Delinquencies Rise at Boeing Finance Unit

Boeing Co.’s finance unit said Monday that delinquent payments and nonperforming assets rose sharply in the first half of this year and that it might take a charge against earnings if the troubled 757 jet line was closed.

Executives of the Chicago-based company, the world’s largest commercial aircraft maker, said in an earnings conference call last month that Boeing was nearing a decision on whether to shut down the 757 jet line.

If that happens, Boeing would incur a charge of about $200 million and its net profit would be cut by about $100 million, they said in the call.

In a securities filing Monday, Boeing Capital Corp. reported that 23% of its receivables, or $1.76 billion, were owed by delinquent customers as of June 30.

Noting that many of its airline customers had filed for bankruptcy protection or have asked to restructure payments, Boeing Capital listed $1.07 billion in nonperforming assets, or 8.9% of its portfolio of $12 billion, up from 4.6% at the end of 2002.

Its largest customers include bankrupt carriers United Airlines, Hawaiian Airlines and Brazil’s Varig, along with struggling discount carrier ATA.

Seattle-based Boeing Capital, originally envisioned as a profit center but lately pressed into service to help struggling airlines take delivery of Boeing jets, lists $9.9 billion in aircraft financial services among $12.6 billion in assets. The remainder are mostly commercial equipment leases and financing.

The finance unit listed $9.3 billion in debt on its balance sheet, down from $9.5 billion at the end of 2002. Including that figure, Boeing’s total company debt stood at $14.6 billion.

Boeing Capital has previously booked several hundred million dollars in charges to reflect the crumbling value of its aircraft and the credit quality of its customers amid a steep slump in air travel exacerbated by the Sept. 11 terrorist attacks.