     21.1            15.2             38.9            32.9
Income retained for growth at beginning of
    period                                                    295.8           245.0            278.9           236.2
Dividends                                                      (0.9)           (8.9)            (1.8)          (17.8)
                                                      ===================================================================
Income retained for growth at end of period            $      316.0     $     251.3      $     316.0    $      251.3
                                                      ===================================================================

See notes to consolidated financial statements.
</TABLE>


<PAGE>


<TABLE>
<CAPTION>

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

                                                                                              Six months ended
                                                                                                  June 30,
(Dollars in millions)                                                                     2000               1999
-------------------------------------------------------------------------------------------------------------------------

OPERATING ACTIVITIES
<S>                                                                                  <C>               <C>
    Net income                                                                       $        38.9     $        32.9
    Adjustments to reconcile net income to net cash provided by
       operating activities:
         Depreciation expense - equipment under operating leases                              46.5              37.8
         Net gain on disposal or re-lease of assets                                           (8.1)            (13.8)
         Provision for losses                                                                  4.8               3.6
         Change in assets and liabilities:
           Accounts with Boeing and BCSC                                                      12.8              (5.8)
           Other assets                                                                        9.8              (2.0)
           Accounts payable and accrued expenses                                              (1.9)             (2.2)
           Other liabilities                                                                   2.9               9.8
           Deferred income taxes                                                              (2.8)              8.5
         Other, net                                                                           (7.0)             (0.6)
                                                                                    -------------------------------------
                                                                                              95.9              68.2
                                                                                    -------------------------------------
INVESTING ACTIVITIES
    Net change in short-term notes and leases receivable                                     (81.3)            (36.0)
    Purchase of net assets from Boeing                                                    (1,261.9)              -
    Purchase of equipment for operating leases                                               (59.1)            (18.7)
    Proceeds from disposition of equipment and leases receivable                              54.8              87.5
    Collection of notes and leases receivable                                                505.6             164.1
    Acquisition of notes and leases receivable                                              (285.8)           (197.7)
                                                                                    -------------------------------------
                                                                                          (1,127.7)             (0.8)
                                                                                    -------------------------------------
FINANCING ACTIVITIES
    Net change in short-term notes payable                                                   249.1             (48.8)
    Long-term debt:
       Intercompany issuance for purchase of net assets from Boeing                        1,261.9               -
       Proceeds                                                                               51.6             145.0
       Repayments                                                                           (559.8)           (145.9)
    Payment of cash dividends                                                                 (1.8)            (17.8)
    Capital contribution from Boeing                                                          45.0               -
                                                                                    -------------------------------------
                                                                                           1,046.0             (67.5)
                                                                                    -------------------------------------
Net increase (decrease) in cash and cash equivalents                                          14.2              (0.1)
Cash and cash equivalents at beginning of year                                                26.9              20.3
                                                                                    =====================================
Cash and cash equivalents at end of period                                           $        41.1     $        20.2
                                                                                    =====================================

See notes to consolidated financial statements.
</TABLE>


<PAGE>

<TABLE>
<CAPTION>

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

                                                                                         Six months ended
                                                                                             June 30,
(Dollars in millions)                                                                          2000
---------------------------------------------------------------------------------------------------------------

NON-CASH INVESTING AND FINANCING ACTIVITIES FOR STOCK TRANSFER INCLUDED IN THE
    PORTFOLIO ACQUISITION (SEE NOTE 1):
<S>                                                                                   <C>
      Acquisition of leases receivable                                                $          (170.0)
                                                                                     ==========================
      Acquisition of accounts payable                                                 $             1.4
                                                                                     ==========================
      Acquisition of intercompany payables                                            $            60.1
                                                                                     ==========================
      Acquisition of long-term debt                                                   $            58.4
                                                                                     ==========================
      Capital contribution from Boeing for stock transfer                             $            50.1
                                                                                     ==========================

There were no non-cash  investing  and financing  activities  for the six months
ended June 30, 1999.

See notes to consolidated financial statements.
</TABLE>


<PAGE>


Boeing Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements
June 30, 2000
(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"),  which is 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 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 footnotes  required
by accounting  principles generally accepted in the United States of America 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 six-month period ended June 30, 2000, are
not  necessarily  indicative  of the results  that may be expected  for the year
ended December 31, 2000. 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, 1999.

As of March 31, 2000, the Company  acquired  certain tangible assets and assumed
certain liabilities of Boeing and certain subsidiaries of Boeing,  pursuant to a
Term  Sheet  dated as of January  1, 2000 as well as  various  definitive  asset
transfer agreements dated as of March 31, 2000 (collectively  referred to as the
"Transfer Agreements").  Under the terms of the Transfer Agreements, the Company
acquired,  effective  as of January 1, 2000, a  significant  portion of Boeing's
customer  financing  portfolio,  including  lease  and loan  agreements  and the
related receivables and assets (the "Portfolio"). The purchase price was paid in
the form of promissory notes, dated January 1, 2000, in the aggregate  principal
amount of $1,261.9 million,  together with an equity contribution to the Company
of $50.1 million. The Company has recorded an intercompany  receivable for $17.3
million from Boeing in consideration  for which the Company will assume Boeing's
deferred taxes with respect to the Portfolio.  The statements  should be read in
conjunction  with  the  notes  to the  Statements  of Net  Assets  Acquired  and
Statements  of Revenues,  Direct  Expenses  and  Identified  Corporate  Expenses
included in the Company's Form 8-K dated April 13, 2000.

The pro forma  unaudited  consolidated  results  of  operations  as  though  the
Portfolio had been acquired as of January 1, 1999 are estimated as follows:

<TABLE>
<CAPTION>

                                                                                             Six Months
(Dollars in millions)                                                                    Ended June 30, 1999
-----------------------------------------------------------------------------------------------------------------
<S>                                                                                   <C>
Revenues                                                                              $           209.6
Net income                                                                            $             7.1
</TABLE>

These  unaudited pro forma results have been prepared for  comparative  purposes
only and do not  purport to be  indicative  of the results of  operations  which
would have actually  resulted had the combinations  been in effect on January 1,
1999, or of future results of operations.


Note 2 -- Credit Agreements and Long-Term Debt

As of March 27,  2000,  $1.0  billion of the  364-day  revolving  credit line of
Boeing has been made available to the Company. This new credit facility replaces
the Company's  former $240.0 million credit line,  which was terminated on March
30, 2000.

The  provisions of the most  restrictive  debt covenant  prohibit the payment of
cash  dividends  by the  Company to the extent that the  Company's  consolidated
assets would be less than 115% of its  consolidated  liabilities  after dividend
payments.


Note 3 -- Commitments and Contingencies

Litigation

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. (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,  among other things,  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
appealed  the Final  Judgment  to the United  States  Court of  Appeals  for the
Eleventh  Circuit.  On June 8,  2000,  the Court of Appeals  affirmed  the Final
Judgment.  In July 2000,  Aviaco  filed a petition  for  rehearing.  Taking into
account amounts reserved for this  litigation,  the Company does not expect such
litigation to have any material  adverse  effect on its  earnings,  cash flow or
financial position.

A number of other legal proceedings and claims are pending or have been asserted
against the Company.  A substantial  number of such legal proceedings and claims
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.

Other

Viacao Aerea Rio-Grandense ("VARIG") accounted for $348.2 million (8.2% of total
Company  portfolio) as of June 30, 2000.  VARIG has defaulted on its obligations
under  leases  within the  Portfolio  in recent  years,  which has  resulted  in
deferrals and restructurings.  Taking into account collateral values, as well as
certain  first loss  deficiency  and lease rental  guaranties,  which Boeing has
provided to the Company covering a portion of the VARIG  obligations,  it is not
expected that the VARIG  transactions will have a material adverse effect on the
Company's earnings, cash flow or financial position.

World  Airways,  Inc.  ("World")  accounted  for $170.4  million  (4.0% of total
Company  portfolio) and $170.2 million (5.9% of total Company portfolio) at June
30, 2000 and  December  31,  1999,  respectively.  Based on  publicly  available
reports,  World  reported net income of $0.6  million for the second  quarter of
2000 and a quarter-end  cash position of $20.0 million,  which is a 72% increase
over its cash position at the end of 1999. World,  however, is still reporting a
total net loss of $4.1  million  for the first half of 2000.  McDonnell  Douglas
provides first loss  deficiency  and lease rental  guaranties to the Company for
certain  obligations of World under various lease agreements between the Company
and World.  Taking into account the guaranties and collateral  values, it is not
expected that the World  transactions will have a material adverse effect on the
Company's earnings, cash flow or financial position.

Trans World Airlines,  Inc. ("TWA")  accounted for $146.4 million (3.5% of total
Company  portfolio) and $147.3 million (5.1% of total Company portfolio) at June
30, 2000 and December  31, 1999,  respectively.  In April 1999,  Moody's  rating
agency  lowered  TWA's  Outlook  from  Stable  to  Negative.  Based on  publicly
available  information,  in the second quarter of 2000, TWA incurred another net
loss. McDonnell Douglas provides first loss deficiency guaranties to the Company
for certain  obligations of TWA under the various lease  agreements  between the
Company and TWA. At June 30, 2000,  the maximum  aggregate  coverage  under such
guaranties  was $41.5  million.  As of the date  hereof,  TWA is  current on its
payment  obligations  to the Company.  If,  however,  TWA were to default on its
payment obligations to the Company, this could have a material adverse effect on
the Company's earnings, cash flow or financial position.

At June 30,  2000,  the Company  had  commitments  to provide  leasing and other
financing  totaling  $1,339.1  million,  $1,059.5  million  of which  related to
financing new Boeing commercial  aircraft.  The Company anticipates that not all
of these  commitments  will be utilized  and that it will be able to arrange for
third-party investors to assume a portion of the remaining commitments.

In conjunction with prior asset dispositions and certain guaranties, at June 30,
2000,  the  Company  was  subject  to a maximum  contingent  liability  of $43.7
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 June 30,  2000,  the Company had  guaranteed  the  repayment of $3.6
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, and  particularly in Notes 2 and 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 impact on the  Company of
strategic  decisions of Boeing,  the level of new financing  opportunities  made
available  to the  Company  by Boeing,  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 Company's
relationship with Boeing,  as well as strategic  decisions of Boeing relating to
the Company,  the capital  equipment  requirements  of United States and foreign
businesses, capital availability and cost, changes in laws 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 particularly  including  implementation of
the Company's  directive from Boeing to lead the Boeing-wide  customer financing
efforts, defaults by customers, regulatory uncertainties and legal proceedings.
--------------------------------------------------------------------------------


Finance lease income  increased  $11.4 million (19.7%) from the first six months
of 1999, primarily  attributable to a comparable increase in finance leases as a
result of the  Portfolio  acquisition  (see Note 1 of the Notes to  Consolidated
Financial Statements in Item 1).

Interest on notes receivable increased $29.5 million (116.6%) from the first six
months of 1999,  primarily  attributable  to new  volume of  commercial  finance
(formerly  referred to as  commercial  equipment  leasing and  financing)  notes
receivable  and an increase  in notes  receivable  as a result of the  Portfolio
acquisition.

Net operating  lease income  increased  $29.8 million (89.5%) from the first six
months of 1999,  primarily  attributable to an increase in operating leases as a
result of the Portfolio acquisition.

Gain on disposal or re-lease of assets  decreased $5.7 million  (41.3%) from the
first six months of 1999, primarily  attributable to $5.5 million of income from
two sales within the commercial finance portfolio in the first half of 1999. The
remaining decrease is attributable to other sales within the commercial aircraft
portfolio and commercial finance portfolio in the first six months of 1999.

Other income  increased $3.0 million (300.0%) from the first six months of 1999,
primarily  attributable  to fee  income  of $2.1  million  and $1.1  million  in
intercompany  interest income earned on cash received by Boeing on the Company's
behalf for payments on leases and loans included in the Portfolio acquisition.

Interest  expense  increased  $44.6 million (69.2%) from the first six months of
1999, primarily attributable to the debt issued in connection with the Portfolio
acquisition  and a higher level of  borrowings  in 2000 as a result of increased
financing activity.

Provision for losses increased $1.2 million (33.3%) from the first six months of
1999,  primarily  attributable  to the  increase in financing  receivables  as a
result of the Portfolio acquisition.

Operating expenses increased $10.6 million (207.8%) from the first six months of
1999,  primarily  attributable  to the  addition of employees  and  nonrecurring
professional service fees incurred in early 2000 for various project assistance.

Other expenses increased $3.3 million (64.7%) from the first six months of 1999,
primarily  attributable to a $6.7 million  write-off of charges  relating to the
discontinuation of a new lease  administration  system conversion project in the
second  quarter of 2000,  as  compared  to a $4.2  million  write-down  taken on
aircraft returned to the Company in the second quarter of 1999.

Impact of Boeing's Customer Financing Consolidation

In 1999, the  commercial  aircraft  financing  group had negligible new business
volume  largely due to the fact that the Company was awaiting the decision  made
by  Boeing  in  the  fourth   quarter  of  1999  that  the  Company  would  have
responsibility for Boeing's customer  financing efforts.  Now that such decision
has been made, the Company is expected to experience a very significant increase
in new commercial aircraft financing volume compared with prior years.

As of March 31, 2000, the Company  acquired  certain tangible assets and assumed
certain liabilities of Boeing and certain subsidiaries of Boeing,  pursuant to a
Term Sheet dated as of January 1, 2000 as well as the various  definitive  asset
transfer  agreements dated as of March 31, 2000. Under the terms of the Transfer
Agreements, the Company acquired, effective as of January 1, 2000, a significant
portion of  Boeing's  customer  financing  portfolio,  including  lease and loan
agreements and the related  receivables and assets.  The purchase price was paid
in the form of  promissory  notes,  dated  January  1,  2000,  in the  aggregate
principal amount of $1,261.9  million,  together with an equity  contribution to
the  Company  of  $50.1  million.  The  Company  has  recorded  an  intercompany
receivable for $17.3 million from Boeing in consideration  for which the Company
will assume Boeing's deferred taxes with respect to the Portfolio.

A  portion  of  Boeing's  unfunded  commercial  aircraft  financing  commitments
existing as of June 30, 2000 of approximately  $3,700.0 million may be funded by
the Company, on a transaction by transaction basis,  subject to approval of each
transaction  by the Company's  investment  committee  (which may require  credit
enhancements  from Boeing or other parties or other conditions the Company deems
necessary to meet the Company's investment requirements).

Item 3.       Quantitative and Qualitative Disclosures About Market Risk

Omitted pursuant to instruction H(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. (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,  among other things,  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
appealed  the Final  Judgment  to the United  States  Court of  Appeals  for the
Eleventh  Circuit.  On June 8,  2000,  the Court of Appeals  affirmed  the Final
Judgment.  In July 2000,  Aviaco  filed a petition  for  rehearing.  Taking into
account amounts reserved for this  litigation,  the Company does not expect such
litigation to have any material  adverse  effect on its  earnings,  cash flow or
financial position.

A number of other 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 borrowing operations, 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.

Borrowing Operations

On October  10,  1997,  the  Company  filed  with the  Securities  and  Exchange
Commission  ("SEC")  a  Form  S-3  Registration  Statement  for a  public  shelf
registration of $1.2 billion of its debt securities (SEC File No. 333-37635). On
October 31, 1997, the SEC declared such Registration  Statement to be effective.
The  Company  has  authorized  the sale and  issuance  from  time to time at the
Company's  discretion of such debt securities in the form of Company's  Series X
medium-term  notes for the  registered  amount of $1.2  billion.  As of June 30,
2000, the Company issued $1,060.0 million in aggregate  principal amount of such
notes, at interest rates ranging from 5.35% to 7.64% and with maturities ranging
from nine months to 14 years.

On July 7,  1999,  the  Company  filed  with  the  SEC a Form  S-3  Registration
Statement  (SEC File No.  333-82391)  for a public  shelf  registration  of $2.5
billion of its debt  securities.  On July 20, 2000, the Company filed  Amendment
No. 1 to Form S-3  Registration  Statement  which will  permit the Company to
offer the $2.5  billion  together  with the  remaining  $140.0  million from the
October 10, 1997 Registration  Statement (SEC File No.  333-37635),  pursuant to
Rule  429.  The  Company  plans  to  request  the SEC to  declare  such  amended
Registration Statements to be effective in the third quarter of 2000.

As of March 27,  2000,  $1.0  billion of the  364-day  revolving  credit line of
Boeing has been made available to the Company. This new credit facility replaces
the Company's  former $240.0 million credit line,  which was terminated on March
30,  2000.  A copy  of the  Revolving  Credit  Agreement  and  related  Borrower
Subsidiary Letter are included with this report on Form 10-Q as Exhibit 10.


Portfolio Balances
<TABLE>
<CAPTION>

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

                                                                               June 30,        December 31,
(Dollars in millions)                                                            2000              1999
--------------------------------------------------------------------------------------------------------------
Commercial Aircraft Financing
  Boeing commercial aircraft financing
<S>                                                                        <C>               <C>
      Finance leases                                                       $       925.9     $       744.7
      Operating leases                                                           1,104.0             470.0
      Notes receivable                                                             338.9              51.8
                                                                           -----------------------------------
                                                                                 2,368.8           1,266.5
                                                                           -----------------------------------
  Other commercial aircraft financing
      Finance leases                                                               114.7             119.8
      Operating leases                                                              25.6              21.3
      Notes receivable                                                               2.8               3.2
                                                                           -----------------------------------
                                                                                   143.1             144.3
                                                                           -----------------------------------
Commercial Finance
    Finance leases                                                                 588.3             508.3
    Operating leases                                                               345.9             336.9
    Notes receivable                                                               793.5             652.4
                                                                           -----------------------------------
                                                                                 1,727.7           1,497.6
                                                                           -----------------------------------
Other                                                                                0.5               0.6
                                                                           ===================================
                                                                           $     4,240.1     $     2,909.0
                                                                           ===================================

</TABLE>

<TABLE>
<CAPTION>

New Business Volume

New business volume is summarized as follows:

                                                                                    Six months ended
                                                                                        June 30,
(Dollars in millions)                                                            2000              1999
--------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>               <C>
Boeing commercial aircraft financing                                        $        2.0       $       2.5
Commercial finance                                                                 343.0             212.4
                                                                           -----------------------------------
                                                                            $      345.0       $     214.9
                                                                           ===================================

</TABLE>


<TABLE>
<CAPTION>

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

                                                                               June 30,        December 31,
(Dollars in millions)                                                            2000              1999
--------------------------------------------------------------------------------------------------------------
Allowance for losses on financing receivables at beginning
<S>                                                                        <C>                <C>
    of year                                                                $       60.7       $        62.1
Provision for losses                                                                4.8                 7.4
Net recoveries (write-offs)                                                         0.4                (8.8)
Allowance acquired from Boeing                                                     80.2                 -
                                                                          ------------------------------------
Allowance for losses on financing receivables at end of
    period                                                                 $      146.1       $        60.7
                                                                          ====================================

Allowance as a percentage of total receivables                                      5.3%                2.9%

Net write-offs as percent of average receivables                                   - %                  0.4%

More than 90 days delinquent:
    Amount of delinquent installments                                      $        2.5       $         0.1
    Total receivables due from delinquent obligors                                 48.8                 0.8
    Total receivables due from delinquent obligors
       as a percentage of total receivables                                         1.8%                0.1%
</TABLE>

Receivable Write-offs, Net of Recoveries by Segment

Commercial  aircraft  financing had no net write-offs of receivables for the six
months ended June 30, 2000 or 1999.  Commercial  finance had net  recoveries  of
receivables  of $0.4  million for the six months ended June 30, 2000 and had net
write-offs of $5.6 million for the six months ended June 30, 1999.


Item 6.       Exhibits and Reports on Form 8-K

A.    Exhibits

         Exhibit 10.1 Revolving Credit Agreement.

         Exhibit 10.2 Borrower Subsidiary Letter.

         Exhibit 12 Computation of Ratio of Income to Fixed Charges.

         Exhibit 27 Financial Data Schedule.

B.    Reports on Form 8-K

         Form 8-K dated  April 13,  2000 to report  under Item 2, the  Portfolio
         acquisition  and  to  report  under  Item  7 the  pro  forma  financial
         information of the Portfolio acquisition.


<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

August 14, 2000                    /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)