10-Q 1 ba-20220331.htm 10-Q ba-20220331
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ba-20220331_g1.jpg
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                      
Commission file number 1-442
 THE BOEING COMPANY
(Exact name of registrant as specified in its charter)
Delaware 91-0425694
(State or other jurisdiction of
incorporation or organization)		 (I.R.S. Employer Identification No.)
100 N. Riverside Plaza,Chicago,IL 60606-1596
(Address of principal executive offices) (Zip Code)
(312)544-2000
(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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405/ of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer☒Accelerated filer☐
Non-accelerated filer☐Smaller reporting company ☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $5.00 Par ValueBANew York Stock Exchange
As of April 20, 2022, there were 591,635,833 shares of common stock, $5.00 par value, issued and outstanding.


THE BOEING COMPANY
FORM 10-Q
For the Quarter Ended March 31, 2022
INDEX
Part I. Financial Information (Unaudited)Page
Item 1.
Item 2.
Item 3.
Item 4.
Part II. Other Information
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.

Part I. Financial Information
Item 1. Financial Statements

The Boeing Company and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
(Dollars in millions, except per share data)Three months ended March 31
20222021
Sales of products$11,427 $12,518 
Sales of services2,564 2,699 
Total revenues13,991 15,217 
Cost of products(11,412)(11,632)
Cost of services(2,226)(2,167)
Boeing Capital interest expense(7)(9)
Total costs and expenses(13,645)(13,808)
346 1,409 
(Loss)/income from operating investments, net(20)37 
General and administrative expense(863)(1,032)
Research and development expense, net(633)(499)
Gain on dispositions, net1 2 
Loss from operations(1,169)(83)
Other income, net181 190 
Interest and debt expense(630)(679)
Loss before income taxes(1,618)(572)
Income tax benefit376 11 
Net loss(1,242)(561)
Less: net loss attributable to noncontrolling interest(23)(24)
Net loss attributable to Boeing Shareholders($1,219)($537)
Basic loss per share($2.06)($0.92)
Diluted loss per share($2.06)($0.92)
Weighted average diluted shares (millions)591.7585.4
See Notes to the Condensed Consolidated Financial Statements.
1
The Boeing Company and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
(Dollars in millions)Three months ended March 31
2022 2021 
Net loss($1,242)($561)
Other comprehensive income, net of tax:
Currency translation adjustments24 (36)
Unrealized gain on derivative instruments:
Unrealized gain arising during period, net of tax of ($28) and ($3)
94 11 
Reclassification adjustment for losses/(gains) included in net loss, net of tax of ($9) and $0
35 (2)
Total unrealized gain on derivative instruments, net of tax129 9 
Defined benefit pension plans and other postretirement benefits:
Amortization of prior service credits included in net periodic pension cost, net of tax of $6 and $6
(23)(23)
Amortization of actuarial losses included in net periodic pension cost, net of tax of ($40) and ($65)
159 228 
Settlements included in net loss, net of tax of $0 and $0
1 
Pension and postretirement cost related to our equity method investments, net of tax of $0 and ($1)
2 
Total defined benefit pension plans and other postretirement benefits, net of tax136 208 
Other comprehensive income, net of tax289 181 
Comprehensive loss, net of tax(953)(380)
Less: Comprehensive loss related to noncontrolling interest(23)(24)
Comprehensive loss attributable to Boeing Shareholders, net of tax($930)($356)
See Notes to the Condensed Consolidated Financial Statements.
2
The Boeing Company and Subsidiaries
Condensed Consolidated Statements of Financial Position
(Unaudited)
(Dollars in millions, except per share data)March 31
2022		December 31
2021
Assets
Cash and cash equivalents$7,409 $8,052 
Short-term and other investments4,873 8,192 
Accounts receivable, net2,407 2,641 
Unbilled receivables, net8,991 8,620 
Current portion of customer financing, net157 117 
Inventories79,819 78,823 
Other current assets, net2,356 2,221 
Total current assets106,012 108,666 
Customer financing, net1,580 1,695 
Property, plant and equipment, net of accumulated depreciation of $20,759 and $20,538
10,755 10,918 
Goodwill8,065 8,068 
Acquired intangible assets, net2,492 2,562 
Deferred income taxes91 77 
Investments992 975 
Other assets, net of accumulated amortization of $1,024 and $975
5,814 5,591 
Total assets$135,801 $138,552 
Liabilities and equity
Accounts payable$8,779 $9,261 
Accrued liabilities17,864 18,455 
Advances and progress billings52,458 52,980 
Short-term debt and current portion of long-term debt2,591 1,296 
Total current liabilities81,692 81,992 
Deferred income taxes158 218 
Accrued retiree health care3,471 3,528 
Accrued pension plan liability, net8,719 9,104 
Other long-term liabilities1,879 1,750 
Long-term debt55,150 56,806 
Total liabilities151,069 153,398 
Shareholders’ equity:
Common stock, par value $5.00 — 1,200,000,000 shares authorized; 1,012,261,159 shares issued
5,061 5,061 
Additional paid-in capital9,295 9,052 
Treasury stock, at cost - 420,886,484 and 423,343,707 shares
(51,573)(51,861)
Retained earnings33,189 34,408 
Accumulated other comprehensive loss(11,370)(11,659)
Total shareholders’ deficit(15,398)(14,999)
Noncontrolling interests130 153 
Total equity(15,268)(14,846)
Total liabilities and equity$135,801 $138,552 
See Notes to the Condensed Consolidated Financial Statements.
3
The Boeing Company and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in millions)Three months ended March 31
20222021
Cash flows – operating activities:
Net loss($1,242)($561)
Adjustments to reconcile net loss to net cash used by operating activities:
Non-cash items – 
Share-based plans expense203 321 
Treasury shares issued for 401(k) contribution329 306 
Depreciation and amortization486 536 
Investment/asset impairment charges, net72 16 
Customer financing valuation adjustments48 
Gain on dispositions, net(1)(2)
Other charges and credits, net175 35 
Changes in assets and liabilities – 
Accounts receivable237 (394)
Unbilled receivables(356)(790)
Advances and progress billings(522)421 
Inventories(1,203)(680)
Other current assets140 153 
Accounts payable(369)(819)
Accrued liabilities(594)(1,615)
Income taxes receivable, payable and deferred(403)(34)
Other long-term liabilities96 (84)
Pension and other postretirement plans(371)(265)
Customer financing, net18 46 
Other41 23 
Net cash used by operating activities(3,216)(3,387)
Cash flows – investing activities:
Payments to acquire property, plant and equipment(349)(291)
Proceeds from disposals of property, plant and equipment 8 2 
Contributions to investments(1,732)(9,688)
Proceeds from investments5,037 12,738 
Other1 3 
Net cash provided by investing activities2,965 2,764 
Cash flows – financing activities:
New borrowings2 9,814 
Debt repayments(396)(9,847)
Stock options exercised30 23 
Employee taxes on certain share-based payment arrangements(32)(38)
Net cash used by financing activities(396)(48)
Effect of exchange rate changes on cash and cash equivalents(3)(18)
Net decrease in cash & cash equivalents, including restricted(650)(689)
Cash & cash equivalents, including restricted, at beginning of year8,104 7,835 
Cash & cash equivalents, including restricted, at end of period7,454 7,146 
Less restricted cash & cash equivalents, included in Investments45 87 
Cash and cash equivalents at end of period$7,409 $7,059 
See Notes to the Condensed Consolidated Financial Statements.
4
The Boeing Company and Subsidiaries
Condensed Consolidated Statements of Equity
For the three months ended March 31, 2022 and 2021
(Unaudited)
Boeing shareholders  
(Dollars in millions, except per share data)Common
Stock		Additional
Paid-In
Capital		Treasury StockRetained
Earnings		Accumulated Other Comprehensive LossNon-
controlling
Interests		Total
Balance at January 1, 2021$5,061 $7,787 ($52,641)$38,610 ($17,133)$241 ($18,075)
Net loss(537)(24)(561)
Other comprehensive income, net of tax of ($63)
181 181 
Share-based compensation321 321 
Treasury shares issued for stock options exercised, net
(16)39 23 
Treasury shares issued for other share-based plans, net
(73)37 (36)
Treasury shares issued for 401(k) contribution136 170 306 
Balance at March 31, 2021$5,061 $8,155 ($52,395)$38,073 ($16,952)$217 ($17,841)
Balance at January 1, 2022$5,061 $9,052 ($51,861)$34,408 ($11,659)$153 ($14,846)
Net loss(1,219)(23)(1,242)
Other comprehensive income, net of tax of ($71)
289 289 
Share-based compensation 203 203 
Treasury shares issued for stock options exercised, net(19)49 30 
Treasury shares issued for other share-based plans, net(67)36 (31)
Treasury shares issued for 401(k) contribution126 203 329 
Balance at March 31, 2022$5,061 $9,295 ($51,573)$33,189 ($11,370)$130 ($15,268)
See Notes to the Condensed Consolidated Financial Statements.



5
The Boeing Company and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Summary of Business Segment Data
(Unaudited)
(Dollars in millions)Three months ended March 31
20222021
Revenues:
Commercial Airplanes$4,161 $4,269 
Defense, Space & Security5,483 7,185 
Global Services4,314 3,749 
Boeing Capital46 60 
Unallocated items, eliminations and other(13)(46)
Total revenues$13,991 $15,217 
Earnings/(loss) from operations:
Commercial Airplanes($859)($856)
Defense, Space & Security(929)405 
Global Services632 441 
Boeing Capital(36)21 
Segment operating (loss)/earnings(1,192)11 
Unallocated items, eliminations and other(260)(364)
FAS/CAS service cost adjustment283 270 
Loss from operations(1,169)(83)
Other income, net181 190 
Interest and debt expense(630)(679)
Loss before income taxes(1,618)(572)
Income tax benefit376 11 
Net loss(1,242)(561)
Less: Net loss attributable to noncontrolling interest(23)(24)
Net loss attributable to Boeing Shareholders($1,219)($537)
This information is an integral part of the Notes to the Condensed Consolidated Financial Statements. See Note 17 for further segment results.
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The Boeing Company and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Dollars in millions, except otherwise stated)
(Unaudited)
Note 1 – Basis of Presentation
The condensed consolidated interim financial statements included in this report have been prepared by management of The Boeing Company (herein referred to as “Boeing”, the “Company”, “we”, “us”, or “our”). In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation are reflected in the interim financial statements. The results of operations for the period ended March 31, 2022 are not necessarily indicative of the operating results for the full year. The interim financial statements should be read in conjunction with the audited Consolidated Financial Statements, including the notes thereto, included in our 2021 Annual Report on Form 10-K.
Liquidity Matters
During the first three months of 2022, net cash used by operating activities was $3.2 billion. Our operating cash flows continue to be impacted by lower commercial airplane deliveries and concessions paid to 737 MAX customers. We expect negative operating cash flows until commercial deliveries ramp up. As a result, our cash and short-term investment balance was $12.3 billion at March 31, 2022, down from $16.2 billion at December 31, 2021, while our debt balance was $57.7 billion at March 31, 2022, down from $58.1 billion at December 31, 2021. Short-term debt and the current portion of long-term debt increased to $2.6 billion at March 31, 2022 from $1.3 billion at December 31, 2021. The current portion of long-term debt includes term notes of $0.9 billion maturing in 2022.
As of March 31, 2022, our unused borrowing capacity on revolving credit agreements is $14.7 billion, unchanged from December 31, 2021. We anticipate that these credit lines will remain undrawn and primarily serve as back-up liquidity to support our general corporate borrowing needs. Our borrowing capacity includes $6.3 billion scheduled to expire in October 2022, of which $3.1 billion has a one-year term out option that allows us to extend the maturity of any borrowings one additional year.
Our short-term and long-term credit ratings remained unchanged during the first quarter of 2022. There is risk for future downgrades.
At March 31, 2022 and December 31, 2021, trade payables included $2.1 billion and $2.3 billion payable to suppliers who have elected to participate in supply chain financing programs. We do not believe that future changes in the availability of supply chain financing will have a significant impact on our liquidity.
We are also working with our customers and supply chain to accelerate receipts and conserve cash. For example, the United States Department of Defense (U.S. DoD) has taken steps to work with its industry partners to increase liquidity in the form of increased progress payment rates and reductions in withholds among other initiatives.
We continue to transform and improve our business processes. These activities are not intended to constrain our capacity but to enable the Company to emerge stronger and be more resilient when the market recovers.
Based on our current best estimates of market demand, planned production rates, timing of cash receipts and expenditures, our ability to successfully implement further actions to improve liquidity, as well as our ability to access additional liquidity, if needed, we believe it is probable that we will be able to fund our operations for the foreseeable future.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We believe
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that the accounting estimates and assumptions are appropriate, however, given the increased uncertainties surrounding the severity and duration of the impacts of the COVID-19 pandemic actual results could differ from those estimates.
Long-term Contracts
Changes in estimated revenues, cost of sales, and the related effect on operating income are recognized using a cumulative catch-up adjustment which recognizes in the current period the cumulative effect of the changes on current and prior periods based on a long-term contract’s percentage-of-completion. When the current estimates of total sales and costs for a long-term contract indicate a loss, a provision for the entire reach-forward loss on the long-term contract is recognized.
Net cumulative catch-up adjustments to prior periods' revenue and earnings, including certain reach-forward losses, across all long-term contracts were as follows:
(In millions - except per share amounts)Three months ended March 31
20222021
(Decrease)/increase to Revenue($612)$7 
Increase to Loss from operations($1,130)($176)
Decrease to Diluted EPS($1.47)($0.29)
Note 2 – Earnings Per Share
Basic and diluted earnings per share are computed using the two-class method, which is an earnings allocation method that determines earnings per share for common shares and participating securities. The undistributed earnings are allocated between common shares and participating securities as if all earnings had been distributed during the period. Participating securities and common shares have equal rights to undistributed earnings.
Basic earnings per share is calculated by taking net earnings, less earnings available to participating securities, divided by the basic weighted average common shares outstanding.
Diluted earnings per share is calculated by taking net earnings, less earnings available to participating securities, divided by the diluted weighted average common shares outstanding.
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The elements used in the computation of basic and diluted earnings per share were as follows:
(In millions - except per share amounts)Three months ended March 31
20222021
Net loss attributable to Boeing Shareholders($1,219)($537)
Less: earnings available to participating securities
Net loss available to common shareholders($1,219)($537)
Basic
Basic weighted average shares outstanding
591.7 585.4 
Less: participating securities(1)
0.3 0.4 
Basic weighted average common shares outstanding
591.4 585.0 
Diluted
Basic weighted average shares outstanding
591.7 585.4 
Dilutive potential common shares(2)
Diluted weighted average shares outstanding
591.7 585.4 
Less: participating securities(1)
0.3 0.4 
Diluted weighted average common shares outstanding
591.4 585.0 
Net loss per share:
Basic
($2.06)($0.92)
Diluted
(2.06)(0.92)
(1)Participating securities include certain instruments in our deferred compensation plan.
(2)Diluted earnings per share includes any dilutive impact of stock options, restricted stock units, performance-based restricted stock units and performance awards.
As a result of incurring a net loss for the three months ended March 31, 2022 and 2021, potential common shares of 3.6 million and 1.7 million were excluded from diluted loss per share because the effect would have been antidilutive. In addition, the following table includes the number of shares that may be dilutive potential common shares in the future. These shares were not included in the computation of diluted loss per share because the effect was either antidilutive or the performance condition was not met.
(Shares in millions)Three months ended March 31
20222021
Performance awards1.6 2.6 
Performance-based restricted stock units0.4 0.7 
Restricted stock units0.4 1.4 
Stock options0.6 0.2 
Note 3 – Income Taxes
Our effective tax rates were 23.2% and 1.9% for the three months ended March 31, 2022 and 2021. The 2022 estimated annual effective tax rate reflects the 21% federal tax rate and an increase to the valuation allowance, which is partially offset by research and development tax credits. The 2021 rate also reflected the 21% federal tax rate which was largely offset by discrete tax expenses recorded in the first quarter of 2021 primarily related to an increase in the valuation allowance.
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As of December 31, 2021, the Company had recorded valuation allowances of $2,423 primarily for certain federal deferred tax assets, as well as for certain federal and state net operating loss and tax credit carryforwards. To measure the valuation allowance, the Company estimated in what year each of its deferred tax assets and liabilities would reverse using systematic and logical methods to estimate the reversal patterns. Based on these methods, deferred tax liabilities are assumed to reverse and generate taxable income over the next 5 to 10 years while deferred tax assets related to pension and other postretirement benefit obligations are assumed to reverse and generate tax deductions over the next 15 to 20 years. The valuation allowance primarily results from not having sufficient income from deferred tax liability reversals in the appropriate future periods to support the realization of deferred tax assets.
Federal income tax audits have been settled for all years prior to 2018. The Internal Revenue Service (IRS) began the 2018-2019 federal tax audit in the first quarter of 2021 and added tax year 2020 to the audit in the fourth quarter of 2021. We are also subject to examination in major state and international jurisdictions for the 2008-2020 tax years. We believe appropriate provisions for all outstanding tax issues have been made for all jurisdictions and all open years.
Note 4 – Allowances for Losses on Financial Assets
The changes in allowances for expected credit losses for the three months ended March 31, 2022 and 2021 consisted of the following:
Accounts receivable Unbilled receivablesOther current assetsCustomer financingOther assetsTotal
Balance at January 1, 2021($444)($129)($72)($17)($140)($802)
Changes in estimates10 (1)(6)(42)(39)
Write-offs1 1 
Balance at March 31, 2021($433)($130)($78)($17)($182)($840)
Balance at January 1, 2022($390)($91)($62)($18)($186)($747)
Changes in estimates(7)15 5 (48)(22)(57)
Write-offs6 6 
Recoveries1 1 
Balance at March 31, 2022($390)($76)($57)($66)($208)($797)
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Note 5 – Inventories
Inventories consisted of the following:
March 31
2022		December 31
2021
Long-term contracts in progress$821 $872 
Commercial aircraft programs69,239 68,106 
Commercial spare parts, used aircraft, general stock materials and other
9,759 9,845 
Total$79,819 $78,823 
Commercial spare parts, used aircraft, general stock materials and other includes capitalized precontract costs of $710 at March 31, 2022 and $648 at December 31, 2021 primarily related to KC-46A Tanker and Commercial Crew. See Note 9.
Commercial Aircraft Programs
The increase in commercial aircraft programs inventory during 2022 reflects a continued buildup of 787 aircraft, as well as growth in 777X inventory. Commercial aircraft programs inventory includes approximately 320 737 MAX aircraft and 115 787 aircraft at March 31, 2022 as compared with 335 737 MAX aircraft and 110 787 aircraft at December 31, 2021.
A number of customers have requested to defer deliveries or to cancel orders. We are currently remarketing certain aircraft and may have to remarket additional aircraft in future periods. If we are unable to successfully remarket the aircraft, determine further production rate reductions are necessary, and/or contract the program accounting quantities, future earnings may be reduced and/or additional reach-forward losses may have to be recorded.
At March 31, 2022 and December 31, 2021, commercial aircraft programs inventory included the following amounts related to the 737 program: deferred production costs of $1,753 and $1,296 and unamortized tooling and other non-recurring costs of $600 and $617. At March 31, 2022, $2,343 of 737 deferred production costs, unamortized tooling and other non-recurring costs are expected to be recovered from units included in the program accounting quantity that have firm orders and $10 is expected to be recovered from units included in the program accounting quantity that represent expected future orders.
At March 31, 2022 and December 31, 2021, commercial aircraft programs inventory included the following amounts related to the 777X program: deferred production costs of $1,091 and $652 and $3,572 and $3,521 of unamortized tooling and other non-recurring costs. In April 2022, we decided to pause production of the 777X-9 during 2022 and 2023. We expect that the production pause will result in abnormal production costs that will be period expensed in future periods and continue until 777X-9 production resumes. The 777X program has near break-even margins at March 31, 2022. The level of profitability on the 777X program will be subject to a number of factors. These factors include continued market uncertainty, the impacts of COVID-19 on our production system as well as impacts on our supply chain and customers, further production rate adjustments for the 777X or other commercial aircraft programs, any contraction of the accounting quantity and potential risks associated with the testing program and the timing of aircraft certification. One or more of these factors could result in additional reach-forward losses on the 777X program in future periods.
During the fourth quarter of 2021, we determined that estimated costs to complete the 787 program plus costs already included in 787 inventory exceeded estimated revenues from the program. The resulting reach-forward loss of $3,460 was recorded as a reduction to deferred production costs. At March 31, 2022 and December 31, 2021, commercial aircraft programs inventory included the following amounts related to the 787 program: deferred production costs of $11,753 and $11,693, $1,861 and $1,907 of supplier advances, and $1,818 and $1,815 of unamortized tooling and other non-recurring costs. At March 31, 2022, $8,901 of 787 deferred production costs, unamortized tooling and other non-recurring costs are expected to be recovered from units included in the program accounting quantity that have firm
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orders and $4,670 is expected to be recovered from units included in the program accounting quantity that represent expected future orders. We expensed abnormal production costs of $312 during the three months ended March 31, 2022.
Commercial aircraft programs inventory included amounts credited in cash or other consideration (early issue sales consideration) to airline customers totaling $3,383 and $3,290 at March 31, 2022 and December 31, 2021.
Note 6 – Contracts with Customers
Unbilled receivables increased from $8,620 at December 31, 2021 to $8,991 at March 31, 2022, primarily driven by revenue recognized at Defense, Space & Security (BDS) and Global Services (BGS) in excess of billings.
Advances and progress billings decreased from $52,980 at December 31, 2021 to $52,458 at March 31, 2022, primarily driven by revenue recognized at BDS, Commercial Airplanes (BCA), and BGS and the return of BCA customer advances, partially offset by advances on orders received.
Revenues recognized during the three months ended March 31, 2022 and 2021 from amounts recorded as Advances and progress billings at the beginning of each year were $3,401 and $4,718.
Note 7 – Customer Financing
Customer financing primarily relates to the Boeing Capital (BCC) segment. Financing arrangements typically range in terms from 1 to 12 years and may include options to extend or terminate leases. Certain leases include provisions to allow the lessee to purchase the underlying aircraft at a specified price.
Customer financing consisted of the following:
March 31
2022		December 31
2021
Financing receivables:
Investment in sales-type/finance leases$886 $944 
Notes410 412 
Total financing receivables
1,296 1,356 
Less allowance for losses on receivables(66)(18)
Financing receivables, net1,230 1,338 
Operating lease equipment, at cost, less accumulated depreciation of $62 and $58
507 474 
Total$1,737 $1,812 
At March 31, 2022 and December 31, 2021, $412 and $378 were determined to be uncollectible financing receivables and placed on non-accrual status. The increase in the allowance for losses on receivables during the three months ended March 31, 2022 was primarily due to impacts of the war in Ukraine. Customer financing interest income received was $3 and $6 the three months ended March 31, 2022 and 2021.
Customer financing receivables past due as of March 31, 2022 were $1.
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Our financing receivable balances at March 31, 2022 by internal credit rating category and year of origination consisted of the following:
Rating categoriesCurrent2021202020192018PriorTotal
BBB$98 $98 
BB$9 $231 $118 $42 $13 121 534 
B35 188 223 
CCC7 24 410 441 
Total carrying value of financing receivables$9 $266 $125 $66 $13 $817 $1,296 
At March 31, 2022, our allowance for losses related to receivables with ratings of CCC, B, BB, and BBB. We applied default rates that averaged 88.1%, 26.8%, 3.4%, and 0.1%, respectively, to the exposure associated with those receivables.
Customer Financing Exposure
The majority of our customer financing portfolio is concentrated in the following aircraft models:
March 31
2022		December 31
2021
717 Aircraft ($58 and $62 accounted for as operating leases)
$589 $603 
747-8 Aircraft (accounted for as sales-type finance leases)394 435 
737 Aircraft ($186 and $145 accounted for as operating leases)
204 163 
777 Aircraft ($221 and $225 accounted for as operating leases)
229 233 
MD-80 Aircraft (accounted for as sales-type finance leases)140 142 
757 Aircraft (accounted for as sales-type finance leases)121 126 
747-400 Aircraft ($0 and $1 accounted for as operating leases)
48 50 
Operating lease equipment primarily includes large commercial jet aircraft.
Lease income recorded in revenue on the Condensed Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021 included $18 and $13 from sales-type/finance leases, and $15 and $18 from operating leases, of which $4 and $2 related to variable operating lease payments. Profit at the commencement of sales-type leases was recorded in revenue for the three months ended March 31, 2022 and 2021 in the amount of $4 and $16.
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Note 8 – Investments
Our investments, which are recorded in Short-term and other investments or Investments, consisted of the following:
March 31
2022		December 31
2021
Equity method investments (1)
$947 $930 
Time deposits4,331 7,676 
Available for sale debt instruments497 464 
Equity and other investments45 45 
Restricted cash & cash equivalents(2)
45 52 
Total$5,865 $9,167 
(1)Dividends received were $27 and $5 during the three months ended March 31, 2022 and 2021.
(2)Reflects amounts restricted in support of our property sales, workers’ compensation programs, and insurance premiums.
Allowance for losses on available for sale debt instruments are assessed quarterly. All instruments are considered investment grade and, as such, we have not recognized an allowance for credit losses as of March 31, 2022.
Note 9 – Commitments and Contingencies
737 MAX Grounding
Over 185 countries have approved the resumption of 737 MAX operations. The Civil Aviation Administration of China issued an airworthiness directive in the fourth quarter of 2021 outlining actions required for airlines to return to service. The 737 MAX has yet to return to service in China. While we expect 737 MAX deliveries to China to resume in 2022, subject to final regulatory approvals, risk remains around the timing and rate of those deliveries. The 737 MAX remains grounded in a small number of non-U.S. jurisdictions.
We have gradually increased production rates since 2020 and expect to increase the production rate to 31 per month during the second quarter of 2022, as well as implement further gradual production rate increases in subsequent periods based on market demand and supply chain capacity.
We continued to produce at abnormally low production rates through the first quarter of 2022 and expensed abnormal production costs of $188 and $568 during the three months ended March 31, 2022 and 2021. We do not expect the remaining abnormal costs related to the 737 MAX to be significant.
In the first quarter of 2022, we delivered 81 aircraft. We have approximately 320 airplanes in inventory as of March 31, 2022 and we anticipate delivering most of these aircraft by the end of 2023. We continue to work with customers who have requested to defer deliveries or to cancel orders for 737 MAX aircraft, and we are remarketing and/or delaying deliveries of certain aircraft included within inventory. In the event that we are unable to resume aircraft deliveries in China and/or ramp up deliveries consistent with our assumptions, our expectation of delivery timing and our expectation regarding future gradual production rate increases could be impacted.
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The following table summarizes changes in the 737 MAX customer concessions and other considerations liability during the three months ended March 31, 2022 and 2021.
20222021
Beginning balance – January 1$2,940 $5,537 
Reductions for payments made(550)(1,172)
Reductions for concessions and other in-kind considerations(5)(25)
Changes in estimates34 30 
Ending balance – March 31$2,419 $4,370 
The liability balance of $2.4 billion at March 31, 2022 includes $1.8 billion of contracted customer concessions and other liabilities and $0.6 billion that remains subject to negotiation with customers. The contracted amount includes $0.8 billion expected to be liquidated by lower customer delivery payments, $0.8 billion expected to be paid in cash and $0.2 billion in other concessions. Of the cash payments to customers, we expect to pay $0.6 billion in 2022. The type of consideration to be provided for the remaining $0.6 billion will depend on the outcomes of negotiations with customers.
Environmental
The following table summarizes environmental remediation activity during the three months ended March 31, 2022 and 2021.
20222021
Beginning balance – January 1$605 $565 
Reductions for payments made, net of recoveries(13)
Changes in estimates48 15 
Ending balance – March 31$653 $567 
The liabilities recorded represent our best estimate or the low end of a range of reasonably possible costs expected to be incurred to remediate sites, including operation and maintenance over periods of up to 30 years. It is reasonably possible that we may incur charges that exceed these recorded amounts because of regulatory agency orders and directives, changes in laws and/or regulations, higher than expected costs and/or the discovery of new or additional contamination. As part of our estimating process, we develop a range of reasonably possible alternate scenarios that includes the high end of a range of reasonably possible cost estimates for all remediation sites for which we have sufficient information based on our experience and existing laws and regulations. There are some potential remediation obligations where the costs of remediation cannot be reasonably estimated. At March 31, 2022 and December 31, 2021, the high end of the estimated range of reasonably possible remediation costs exceeded our recorded liabilities by $1,094.
Product Warranties
The following table summarizes product warranty activity recorded during the three months ended March 31, 2022 and 2021.
20222021
Beginning balance – January 1$1,900 $1,527 
Additions for current year deliveries35 17 
Reductions for payments made(118)(44)
Changes in estimates149 234 
Ending balance – March 31$1,966 $1,734 
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Commercial Aircraft Commitments
In conjunction with signing definitive agreements for the sale of new aircraft (Sale Aircraft), we have entered into trade-in commitments with certain customers that give them the right to trade in used aircraft at a specified price upon the purchase of Sale Aircraft. The probability that trade-in commitments will be exercised is determined by using both quantitative information from valuation sources and qualitative information from other sources. The probability of exercise is assessed quarterly, or as events trigger a change, and takes into consideration the current economic and airline industry environments. Trade-in commitments, which can be terminated by mutual consent with the customer, may be exercised only during the period specified in the agreement, and require advance notice by the customer.
Trade-in commitment agreements at March 31, 2022 have expiration dates from 2022 through 2029. At March 31, 2022 and December 31, 2021 total contractual trade-in commitments were $1,289 and $612. As of March 31, 2022 and December 31, 2021, we estimated that it was probable we would be obligated to perform on certain of these commitments with net amounts payable to customers totaling $379 and $283 and the fair value of the related trade-in aircraft was $379 and $283.
Financing Commitments