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 June 30, 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 August 13, 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>
<CAPTION>

                                                                               June 30,        December 31,
(Dollars in millions, except stated value and par value)                         1999              1998
---------------------------------------------------------------------------------------------------------------
                                                                              (Unaudited)
ASSETS
    Financing receivables:
<S>                                                                        <C>               <C>
      Investment in finance leases                                         $       1,365.0   $       1,365.0
      Notes receivable                                                               582.9             545.7
                                                                           ------------------------------------
                                                                                   1,947.9           1,910.7
      Allowance for losses on financing receivables                                  (60.1)            (62.1)
                                                                           ------------------------------------
                                                                                   1,887.8           1,848.6
    Cash and cash equivalents                                                         20.2              20.3
    Equipment under operating leases, net                                            812.5             889.2
    Equipment held for sale or re-lease                                               73.9              62.3
    Other assets                                                                      43.0              41.0
                                                                           ------------------------------------
                                                                           $       2,837.4   $       2,861.4
                                                                           ====================================

LIABILITIES AND SHAREHOLDER'S EQUITY
    Short-term notes payable                                               $         187.9   $         236.7
    Accounts payable and accrued expenses                                             33.4              35.6
    Accounts with Boeing and BCSC                                                      0.9               6.7
    Other liabilities                                                                 94.6              84.8
    Deferred income taxes                                                            391.8             383.3
    Long-term debt:
      Senior                                                                       1,688.1           1,678.7
      Subordinated                                                                    44.9              54.9
                                                                           ------------------------------------
                                                                                   2,441.6           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                                                     251.3             236.2
                                                                           ------------------------------------
                                                                                     395.8             380.7
                                                                           ------------------------------------
                                                                           $       2,837.4   $       2,861.4
                                                                           ====================================
See notes to consolidated financial statements.
</TABLE>


<PAGE>


Boeing Capital Corporation and Subsidiaries
Consolidated Statements of Income and Income Retained for Growth
(Unaudited)
<TABLE>
<CAPTION>
                                                                    Three months ended          Six months ended
                                                                         June 30,                   June 30,
(Dollars in millions)                                               1999          1998         1999          1998
----------------------------------------------------------------------------------------------------------------------

OPERATING INCOME
<S>                                                             <C>           <C>           <C>          <C>
    Finance lease income                                        $     28.8    $     31.5    $     58.0   $     63.4
    Interest income on notes receivable                               12.7           8.2          25.3         14.9
    Operating lease income, net of depreciation expense               16.6          17.2          33.3         34.8
    Net gain on disposal or re-lease of assets                         6.4          10.4          13.8         15.2
    Other                                                              0.6           0.3           1.0          0.8
                                                                ------------------------------------------------------
                                                                      65.1          67.6         131.4        129.1
                                                                ------------------------------------------------------

EXPENSES
    Interest expense                                                  31.5          32.2          64.5         64.7
    Provision for losses                                               1.9           2.6           3.6          5.3
    Operating expenses                                                 2.7           2.6           5.1          5.2
    Other                                                              4.7           0.8           5.1          3.8
                                                                ------------------------------------------------------
                                                                      40.8          38.2          78.3         79.0
                                                                ------------------------------------------------------
Income before provision for income taxes                              24.3          29.4          53.1         50.1
Provision for income taxes                                             9.1          10.9          20.2         18.5
                                                                ------------------------------------------------------
Net income                                                            15.2          18.5          32.9         31.6
Income retained for growth at beginning of period                    245.0         210.5         236.2        208.6
Dividends                                                             (8.9)         (0.9)        (17.8)       (12.1)
                                                                ======================================================
Income retained for growth at end of period                     $    251.3    $    228.1    $    251.3   $    228.1
                                                                ======================================================
</TABLE>
See notes to consolidated financial statements.


<PAGE>


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

<TABLE>
<CAPTION>
                                                                                    Six months ended
                                                                                        June 30,
(Dollars in millions)                                                           1999              1998
---------------------------------------------------------------------------------------------------------------

OPERATING ACTIVITIES
<S>                                                                        <C>               <C>
    Net income                                                             $        32.9     $        31.6
    Adjustments to reconcile net income to net cash provided by
       operating activities:
         Depreciation expense - equipment under operating leases                    37.8              36.0
         Net gain on disposal or re-lease of assets                                (13.8)            (15.2)
         Provision for losses                                                        3.6               5.3
         Change in assets and liabilities:
           Accounts with Boeing and BCSC                                            (5.8)             12.0
           Other assets                                                             (2.0)             (3.5)
           Accounts payable and accrued expenses                                    (2.2)            (14.9)
           Other liabilities                                                         9.8               8.9
           Deferred income taxes                                                     8.5              13.6
         Other, net                                                                 (0.6)              0.3
                                                                           ------------------------------------
                                                                                    68.2              74.1
                                                                           ------------------------------------
INVESTING ACTIVITIES
    Net change in short-term notes and leases receivable                           (36.0)             (3.2)
    Purchase of equipment for operating leases                                     (18.7)            (13.5)
    Proceeds from disposition of equipment, notes and
       leases receivable                                                            87.5              82.9
    Collection of notes and leases receivable                                      164.1              88.3
    Acquisition of notes and leases receivable                                    (197.7)           (220.4)
                                                                           ------------------------------------
                                                                                    (0.8)            (65.9)
                                                                           ------------------------------------
FINANCING ACTIVITIES
    Net change in short-term borrowings                                            (48.8)             13.3
    Debt having maturities more than 90 days:
       Proceeds                                                                    145.0              85.0
       Repayments                                                                 (145.9)           (121.2)
    Payment of cash dividends                                                      (17.8)            (12.1)
                                                                           ------------------------------------
                                                                                   (67.5)            (35.0)
                                                                           ------------------------------------
Net decrease in cash and cash equivalents                                           (0.1)            (26.8)
Cash and cash equivalents at beginning of year                                      20.3              39.1
                                                                           ====================================
Cash and cash equivalents at end of period                                 $        20.2     $        12.3
                                                                           ====================================

See notes to consolidated financial statements.
</TABLE>



<PAGE>


Boeing Capital Corporation and Subsidiaries
Notes to Consolidated Financial Statements
June 30,1999
(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 six-month period ended June 30, 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, $66.4 million of
the Company's income retained for growth was available for dividends at June 30,
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 $155.0 million (5.6% of total
Company  portfolio) and $163.3 million (5.8% of total Company portfolio) at June
30, 1999 and December  31, 1998,  respectively.  In April 1999,  Moody's  rating
agency lowered TWA's Outlook from Stable to Negative. McDonnell Douglas provides
guaranties to the Company for certain obligations of TWA under the various lease
agreements  between the Company and TWA. At June 30, 1999, the maximum aggregate
coverage under such guaranties was $32.3 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 $172.9  million  (6.3% of total
Company  portfolio) and $176.4 million (6.3% of total Company portfolio) at June
30, 1999 and December 31, 1998,  respectively.  World experienced losses in 1998
and its cash balances fell to relatively low levels.  Also,  Worldcorp Inc., the
majority owner of World, has 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 reduce rentals and
maintenance  reserve  payments.  The Company  anticipates  it will agree to such
requests, subject to satisfactory documentation.  The Company has concluded that
the 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).  During the second  quarter of 1999,
the  Company  adjusted  the  carrying  value  of  the  ex-Westair   aircraft  to
approximate their fair value,  resulting in a pre-tax loss of approximately $3.4
million. The Company does not expect the disposition of these aircraft 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,  the  disposition of the aircraft 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 June 30, 1999 or December
31, 1998.

At June 30,  1999,  the Company  had  commitments  to provide  leasing and other
financing totaling $176.0 million.

In conjunction with prior asset dispositions and certain guaranties, at June 30,
1999, the Company was subject to a maximum  recourse of $48.3 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,  1999,  the Company had  guaranteed  the  repayment of $4.2
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.
--------------------------------------------------------------------------------


Finance lease income  decreased $5.4 million (8.5%) from the first six months of
1998,  primarily  attributable  to two MD-11  aircraft  that were sold in August
1998.

Interest on notes receivable  increased $10.4 million (69.8%) from the first six
months of 1998, primarily attributable to a $171.8 million net increase in notes
receivable between June 30, 1998 and 1999.

Provision for losses decreased $1.7 million (32.1%) from the first six 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 increased $1.3 million (34.2%) from the first six months of 1998,
primarily  attributable to a $4.2 million  write-down taken on aircraft returned
to the  Company,  as compared to  maintenance  expenses  of  approximately  $2.1
million incurred in the first six months of 1998 on a repossessed aircraft.

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  and  properly  treat the Year 2000 may cause  systems to
process financial and operational  information  incorrectly.  In July of 1999 we
decided to replace our independent  advisory firm for Year 2000 matters with the
independent  advisory firm which installed our new lease  administration  system
(discussed  below).  The new  firm has  commenced  work for us and we are in the
process of entering into a definitive  agreement with them. As further discussed
below,  the new advisory firm will assist us in converting our systems which are
not Year 2000 compliant to systems which are Year 2000 compliant and to test our
systems for Year 2000 compliance.  We do not expect this change of firms to have
a  material  adverse  effect on the cost or timing  of the  Company's  Year 2000
compliance efforts.

We have  assessed and continue to re-assess the impact of the Year 2000 issue on
our information  technology  ("IT") systems.  One of our principal IT systems is
our lease administration system, by which we keep track of our leases, loans and
certain other financial information. In 1996, we initiated a conversion from our
existing lease  administration  system to programs that we have been advised are
Year 2000 compliant. We plan to complete conversion of this lease administration
system  in the  latter  half of  August  of 1999.  We plan to test the new lease
administration  system  during the third  quarter of 1999 to confirm  that it is
compliant.  In the event that such testing proves the system not to be compliant
and the system cannot be made compliant prior to the end of 1999, our operations
could be materially adversely affected.

Our second principal IT system is our general ledger  accounting  system. We use
our general ledger accounting system to keep track of our financial results.  We
are in the process of  selecting a general  ledger  accounting  system  which is
certified by its  manufacturer to be Year 2000 compliant.  We expect to commence
converting our general ledger  accounting system to a Year 2000 compliant system
in the third quarter of 1999. While we expect the compliant accounting system to
be operational  during the fourth quarter of 1999, if it is not, our contingency
plan is to remediate our existing general ledger  accounting system at a cost of
approximately  $75,000.  If our  contingency  plan for this  system  fails,  our
operations could be materially and adversely affected.

With respect to our IT systems  other than our lease  administration  system and
general  ledger  accounting  system,  we intend  to  develop  contingency  plans
relating to possible  Year 2000  problems  to the extent we deem  necessary  and
appropriate, taking into account the advice of the advisory firm which has begun
examining  our IT  systems  and  which we  expect  will  complete  its  analysis
approximately at the end of the third quarter of 1999.

Although we do not consider it likely that Year 2000  problems  inherent  within
our IT systems will result in significant  operational problems, the possibility
of such problems cannot be discounted at this time.

With respect to our non-IT  systems such as our telephone and elevator  systems,
we have  assessed and  continue to  re-assess  the impact of Year 2000 issues on
these  systems.  We believe  that our non-IT  systems  are Year 2000  compliant.
However,  no assurance can be given that our  operations  will not be materially
adversely affected by problems with the non-IT systems related to the Year 2000.

The  total  cost of the Year 2000  conversion  efforts  to date has been  funded
through  operating  cash flows and has not had a material  adverse effect on our
earnings, cash flow or financial position. This amount does not include the cost
of converting to a new lease administrative  system, a project initiated in 1996
to accomplish our goal of increasing productivity  irrespective of the Year 2000
issue.  Based on  information  available  to  date,  the  estimated  cost of the
remaining Year 2000 conversion efforts,  including any remediation of our IT and
non-IT systems as well as testing of all our systems, is $1.5 million.

We can give no  assurance  that Year 2000  problems  of third  parties  (such as
vendors,  customers and other financial  institutions with which we do business)
will not materially and adversely impact our operations or operating results. We
are in the process of assessing  the Year 2000  readiness of those third parties
whose lack of Year 2000  readiness  could have a material  adverse impact on our
operations.  In  early  1999,  we  identified  and  sent  inquiries  to  certain
significant customers and third parties regarding their Year 2000 readiness.  We
have  received a response  from the  majority  of such third  parties  and their
responses to date do not indicate a likelihood that their lack of readiness will
have a material  adverse  effect on our  operations.  Our assessment of the Year
2000 readiness of certain third parties 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, 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.

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
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.

Borrowing Operations

On June 22, 1999, the Company authorized an additional $300.0 million (resulting
in an aggregate of $1.2 billion  authorized) of medium-term  notes to be offered
and sold from time to time in the Company's discretion pursuant to the Company's
public shelf registration (SEC Registration No. 333-37635). As of June 30, 1999,
the  Company  issued  $716.4  million  of the  $1.2  billion  medium-term  notes
authorized,  at interest  rates ranging from 5.10% to 6.77% and with  maturities
ranging from 10 months to 11 years,  leaving an unused balance of $483.6 million
on June 30, 1999.

On July 7, 1999, the Company filed with the  Securities and Exchange  Commission
("SEC") a Form S-3  Registration  Statement for a public shelf  registration  of
$2.5 billion of its debt  securities (SEC File No.  333-82391).  The Company has
not  requested the SEC to declare such  Registration  Statement to be effective.
The Company presently expects to commence  utilizing the new shelf  registration
upon completion of its currently effective shelf registration.


Portfolio Balances

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

<TABLE>
<CAPTION>

                                                                               June 30,        December 31,
(Dollars in millions)                                                            1999              1998
--------------------------------------------------------------------------------------------------------------
Aircraft Financing
  Boeing/McDonnell Douglas aircraft financing
<S>                                                                        <C>               <C>
      Finance leases                                                       $       783.7     $       803.3
      Operating leases                                                             466.9             513.3
      Notes receivable                                                              49.0              82.9
                                                                           -----------------------------------
                                                                                 1,299.6           1,399.5
                                                                           -----------------------------------
  Other commercial aircraft financing
      Finance leases                                                               125.4             131.6
      Operating leases                                                              21.4              30.4
      Notes receivable                                                               3.5              12.0
                                                                           -----------------------------------
                                                                                   150.3             174.0
                                                                           -----------------------------------
Commercial Equipment Leasing and Financing
    Finance leases                                                                 455.9             430.1
    Operating leases                                                               324.2             345.5
    Notes receivable                                                               529.8             449.4
                                                                           -----------------------------------
                                                                                 1,309.9           1,225.0
                                                                           -----------------------------------
Other                                                                                0.6               1.4
                                                                           ===================================
                                                                           $     2,760.4     $     2,799.9
                                                                           ===================================
</TABLE>



New Business Volume

New business volume is summarized as follows:

<TABLE>
<CAPTION>

                                                                                    Six months ended
                                                                                        June 30,
(Dollars in millions)                                                            1999              1998
--------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>               <C>
Boeing/McDonnell Douglas aircraft financing                                $         2.5     $        25.5
Other commercial aircraft financing                                                  -                22.5
Commercial equipment leasing and financing                                         212.4             171.8
                                                                           -----------------------------------
                                                                           $       214.9     $       219.8
                                                                           ===================================
</TABLE>


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

<TABLE>
<CAPTION>

                                                                               June 30,        December 31,
(Dollars in millions)                                                            1999              1998
--------------------------------------------------------------------------------------------------------------
Allowance for losses on financing receivables at beginning
<S>                                                                        <C>              <C>
    of year                                                                $        62.1    $        55.9
Provision for losses                                                                 3.6              7.4
Write-offs, net of recoveries                                                       (5.6)            (2.5)
Other                                                                                -                1.3
                                                                          ====================================
Allowance for losses on financing receivables at end of
    period                                                                 $        60.1    $        62.1
                                                                          ====================================

Allowance as a percentage of total receivables                                       3.1%             3.3%

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

More than 90 days delinquent:
    Amount of delinquent installments                                      $         0.3    $         0.5
    Total receivables due from delinquent obligors                                   1.7              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 six
months ended June 30, 1999 or 1998.  Commercial  equipment leasing and financing
had net write-offs of $5.6 million for the six months ended June 30, 1999 and no
write-offs of receivables for the six months ended June 30, 1998.


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


August 13, 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)