Chicago O Hare International Airport and Chicago Midway International Airport

Transcription

1 C I T Y O F C H I C A G O Chicago O Hare International Airport and Chicago Midway International Airport Chicago Investor Conference August 3, 2016

2 This Investor Presentation is provided for your general information and convenience only, is current only as of its date and does not constitute an offer to sell or a solicitation of an offer to buy securities. The information contained herein does not constitute a sufficient basis for making a decision with respect to the purchase or sale of any security. All information regarding or relating to bonds issued or to be issued by the City of Chicago ( the City ) is qualified in its entirety by the relevant Official Statement and any related supplements and continuing disclosure. Investors should review the relevant Official Statement and any related supplements and continuing disclosure before making a decision with respect to the purchase or sale of any bonds issued or to be issued by the City. In addition, before purchasing any bond issued or to be issued by the City, please consult your legal and financial advisors for information about and analysis of the bonds risks and their suitability as an investment in your particular circumstances. The City makes no representation in this Investor Presentation regarding the reliability or accuracy of any information in this Investor Presentation. The financial data and other information provided herein are given in summary form and are not warranted as to completeness or accuracy and are subject to change without notice. Certain of the information set forth herein has been derived from external sources that has not been independently verified, and no representation or warranty, expressed or implied, is made as to, and no reliance should be placed on the fairness, accuracy, completeness or correctness of, such information contained herein. None of the City or its representatives or agents, including any underwriters of bonds issued or to be issued by the City, shall have any liability whatsoever in negligence or otherwise for any loss however arising from any use of this Investor Presentation or its contents or otherwise arising in connection with this Investor Presentation or any other information or material discussed. By viewing this Investor Presentation, you agree not to duplicate, copy, download, screen capture, electronically store or record this Investor Presentation except for your own personal use, nor to produce, publish or distribute this Investor Presentation in any form whatsoever. Events may occur subsequent to the date hereof that would have a material adverse effect on the information that is presented herein. The City is under no obligation to update any of the information set forth herein. No dealer, broker, salesperson or any other person has been authorized by the City to give any information or make any representation in connection with the City or any bonds of any of the City, and if given or made, such other information or representation must not be relied upon as having been authorized by the City. This Investor Presentation includes forward-looking statements based on current beliefs and expectative about future events. Forward-looking statements include financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future events. Forward-looking statements are not guarantees of future performance and are subject to inherent risks, uncertainties and assumptions about the City, Chicago O Hare International Airport and Chicago Midway International Airport, changes in economic conditions globally or in the State of Illinois and political and regulatory factors. Those events are uncertain; their outcome may differ from current expectations which may in turn significantly affect expected results. Actual results may differ materially from those projected or implied in these forward-looking statements. Any forward-looking statement contained in this Investor Presentation speaks as of the date of this Investor Presentation. The City undertakes no obligation to publicly revise or update any forward-looking statements in light of new information or future events. 1

3 C H I C AG O R EG I O N S ST RO N G A I R P O RTS The City s central location and large economic base make it an ideal for air service The City of Chicago owns and operates Chicago O Hare International Airport and Chicago Midway International Airport Three of the four largest U.S. airlines hub at Chicago s Airports. O Hare: United Airlines and American Airlines Midway: Southwest Airlines Third Largest Air Trade Area in the U.S.- approximately 9.8 million Air Trade Area City of Chicago 2,722,389 City of Chicago Indiana Source: City of Chicago Department of Aviation ( CDA ) Total Chicago ATA Population 9,753,872 2

4 ST R AT EG I C V I S I O N FO R T H E C H I C AG O A I R P O RT SYST E M BENEFITS TO THE CITY CUSTOMER SERVICE GLOBAL CONNECTIVITY WORK AS A BUSINESS PARTNER Enhance/Facilitate economic activity in the Air Trade Area Direct: Development Indirect: Tax revenue, business and job growth World-class facilities Best-in-class technology Quality services and products Encourage growth among current airlines and create environment for new entrants (domestic, international, cargo) Encourage Growth: Increase flight frequency and aircraft size Focus on improving yields for airlines, concessionaires and other business partners Improve concession revenues, per passenger and total Increase international capacity Source: CDA 3

5 U. S. CO M M E RCIAL A I R S E RV I C E T R E N D S Airlines continue to consolidate their service at their largest hubs 1 Consolidation of service at large hubs will create a leaner and more efficient air transportation network that is more likely to be profitable (yet also more likely to be congested) 2 Domestic airlines realized record profits of $25.6 billion in 2015 Ultra Low Cost Carriers (ULCC)s have grown rapidly, increasing seat capacity by 21 percent in 2015 and are scheduled to grow a further 19 percent in Source: Wittman, M.D. and W.S. Swelbar Trends and Market Forces Shaping Small Community Air Service in the United States. MIT International Center for Air Transportation. Report No. ICAT Page 4 2 Source: Wittman, M.D. and W.S. Swelbar Trends and Market Forces Shaping Small Community Air Service in the United States. MIT International Center for Air Transportation. Report No. ICAT Page 19 3 Source: Innovata, accessed July

6 C H I C AG O O ' H A R E I N T E R N AT I O N A L A I R P O RT 5

7 O H A R E ST R E N G T H S A critical market and hub for United and American O Hare fulfills a critical role in the U.S. and global air transport systems The airlines and airport are prepared for growth The City is the 3rd largest U.S. Origin & Destination (O&D) market Critical international gateway 2nd busiest U.S. airport and 4th busiest worldwide based on passengers 6

8 S I G N I F I C A N T G ROW T H AT O H A R E Strong Market: Chicago and its suburbs are a global destination with a diverse economy The Air Trade Area is the 3rd largest O&D market in the U.S. O Hare serves a critical role in the systems of both United and American O Hare has seen significant Low-Cost Carrier ( LCC ) growth in recent years; LCC enplaned passengers increased 61% in 2015 from the prior year, and over six times since 2009 Recent Growth: 2015 enplaned and deplaned passengers grew at 9.8% Through June 2016, enplaned and deplaned passengers have grown 3.3% over the same period from % O&D enplaned passenger growth in 2015 Source: Ricondo and Associates; Report of the Airport Consultant Source: Chicago Department of Aviation, Airport Activity Statistics 7

9 Millions O HARE S POSITION AS A TOP GLOBAL AIRPORT IS DRIVEN BY NUMEROUS FAC TORS When measured by passengers, O Hare is the 2 rd largest U.S. airport and the 4 th largest worldwide 1 When measured by operations, O Hare is #2 worldwide 1 O Hare is the largest international midcontinent gateway Top World & U.S. Airports by Operations Top U.S. Airports by Passengers Domestic O&D Passengers Top 5 U.S. Airports 3 Rank Airport Operations 1 Atlanta 882,497 2 Chicago-O Hare 875,136 3 Dallas Ft. Worth 681,244 4 Los Angeles 655,564 5 Beijing 590,169 Rank 1 Source: Airports Council International (Preliminary) 2 Source: Ricondo and Associates; Report of the Airport Consultant, Chapter Source: U.S. Department of Transportation DB1B Survey Airport Passengers (millions) 1 Atlanta Chicago O Hare Los Angeles Dallas Ft. Worth New York JFK LAX LAS ORD DEN MCO 8

10 Millions T H E S T R E N G T H O F T H E O & D M A R K E T P R O V I D E S T H E F O U N DAT I O N FOR GROWTH AT O ' H A R E The strength of the O&D market, the third largest in the US, is the foundation for the significant role O Hare plays in the systems and profits of both United and American; O Hare is the third most profitable hub for both airlines 1,2 Approximately half of enplaned passengers at O Hare are O&D 3 O&D enplanements have grown since 2009 and continue to improve 3 40 Total Enplanements ,3 O&D %: 47.9% 47.3% 49.6% 50.7% 50.2% 50.0% 52.3% Connecting Enplanements O&D Enplanements Source: U.S. Department of Transportation DB1B Survey 2 Source: Ricondo and Associates; Report of the Airport Consultant, Exhibit Source: Ricondo and Associates; Report of the Airport Consultant, Table 4-7 9

11 O H A R E P O S I T I O N S C A R R I E RS TO TA K E A DVA N TAG E O F LU C R AT I V E A L L I A N C ES O Hare is served by 21 U.S. flag and 35 foreign flag carriers 1 O Hare offers non-stop service to 231 destinations, providing unmatched connectivity to the world 2 Star Alliance oneworld SkyTeam Other Note: Regional partners of U.S. flag carriers not shown 1 Source: Innovata, as of July 2016 and includes airlines operating seasonally 2 Source: Innovata, includes seasonal service, Graphic Sources: Respective alliance and airline websites 10

12 O ' H A R E P ROV I D ES ST RO N G D O M EST I C S E RV I C E ACRO S S T H E U. S. O Hare has 1,097 daily departures to 166 domestic non-stop destinations This is an increase of 16 destinations since 2010 No other airport serves as many domestic non-stop destinations as O Hare Of the top 15 markets with non-stop service from O Hare, all are served by at least three carriers 47 of O Hare s top 50 O&D markets are served by multiple carriers Source: Innovata, as of July 2016 includes seasonal service. Graphic Source: Ricondo and Associates 11

13 E N P L A N E M E N T G R O W T H AT O ' H A R E H A S B E E N D R I V E N B Y B O T H N E W C A R R I E R S A N D N E W R O U T E S Source: CDA and respective airline press releases 12

14 Millions Millions O H A R E I S T H E L A RG EST M I D - CO N T I N E N T I N T E R N AT I O N A L G AT E WAY International enplanements comprise 14.4% of total activity 1 Broad base of foreign flag carriers serve business and leisure travel 2 The unrivaled number of domestic destinations at O Hare combined with the international connectivity drives profits for United and American 2 International Enplanements % of Total Enplanements: % 15.4% 14.8% 14.9% 15.3% 15.4% 14.4% O Hare is the leading non-coastal international airport International Enplaned Passengers Foreign Flag Carriers ORD ATL DFW LAS DTW 4 Source: U.S. Department of Transportation T ORD LAS DFW ATL DEN PHX 5 Source: Innovata, as of July Source: Chicago Department of Aviation Airport Activity Statistics 2 Source: Ricondo and Associates; Report of the Airport Consultant 13

15 O ' H A R E I S A G LO BAL GAT E WAY 1 Source: Innovata, as of July 2016, includes seasonal service. Graphic Source: Ricondo and Associates As the fifth busiest international U.S. gateway, O Hare provides 130 daily flights to 64 international nonstop destinations serving Europe, Asia and Latin America 1 14

16 I N T E R N AT I O N A L S E R V I C E A D D I T I O N S S I N C E D E M O N S T R AT E T H E D I V E R S I T Y O F I N T E R N AT I O N A L M A R K E T S A C C E S S I B L E F R O M O H A R E Service additions include destinations in Asia, Europe, Central America and Canada Source: CDA and respective airline press releases 15

17 O H A R E O P E N E D I T S F I RST A G AT E On July 19, 2016, O Hare opened it s first A380 Gate Provides opportunities for carriers currently flying A380 Aircraft Air France Asiana British Airways China Southern Emirates Etihad Korean Lufthansa Malaysia Qantas Qatar Singapore Thai Source: CDA and respective airline press releases 16

18 LOW - CO ST C A R R I E R AC T I V I T Y H A S S I G N I F I C A N T LY I N C R EA S E D AT O ' H A R E In 2009, O Hare was ranked 25 th in LCC average daily departures 1 In 2016, O Hare has improved to 9 th nationally in LCC activity. In 2015, LCC enplaned passengers grew 61% from the prior year. Low-Cost Carrier Enplanement Growth 2 Airline % Change 190,794 1,505, % LCC Activity Average Daily Departures 1 Rank Airport 2009 Airport New York Kennedy 163 New York-JFK Denver 163 Boston Ft. Lauderdale 88 Fort Lauderdale Boston 63 Orlando Orlando 56 Los Angeles 82 6 San Francisco 40 Denver 81 7 Los Angeles 29 San Francisco 80 8 Long Beach 28 Las Vegas 75 9 Las Vegas 23 Chicago-O'Hare Washington Dulles 23 San Juan San Juan 22 Washington-National New York LaGuardia 21 New York-La Guardia Seattle 16 Detroit Detroit 16 Atlanta , ,947 44% - 809,191 N/A 15 Ft. Myers 16 Dallas/Fort Worth Tampa 16 Tampa West Palm Beach 15 Newark San Diego 14 Fort Myers Buffalo 13 Long Beach ,571 N/A Total 374,521 2,777, % 1 Source: Innovata 2 Source: Chicago Department of Aviation, Airport Activity Statistics 20 Newark 12 Philadelphia White Plains 11 Houston-Intercontinental Austin 10 West Palm Beach Atlantic City 10 Baltimore Salt Lake City 10 Cleveland Chicago O Hare 10 San Diego 19 17

19 Millions O H A R E I S A U N I Q U E D UA L - H U B A I R P O RT United and American both operate significant hubs at O Hare 1 Even as a dual hub, 21.4% of O Hare air traffic is provided by other carriers 2 Airline Market Share (Enplanements) Over the last six years, United has seen a decrease in system-wide enplanements of 3.3 percent with only a slight decrease at O Hare 3 Over this same timeframe, American has increased system-wide enplanements by 8.6 percent while enplanements at O Hare have been stable 3 United and American s System-wide Enplanements AA UA Other 21.4% American 34.5% United 44.1% Source: U.S. Department of Transportation T Source: Ricondo and Associates; Report of the Airport Consultant, Chapter Source: U.S. Department of Transportation T-100 Non-Stop Markets Served from ORD* 5 Domestic International United American Source: Innovata Note: Includes regional affiliates * As of July 2016, includes seasonal service. 18

20 O H A R E P ROV I D ES ST RO N G S E RV I C E TO E V E RY R EG I O N O F T H E WO R L D Top 10 U.S. Airport Seat Capacity by Region and Hub 1 100% 90% 80% 70% 60% SFO SEA LAX LAS 50% JFK 40% DFW 30% 20% 10% 0% #2 #4 #2 Domestic Asia Canada EMEA Latin/South America #2 #5 #3 Grand Total DEN CLT ATL ORD Total Seat Capacity: 308,876,809 14,804,141 7,566,105 26,375,933 19,948, ,571,865 1 Source: Innovata CY 2016 seat capacity 19

21 O H A R E I S M A X I M I Z I N G C O N C E S S I O N R E V E N U E THROUGH STRAT EGIC PLANNING 2015 Completed 21 New Stores and Refurbishments New Concepts: Coach, MAC, Chicago Sports Pop Up Refurbishments: 1 Starbucks, 2 McDonald s, others Additions increased terminal concession revenues in 2015 to $244.0 million 2016 Completed 2016 New Stores Sarah s Candies Green Market Publican Summer House Mobile Ala Cart (x2) $3.50 $3.00 $2.50 $2.00 Terminal Concession Revenue 1 per Enplaned Passenger $2.42 $2.77 $2.98 $3.04 $ $ Reflects Revenue received by the airport 2 Airline rebanking resulted in a reduction of connecting passenger dwell times in the terminal Source: O Hare CAFR 2015 Source: Chicago Department of Aviation 2 20

22 STAT U S U P DAT E FO R O ' H A R E ' S A I R F I E L D M O D E R N I ZAT I O N Three of four runways and one runway extension complete as of October 2015 Runway 9C-27C under construction Phase 1 and 2A are fully funded, on-time and on-budget Only $36 million Phase 2A projects remain to be completed after 2016 Airfield modernization benefits are being realized now Parallel, non-intersecting operational flows Triple parallel approaches in good and poor weather Increased runway availability during snow events Eased impact of 2014 FAA rule further restricting converging runway operations Airfield safety improved Runway projects made airline schedule re-banking possible Source: Chicago Department of Aviation 21

23 A I R F I E L D I N V EST M E N T H A S R E D U C E D D E L AYS Runway throughput capacity has increased Average annual system impact delays have reduced 57% when comparing to Poor/Good Weather Arrival Rates Pre-OMP 56/72 Today s Airfield 106/114 22

24 C A P I TA L I N V EST M E N T FO R A 21 ST C E N T U RY A I R P O RT O Hare 21 Projects Runway 9C-27C Deicing Pad Crossfield Taxiway Terminal Area Plan International Terminal Expansion Concourse L Expansion Hotel Development Northeast Air Cargo Facility Multimodal Facility O Hare Express Rail Conceptual plan, subject to change 23

25 CONSTRUCTION SCHEDULE $ 1. 3 B I L L I O N A I R F I E L D I N F R A ST R U C T U R E P L A N Planning and Design of Deicing Pads and Taxiways Construction of Runway 9C 27C Construction of Deicing Pads Robust Workforce Development Program MBE/WBE goals of 26% & 6% Construction of Taxiways and Utilities Construction of 9R-27L Extension (not currently funded) 24

26 T E R M I N A L A R E A D E V E L O P M E N T T O C R E AT E L O N G - T E R M G R O W T H O P P O R T U N I T I E S Developing Terminal Area Plan (TAP) to address long-term terminal and gate needs Strengthening the airport s connectivity, capacity, and efficiency Improve passenger experience City and airlines jointly evaluating terminal options Modernizing of existing terminals and their functional and commercial spaces 25

27 E X PA N S I O N O F I N T E R N AT I O N A L T E R M I N A L T O S U P P O R T I N C R E A S I N G D E M A N D Terminal Expansion will include 9 new wide-body gates Provides the Airport s second A380 capable gate Addresses near-term demand and capacity of International Terminal gates and facilities Includes expanded security screening and Federal Inspection Services (FIS) facilities 26

28 CO N CO U RSE L E X T E N S I O N P ROV I D ES N EA R - T E R M G AT E C A PACITY 5 NEW GATES Adds 5 new gates to Terminal 3 (American Airlines) Improve on-time performance by increasing gate capacity First gate capacity increase since

29 T H R E E P L A N N E D H OT E L D E V E LO P M E N T S New Mixed Hotel/Office Development New Full Service Hotel (Terminal 5) Renovate and Modernize Full Service Hotel (Core) SOURCES: DigitalGlobe, September 21, 2015 (aerial photography for visual reference only, may not be to scale), and Jones Lang LaSalle, June 2016 PREPARED BY: Jones Lang LaSalle, June 2016, and Ricondo & Associates, Inc., June Hotel Developments Benefits: Improved direct access accommodations for business and leisure travelers New conference facilities for that benefit from the connectivity of O Hare Increases non-airline revenues 28

30 M U LT I M O DA L FACILITY FO R R E N TA L C A RS, PA R K I N G, A N D CO N N EC T I V I T Y Includes Consolidated Rental Car Facility (CRCF), public parking, extension of Airport Transit System (ATS) for direct access and development opportunities Under construction and project fully funded through a combination of: Customer Facility Charge (CFC) revenue (CFC Bonds and U.S. DOT Transportation Infrastructure Finance and Innovation Act (TIFIA) Loan), Airport Revenue (General Airport Revenue Bonds), and Passenger Facility Charge (PFC) revenue 29

31 N O RTHEA ST C A RG O FACILITY EXPA N D S A I R P O RT S C A RG O C A PA B I L I T I ES of Boeing s newest generation freighters can be accommodated in O Hare s new cargo facility Project under construction opening Fall

32 O ' H A R E ' S S O L I D F I N A N C I A L P E R FO R M A N C E Net Concession and Parking revenues increased 1.5% in 2015 resulting in a record high of $244 million, and a compound annual growth rate of 4.7% since 2009 The City has managed O&M expenses with 3.3% compound annual growth in expenses from 2009 to 2015, excluding pension expenses pursuant to actuarial accounting but not due in Concession Revenues $185.1 $196.6 $211.9 $218.1 $223.3 $240.3 $244.0 O&M Expenses 1 $404.3 $410.6 $431.1 $450.2 $426.0 $495.0 $ Excludes depreciation and amortization, excludes pension expenses pursuant to actuarial accounting but not due in 2015 All amounts are shown in millions Under the residual use agreement, airlines provide revenues to fund the balance of O Hare s financial requirements 31

33 O H A R E D E BT OV E RV I E W General Airport Revenue Bonds (GARBs) are secured by Net Airport Revenues (Revenues less O&M Expenses) Certain GARB series are also secured by a subordinate pledge of PFC Revenues or FAA AIP Grant Revenues received under a Letter of Intent Under the residual airport use agreement, the airlines are charged the amount necessary to cover net expenses and fund deposits, including debt service and coverage requirements PFC Stand-Alone Bonds are secured by a first lien on PFC Revenues CFC Stand-Alone Bonds are secured by a first lien on CFC Revenues and Facility Rent Senior Lien GARBs PFC Stand Alone 1 CFC Stand Alone 2 Amount Outstanding (as of 7/2016) ($ millions) $6,401 $595.6 $248.8 Ratings (Moody s/s&p/fitch/kroll) A2/A/A-/A+ (Moody s, S&P, and Kroll with Stable Outlooks; Fitch positive) A2/A-/A/na (All with Stable Outlooks) Baa1/BBB/na/na (All with Stable Outlooks) 1 PFC Stand Alone bonds have not been rated by Kroll 2 CFC Stand Alone bonds have not been rated by Fitch or Kroll 32

34 Millions G A R B OV E RV I E W O Hare GARB Bonds: Annual Debt Service ($ millions) $700 $600 $500 $400 $300 $200 $100 $0 Principal Interest Par Outstanding 7/2016 ($ millions) Debt Mix Type Total Senior Lien $6,401 Total $6,401 Fixed 96% Unhedged VRDB 4% Residual agreement ensures coverage requirement of 1.10x met each year. The City will continue to evaluate refunding opportunities to the portfolio. 33

35 Millions P FC STA N D - A LO N E B O N D OV E RV I E W $595.6 million of outstanding PFC Stand-Alone Bonds (as of July 2016) O Hare PFC Stand-Alone Bonds: Annual Debt Service ($ millions) $70 $60 $50 $40 $30 $20 $10 $0 Interest Principal Debt Mix Strong coverage on PFC Stand-Alone Bonds Historical coverage between 1.65x and 2.69x Fixed 100% 34

36 Millions C FC STA N D - A LO N E B O N D OV E RV I E W $248.8 million of outstanding CFC Stand-Alone Bonds (as of July 2016) O Hare CFC Stand-Alone Bonds: Annual Debt Service ($ millions) Principal Interest $20 $15 $10 $5 $0 Strong coverage on CFC Stand-Alone Bonds Coverage projected to increase from 2.37x in 2018 to 4.62x Fixed 100% Debt Mix No additional issuance anticipated in

37 C H I C AG O M I DWAY I N T E R N AT I O N A L A I R P O RT 36

38 M I DWAY ST R E N G T H S Integral to Southwest s business strategy and network Midway plays a critical and distinct role in the national air transportation system 2015 busiest year in Airport s history with record 11 million enplanements Capital projects are demand and revenue driven Consistent financial performance and competitive CPE Successful working relationship with airlines (15-year use agreement) 37

39 M I DWAY I N T E R N AT I O N A L A I R P O RT Busiest square mile in aviation One of the fastest growing airports in the nation Southwest s busiest airport 38

40 P R E M I E R P O I N T - TO- P O I N T A I R P O RT Premier point-to-point airport in the U.S. offering leisure and business travel to 78 domestic and international markets* Consistently among the top 30 airports in the US based on passengers and is one of the fastest growing large-hub airports in the U.S. Generates approximately $7 billion in economic activity each year and 90,000 jobs Chicago s close-in and convenient airport *Includes seasonal service 39

41 Enplanements in millions ST RO N G O & D M A R K E T Midway Historical Enplanements and Growth (enplanements in millions) Resilient to industry and economic challenges Announcement of $800mm Terminal Development Program September /11 terrorist attacks October 2004 ATA files bankruptcy and significantly reduces MDW services September 2010 Southwest announces acquisition of AirTran 2008 Beginning of economic turmoil 2015 Record traffic year in MDW s 88-year history November 1991 Midway Airlines files bankruptcy and ceases operations Midway s passenger demand remains resilient in the face of industry challenges Source: CDA, Airport Activity Statistics 40

42 R ECO R D T R A F F I C Consistent year-over-year growth from , making the Airport the second fastest growing U.S. large hub airport during this time period (3.7% CAGR) 2015 enplaned passengers were a record 11.0 million, which represents a 4.8% year-over-year increase / Indicates a record amount of enplanements in the given time period Source: City of Chicago, Chicago Department of Aviation Management Records, March Report of the Airport Consultant Total Enplanements (millions) 2.25 million in the 1 st Quarter of million in the 1 st Quarter of Projected (Except YTD) 41

43 STA B L E S H A R E O F C H I C AG O O & D PA S S E N G E RS Midway s Share of Chicago O&D Passengers 100.0% 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% Average = 26.8% 30.0% 20.0% 10.0% 28.2% 26.6% 27.5% 27.0% 25.5% 26.9% 26.7% 26.6% 26.9% 27.3% 27.4% 25.5% 0.0% Sources: USDOT O&D Survey, Chicago Midway International Airport Comprehensive Annual Financial Report For the year ended December 31, 2014 and

44 B ROA D A N D D I V E RSE RO U T E N E T WO R K Midway has 272 average daily departures to 69 domestic destinations and 9 international destinations Midway s Top 10 Markets Rank Market Total 2015 O&D Passengers 1 New York/Newark 623,638 2 Orlando 603,713 3 Las Vegas 560,818 4 Denver 529,109 5 Atlanta 520,485 6 Dallas 490,764 7 Phoenix 486,532 8 Minneapolis 450,589 9 Tampa 416, Los Angeles 403,223 Added in 2016: Dayton, OH (DAY) Flint, MI (FNT) Grand Rapids, MI (GRR) *1/ Data based on April 2016 Source: 2016 Report of the Airport Consultant 43

45 S O U T H W EST CO M M I T T E D TO M I DWAY Daily Flights Destinations Served in the Southwest s Network Daily Seat Capacity in Southwest s Network MDW BWI MDW LAS 34,995 30, LAS DEN HOU PHX BWI DEN PHX DAL 29,344 25,176 23,721 22, DAL 51 HOU 20, MCO ATL ATL MCO 17,177 16,767 0 MDW LAS DEN BWI PHX TPA LAX 16, ,000 20,000 30,000 40,000 Midway Leads in Southwest s Fleet Deployment, Network Connectivity, and Seat Capacity Source: 2016 Report of the Airport Consultant 44

46 O U T P E R FO R M E D U. S. CO M PA R A B L ES Top 10 Airports in Southwest s Network by Share of Total Southwest Passengers (2016) Southwest Departure and Passenger Performance: Average CAGR % 7% Southwest at Midway Southwest Network 6% 6% 5.5% 5% 4% 4% 3% 2.4% 2.7% 2% 2% 1% 0.3% 0% MDW LAS BWI DEN PHX DAL HOU ATL MCO LAX 0% Departures Passengers Note: Includes AirTran activity 1/ 2015 data are for the 12 months ending September 2015, the latest period available Source: U.S. Department of Transportation T-100, March 2016 Growth in Southwest passengers and departures at Midway has exceeded such growth in the rest of Southwest s network 45

47 AT T R AC T I V E P L AT FO R M FO R PA S S E N G E R G ROW T H Southwest serves more destinations from Midway than from any other airport in its network In the past decade, Midway departures have grown eight times faster compared to the rest of the network Southwest performs 58 daily operations of the Boeing Aircraft, making up 23% of Midway total operations Full implementation of post-wright Amendment schedules Catalysts, including changes in Southwest s network and routing, is driving near term enplanement growth 46

48 D I V E RSE M I X O F O P E R AT I N G R E V E N U ES Concession and parking revenues grew 33% from 2010 to 2015, with a CAGR of 5.8% Total Operating Revenues (millions) $240 $200 Landing Fees Rental Revenues Parking Concessions Enplanements (Right Axis, in millions) $160 $120 $21.5 $27.8 $23.8 $23.9 $29.1 $30.8 $26.5 $32.7 $28.4 $29.8 $27.7 $34.2 $35.8 $ $80 $64.4 $65.8 $71.0 $73.5 $65.1 $62.2 $ $40 $0 $35.3 $38.6 $32.1 $42.5 $42.5 $48.4 $ Budget 2 0 Source: City of Chicago Finance Department and Chicago Department of Aviation; 2016 projected enplanement numbers from Ricondo & Associates, Inc., March

49 E N H A N C E M E N T O F T E R M I N A L CO N C ESSIONS RFP process is underway to transform Midway s concessions program with a welcoming and open atmosphere which will further enhance non-airline revenues Plans anticipate adding 19,324 s.f. of new concession space to the existing 44,033 s.f. program Our Vision Deliver an exceptional, first class passenger experience using innovative, diverse and authentic expressions of Chicago's culture and spirit Our Goals Provide quality offerings and facility design in a dynamic and robust retail environment showcasing Chicago's fabulous character to the world Create opportunities that encourage ACDBE and local participation in all aspects of the concession program Maximize concession revenue and loacl sales tax revenue * Chicago Department of Aviation Improve the customer's travel experience 48

50 PA S S E N G E R S EC U R I T Y C H EC K P O I N T E X PA N S I O N Project scope and benefits: Current Passenger Security is not adequate to meet passenger demand forecast Project of an 80,000 square foot pavilion will be constructed over Cicero Avenue for expanded TSA passenger screening functions and new concession opportunities Non-Airline Revenue Increases Relocating security checkpoint to the pavilion will create 18,000 square feet of new revenue generating space in a prime location Total project cost estimated at $82 million Schedule: 100% design to be completed by December 2016 Construction scheduled to start 2nd Quarter 2017 Project completion planned for 2nd Quarter 2019 Source: Chicago Department of Aviation, February

51 T E R M I N A L PA R K I N G G A R AG E E X PA N S I O N Expansion to the Terminal Parking Garage over the adjacent CTA Maintenance Yard adding approximately 1,500 new parking premium spaces Renovation of the CTA Pedestrian Walkway, including new elevators and escalators, entrance plaza improvements, installation of a new Parking Access Revenue Control System, energy efficient upgrades Total project cost estimated at $131.7 million Schedule: 100% design to be completed by December 2016 Construction scheduled to start 2nd Quarter 2017 Project completion planned for 2nd Quarter

52 M I DWAY S S O L I D F I N A N C I A L P E R FO R M A N C E Net Concession and Parking revenues increased 4.7% in 2015 resulting in a record high of $65.6 million The City has managed O&M expenses with 4.4% compound annual growth in expenses from 2009 to 2015, excluding pension expenses pursuant to actuarial accounting but not due in 2015 Most Midway services are provided by private contractors, allowing the City flexibility in managing expenses Concession Revenues $49.3 $49.4 $52.9 $54.7 $59.2 $62.6 $65.6 O&M Expenses 1 $99.6 $108.3 $110.1 $114.3 $121.1 $129.6 $ Excludes depreciation and amortization, excludes pension expenses pursuant to actuarial accounting but not due in 2015 All amounts are shown in millions Under the residual use agreement, airlines provide revenues to fund the balance of Midway s financial requirements 51

53 M I DWAY D E BT OV E RV I E W Midway Airport Revenue Bonds (MARBs) are secured by a pledge of Airline and Concession Revenues less O&M Expenses (Net Airport Revenues) Airport contributes PFC revenue to offset MARB debt service related to PFC eligible projects; $41.7 million contributed in FY 2015 Second Lien Series 2010C MARBs are also secured by a pledge of rental car CFC revenues First Lien MARBs 1 Second Lien MARBs Amount Outstanding ($ millions) $28.73 $1,753 Ratings (Moody s/s&p/fitch/kroll) A2/A/A/na (All with Stable Outlooks) A3/A/A/A (All with Stable Outlooks) Final Maturity First Lien MARBs have not been rated by Kroll. 52

54 M I DWAY D E BT OV E RV I E W ( CO N T I N U E D ) Second Lien is the working lien Residual agreement ensures coverage requirement of 1.10x met each year. Midway Bonds: Annual Debt Service ($ millions) $150 $125 $100 $75 $50 $25 $0 First Lien Second Lien Par Outstanding 9/2015 ($ thousands) Type Total First Lien $28,730 Second Lien 1,752,875 Total* $1,781,605 * Numbers may not total due to rounding Unhedged Variable Rate 7% Synthetic Fixed Rate 7% Debt Mix Fixed Rate 86% 53

55 Q U EST I O N S 54