Boeing has consolidated and refocused its various finance operations into a lean, aggressive profit center in the wake of its 1997 merger with McDonnell Douglas.

The resulting company, Boeing Capital Corp, continues to provide financial support for customers who buy Boeing products, from missiles to 747s, according to BCC president Tom Motherway. But it also is further diversifying its portfolio to include business jets and a range of non-aviation assets such as steel mill equipment and even the odd river dredge.

BCC is structured as a separate company from Boeing, with its own credit rating and debt, according to Motherway. Its finances are likely to be moved off the Boeing balance sheet in a few years. Currently it has a portfolio of about $4 billion.

Boeing and McDonnell Douglas have been in the finance business for years, Motherway explained. First, it is necessary for providers of high cost, high technology capital goods to help finance promising customers. Second, such a business can also provide good shareholder returns. The old McDonnell Douglas Finance Corporation historically provided an after-tax return on equity of over 16% and made 18% in its last year, Motherway said.

The business is "a natural" for Boeing as the company has highly experienced finance talent and vast expertise in the major assets it sells, he said.

Look for BCC to continue its role in "bundling" new and used aircraft deals that combine sales with financing, modification and maintenance support, Motherway said. In addition to its assistance in recent Boeing deals with DHL and American Trans Air, BCC is structuring the Royal Air Force's C-17 lease. It looks to run seven years with two one-year options.

BCC doesn't plan to compete with major Boeing customers ILFC and GECAS. That's because BCC doesn't buy large blocks of aircraft on a speculative basis. It also emphasizes financial leases over the operating leases ILFC and GECAS are best known for, Motherway said. Indeed, BCC brought ILFC and another leasing company into the recent ATA deal. BCC also believes the majority of its aircraft-related business will involve used aircraft, with passenger-to-freighter conversions a growing component of that, he said.

And yes, if a customer has its heart set on a new Airbus, BCC is willing to finance the deal if it makes economic sense, Motherway said. After all, a buck's a buck to Boeing shareholders.

By Paul Proctor