# Chicago Midway

International Airport

Request for Qualifications

January 2013

# Page 2 of 30 

# Table of Contents

I. Overview of RFQ 3

II. Investment highlights 7

III. Midway description 9

IV. Legislative framework 22

V. Minimum bidder qualification requirements 24

VI. RFQ submission requirements and procedure 25

VII. Appendix 30

# Page 3 of 30 

# I. Overview of RFQ

Introduction

The City of Chicago (the “City”) invite s interested parties to re spond to this Request for Qualifications (“RFQ”)

regarding a Long-term Management Agreement and La nd Lease (the “Agreement”) for Chicago Midway

International Airport (“Midway”, “the Ai rport”, “Midway Airport” or “MDW”). The information provided will be used

to assist the City in determining qua lified bidders to participate in a procurement process for the Agreement which

is intended to be not more than 40 years. Under such Agreement, a bidder w ill be required to finance, operate,

maintain and improve Midway Airport.

The execution of the Agreement would be the first transaction of its kind for a major commercial service airport in

the United States (“US”). The propos ed transaction would be implemented under the Airport Pr ivatization Pilot

Program (the “Pilot Program”) authorized by federal law and administered by the Federal Aviation Administration

(“FAA”). Currently, the only other commercial service airport application process under the Pilot Program relates

to Luis Munoz Marin International Airp ort in San Juan, Puerto Rico. The FAA is currently reviewing the final

application for that transaction.

The City has engaged Credit Suisse Securities (USA) LLC (“ Credit Suisse” or the “Advisor”) as its lead financial

advisor to assist in evaluating the execution of the Agreem ent for Midway Airport. The City and its Advisor will seek

to structure a transaction that meet s the City’s primary objectives of:



# Protecting the public interest

 Establish a Traveler’s Bill of Rights to protect the public’s interest and main tain the highest standard of safety,

security and customer service

 Improve the competitive position, service quality, growth prospects and efficiency of the Airport for the benefit

of Chicago residents, airlines and other users

 Ensure that future airport develo pment is safe, functional, efficient and delivered when necessary

 Minimize the City’s exposure to residual risks and liabilities

 Maximize value for the City and its taxpayers, consistent with other stated objectives, through both upfront and

annual payments

 Execute a new Use Agreement that will increase the ef ficiency of the Airport's operations and improve its

responsiveness to users



# Conducting a fair and transparent transaction process

 Protect the interests of current and future airline users

 Ensure fair and equitable treatment of current City airport employees

 Ensure a smooth and timely transition from public to private management

# Page 4 of 30 

# Indicative timeline

Item Preliminary Timing

RFQ Released January 18, 2013

RFQ Responses Due February 22, 2013

Issue Information Memorandum and Draft Documents Q1 2013

Final Bid Documents and Binding Bids Due Q3 2013

Note: The City reserves the right to change the indicative timeline at any time



# Once binding bids are submitted, a repo rt of the Midway Advisory Panel will be issued. City Council will have a

review period of no less than four weeks prior to final action by Council. Once Council has approved the

transaction, a final application will be submitted to the F AA. It is expected that there will be a 60 day public

comment and a 60 day review peri od, followed by financial clos ing of the transaction.



# Function of this RFQ

This RFQ allows prospective Bidders to formally express their interest in bidding on the Agreement for Midway.

The City seeks to use responses to this RFQ to identify the best qualified bidders.

Those interested in bidding on the Agreement should resp ond to this RFQ no later than 4:00 pm CT on February

22 nd 

# , 2013. The City will determine, in its discretion, whether to accept any responses that are not received by the

date and time set forth in this paragr aph. Based on the RFQ submissions, t he City will determine those interested

parties that are qualified to bi d on the Agreement. The City reserves the righ t to qualify, at its absolute discretion, a

limited number of bidders to arrive at a shor tlist that allows for an orderly procurement.

For the purposes of this RFQ, t he following definitions will apply:

 “Team” or “Bidder” means an individual, a company, or a consortium of individuals and/or companies formed

to undertake the transaction

 “Team Member” means a member of a Team

The City is interested in receiving re sponses from complete Team s or Bidders that fulfill the requirements outlined

in sections V and VI of this RFQ.

However, individual firms, including those that would provid e debt and/or equity financing to a Team or Bidder, may

submit a letter of interest. The City will publish a list of parties that have expressed such interest. A letter of

interest should be no more than two pages and identify the interested party, financi ng capable of providing and

rationale for interest.



# Restricted parties

Restricted Parties (as identified below), their respective di rectors, officers, partners, em ployees and person or legal

entities related to them are not eligible to participate as Team Members, or advise any Team, directly or indirectly,

or participate in any way as an employee, advisor, or co nsultant or otherwise in connection with any Team. Each

Team will ensure that each Te am Member does not use, consult, include or seek advice from any Restricted Party.

The following Restricted Parties have been identified:

 Avia Solutions Limited

 Cabrera Capital Markets, LLC

 Cotillas and Associates

 Credit Suisse Securities (USA) LLC

# Page 5 of 30 

#  Deloitte & Touche LLP

 Mayer Brown LLP

 M.R. Beal & Company

 Pugh, Jones & Johnson, P.C.

 Ricondo & Associates, Inc.

 Sanchez Daniels & Hoffman LLP



# Overview of procurement process

The City, along with its advisors, will review RFQ responses and determ ine Qualified Bidders.

Qualified Bidders will be provided with a Confidentiality Agreement. Upon s uccessful execution, Qualified Bidders

will receive a Confidential Information Memorandum (“CIM” ), draft transaction document s, and a process letter.

The City will provide Qualified Bidders with information and may request in formation from bidders in its sole

discretion. Such information requests may include details about qualifications, partners, valuation, and financing.

The City reserves the right to structure the process in the interests of preserving proce ss integrity, best value for

taxpayers and assuring a high quality airport operation.

Qualified Bidders will have the opportun ity to conduct due dilige nce of Midway through: (i) access to an on-line

data room; (ii) Midway tours and addi tional inspections by Bidde r representatives; (iii) management presentations;

(iv) review and discussion of the City’s proposed Ag reement, Use Agreement with the airlines and Operating

Standards. Qualified Bidders may also have the opportunit y and be expected to meet with the FAA, TSA, airlines

serving Midway, and other Airp ort stakeholders. Following this due-diligen ce process, final, binding bids will be

submitted in accordance with procedures to be provided to the Qualified Bidders. Final bid submissions must

include committed financing.

Qualified Bidders will be requ ired to comply with the City’s Economic Disclosure Statement and Affidavit (“EDS”)

and certain other requirements before submitting final bids. A copy of the City’s EDS is posted on the website for

the City’s Department of Procurement Services at www.c ityofchicago.org. (Please click “Chicago Government:

Procurement Services -> City Se rvices: Find/Get -> Economic Disclosure Statement (EDS)”).

If one or more final, binding submissi ons received at the conclusion of the procurement process meet the City’s

objectives, the City expects to submit the winning bid to the Chicago City Council for approval. Assuming Council

approval, and, subject to review and final approval by the FAA, the City will enter into the Agreement with the

winning bidder (the “Private Operator”) . The Private Operator will be requir ed to assume the new Use Agreement

with the Airlines upon the effect ive date of the Agreement.

The City reserves the right to modify or terminate this pr ocurement process at any time if the City determines such

action to be in its best inte rests. The receipt of proposals or other docu ments at any stage of either the RFQ or the

bidding process will in no way obligate the City to ent er into any contract of any kind with any party.



# Oversight of the procurement process

The City is committed to full transparen cy that will ensure that all aspects of the process for implementation of the

proposed lease of Midway Airport, t he terms of the Agreement, and the qua lifications of the proposed Private

Operator are consistent with t he interests of the City, its re sidents and its taxpayers.

The City has established the Midway Advisory Panel that i ncludes representatives from the City Council and labor,

business and civic leaders. The Panel has been asked to se lect an independent advisor to review all aspects of the

proposed transaction and to deliver a written report to the City Council and the public prior to Council

consideration of any proposed lease of the Airport.

# Page 6 of 30 

# The City will also provide additional opportunities for the gene ral public to learn about and provide input and

comment regarding the proposed transaction, includin g through access to a dedicated website containing

information about the proposed transact ion and the status of the solicitation and bidding process described above.

In addition, the City will consult with , and provide information to, airport users about the prop osed transaction

throughout the solicitation and bidding process described above.

The City expects that these various transparency and outreach efforts will complement the public comment and

review process required by the FAA under the Pilot Program regulations.

The Agreement will be between the City of Chicago and the Private Operator , under which the Private Operator

will be required to finance, operate, maintain and improve Midway Airport. The Private Operator will have the right

to collect revenues associated with the operation of Midway (including ae ronautical, concession, customer facility

charges (“CFC”), passenger facility ch arges (“PFC”) and federal grants, subj ect to restrictions imposed by the

FAA) during the term of the Agreement. The Private Oper ator will assume a new Use Agreement with the airlines

operating at Midway Airp ort which will govern the relation ship between such airlines an d the Private Operator. This

will include standards related to the op eration and maintenance of the Airport with which the Private Operator will

be required to comply. The Agreement will require the Private Oper ator to comply with the City’s minority-owned

and female-owned business (“MBE” and “WBE”) requirem ents, as well as applicable federal disadvantaged

business enterprise (“DBE”) participation requirements, in its contracting activities during the term of the

Agreement. Upon entering into the Ag reement, the City will use a portion of the proceeds to defease or redeem

Midway’s existing indebtedness.



# City of Chicago

The City was incorporated in 1837, is America’s third largest city by population and is the center of a larger

Chicago metropolitan ar ea (“Metropolitan Area”) with a population of over nine million. According to World

Business Chicago, the Metropolitan Area is home to over 400 major corporate headquarters, including 29 Fortune

500 company headquarters (only the New York metropolitan area has a larger number of Fortune 500 company

headquarters). Since its earliest days, Chicago has capi talized upon its geographic location to foster the

development of transportation and other network-based in frastructure, from ports and railroads, to communication

wires, interstate highways, an d air travel. As a home rule unit of local government under the I llinois Constitution of

1970, the City “may exercise any power and perform any fu nction pertaining to its go vernment and affairs.” The

City has a mayor-council form of government. The Mayor is the Chief Executive Officer of the City and is elected to

a four-year term. Rahm Emanuel was el ected as Chicago’s Mayor in April 2011. The City Council is the legislative

body and consists of 50 members; each elected to represent one of the City’s 50 wards.

# Page 7 of 30 

# II. Investment highlights

Midway Airport represents an excellent investment opport unity for the private sector. Though a well-run airport

today, Midway does not currently provide any direct fina ncial benefit to the taxpayer s of Chicago and the City

believes it can achieve significant financial and operationa l benefits throughout the term of the Agreement for the

benefit of current and futu re Chicago taxpayers.

At the same time, the Agreement provid es the private sector with a signific ant opportunity. Highlights of the

Agreement include:

 Marquee infrastructure asset / Landmark transaction

 Highly successful business model with record recent performance

 Partnership with leading US airlines and Southwest’s largest operation

 Long-term, high-quality investment opportunity

 New airline rate agreement

 Significant performance upside



# Marquee infrastructure asset / Landmark transaction

 The proposed transaction would be the first of its kind involving a large hub airport in the US. Only one large

hub airport can be included in the FAA Pilot Program that allows for the lease of up to 10 “public-use” airports

in the US, and that slot has previously been awarded to Midway.

 Midway represents the ideal first-mover opportunity for glob al infrastructure investors in the US airport space.

Given its location in the center of the US, Midway is an integral part of the national aviation system.

 Midway is located 10 miles from down town Chicago and is strategically posi tioned as the premier point-to-point

airport in the US, providing serv ice to business and leisure travelers throughout the region.



# Highly successful business model with record recent performance

 2012 was the busiest year in Midway's 85 year history with passenger enpla nements expected at 9.6 million.

 Midway has been consistently among the top 30 airports in the nation based on passengers and is one of the

fastest growing airports in the US with passengers growing 7.1% in 2011.

 Midway was the 4 th 

# fastest growing large hub US airport from 1999 – 2011. From 1999 to 2011, Midway has

experienced a 3.2% compounded annual growth rate, compared to 0.5% nationwide.

 The Airport was also winner of the 2011 US Airport Growth Award from Airline Route News & Analysis

(ann.aero) as the fastes t growing airport in the larg e airport category (airport with over 10 million annual

passengers).

 O&M expenses remained level between 2007 and 2011 as t he result of controllable contractual and personnel

expenses.

 Midway is the nation’s 26th busiest airport. As of December 2012, the Airport served over 60 airports,

including six locations in Mexico, as well as Toronto, Ca nada, with over 500 non-stop arrivals and departures.



# Partnership with leading US airlines and Southwest’s largest operation

 Southwest Airlines currently leases 29 of Midway’s 43 gates and has signif icantly expanded its operations and

market share at the Airport over the last decade. Southwest expects significant growth at Midway over the next

3 – 5 years as the result of its acquisition and integr ation of AirTran Airways and the end of certain “Wright

# Page 8 of 30 

# Amendment“ regulatory restrictions that prohibit no nstop service from Midway to Dallas Love Field (1) 

# . More

information about traffic forecasts will be made available later in the process.

 Additionally, Midway is served by AirTran Airways (which is a wholly-owned affiliat e of Southwest), Delta Air

Lines (and its regional affiliates), Fron tier Airlines, Porter Airlines, Volari s Airlines, and various public charter

flight airlines.



# Long-term, high-quality investment opportunity

 Midway is an important US dollar-den ominated infrastructure asset at a time when the market for US assets is

scarce.

 The City has decided to undertake a transaction that provides full operational and financial control and

responsibility for future de velopment to the Private Operator, subject to the terms and conditions of the

Agreement. All ongoing relationships wi th the City relating to Midway will be clear and contractually based.

The Agreement is intended to be not more than 40 years, allowing the selected Private Operator to carry out

long-term investment and planning for Midway.

 Chicago is America’s third-largest city in terms of population and is the center of a larger Metropolitan Area with

a population of approximately 9.6 millio n residents. The Metrop olitan Area is home to over 400 major corporate

headquarters, including 29 Fort une 500 company headquarters.



# New airline rate agreement

 The Private Operator will assume a new Use Agreement with airlines serving Midway that will become effective

upon closing of the proposed transact ion. This Use Agreement will provide for a new framework of rate-setting

that is simple, long-term, inflation linked and caps airline tariffs only. It is designed to provide the airlines with

stability and competitive rates, while allowing the Private Operator to obta in the benefits of it s ability to maximize

non-airline revenues from increased passenger volume.



# Significant performance upside

 There is significant potential to increase commercial reve nue both in terms of variety of activities and increased

sales per passenger. Additionally, the City has created the opportunity for additional commercial concession

space. Current commercial contract s for offerings within the terminal provide for operatio nal flexibility.

 A Federal Inspection Services ("FIS") facility offers signific ant opportunity for carriers to expand internationally.

In recent years the US bilateral air services agreements with Mexico and countries in the Caribbean have been

significantly liberalized creating potential opportunities for new air services between Midway and these

destinations. For example, in 2012, Southwest's wholly-owned subsidiary AirTran Airways began service

between Midway and Cancun, Mexico and added a second flight in December 2012. Mexico-based Volaris has

steadily increased its portfolio of destinations served from Midway since commencing service to Guadalajara,

Mexico in December 2010. Porter Airl ines provides service to Toronto City Airport. Travel between Midway

and points in Canada, Mexico and the Caribbean represent internationa l service growth opportunities.

 Since 1997, the City has invested nearly $1 billion in st ructure improvements at Mi dway, limiting the need for

significant near-term projects. Along with the completion of the new, stat e-of-the art terminal in 2004, runways

are resurfaced on a continual basis. In 2005, the Ai rport opened a 6,300 space economy parking garage. In

2007, the Airport's inline baggage screening system was completed. Other than a new rental car facility,

scheduled to open in Spring 2013, and to be financed with a customer surcharge known as a CFC, the

Airport's near-term capital improvement program ("CIP") includes: cyclical ai rfield rehabilitation, soundproofing

homes surrounding the Airport and improving existing security, including a new passenger security checkpoint,

but no major expansion projects.

(1) The Wright Amendment was passed by Congress to regulate non-stop service to and from Dallas Love Field.

Applicable restrictions will be fu lly phased out by the end of 2014.

# Page 9 of 30 

# III. Midway description

Overview

Midway International Airport is presently positioned comm ercially as the nation's premier point-to-point airport,

offering leisure and business travel to 62 markets. Midway is co nsistently among the top 30 airports in the nation,

based on passengers. Midway's 5 ru nways handled almost 19 million passeng ers in 2011. Midway is one of the

fastest growing airports in the US wi th passenger enplanements growing 7.1% in 2011. The strength of Midway’s

core local passenger market is extremely resilient to chang es in the aviation industry and economy as Chicago has

one of the most divers e local and regional economies in the nation . In fact, 2012 was the busiest year in the

Midway’s 85 year history with an expected record 9.6 million passenger enplanements.

The new airport terminal opened at Midway Airport in 2004. The Midway Terminal Development Program brought

43 gates, spacious facilities, a bright and airy Concessions Triangle with unique restaurants and shops, greatly

expanded parking and improved roadways to Midway Airport.

Midway Airport is conveniently located 10

miles southwest of do wntown Chicago.

The Chicago Transit Authority's rapid

transit rail service to Midway makes the

commute to the airport fast, easy and

inexpensive, and reinforces Midway's

presence as Chicago's close-in and

convenient airport.

Midway makes a signif icant contribution

to Chicago’s $532 billion economy (2010

dollars). A 2001 study estimated Midway

generates close to $7 billion (2000

dollars) in economic activity each year and

90,000 jobs.

# Page 10 of 30 

# History of Midway

1927 – Dedicated as Chicago’s 1967 – North Terminal redeveloped 1999 – Midway Airport Parking

Municipal Airport Garage opened and Midway served

13 million passengers

1929 – Recognized as the busiest 1978 – Deregulation of the airline 2004 – Completion of Midway

Airport in the world industry opened market to smaller Terminal Development Program

airlines and discount fares

1949 – Renamed in honor of the 1985 – Southwest Airlines began 2005 – Midway served 18 million

Battle of Midway during World service from Midway passengers

War II

1961 – Relinquished the “World’s 1993 – The Chicago Transit 2006 – Preliminary Application filed

Busiest Airport” title to O’Hare Authority began rapid transit under FAA Pilot Program

Orange Line rail service to Midway

1964 – United returned with 1996 – Mayor Richard Daley 2012 – Midway has its busiest

service to New York announced the historic Mi dway year serving 19.2 million passengers

Airport Terminal Development (projected); City files Revised Preliminary

Program, which was launched the App lication with FAA Pilot Program

following year



# Physical description

Area

The Midway Airport complex covers a little more than one square mile, approximately 840 acres, and is colloquially

known as the world's busiest square mile in avia tion with 255,227 flight operations in 2011.



# Location

Midway Airport is 10 miles southwest of downtown Chicago, with excellent transportation access. The Chicago

Transit Authority's station at Midway connects directly to the downtown busi ness district (with a trip time of

approximately 30 minutes), commonly called the “Loop,” as well as neighborhoods throughout the City and the

metropolitan area. The Airport is also accessible from all points in the City and Chicago metropolitan area via an

extensive network of expressways and major arterial streets. Midway Airport is located in the heart of a vibrant

residential, industrial and retail community.

# Page 11 of 30 

# Runways

The Airport has five runways with a configuration of three parallel runways intersected by two parallel runways.

Runways 13C / 31C and 4R / 22L are the two longest ru nways at 6,522 feet and 6,4 45 feet, respectively, and

serve as the Airport's primary air carri er runways. Runways 13L / 31R and 4L / 22R are shorter and are primarily

used by small commuter and general av iation aircraft. Runway 13R / 31L, the shortest ru nway, is used for small

general aviation aircraft only. Runway ends 4R, 13C and 31C have Instrument Landing capability.

# Page 12 of 30 

# Terminal Building

Midway's terminal opened in June 2004, increasing total gates from 29 to 43. Termin al square footage increased

from 260,000 square feet to 1,000,000 square feet. The Airport is equipped with a Federal Inspection Services

facility to service international flights. The terminal featur es 2,800 feet of curb front.

# Page 13 of 30 

# Concessions

Midway's Concession Triangle offers a varied selection of familiar national brands and local cuisine. Travelers have

a range of selections, including Chicago brands such as Potbelly Sandwich Works, Lalo’s Mexican Restaurant,

Gold Coast Dogs, Harry Caray's Stea khouse, Manny's Deli and Pegasus (a Gree k tavern), among others. In

addition, the Airport has completed cons truction of the Concourse A Infill proj ect which includes 5,850 square feet

of new concession areas for future oppo rtunities. In total, Midway has 49,95 4 square feet of retail and food and

beverage space in its terminals.



# Parking

Currently, Midway has 3 airport parking lots providin g over 12,000 spaces. The 2,500-space main garage is

connected to the Midway Terminal Building for convenient access to ticket counters and baggage claim. A new,

6,300-space economy park ing garage opened in 2005. The economy lots have another 2, 542 surface spaces.

Midway also operates a “cell phone” lot, which enables dr ivers to park in a nearby lot and wait until the passenger

they are picking up has arrived.



# Consolidated Rental Car Facility

In summer 2011, construction began on the Consolidated Rental Car Facilit y. This project has four components –

the largest of which is the new parking garage for rental car operations . The new rental ca r facility includes a

1,900 space garage, customer service c enter and car processing area and is scheduled to open in early spring

2013. Once the consolidated rental car facility is open, t he rental car agencies will va cate their areas within the

terminal building baggage claim level and the 2nd level of the terminal parking garage providing opportunities for

non-airline revenue growth in concessions and parking areas.

# Page 14 of 30 

# Other local airports:

O'Hare International Airport, located

approximately 18 miles northwest of the City's

central business district, is the largest

commercial airport within the Chicago region,

with approximately 33.2 million enplanements

in 2011. In 2011, O'Hare was the second

busiest airport in the world, measured in terms

of total operations, and the fourth busiest

airport in terms of total passengers. O'Hare's

two largest airlines, American Airlines and

United Airlines, have significant hubbing

operations and have a high level of connecting

activity at O'Hare serving destinations

throughout the world. O'Hare is expected to

continue to serve as the primary commercial

airport within the Chicago region.

Gary/Chicago International Airport is located

on the south end of Lake Michigan about 25

miles from downtown Chicago. Nearby

highway connections incl ude I-90, I-80, I-94, I65 and the Chicago Skyway. Gary/Chicago is

an important reliever airport for the Chicago

area, supplementing Chicago's major airports,

O'Hare and Midway. The airport presently has

commercial service by Alle giant Air to Orlando,

Florida via Orlando Sanford International

Airport.

The nearest commercial service airport outside the Metropolitan Area is General Mitchell International Airport

(“Mitchell”) located approximately 85 miles north of Midway . Mitchell serves the commercial air service needs to

Milwaukee, southeast Wisconsin, and portions of northern Illinois. On a representative week day in December

2012, Mitchell offered air carri er service to/from 31 airp orts with 256 flights.

Chicago Rockford International Airport (“Rockford”) is located approximately 75 miles northwest of Midway. On a

representative weekday in December 2012, Rockford offered air carrier service to/from 2 airports with 4 flights.

Plans to build a south suburban airport in the Chicago Region are underway by the Illinois Department of

Transportation. A Master Plan and Envi ronmental Impact Statement for an airp ort located near Peotone, Illinois (in

Will County approximately 35 miles south of the City’s central business district) ar e in process. The City does not

expect that a future south suburban airport would compete with Midway.

# Page 15 of 30 

# Historical performance

Traffic / enplanements

The FAA classifies Midway as a “large hub” airport, defined as including more than 1% of all domestic

enplanements. From 2005-2011, the numb er of enplanements grew from 8.6 million to 9.4 million. Although

Midway has been affected by restructurings in the airl ine industry and the recent global economic downturn, the

large passenger market that exists in the Chicago region ha s proven to be attractive to airlines such as Southwest.

In 2011, Midway experienced 7.1% grow th in passenger enplanement activity as compared with the US industry

average of 2.3% during 2011.

Midway enplanements (2002 – 2012E)

(enplanements in millions)



# 8.2 8.9 9.5

8.6 9.1 9.3

8.2 8.5 8.7 9.4 9.6

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012E



# Midway has demonstrated a resilient traffic profile, particularly when co mpared against national statistics:

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012E

Midway enplanement growth (1)



# 10.1% 9.4% 6.7% (9.7%) 5.7% 2.2% (11.4%) 2.9% 3.1% 7.1% 2.9%

Nationwide enplanement growth (2)



# (8.1%) 2.2% 6.9% 6.5% (0.2%) 3.2% (1.4%) (7.3%) 0.7% 2.3% NA

(1) Represents Midway enplanement growth for the twelve months ending December 31st. Excludes general aviation, military, heli copter and miscellaneous

passengers

(2) Represents US domestic enplanement growth for the twelve months ending September 30th ATA

decreases

service ATA

ceases

operations Southwest

destinations and

enplanements at

Midway grow Volaris initiates service;

AirTran and Southwest

announce merger

# Page 16 of 30 

# Financial performance

Overview

Midway Airport is owned by the City and operated by the Chicago Department of Aviation (“CDA”). The Airport is

accounted for as a self-reporting enterprise fund of the City. The City maintains the books, records and accounts

of the Airport in accordance with generally accepted account ing principles and as required by the provisions of the

Airport Use Agreements, bond ordinances and indentures.

Historically, Midway has operated on a residual rate-mak ing methodology for the calculation of airline rates and

charges. Under this methodology, total operating an d maintenance expenses and debt service (including

coverage) are calculated for each cost-revenue center and offset by non-aeronautical revenues. Midway’s bond

indentures require that Airport financial statements be audited by independent certif ied public accountants. The

most recent Midway audited financial statements, together with an unqualified opinion of Midway’s auditors, are

attached to this RFQ. The audited financials for the fiscal year ended December 31, 2012 are expected to be

ready during June of 2013.

Revenues

The primary sources of Midway operating revenues are landing fees, terminal area use charges, rents and

concession and parking revenues. These revenues, along with federal grants, PFC revenue, and CFC revenue

fund Midway operating and capital expe nses, fund deposits and net debt se rvice requirements. In 2011, Midway

generated $157.4 million of operatin g revenue (excluding PFC and CFC re venues), plus $36.9 million of PFC

revenue, $6.2 million of CFC revenue, and $0.8 million of other no n-operation revenues brok en down as follows:

2011 total revenue 2011 operating revenue

Operating

revenue

78% PFC

18% CFC

3% Other

<1%



# Total revenue: $201 million Car parking

18%

Other nonaero

15%

Landing fees

25% Rental fees (1)



# 42%



# Operating revenue: $157 million

Note: Totals may not sum to 100% due to rounding

(1) Includes terminal area use charges and other rentals and fueling system fees

# Page 17 of 30 

# Expenses

Midway’s primary operating expenses include salaries and wages, repairs and maintenance, professional and

engineering costs and other operating expenses typical for an airport of Midway’s size. From 2007 to 2011,

operating expenses at Midway have decreased by appr oximately 1%. A breakdown of Midway’s 2011 operating

expenses, excluding depreciation and amortization is below:

2011 operating expenses (excluding

depreciation and amortization)

Salaries and

wages

40%

Repairs and

maintenance

37% Professional

and

engineering

services

14% Energy

6% Other

2% Materials and

supplies

1%



# Operating expenses (excluding depreciation and

amortization): $110 million

# Page 18 of 30 

# Earnings before interest, taxes, depreciation and amortization (“EBITDA”)

Midway’s historical EBITDA performan ce is summarized in the table below:

($ in millons)



# 2007-2011

FYE 12/31 2007 2008 2009 2010 2011 CAGR

Enplanements (1) 

# 9.3 8.2 8.5 8.7 9.4 0.2%

% growth 2.2% (11.4%) 2.9% 3.1% 7.1%



# Revenue:

Landing fees $20 $29 $22 $35 $39 18.4%

Rental revenues:

Terminal area use charges 17 26 31 43 41 24.0%

Other rentals and fueling system fees 18 16 20 21 25 8.9%

Concession revenues

Auto parking 30 32 28 28 29 (0.5%)

Auto rentals 8 8 9 8 9 1.0%

Restaurant 8 8 7 8 9 2.2%

News and gifts 4 4 3 3 4 (2.2%)

Other 2 2 2 2 3 2.8%

Subtotal operating revenues 107 125 122 149 157 10.1%

Passenger facility charge revenue 38 32 34 35 37 (0.6%)

Customer facility charge revenue 87666 (4.9%)

Other non-operating revenue 1 1 7 1 1

–

Total revenue $ 153 $ 165 $ 169 $ 191 $201 7.0%

% growth 11.1% 7.5% 2.7% 12.6% 5.5%



# Operating expenses:

Salaries and wages $40 $37 $40 $42 $44 2.2%

Repairs and maintenance 37 37 38 32 41 2.5%

Energy 7 7 8 7 6 (3.8%)

Materials and supplies 2 2 1 2 1 (5.1%)

Professional and engineering services 15 20 7 16 16 1.4%

Other operating expenses 10 6 6 10 2 (31.3%)

Total operating expenses $ 111 $ 110 $ 100 $ 108 $110 (0.3%)

% of revenue 72.6% 66.5% 58.9% 56.8% 54.7%



# EBITDA $ 42 $ 55 $ 70 $82 $91 21.4%

% margin 27.4% 33.5% 41.1% 43.2% 45.3%

% growth 3.5% 31.4% 26.2% 18.2% 10.7%



# Depreciation and amortization $42 $46 $48 $53 $51 4.7%

% of revenue 27.7% 27.9% 28.2% 27.7% 25.4%

Source: Midway financial statements

(1) Excludes general aviation, military, helicopter and miscellaneous passengers

# Page 19 of 30 

# FAA Airport Improvement Program (“AIP”) grants

The Airport and Airway Improvement Act of 1982 created th e AIP grant program, which is administered by the

FAA. AIP grants include entitlement grants, which are a llocated among airports by the FAA in accordance with a

formula based on enplanements, and discretionary grants, which are allocated by the FAA in accordance with its

guidelines. Midway receives approximately $3 million annually of entitlement funding, net of the fo rfeiture of certain

entitlement funds required as a result of imposing a $4. 50 PFC. Under current federal law, entitlement grants to

airports such as Midway that impose a PFC of $4.50 ar e reduced for each fiscal year by 75% of projected

revenues from the PFC in such fiscal year, but not to exceed 75% of the entitlement grant to which the airport

would otherwise be entitled.



# Passenger Facility Charges (“PFC”)

The United States Congress enacted le gislation (the “Aviation Safety an d Capacity Expansion Act of 1990”)

authorizing a public agency, such as the City, that contro ls a commercial service airport to charge each paying

passenger enplaning at the airport (subject to limited ex ceptions) a PFC of $1.00, $2.00 or $3.00. The Wendell H.

Ford Aviation Investment and Reform Act for the 21st Century (“AIR 21”) subsequently authorized eligible public

agencies such as the City to impose PFCs of $4.00 or $4.50.

The purpose of the PFC is to provide additional capital f unding for airport projects. The proceeds from PFCs can

only be used to finance eligible airport-related projects that preserve or enhance safety, capacity or security of the

national air transportation system; reduce noise or mitiga te noise impacts resulting fr om an airport; or furnish

opportunities for enhanced competition between or among ai r carriers. Before imposing and using PFCs, a public

agency must receive FAA approval.

AIR 21 authorized eligible public agencies such as the Ci ty to impose PFCs to finance PFC eligible projects,

including the payment of debt service on indebtedness i ncurred to finance such projects, which cannot be paid

from funds reasonably expected to be available through t he AIP. Funding of surface transportation or terminal

projects at this level is conditioned on a finding that the public agency has made adequate provision for financing

the airside needs of the airport, including runways, taxiways, aprons and aircraft gates. In addition, at medium and

large hub airports such as Midway, projects eligible for the $4.00 or $4.50 level of PFC funding are required to

make significant contributions to improving air safety and security, increasing competition among air carriers,

reducing current or anticipated congestion or reducing t he impact of aviation on people living near the airport.

Effective January 1, 2007, the City be gan imposing PFCs at Midway at $4. 50. Under the Pilot Program, the

Private Operator will be consid ered a “public agency” for pu rposes of the PFC Program, with comparable ability to

impose and use PFCs. Currently, PFCs are committed to pay approximately $ 775 million principal amount of debt

that was incurred by the City to finance eligible capital projects. A Private Operator wishing to seek PFC authority

to pay debt service on debt instruments used to replace existing PFC-backed municipal bonds may be permitted to

substitute an equivalent principal amount of its own de bt and use PFC revenues to pay principal and reasonable

debt service on such debt under FAA's PFC amendment procedures. This type of amendment would require

airline consultation as well as FAA coordination, re view and approval to meet statutory requirements.



# Customer Facility Charges (“CFC”)

The City of Chicago adopted a CFC or dinance on July 27, 2005 and first im plemented a CFC at the Airport in

September 2005 at the rate of $3.75 per transaction day. Currently, the CFC rate remains at $3.75 per

transaction day, which is one of the lo west rates in the US, and led to tota l CFC collections of approximately $48

million through December 2012. Under Illinois law, fund s from CFCs may not exceed the reasonable costs of

financing, designing, constr ucting, operating and maintaining the consolidated rent al car facility and common use

transportation equipment facilities an d cannot be used for an y other purposes. Base d on the current City

ordinance, the Commissioner of CDA has the authority to ad just the CFC rate from time to time with 30 days

written notice to the on-airport rental car companies.

# Page 20 of 30 

# Airline operations at Midway

As of December 2012, scheduled passenger air service at Midway was provided by six commercial airlines

(together with region al affiliates and code share part ners). Collectively, these air lines offer service to/from more

than 60 markets with nearly 510 daily flights. The followin g tables identify the market sh ares of the airlines based

on enplaned passengers and landed weight:

Carrier shares by enplaned passengers (2011) Carrier shares by landed weight (2011)



# Southwest

88% Delta 5%

AirTran 4%

Frontier

2%

Porter

<1%

Volaris

<1% Southwest

84% Delta 6%

AirTran 4%

Porter 1%

Volaris

<1%

Others 3%

Note: Totals may not sum to 100% due to rounding

# Page 21 of 30 

# Midway network

In 2011 and 2012, Southwest added seven new non- stop markets: Newark, NJ; Charleston, SC;

Greenville/Spartanburg, SC; Akron/Canton, OH; Atlanta, GA; Oklahoma City, OK; and Des Moines, IA; AirTran

added nonstop service to Branson, MO and Cancun, Mexico . International service commenced at Midway in the

first quarter of 2002, upon completion of the FIS facility. Currently, internat ional service at Mi dway is modest.

However, in 2012, AirTran started operating two daily no nstop flights between Midway and Cancun, Mexico. In

addition, Volaris began service to five destinations in Me xico (the most recent city added was Leon in October

2012) and Porter began service to Toront o City Airport. Additionally, AirTra n plans to add service to Tampa, FL

and Fort Lauderdale, FL in 2013.

Note: Map includes airports with seasonal, scheduled charter, and less than daily service

# Page 22 of 30 

# IV. Legislative framework

Federal approvals

The proposed transaction must be approved by the FAA under the Pilot Program. The Pilot Program was

authorized by Title 49 USC 47134 (enacted pursuant to Section 149 of the FAA Authorization of 1996 and

amended by Section 155 of the Vision 100 Century of Aviation Reauthoriz ation Act of 2003) and implemented

regulatory guidance and application pr ocedures adopted by the FAA Airport Pr ivatization Pilot Pr ogram: Application

Procedures (62 Federal Register 48693) September 16, 1997.

Under the 2012 Reauthorization Act, the FAA increased the number of airports that ca n participate in the Pilot

Program from five to 10 “public use” airports in the United States. Only one of these airports may be a “large hub

airport,” such as Midway (defined as an airport which has one percent or more of total US passenger boardings).

To date, one airport, the Stewart International Airport in Newburgh, New York has been closed under the Pilot

Program. However, in October 2007, the Port Authority of New York and New Jersey purchased the operating

lease rights to Stewart, effectively en ding that arrangement. In August 2012, a final application was submitted

under the Pilot Program for the Luís Muñoz Marín Internat ional Airport in San Juan, Puerto Rico and the FAA is

currently reviewing the final application for that transaction.

The City’s Preliminary Application unde r the Pilot Program for Midway was previously accepted for review by the

FAA and as a result, the large hub slot under the Pilot Pr ogram was reserved for Midway. The City has recently

revised and updated this Preliminary Application.

The Pilot Program permits a private oper ator to become the airport sponsor el igible to assess a Passenger Facility

Charge and receive entitlement and discretionary grants und er the AIP. The applicable local matching share for

future discretionary grants is 30% fo r airports under the Pilot Program, as opposed to 25% for other major hub

airports.

In order to qualify for the FAA Pilot Program, the Agreement would have to ensure that the following conditions are

met:

 The Airport will continue to be available for public use on reasonable terms and conditions without unjust

discrimination;

 The operation of the Airp ort will not be interrupted if a private operat or experiences bankrupt cy or other financial

difficulty;

 A private operator will maintain, improve, and modernize Midway facilities through ca pital investment, and will

submit a plan for these actions;

 Airport fees imposed on air carriers will not increase faster than inflation unless a higher amount is approved by

at least 65% of the air carriers using the Airport and the air carriers having at least 65% of aircraft landed

weight at Midway;

 The percentage of increase in fees imposed on general aviation operators will not exceed the percentage

increase in fees imposed on air carriers;

 Safety and security will be maintain ed at the highest possible levels;

 Adverse effects of noise from operations at Midway will be mitigated to the same extent as at a public airport;

 Adverse effects on the environment from Midway operations will be mitigated to the same extent as at a public

airport; and

 Any collective bargaining agreement that covers Midway empl oyees and is in effect on the date of a lease of the

Airport will not be abrogated by the lease.

# Page 23 of 30 

# In addition to these requirements, in order for the City to participate in the Pilot Program, the FAA Administrator

must find that the transfer of the Airp ort to a private operator will not result in unfair and dece ptive practices or

unfair methods of competition, and th at the interests of general aviation users are not adversely affected.

As part of its application to the FAA for approval of the proposed transactio n, the City will request that the FAA

grant exemptions from otherwise applicable regulatory re quirements, including the prohibition on use of Airport

revenues for non-Airport purposes by the City and the Pr ivate Operator; and the requir ement to repay Federal grant

funds.

FAA approval of the exemption from the prohibition on use of Airport revenues for non-Airport purposes by the City

is conditioned upon approval by at least 65 percent of the scheduled air carriers serv ing Midway and by scheduled

and nonscheduled air carriers whose aircraft landing at Midway during the preceding calendar year, had a total

landed weight during the preceding calendar year of at le ast 65 percent of the total landed weight of all aircraft

landing at Midway during such year. The City and t he airlines serving Midway have reached a preliminary

understanding on the terms of the new Use Agreement. The City intends to enter into legally binding

documentation with these airlines prior to the comm encement of formal bidding for the Agreement.

Upon the City’s selection of the Private Operator, the City will file a final applic ation with the FAA. Upon receipt of

the final application, we expect the FAA will publish notice and accept public comment fo r a period of at least 60

days. Approval by the FAA of the fi nal application and the proposed transa ction may not occur until the conclusion

of this public comment period. As pa rt of its review and in order to approve the final application, the FAA will

require that the Private Operator satisfy applicab le operating, safety and security requirements.



# City and state approvals

As a “home rule” municipality, the City is authorized unde r the Illinois Constitution to approve the Agreement and

the selection of the Priv ate Operator. It is expected that the City Council will adop t an ordinance authorizing the

Agreement, the Use Agreement and the selection of the Pr ivate Operator, upon the completion of the bidding

process described in Sectio n I above. In 2006, the Illinois General Assembly enacted Public Act 94-750, which

provides for certain requirements that must be satisfied in connection with any Agreement involving Midway. These

requirements relate specifically to: labo r relations and employee protections; continued compliance with applicable

ordinances governing contracting with minority-owned and women-owned businesses, prohibiting discrimination

and requiring appropriate affirmative action; and application of the net proceeds by the City. The Agreement will be

implemented in accordance with the re quirements of Public Act 94-750. Public Act 94-750 imposes certain

conditions on a transaction involving Mi dway by the City but does not otherwis e limit the City’s ability to enter into

an Agreement and it does not require approval by either the General Assembly or by any department or agency of

the State for the Agreement to become effective.



# Interstate airport compact

The City and the City of Gary, Indiana entered into an interstate airport compact (t he “Compact”) in 1995. The

compact established an Interstate Airp ort Authority (the “Authority”) which reviews and approves certain actions

involving Midway, Chicago O’Hare International Airport and the Gary/Chicago Airport. Prior to closing, the City

will obtain all approvals required pursuant to the Compact to cons ummate the Agreement.

# Page 24 of 30 

# V. Minimum bidder qualification requirements

This RFQ is open to prospective Bidders capable of m eeting the requirements highlighted in this section and

detailed further in Section VI. Upon receipt, all RFQ submissions will be re viewed for complete ness in accordance

with the submission requirements highlighted in Section VI of this RFQ. At the end of this completeness review,

the City, along with its advisors, will assess each Team’s qualifications in the ar eas of (i) op erational and

management capability and (ii) financial capability. There w ill be no restriction as to t he number of Teams that may

qualify to bid on the Agreement. The City may, in its sole discretion, allow changes in the composition of a Team if

the Team is comprised of more than one enti ty (e.g., joint venture, partnership, etc.).



# Operational and management capability

The evaluation of operationa l and management capabilities will consider whether the RFQ submission adequately

responds to the requirements of the Agreement with respect to the following areas of expertise:

 Airport operations, development, maintenance and route development;

 Safety and security / management of crit ical pieces of tran sport infrastructure;

 Passenger customer service; and

 Experience of working with government authorities.

The winning bidder must obtain a Part 139 Airport Operating Certificate from the FAA to operate Midway and must

satisfy all applicable regulatory requir ements, including those of the Transporta tion Security Administration (“TSA”),

Customs and Border Patrol (“CBP”) and other regulatory agencies relating to airport safety and security.



# Financial capability

The evaluation of financial capabilities will address wh ether the RFQ submission ad equately responds to the

financial capability requirement s of the Agreement with resp ect to the following areas:

 Financial capacity to fund upfront payment to the City and maintain and improve the Airport throughout the term

of the Agreement;

 Ability to raise appropriate financing;

 Credit quality to ensure the payment of any obligations, including, but no t limited to, obligations under the

Agreement; and

 Commitment to submit a competitive price.

# Page 25 of 30 

# VI. RFQ submission requirements and procedure

RFQ submission requirements

Prospective Bidders that anticipate responding to this RFQ shall so indicate as so on as possible by providing

contact information via e-mail to both representatives of the Advisor listed be low. RFQ submissi ons should comply

with the format provided under “Format and Required Information for RFQ Submission” below. Additional

information not specifically related to the Agreement or this RFQ should not be included. All questions or requests

for information regarding this RFQ should be in writing and should be directed to only the representatives of the

Advisor as listed below.

Mr. Philip Iley

Credit Suisse

Phone: (44) 20-7888-7681

philip.iley@credit-suisse.com Mr. James Flaherty

Credit Suisse

Phone: (312) 750-2928

james.flaherty@c redit-suisse.com

The City may request additional information or clarifications from any, some or all prospective Bidders at any time.



# Changes to this RFQ

At any time, in its sole discretion, the City may, by wri tten addenda to this RFQ, modify, amend, cancel, and / or

reissue this RFQ. If an add endum is issued prior to the submission date, it will be ma de available on the following

website:

www.cityofchicago.org/midwaytransaction

If an addendum is issued after Information has been received, it may, at the City’s discretion, be provided only to

those respondents whose submittals may be impacted by such addendum.



# No liability for costs

The City and its advisors are not resp onsible for costs or damages incurred by Bidders, Teams, Team Members,

subcontractors, or other interested parties in connection wi th the solicitation process, including but not limited to

costs associated with prepar ing responses, qualifications , and proposals and of partic ipating in any conferences,

oral presentations, or negotiations.



# Modification and termination rights

The City reserves the right to modify or terminate the RF Q for the Agreement at any stage if the City determines

such action to be in its best interest. The receipt of pr oposals or other documents at any stage of either the RFQ

or the tender process w ill in no way obligate the City to enter into any contract of any kind with any party.



# Authorization for further investigation

By submitting a response to this RFQ, each Bidder speci fically authorizes the City an d its advisors to make any

inquiry or investigation to verify the statements, documents, and information su bmitted in connection with this RFQ

and to seek clarification from the Bidder’s officers, em ployers, advisors, accountings and clients regarding the

same.

# Page 26 of 30 

# Confidentiality and disclosure of information

All materials submitted in response to or in connection with this RFQ shall become the property of the City.

Information submitted in response to th is RFQ will be exempt from disclosure until the conclusion or termination of

the procurement and bidding process referred to herein.

In addition, under the Illinois Freedom of Information Act, as amended (“FOIA”) : (i) Information that contains trade

secrets and commercial or financial information may be exem pt if disclosure would resu lt in competitive harm; and

(ii) However, in order for such Information to be trea ted as a trade secret or information that would cause

competitive harm, you must mark any such document as “p roprietary, privileged and conf idential.” If you mark a

document as “proprietary, privileged or confidential,” the City will evaluate and determine whether the document

may be withheld from disclosure unde r FOIA. Any determination made by the City is subject to review by the

Illinois Attorney Genera l and judicial review.



# No personal liability

Neither the members of the City government, nor any of t hem, nor any officer, agent or employee thereof shall be

charged personally with any lia bility by a respondent or another or held liable to a respondent or an other under any

term or provision of this RFQ or any statements made herein or because of the submission or attempted

submission of information or other response hereto or otherwise.

# Page 27 of 30 

# Format and required information for RFQ submission

All RFQ submission should follow the fo rmat outlined below and should be su bmitted in English. All submissions

should be no more than 20 single-s ided pages (excluding appendices):

1. Cover page (to include identific ation of all Team Members)

2. Executive summary and strategic rationale (2 pages maximum)

3. Description of bidder

a. Description of Bidder: Provide a de scription of the Team, including a description of all Team Members

and the anticipated legal relationship (governance and shareholder structure) among the Team

Members (e.g., partners, shareholders, cli ent-consultants, etc.) as appropriate.

b. Roles of team members an d key personnel: Briefly outline the roles of the Team Members and key

personnel. In doing so, please address expertise in airport operations, development, maintenance,

route development, safety and securi ty, customer service, project financing and government relations.

c. Controlling interest / ultimate ownership: Identify the individuals or companies who hold a major or

controlling interest in each Team Member.

4. Capabilities and satisfaction of mini mum bidder qualification requirements

a. Operational and management capab ility: Teams should address the fo llowing areas with respect to

operational an d management capability:

i. Operations and maintenance expertise: Teams must provide evidence demonstrating their ability

to operate and maintain a project of this nature and scope. Specifically, the Team should have:

− Substantial international hub airport operation and maintenance experience;

− Advanced knowledge of terminal , runway and associated fac ilities, maintenance, repair,

construction and practical application of equipment and materials associated with airport

operations, as well as a demonstrated understanding in aging behavior of terminal, runway

and associated facilities to assess and determine the necessi ty for remedial maintenance

action;

− Familiarity with FAA regulations and proced ures, airport operations, construction and

maintenance standards;

− Experience with facilitating ai rport passenger growth via rout e development and marketing;

− Demonstrated understanding of airport-aging behavior to assess and determine the

applicability of remedial-maintenance action;

− Extensive experience in using airport condition and weather information to perform seasonal

maintenance, particularly as it rela tes to extreme winter weather; and

− To the extent an operator has not been engage d at this stage, a prospective Bidder should

demonstrate a track record of managing infras tructure projects by using its own managerial

teams (“in-house” operations) or track record of successfully sub-cont racting its operational

obligations in infrastructure projects to appropriate and compet ent third-parties.

ii. Customer service: Teams must demonstrate their commitment to achieving the highest standards

of customer service and satisfaction. Specifically , the Team must highlight their experience and

qualifications in the following areas:

# Page 28 of 30 

# − Maintaining productive ongoing relationships with government entit ies, similar to the

relationship that the winning Bidder will have with the City;

− Providing excellent customer service to the traveling public;

− Delivering safe and efficient operating conditions to airlines, particularly those at Midway; and

− Maintaining active public rela tions functions targeted at travelers, taxpayers and airport

tenants.

iii. Safety and Security: Teams must demonstrate th eir ability to address an d resolve safety and

security issues. Specifically, the Team should have:

− Knowledge of airport safety and security ma nagement and methodologies, including TSA

security plan approval process;

− Experience in emergency response support; and

− Background in relevant traffic engineering stan dards, specifications, policies, practices and

processes.

b. Financial capability: Teams should address the follo wing areas with respect to financial capability:

i. Financial capacity: Teams must demonstrate their fina ncial capacity to pay t he equity portion of the

purchase price and to maintain Midway for the term of the Agreement. To demonstrate sufficient

financial capacity, Team Members must provide copi es of audited financial statements for the past

three years, together with any other relevant financi al information. If audited financial statements

cannot be provided, Team Members should provide enough financial information to demonstrate

that they have the financial resources to successfu lly execute a project of this nature and scope.

Financial factors which will be assessed includ e (financial statements can be included as

appendices):

− Adequacy and availability of liquid equity;

− Profitability;

− Debt, capitalization and credit worthiness;

− Demands from other projects / investments; and

− Consortium shareholder agreements.

ii. Ability to Raise Financing: Teams must provide specific evidence demonstrating their proven

ability to raise financing for a project of this na ture and scope. Specific factors that will be

assessed include:

− Track record of raising debt for similar projects, including but not limited to, the number and

size of past relevant transactions and references to specific experience s on past transactions;

and

− Level of commitment shown by the project sponsors

5. Indicative sources of funds: Plea se provide a summary description of how the bidder intends to finance

this transaction, including proposed structuring, sources of funds, lending relationships, etc.

6. Contacts and advisors

a. Contact person: Provide a single contact person for all future communication between the City and the

Advisor and the Team. Please identify the contac t person’s name, title, organization, address,

telephone number, mobile number, fax number, and email address.

# Page 29 of 30 

# b. Expected advisors: Identify the companies and individu als who are expected to act as legal, financial,

technical or other advisors for the Team.

7. Disclosure of conflicts: List any deal ings and / or existing contracts with the City of Chicago, its employees

and elected representatives, as well as any airlines op erating at Midway, suppliers of goods or services to

Midway and other US airports.

8. Relationship with lenders: Please confirm that yo ur Team does not and will not have an exclusive

relationship with a lender re lated to this transaction.

9. Comparable projects: To the extent not otherwise pa rt of previous sections, please provide a list of

comparable projects in which Team Members have participated. Bidders sh ould specify how these

comparable projects relate to the proposed Agreement. This list can be included as an appendix if so

desired.

10. References: Provide a list of Team Member references and contact information. These references should

be able to describe the relevant qualifications and capabilities of Team Member s who would take a leading

role in the operation and maintenance of Midway.



# RFQ submission instructions

RFQ submission (including all attachment s) should be delivered vi a electronic mail to the email address below no

later than 4:00 P.M. CT on February 22 nd 

# , 2013. The City may determine in it s discretion whether to accept any

responses that are not received by the date and time set forth in this paragraph. RFQ submissions may not be

submitted via facsimile machine and hard copies are not required to be delivered. Deliver RFQ submissions to:

City of Chicago

C/O Mr. James Flaherty

Credit Suisse Securities (USA) LLC

james.flaherty@c redit-suisse.com

# Page 30 of 30 

# VII. Appendix

Audited historical financial statements

# City of Chicago, Illinois

Chicago Midway

International Airport

Basic Financial Statements as of and for the

Years Ended December 31, 2011 and 2010,

Required Supplementary Information,

Additional Information, Statistical Information,

and Independent Auditors’ Report

# CITY OF CHICAGO, ILLINOIS

CHICAGO MIDWAY INTERNATIONAL AIRPORT

TABLE OF CONTENTS



# Page

INDEPENDENT AUDITORS’ REPORT 1–2

MANAGEMENT’S DISCUSSION AND ANALYSIS

(REQUIRED SUPPLEMENTARY INFORMATION) 3–10

BASIC FINANCIAL STATEMENTS AS OF AND FOR THE

YEARS ENDED DECEMBER 31, 2011 AND 2010:

Statements of Net Assets 11

Statements of Revenues, Expenses and Changes in Net Assets 12

Statements of Cash Flows 13–14

Notes to Basic Financial Statements 15–38

ADDITIONAL SUPPLEMENTARY INFORMATION —

Debt Service Coverage Calculations:

Chicago Midway Airport Revenue Bonds 39–40

Chicago Midway Airport Second Lien Revenue Bonds 41–42

STATISTICAL INFORMATION:

Historical Operating Results, Each of the Ten Years Ended December 31, 2002–2011 43

Debt Service Schedule 44

Midway Airport Revenue Bonds, Series 1996 Estimated Bond-Funded Costs as of

December 31, 2011 45

Capital Improvement Program 2012–2018, Estimated Sources and Uses of Funds as of

December 31, 2011 46

Terminal Development Program, Estimated Sources and Uses of Funds as of

December 31, 2011 47

Historical Enplaned Passengers, Each of the Ten Years Ended December 31, 2002–2011 48

# CITY OF CHICAGO, ILLINOIS

CHICAGO MIDWAY INTERNATIONAL AIRPORT

TABLE OF CONTENTS



# Page

Enplaned Commercial Passengers by Airline, Each of the Ten Years Ended

December 31, 2002–2011 49

Historical Enplaned Passengers Chicago Region Airports, Each of the Ten

Years Ended December 31, 2002–2011 50

Historical Total Origin and Destination (O&D) Enplanements Chicago Region Airports,

Each of the Ten Years Ended December 31, 2002–2011 51

Aircraft Operations, Each of the Ten Years Ended December 31, 2002–2011 52

Net Assets by Component, Each of the Six Years Ended December 31, 2006–2011 53

Change in Net Assets, Each of the Six Years Ended December 31, 2006–2011 54

Long Term Debt, Each of the Six Years Ended December 31, 2006–2011 55

Full Time Equivalent Chicago Midway Airport Employees by Function,

Each of the Six Years Ended December 31, 2006–2011 56

Principal Employers (Nongovernment) 57

Population and Income Statistics 58

Landing Fees and Terminal Area Use Charges 59

# INDEPENDENT AUDITORS’ REPORT

The Honorable Rahm Emanuel, Mayor,

and Members of the City Council

City of Chicago, Illinois

We have audited the accompanying basic financial statements of Chicago Midway International Airport

(Midway), an enterprise fund of the City of Chicago, Illinois (City), as of December 31, 2011 and 2010,

and for the years then ended, as listed in the foregoing table of contents. These financial statements are

the responsibility of the City’s management. Our responsibility is to express an opinion on these basic

financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of

America. Those standards require that we plan and perform the audit to obtain reasonable assurance about

whether the financial statements are free of material misstatement. An audit includes consideration of

internal control over financial reporting as a basis for designing audit procedures that are appropriate in

the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s

internal control over financial reporting for Midway. Accordingly, we express no such opinion. An audit

also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial

statements, assessing the accounting principles used and significant estimates made by management, as

well as evaluating the overall financial statement presentation. We believe that our audits provide a

reasonable basis for our opinion.

As discussed in Note 1, the basic financial statements referred to above present only Chicago Midway

International Airport, an enterprise fund of the City of Chicago and do not purport to, and do not present

the financial position of the City of Chicago Illinois as of December 31, 2011 and 2010, changes in its

financial position, or where applicable, its cash flows, in conformity with accounting principles generally

accepted in the United States of America.

In our opinion, the basic financial statements, referred to previously, present fairly, in all material

respects, the financial position of Chicago Midway International Airport as of December 31, 2011 and

2010, and the results of its operations and its cash flows for the years then ended, in conformity with

accounting principles generally accepted in the United States of America.

As discussed in Note 1 to the basic financial statements, effective January 1, 2010, the City adopted

Government Accounting Standards Board Statement No. 53 (GASB), Accounting and Financial

Reporting for Derivative Instruments

.

Accounting principles generally accepted in the United States of America require that the management’s

discussion and analysis as listed in the foregoing table of contents be presented to supplement the basic

financial statements. Such information, although not a part of the basic financial statements, is required by

the GASB who considers it to be an essential part of financial reporting for placing the basic financial

statements in an appropriate operational, economic, or historical context. We have applied certain limited

procedures to the required supplementary information in accordance with auditing standards generally

# - 2 -

accepted in the United States of America, which consisted of inquiries of management about the methods

of preparing the information and comparing the information for consistency with management’s

responses to our inquiries, the basic financial statements, and other knowledge we obtained during our

audits of the basic financial statements. We do not express an opinion or provide any assurance on the

information because the limited procedures do not provide us with sufficient evidence to express an

opinion or provide any assurance.

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken

as a whole. The additional supplementary information is presented for purposes of additional analysis and

is not a required part of the basic financial statements. Such information is the responsibility of

management and was derived from, and relates directly to, the underlying accounting and other records

used to prepare the basic financial statements. The information has been subjected to the auditing

procedures applied in the audit of the basic financial statements and certain additional procedures,

including comparing and reconciling such information directly to the underlying accounting and other

records used to prepare the basic financial statements or to the basic financial statements themselves, and

other additional procedures in accordance with auditing standards generally accepted in the United States

of America. In our opinion, the information is fairly stated in all material respects in relation to the basic

financial statements as a whole.

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken

as a whole. The statistical information as listed in the table of contents is also presented for purposes of

additional analysis and is not a required part of the basic financial statements. Such information has not

been subjected to the auditing procedures applied in the audit of the basic financial statements, and

accordingly, we do not express an opinion or provide any assurance on it.

June 29, 2012

# - 3 -

MANAGEMENT’S DISCUSSION AND ANALYSIS

($ IN THOUSANDS)

This following discussion and analysis of the Chicago Midway International Airport’s (Airport) performance

provides an introduction and overview of the Airport’s financial activities for the years ended December 31,

2011 and 2010. Please read this discussion in conjunction with the Airport’s basic financial statements and

the notes to basic financial statements following this section.

FINANCIAL HIGHLIGHTS

2011

N Operating revenues for 2011 increased by $9,547 compared to prior-year operating revenues.

N Operating expenses before depreciation and amortization increased by $1,753 compared to 2010,

primarily due to an increase in repairs and maintenance offset by other operating expenses.

N The Airport’s total net assets at December 31, 2011 were $174,448. This is an increase of $3,522

compared to total net assets at December 31, 2010.

N Capital asset additions for 2011 were $43,346, principally due to land acquisition, terminal

improvements, security enhancements and runway improvements.

2010

N Operating revenues for 2010 increased by $26,755 compared to prior-year operating revenues.

N Operating expenses before depreciation and amortization increased by $8,695 compared to 2009,

primarily due to reimbursement in 2009 for professional fees related to the study of the privatization

of the Airport.

N The Airport’s total net assets at December 31, 2010 were $170,926. This is a decrease of $34,088

compared to total net assets at December 31, 2009.

N Capital asset additions for 2010 were $27,963, principally due to land acquisition, terminal

improvements, security enhancements and runway improvements.

# - 4 -

OVERVIEW OF THE BASIC FINANCIAL STATEMENTS

This discussion and analysis is intended to serve as an introduction to the Airport’s basic financial statements.

The Airport is included in the City of Chicago’s (City) reporting entity as an Enterprise Fund. The Airport’s

basic financial statements are composed of the basic financial statements and the notes to basic financial

statements. In addition to the basic financial statements this report also presents additional and statistical

information after the notes to basic financial statements.

The Statements of Net Assets present all of the Airport’s assets and liabilities using the accrual basis of

accounting, which is similar to the accounting used by private-sector companies. The difference between

assets, deferred outflows and liabilities is reported as net assets. The increase or decrease in net assets may

serve as an indicator, over time, whether the Airport’s financial position is improving or deteriorating.

However, the consideration of other non-financial factors such as changes within the airline industry may be

necessary in the assessment of the overall financial position and health of the Airport.

The Statements of Revenues, Expenses and Changes in Net Assets present all current fiscal year revenues and

expenses, regardless of when cash is received or paid, and the ensuing change in net assets.

The Statements of Cash Flows report how cash and cash equivalents are provided and used by the Airport’s

operating, capital financing and investing activities. These statements are prepared on a cash basis and present

the cash received and disbursed, the net increase or decrease in cash and cash equivalents for the year and the

cash and cash equivalents balance at year-end.

The Notes to Basic Financial Statements are an integral part of the basic financial statements; accordingly,

such disclosures are essential to a full understanding of the information provided in the basic financial

statements.

In addition to the basic financial statements, this report includes Additional Supplementary and Statistical

Information. The Additional Supplementary Information section presents debt service coverage calculations

and the Statistical Information section includes certain unaudited information related to the Airport’s

historical financial and non-financial operating results and capital activities.

FINANCIAL ANALYSIS

Landing fees and terminal area use charges and fueling system charges are assessed to the various airlines

throughout each year based on estimated rates. Such rates are designed to yield collections from airlines

adequate to cover certain operating expenses and required debt service and fund deposits as determined under

provisions of the Airport Use Agreement and Facilities Lease (Use Agreement). Incremental amounts due

from the airlines arise when amounts assessed, based on the estimated rates used during the year, are less than

actual expenses and required deposits for the year. Such incremental amounts due from airlines are included

in accrued revenue. Incremental amounts due to the airlines arise when amounts assessed, based on the

estimated rates used during the year, exceed actual expenses and required deposits for the year. Such

incremental amounts due to airlines are included in deferred revenue. The termination date of the Airport Use

Agreement and Facilities Lease is December 31, 2012. It is anticipated that a new Airport Use Agreement and

Facilities Lease will be in place by December 31, 2012.

# - 5 -

At December 31, 2011, the Airport’s financial position continued to be strong with total assets and deferred

outflows of $1,792,224, total liabilities of $1,617,776, and net assets of $174,448. A comparative condensed

summary of the Airport’s net assets at December 31, 2011, 2010, and 2009 is as follows:

2011 2010 2009



# Current unrestricted assets 78,661$ 78,180$ 66,101$

Restricted and other assets 519,392 533,364 347,045

Capital assets — net 1,152,524 1,151,315 1,168,196

Deferred outflows 35,000 14,896 12,964

Derivatives Instrument 6,647

Total assets and deferred outflows 1,792,224 $ 1,777,755

$ 1,594,306

$

Current liabilities 41,436 $ 58,140

$ 60,310

$

Liabilities payable from restricted assets

and noncurrent liabilities 1,576,340 1,548,689 1,328,982

Total liabilities 1,617,776 $ 1,606,829

$ 1,389,292

$

Net assets:

Invested in capital assets,

net of related debt (deficit) (70,876) $ (39,755)

$ (1,936)

$

Restricted 208,100 190,641 201,158

Unrestricted 37,224 20,040 5,792

Total net assets 174,448 $ 170,926

$ 205,014

$ Net Assets



# 2011

Current unrestricted assets increased by $481 (0.6%) primarily due to an increase in cash and cash

equivalents. The Airport’s current ratio (current unrestricted assets/current unrestricted liabilities) at

December 31, 2011 and 2010 was 1.90:1 and 1.34:1, respectively. Restricted and other assets decreased by

$13,972 (2.6%) mainly due to an increase in payment of construction costs and use of capitalized interest and

Passenger Facility Charges (PFC) for payments on debt service. Net capital assets increased by $1,209 (0.1%)

due principally to increased construction in progress.

The decrease in current liabilities of $16,704 (28.7%) is mainly related to the decrease in accounts payable

and accrued liabilities and a decrease in deferred revenue of $4,202 and $13,965 respectively. The decrease in

deferred revenue represents primarily the net adjustment for current year activity and current year

distributions of deferred revenue related to prior years to the airlines. Liabilities payable from restricted assets

and noncurrent liabilities increased by $27,651 (1.8%) in 2011 mainly due to an increase in accounts payable

of $22,019 partially offset by a decrease in revenue bonds payable from restricted funds for $7,629 and notes

payable of $4,005 and an increase in the fair value of derivative instrument of $14,923.

Net assets may serve, over a period of time, as a useful indicator of the Airport’s financial position. At

December 31, 2011, total net assets were $174,448, an increase of $3,522 (2.1%) from 2010. Due to the

residual Airport Use Agreement, this increase is mainly due to timing differences between depreciation on

property and facilities and cash requirements required for debt service.

# - 6 -

2010

Current unrestricted assets increased by $12,079 (18.3%) primarily due to an increase in cash and cash

equivalents. The Airport’s current ratio (current unrestricted assets/current unrestricted liabilities) at

December 31, 2010 and 2009 was 1.34:1 and 1.10:1, respectively. Restricted and other assets increased by

$186,319 (53.7%) mainly due to an increase in deferred noise mitigation costs. Net capital assets decreased by

$16,881 (1.4%) due principally to depreciation.

The decrease in current unrestricted liabilities of $2,170 (3.6%) is mainly related to the decrease in advances

for terminal and hangar rent and an increase in deferred revenue of $2,190 and $1,475 respectively. The

decrease for terminal and hangar rent is due to timing at year-end for receipts related to 2011 and 2010. The

increase in deferred revenue represents primarily the net adjustment for current year activity. Liabilities

payable from restricted assets and noncurrent liabilities increased by $219,707 (16.5%) in 2010 mainly due to

an increase in revenue bond payable of $273,103 partially offset by a decrease in accounts payable for

restricted funds for $10,086 and notes payable of $57,355 and an increase in the fair value of derivative

instrument of $4,469.

Net assets may serve, over a period of time, as a useful indicator of the Airport’s financial position. At

December 31, 2010, total net assets were $170,926, a decrease of $36,732 (17.7%) from 2009. Due to the

residual Airport Use Agreement, this decrease is mainly due to timing differences between depreciation on

property and facilities and cash requirements required for debt service.

The primary sources of Airport operating revenues are landing fees, terminal area use charges, rents and

concession revenues as defined within the Use Agreement and Facilities Lease. These revenues fund Airport

operating expenses, fund deposits and net debt service requirements. A comparative condensed summary of

the Airport’s changes in net assets for the years ended December 31, 2011, 2010, and 2009 is as follows:

# - 7 - 2011 2010 2009



# Operating revenues:

Landing fees and terminal area uses

charges 79,445 $ 78,194

$ 52,640

$

Rents, concessions and other 77,926 70,862 69,661

Total operating revenues 157,371 149,056 122,301

Operating expenses:

Salaries and wages 43,554 42,105 39,521

Repairs and maintenance 40,732 31,942 37,967

Professional and engineering 15,650 15,832 6,727

Other operating expenses 10,153 18,457 15,426

Depreciation and amortization 51,067 52,767 47,667

Total operating expenses 161,156 161,103 147,308

Operating loss (3,785) (12,047) (25,007)

Nonoperating revenues 61,262 38,860 45,341

Nonoperating expenses (57,016) (63,362) (59,305)

Capital grants 3,061 2,461

Change in net assets 3,522 $ (34,088)

$ (38,971)

$ Changes in Net Assets



# 2011

Landing fees and terminal area use charges for the years 2011 and 2010 were $79,445 and $78,194,

respectively. Rents, concessions and other revenues were $77,926 and $70,862 for 2011 and 2010,

respectively. The increase in 2011 operating revenues of $8,315 (5.6%) from 2010 was mainly due to

increased landing fees and other rentals and fueling fees of $3,284 and $3,490, respectively. Such changes

were due to the residual Airport Use Agreement and Facilities Leases that require airline revenue to be

recognized to the extent necessary to pay the Airport’s operating and maintenance expenses, net debt service

and fund deposit requirements, reduced by non-airline revenues. Concessions increased $3,574 due primarily

to an increase in auto parking of $1,263.

Salaries and wages increased by $1,449 (3.4%) in 2011 compared to 2010. Also, repairs and maintenance

expenses increased by $8,790 (27.5%) in 2011 compared to 2010. This increase was due to a lower than usual

amount in 2010 that resulted from a contract capitalization. Professional and engineering expenses decreased

$182 (1.2%) compared to 2010. Other operating expenses decreased $7,891 (77.3%) in 2011 compared to

2010 due to a decrease in the provision for doubtful accounts.

The 2011 nonoperating revenues of $61,262 are comprised of PFC revenue of $36,850, customer facility

charges (CFC) revenue of $6,175, interest income of $17,460 and other nonoperating revenues of $777.

Nonoperating expenses of $57,016 and $63,362 for the years 2011 and 2010, respectively, were comprised of

bond interest expense.

Capital grants increased $600 in 2011, mainly as a result of when associated expenditures became eligible for

grant reimbursement from the federal government.

# - 8 -

2010

Landing fees and terminal area use charges for the years 2010 and 2009 were $78,194 and $52,640,

respectively. Rents, concessions and other revenues were $70,862 and $69,661 for 2010 and 2009,

respectively. The increase in 2010 operating revenues of $26,755 (21.9%) from 2009 was mainly due to

increased landing fees and terminal area use charges of $13,359 and $12,195, respectively. Such changes

were due to the residual Airport Use Agreement and Facilities Leases that require airline revenue to be

recognized to the extent necessary to pay the Airport’s operating and maintenance expenses, net debt service

and fund deposit requirements, reduced by non-airline revenues.

Salaries and wages increased by $2,584 (6.5%) in 2010 compared to 2009. Professional and engineering

expenses increased by $9,105 (135.4%) mainly due to a reimbursement of costs in 2009 from a deposit

forfeiture of $7,578. Depreciation and amortization expense increased $5,100 (10.7%) as a result of the

increased capital assets due to the activities of the ongoing Capital Improvement Program.

The 2010 nonoperating revenues of $38,860 are comprised of PFC revenue $34,909, CFC revenue of $5,856,

interest income of $1,539 offset by a loss of fair market adjustment of $4,221 and other nonoperating

revenues of $777. During 2010, nonoperating revenues decreased 14.3% due to one time other nonoperating

revenues recognized in 2009.

Nonoperating expenses of $63,362 and $59,305 for the years 2010 and 2009, respectively, were comprised of

bond interest expense.

Capital grants increased $2,461 in 2010, mainly as a result of when associated expenditures became eligible

for grant reimbursement from the federal government.

A comparative summary of the Airport’s cash flows for the years ended December 31, 2011, 2010, and 2009

is as follows:

Cash Flows

2011 2010 2009



# Cash from activities:

Operating 25,607 $ 42,484

$ 43,665

$

Capital and related financing (61,510) 161,297 (51,857)

Investing (72,239) (96,425) (90,733)

Net change in cash and cash equivalents (108,142) 107,356 (98,925)

Cash and cash equivalents:

Beginning of year 249,788 142,432 241,357

End of year 141,646 $ 249,788

$ 142,432

$

2011

As of December 31, 2011, the Airport’s available cash and cash equivalents of $141,646 decreased by

$108,142 compared to $249,788 at December 31, 2010 due to operating activities of $25,607, offset by

capital and related financing activities of $61,510 and investing activities of $72,239. Total cash and cash

equivalents at December 31, 2011 were comprised of unrestricted and restricted cash and cash equivalents of

$35,366 and $106,280, respectively.

# - 9 -

2010

As of December 31, 2010, the Airport’s available cash and cash equivalents of $249,788 increased by

$107,356 compared to $142,432 at December 31, 2009 due to operating activities of $42,484, capital and

related financing activities of $161,297, offset by investing activities of $96,425. Total cash and cash

equivalents at December 31, 2010, were comprised of unrestricted and restricted cash and cash equivalents of

$21,552 and $228,236, respectively.

CAPITAL ASSET AND DEBT ADMINISTRATION

At the end of 2011 and 2010, the Airport had $1,152,524 and $1,151,315, respectively, invested in net capital

assets. During 2011, the Airport had additions of $43,346 related to capital activities. This included $2,159

for land acquisition and the balance of $41,187 for construction projects relating to terminal improvements,

parking and runway improvements.

During 2011, completed projects totaling $9,243 were transferred from construction in progress to applicable

buildings and other facilities capital account. These major completed projects were related to terminal

improvements, along with runway improvements.

The Airport’s capital assets at December 31, 2011, 2010, and 2009 are summarized as follows:

2011 2010 2009



# Capital assets not depreciated:

Land 109,446 $ 107,287

$ 106,918

$

Construction in progress 52,173 20,229 36,042

Total capital assets not depreciated 161,619 127,516 142,960

Capital assets depreciated:

Buildings and other facilities 1,371,443 1,362,200 1,318,793

Less accumulated depreciation for:

Buildings and other facilities (380,538) (338,401) (293,557)

Total capital assets depreciated — net 990,905 1,023,799 1,025,236

Total property and facilities — net 1,152,524 $ 1,151,315

$ 1,168,196

$ Capital Assets at Year-end



# The Airport’s capital activities are funded through Airport revenue bonds, federal and state grants, PFC and

Airport revenue. Additional information on the Airport’s capital assets is presented in Note 5 of the notes to

the basic financial statements.

The Airport issued $4,005 of Commercial Paper Notes during 2010 having an interest rate of 0.29% with a

maturity date of January 20, 2011. Note proceeds may be used to finance portions of the costs of authorized

airport projects and to repay the expenses of issuing the notes

.

# - 10 -

The Airport’s outstanding debt at December 31, 2011, 2010, and 2009 is summarized as follows ($ in

thousands):

2011 2010 2009



# Revenue bonds and notes payable 1,461,490 $ 1,473,380

$ 1,266,515

$

Unamortized:

Bond (discount) premium (281) 8 (8,812)

Deferred loss on refunding (6,291) (6,836) (6,899)

1,454,918 1,466,552 1,250,804

Current bonds payable (22,305) (7,885) (54,650)

Total long-term revenue bonds and

notes payable – net 1,432,613 $ 1,458,667

$ 1,196,154

$ Outstanding Debt at Year-end



# Additional information on the Airport’s long-term debt is presented in Note 4 of the notes to basic financial

statements and in the Statistical Information section of this report.

The Airport’s revenue bonds at December 31, 2011 had credit ratings with each of the three major rating

agencies as follows:

Moody’s

Investor Standard Fitch

Services & Poor’s Ratings



# First Lien Chicago Midway Revenue Bonds A2 A A

Second Lien Chicago Midway Revenue Bonds A3 A- AAt December 31, 2011 and 2010 the Airport believes it was in compliance with the debt covenants as stated

within the Master Trust Indentures.

ECONOMIC FACTORS AND NEXT YEAR RATES AND CHARGES

The airlines using Chicago Midway International Airport generally provide low fare, point-to-point

origination and destination passenger service. During 2011 and 2010, Southwest Airlines accounted for 86.7

and 85.4%, respectively, of total enplanements at the Airport.

Based on the Airport’s rates and charges for 2012, total budgeted operating and maintenance expenses are

projected at $125,512 and total net debt service and fund deposit requirements are projected at $45,976.

Additionally, 2012 non-airline and non-signatory revenues are budgeted for $67,279, resulting in a net airline

requirement of $104,209 that will be funded through landing fees, terminal area use charges, and fueling

system charges.

REQUESTS FOR INFORMATION

This financial report is designed to provide the reader with a general overview of the Airport’s finances.

Questions concerning any of the information provided in this report or requests for additional financial

information should be addressed to the City of Chicago Comptroller’s Office.-11-CITYOFCHICAGO,ILLINOISCHICAGOMIDWAYINTERNATIONALAIRPORTSTATEMENTSOFNETASSETSASOFDECEMBER31,2011AND2010($inthousands)2011201020112010ASSETSANDDEFERREDOUTFLOWSLIABILITIESCURRENTASSETS:CURRENTLIABILITIES:Cashandcashequivalents(Note2)35,366$21,552$Accountspayableandaccruedliabilities12,443$16,645$Investments(Note2)26,70944,917DuetootherCityfunds7,5166,373Accountsreceivable—netofallowancefordoubtfulaccountsAdvancesforterminalandhangarrent2,5342,214ofapproximately$365in2011and$4,275in201012,21110,235Deferredrevenue18,94332,908DuefromotherCityfunds2,1191,051Prepaidexpenses2,175299Totalcurrentliabilities41,43658,140Interestreceivable81126LIABILITIESPAYABLEFROMRESTRICTEDASSETS(Note3):Totalcurrentassets78,66178,180Currentportionofrevenuebondpayable(Note4)22,3057,885Interestrateswappremium(Note4)13,85414,631RESTRICTEDASSETS(Note3):Accountspayable35,06213,043Cashandcashequivalents(Note2)106,280228,236DuetootherCityfunds308374Investments(Note2)286,015189,161Interestpayable28,16224,604Duefromothergovernments2,7321,857DuefromotherCityfunds13Totalliabilitiespayablefromrestrictedassets99,69160,537Accountsreceivable(Note1)5,1692,767Interestreceivable463457NONCURRENTLIABILITIES:Revenuebondspayable—netofdiscount(Note4)1,432,6131,454,662Totalrestrictedassets400,659422,491Capitallease9,0369,408Notespayable—commercialpapers4,005NONCURRENTASSETS:Derivativeinstrument35,00020,077Otherassets—deferrednoisemitigationprogramcostsandfinancingfees118,733110,873Totalnoncurrentliabilities1,476,6491,488,152Propertyandfacilities(Note5):Totalliabilities1,617,7761,606,829Land109,446107,287Buildingsandotherfacilities1,371,4431,362,200NETASSETS(Note1):Constructioninprogress52,17320,229Investedincapitalassets—netofrelateddebt(70,876)(39,755)Totalpropertyandfacilities1,533,0621,489,716Restrictednetassets:Debtservice19,97611,860Lessaccumulateddepreciation380,538338,401Capitalprojects12,66111,438Passengerfacilitycharges5,1775,437Propertyandfacilities—net1,152,5241,151,315Airportuseagreement23,94324,744Noisemitigationprogram110,691102,429Deferredoutflows35,00014,896Otherassets35,65234,733Derivativesinstrument6,647Totalrestrictednetassets208,100190,641Totalnoncurrentassets1,312,9041,277,084Unrestrictednetassets37,22420,040Totalnetassets174,448170,926TOTAL1,792,224$1,777,755$TOTAL1,792,224$1,777,755$Seenotestobasicfinancialstatements.

# - 12 -



# CITY OF CHICAGO, ILLINOIS

CHICAGO MIDWAY INTERNATIONAL AIRPORT

STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

($ in thousands)

2011 2010



# OPERATING REVENUES:

Landing fees and terminal area use charges (Note 1) 79,445 $ 78,194

$

Rents, concessions and other (Note 6) 77,926 70,862

Total operating revenues 157,371 149,056

OPERATING EXPENSES (Notes 7 and 8):

Salaries and wages 43,554 42,105

Repairs and maintenance 40,732 31,942

Professional and engineering services 15,650 15,832

Other operating expenses 10,153 18,457

Total operating expenses before depreciation and amortization 110,089 108,336

Depreciation and amortization 51,067 52,767

Total operating expenses 161,156 161,103

OPERATING LOSS (3,785) (12,047)

NONOPERATING REVENUES (EXPENSES):

Passenger facility charges revenues 36,850 34,909

Customer facility charges revenues 6,175 5,856

Interest (loss) income 17,460 (2,682)

Interest expense (Note 4) (57,016) (63,362)

Other nonoperating revenues 777 777

Total nonoperating revenues (expenses) 4,246 (24,502)

GAIN (LOSS) BEFORE CAPITAL GRANTS 461 (36,549)

CAPITAL GRANTS (Note 1) 3,061 2,461

CHANGE IN NET ASSETS 3,522 (34,088)

TOTAL NET ASSETS — Beginning of year 170,926 205,014

TOTAL NET ASSETS — End of year 174,448 $ 170,926

$

See notes to basic financial statements.

# - 13 -



# CITY OF CHICAGO, ILLINOIS

CHICAGO MIDWAY INTERNATIONAL AIRPORT

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

($ in thousands)

2011 2010



# CASH FLOWS FROM OPERATING ACTIVITIES:

Landing fees and terminal area use charges 69,436 $ 80,559

$

Rents, concessions and other 68,428 69,479

Payments to vendors (68,185) (67,484)

Payments to employees (35,997) (33,752)

Transactions with other City funds — net (8,075) (6,318)

Cash flows provided by operating activities 25,607 42,484

CASH FLOWS FROM CAPITAL AND RELATED

FINANCING ACTIVITIES:

Proceeds from issuance of bonds 327,015

Proceeds from issuance of notes 4,005

Payments to refund commercial paper (4,005) (61,360)

Acquisition and construction of capital assets (15,230) (34,512)

Grant receipts 2,186 604

Bond issuance costs (2,041)

Principal paid on bonds (7,885) (54,729)

Interest paid (60,037) (55,472)

Cash paid for noise mitigation program (18,210) (3,049)

Principal payments on capital lease obligation (372) (344)

Passenger facility charges revenues 34,510 36,744

Customer facility charges revenues 6,113 5,856

Collateral deposit payment 1,420 (1,420)

Cash flows (used in) provided by capital and related

financing activities (61,510) 161,297

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of investments — net (81,418) (97,746)

Investment interest 9,179 1,321

Cash flows used in investing activities (72,239) (96,425)

NET CHANGE IN CASH AND CASH EQUIVALENTS (108,142) 107,356

CASH AND CASH EQUIVALENTS — Beginning of year 249,788 142,432

CASH AND CASH EQUIVALENTS — End of year 141,646 $ 249,788

$

(Continued)

# - 14 -



# CITY OF CHICAGO, ILLINOIS

CHICAGO MIDWAY INTERNATIONAL AIRPORT

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

($ in thousands)

2011 2010



# RECONCILIATION OF CASH AND CASH EQUIVALENTS

REPORTED ON THE STATEMENTS OF NET ASSETS:

Unrestricted 35,366 $ 21,552

$

Restricted 106,280 228,236

TOTAL 141,646 $ 249,788

$

RECONCILIATION OF OPERATING LOSS TO

CASH PROVIDED BY OPERATING ACTIVITIES:

Operating loss (3,785) $ (12,047)

$

Adjustments to reconcile operating loss to

cash flows from operating activities:

Depreciation and amortization 51,067 52,767

Provision for uncollectible accounts (3,886) 3,369

Changes in assets and liabilities:

Decrease in accounts receivable (136) (1,673)

Increase in due from other City funds 76 2,513

Decrease in prepaid expenses (1,876) (277)

Decrease in due to other City funds (53) (1,023)

(Decrease) increase in deferred revenue (4,218) 1,475

Increase (decrease) in advances for terminal and hangar rent 320 (2,190)

Decrease in accounts payable and accrued liabilities (11,902) (430)

CASH FLOWS FROM OPERATING ACTIVITIES 25,607 $ 42,484

$

SUPPLEMENTAL DISCLOSURE OF NONCASH ITEMS:

Property additions in 2011 and 2010 of $30,204 and

$24,271, respectively, are included in accounts payable.

The fair market value adjustments gain (loss) to investments for 2011

and 2010 were $288 and $(2,572), respectively.

See notes to basic financial statements. (Concluded)

# - 15 -



# CITY OF CHICAGO, ILLINOIS

CHICAGO MIDWAY INTERNATIONAL AIRPORT

NOTES TO BASIC FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010



# 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization — Chicago Midway International Airport (Airport) is operated by the City of Chicago

(City) Department of Aviation. The Airport is included in the City’s reporting entity as an Enterprise

Fund. The City is a member of the Chicago-Gary Regional Airport Authority, which was created in

1995 to address the air transportation needs of the Chicago-Northwest Indiana Region. The Airport is

subject to the provisions of the Airport Use Agreement and Facilities Lease (Use Agreement) which is a

residual use agreement that is scheduled to terminate on December 31, 2012. Airport management

anticipates that a new Airport Use Agreement and Facilities Lease will be in place by December 31,

2012.

Basis of Accounting and Measurement Focus — The accounting policies of the Airport are based

upon accounting principles generally accepted in the United States of America, as prescribed by the

Governmental Accounting Standards Board (GASB). The accounting and financial reporting treatment

applied to a fund is determined by its measurement focus. The accounts of the Airport are reported using

the flow of economic resources measurement focus.

The Airport uses the accrual basis of accounting, under which revenues are recognized when earned and

expenses are recognized when incurred. Enterprise funds may elect to apply Financial Accounting

Standards Board (FASB) pronouncements issued after November 30, 1989, provided that such standards

are not in conflict with standards issued by the GASB. The Airport has elected not to apply FASB

pronouncements issued after November 30, 1989.

Annual Appropriated Budget — The Airport has a legally adopted annual budget, which is not

required to be reported.

Management’s Use of Estimates — The preparation of financial statements in conformity with

accounting principles generally accepted in the United States of America requires management to make

estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of

contingent assets and liabilities at the date of the basic financial statements, and the reported amounts of

revenues and expenses during the reporting period. Actual results could differ from the estimates.

Cash, Cash Equivalents and Investments — Cash, cash equivalents and investments generally are

held with the City Treasurer as required by the Municipal Code of Chicago (Code). Interest earned on

pooled investments is allocated to participating funds based upon their average combined cash and

investment balances. Due to contractual agreements or legal restrictions, the cash and investments of

certain funds are segregated and earn and receive interest directly.

The Code permits deposits only to City Council-approved depositories, which must be regularly

organized state or national banks and federal and state savings and loan associations, located within the

City, whose deposits are federally insured.

Investments authorized by the Code include interest-bearing general obligations of the City, the State of

Illinois (State), and the U.S. government; U.S. Treasury bills and other non-interest-bearing general

# - 16 -

obligations of the U.S. government purchased in the open market below face value; domestic money

market mutual funds regulated by, and in good standing with, the Securities and Exchange Commission

and tax anticipation warrants issued by the City. The City is prohibited by ordinance from investing in

derivatives, as defined, without City Council approval.

The Airport values its investments at fair value or amortized cost as applicable. U.S. government

securities purchased at a price other than par with a maturity of less than one year are reported at

amortized cost.

Repurchase agreements can be purchased only from banks and certain other institutions authorized to do

business in the State. The City Treasurer requires that securities pledged to secure these agreements have

a market value equal to the cost of the repurchase agreements plus accrued interest.

Investments generally may not have a maturity in excess of 10 years from the date of purchase. Certain

other investment balances are held in accordance with the specific provisions of applicable bond

ordinances.

Cash equivalents include certificates of deposit and other investments with maturities of three months or

less when purchased.

Accounts Receivable Allowance — Management has provided an allowance based on amounts

recorded at year-end, which may be uncollectible.

Revenues and Expenses — Revenues from landing fees, terminal area use charges, fueling system

charges, parking revenue and concessions are reported as operating revenues. Transactions that are

related to financing, investing and passenger facility charges (PFCs) are reported as nonoperating

revenues. Salaries and wages, repair and maintenance, professional and engineering services and other

expenses that relate to Airport operations are reported as operating expenses. Interest expense, PFC

expenses and financing costs are reported as nonoperating expenses.

Transactions with the City — The City’s general fund provides services to the Airport. The amounts

allocated to the Airport for these services are treated as operating expenses and consist mainly of

employee benefits, self-insured risks and administrative expenses.

Other Assets — Funds expended for the Noise Mitigation Program are recorded as other assets and

amortized over a 20-year useful life on a straight-line basis. The amounts reflected in restricted net

assets only includes amounts previously expended.

Property and Facilities — Property and facilities are recorded at cost or, for donated assets, at market

value at the date of acquisition. Expenditures greater than $5,000 for the acquisition, construction or

equipping of capital projects, together with related design, architectural and engineering fees, are

capitalized. Expenditures for vehicles and other movable equipment are expensed as incurred.

Depreciation and amortization are provided using the straight-line method and begin in the year

following the year of acquisition or completion. Estimated useful lives are as follows:

Facilities and structures 40 years

Runways, aprons, tunnels, taxiways, and paved roads 30 years

Other 10–30 years

Net Assets — Net Assets comprise the net earnings from operating and nonoperating revenues,

expenses and capital grants. Net assets are displayed in three components — invested in capital assets,

net of related debt; restricted for debt service, capital projects, PFC, airport use agreement requirements,

# - 17 -

noise mitigation program and other assets; and unrestricted. Invested in capital assets, net of related debt

consists of all capital assets, net of accumulated depreciation and reduced by outstanding debt net of

debt service reserve and unspent proceeds. Restricted net assets consist of net assets for which

constraints are placed thereon by external parties (such as lenders and grantors) and laws, regulations

and enabling legislation. Unrestricted net assets consist of all other net assets not categorized as either of

the above.

Employee Benefits — Employee benefits are granted for vacation and sick leave, workers’

compensation and health care. Unused vacation leave is accrued and may be carried over for one year.

Sick leave is accumulated at the rate of one day for each month worked, up to a maximum of 200 days.

Severance of employment terminates all rights to receive compensation for any unused sick leave. Sick

leave pay is not accrued. Employee benefit claims outstanding, including claims incurred but not

reported, are estimated and recorded as liabilities. The Airport maintains insurance from a commercial

carrier for workers’ compensation claims. Settlements in each of the past three years have been less than

insurance coverage maintained.

Employees are eligible to defer a portion of their salaries until future years under the City’s deferred

compensation plan created in accordance with Internal Revenue Code Section 457. The deferred

compensation is not available to employees until termination, retirement, death or unforeseeable

emergency. The plan is administered by third-party administrators who maintain the investment

portfolio. The plan’s assets have been placed in trust accounts with the plan administrators for the

exclusive benefit of participants and their beneficiaries and are not considered assets of the City.

The City is subject to the State of Illinois Unemployment Compensation Act and has elected the

reimbursing employer option for providing unemployment insurance benefits for eligible former

employees. Under this option, the City reimburses the State for claims paid by the State.

Bond Issuance Costs, Bond Discounts and Refunding Transactions — Bond issuance costs and bond

discounts are deferred and amortized over the life of the related debt, except in the case of refunding

debt transactions where the amortization period is over the term of the refunding or refunded debt,

whichever is shorter.

Capitalized Interest — Interest expense and income earned on construction bond proceeds are

capitalized during construction on those capital projects paid for from the bond proceeds and are being

amortized over the depreciable lives of the related assets on a straight-line basis.

Capital Grants — The Airport reports capital grants as revenue on the statements of revenues, expenses

and changes in net assets. Capital grants are on a reimbursement basis and revenues are recognized to

the extent of allowable expenditures.

Revenue Recognition — Landing fees and terminal area use charges and fueling system charges are

assessed to the various airlines throughout each year based on estimated rates. Such rates are designed to

yield collections from airlines adequate to cover certain expenses and required debt service and fund

deposits as determined under provisions of the Airport Use Agreement and Facilities Leases (Use

Agreement). Incremental amounts due from the airlines arise when amounts assessed, based on the

estimated rates used during the year, are less than actual expenses and required deposits for the year.

Such incremental amounts due from airlines are included in accrued revenue. Incremental amounts due

to the airlines arise when amounts assessed, based on the estimated rates used during the year, exceed

actual expenses and required deposits for the year. Such incremental amounts due to airlines are

included in deferred revenue.

# - 18 -

PFC Revenue — Effective January 1, 2007, the Federal Aviation Administration (FAA) approved PFCs

of $4.50 per eligible enplaned passenger, less allowable airline administrative costs of $.11 per eligible

enplaned passenger. PFCs are available, subject to FAA regulation and approval, to finance specific

eligible capital projects. The City reports PFC revenue as nonoperating.

Customer Facility Charge (CFC) Revenue — The Airport imposed a CFC of $3.75 per contract day

on each customer for motor vehicle rentals at the Airport for the years ended December 31, 2011 and

2010. CFCs are available to finance specific eligible capital projects. The City reports CFC revenue as

nonoperating revenue and related noncapital expenses as nonoperating expenses in conformity with

industry practice.

Adopted Accounting Standards — In June 2008, the Government Accounting Standards Board

(GASB) issued GASB Statement No. 53, Accounting and Financial Reporting for Derivatives

Instruments . The Airport implemented GASB Statement No. 53 on January 1, 2010. This statement

enhances the usefulness and comparability of derivative instrument information reported by state and

local governments by providing a comprehensive framework for the recognition, measurement, and

disclosure of derivative instrument transactions. Derivative instruments such as interest rate and

commodity swaps, interest rate locks, options (caps, floors, and collars), swaptions, forward contracts,

and futures contracts are entered into by governments as investments; as hedges of identified financial

risks associated with assets or liabilities, or expected transactions (i.e., hedgeable items); to lower the

costs of borrowings; to effectively fix cash flows or synthetically fix prices; or to offset the changes in

fair value of hedgeable items. A key provision of GASB Statement No. 53 is that certain derivative

instruments, with the exception of synthetic guaranteed investment contracts that are fully

benefit-responsive, are reported at fair value by governments in their financial statements. GASB

Statement No. 53 requires that the provisions of this statement should be applied retroactively by

restating financial statements for all periods presented.

2. RESTRICTED AND UNRESTRICTED CASH AND CASH EQUIVALENTS AND

INVESTMENTS

Investments —U.S. agencies include investments in government-sponsored enterprises such as Federal

National Mortgage Association, Federal Home Loan Banks, and Federal Home Loan Mortgage Corp.

The Airport as of December 31, 2011, had the following investments ($ in thousands):

More

Investment Type Less Than 1 1–5 6–10 Than 10 Fair Value



# U.S. treasuries

- $

-

$

-

$

-

$

-

$

U.S. agencies 6,502 288,969 6,219 301,690

Commercial paper 22,583 22,583

Corporate bonds 1,898 1,898

Municipal bonds 9,123 9,123

Certificates of deposits and

other short-term 140,724 140,724

Subtotal 169,809 $ 299,990

$ 6,219

$

-

$ 476,018

Share of City’s pooled funds 15

Total 476,033 $ Investment Maturities (in Years)

# - 19 -

Investments — U.S. agencies include investments in government-sponsored enterprises such as Federal

National Mortgage Association, Federal Home Loan Banks, and Federal Home Loan Mortgage Corp.

The Airport as of December 31, 2010, had the following investments ($ in thousands):

More

Investment Type Less Than 1 1–5 6–10 Than 10 Fair Value



# U.S. treasuries

- $

-

$

-

$

-

$

-

$

U.S. agencies 85,275 180,826 10,567 276,668

Certificates of deposits and

other short-term 219,094 219,094

Subtotal 304,369 $ 180,826

$ 10,567

$

-

$ 495,762

Share of City’s pooled funds 11

Total 495,773 $ Investment Maturities (in Years)



# Interest Rate Risk — As a means of limiting its exposure to fair value losses arising from rising

interest rates, the City’s investment policy requires that investments generally may not have a maturity

date in excess of 10 years from the date of purchase. Certain other investments are held in accordance

with the specific provisions of applicable ordinances.

Credit Risk — The Code limits investments in commercial paper to banks whose senior obligations are

rated in the top two rating categories by at least two national rating agencies and who are required to

maintain such rating during the term of such investment. The Code also limits investments to domestic

money market mutual funds regulated by, and in good standing with, the Securities and Exchange

Commission. Certificates of deposit are also limited by the Code to national banks, which provide

collateral of at least 105% by marketable U.S. government securities marked to market at least monthly;

or secured by a corporate surety bond issued by an insurance company licensed to do business in Illinois

and having a claims-paying rating in the top rating category, as rated by a nationally recognized

statistical rating organization maintaining such rating during the term of such investment. The Airport’s

exposure to credit risk at December 31, 2011 and 2010, is as follows ($ in thousands):

Quality Rating 2011 2010



# Aaa/AAA 6,890 $ 495,762

$

Aa/A 305,821

A/A

P1/A1 22,583

Not rated 140,724

Total funds 476,018 $ 495,762

$

The Airport participates in the City’s pooled cash and investments account, which includes amounts

from other City funds and is maintained by the City Treasurer. Individual cash or investments are not

specifically identifiable to any participant in the pool. The City Treasurer’s pooled fund is included in

the City’s Comprehensive Annual Financial Statements.

Custodial Credit Risk

— Cash and Certificates of Deposit — This is the risk that in the event of a

bank failure, the City’s deposits may not be returned. The City’s investment policy states that in order to

protect the City deposits, depository institutions are to maintain collateral pledges on City deposits

# - 20 -

during the term of the deposit of at least 105% of marketable U.S. government, or approved securities or

surety bonds, issued by top-rated insurers. Collateral is required as security whenever deposits exceed

the insured limits of the Federal Deposit Insurance Corporation. The bank balance of cash and

certificates of deposit with the City’s various municipal depositories were $478.9 million and

$211.0 million at December 31, 2011 and 2010, respectively. Of the bank balance, $478.9 million and

$211.0 million or 100% and 100% at December 31, 2011 and 2010, respectively, were either insured or

collateralized.

The investments reported in the basic financial statements at December 31, 2011 and 2010, is

summarized as follows ($ in thousands):

2011 2010



# Per Note 2:

Investments — Airport 476,018 $ 495,762

$

Investments — City Treasurer Pooled Fund 15 11

476,033 $ 495,773

$

Per basic financial statements:

Restricted investments 286,015 $ 189,161

$

Unrestricted investments 26,709 44,917

Investments included as cash and cash

equivalents on the statements of net assets 163,309 261,695

476,033 $ 495,773

$

3. RESTRICTED ASSETS

There are various limitations and restrictions contained in the Master Indenture of Trust securing the

Chicago Midway Airport Revenue Bonds (First Lien Master Indenture) and the Master Indenture of

Trust securing the Chicago Midway Airport Second Lien Obligation (Second Lien Master Indenture)

and together with the First Lien Master Indenture (Master Indentures), the Use Agreement and federal

regulations contain various limitations and restrictions, which, among other things, require the creation

and maintenance of separate accounts, certain of which must be held by a trustee and into which

required deposits are made by the Airport on a periodic basis to fund construction, debt retirement,

operation and maintenance and contingencies.

# - 21 -

Restricted cash, cash equivalents and investment balances in accordance with the Master Indenture

requirements at December 31, 2011 and 2010, are as follows ($ in thousands):

Account 2011 2010



# Construction 158,373 $ 190,393

$

Capitalized interest 4,817 9,334

Debt service 63,778 49,534

Debt service reserve 102,798 102,798

Operation and maintenance reserve 19,651 19,283

Repair and replacement 4,303 5,083

Emergency reserve 385 367

Customer facility charge (CFC) 27,103 25,410

Other 11,087 12,532

Subtotal — Master Indentures and

Use Agreement accounts 392,295 414,734

Passenger facility charges (PFC) 2,663

Total 392,295 $ 417,397

$ December 31



# Construction and capitalized interest accounts, which are funded with bond proceeds, are restricted to

pay authorized capital improvements and related interest costs during construction.

Required deposits are made by the Airport from revenues collected after funding deposits to an

operation and maintenance account in the following priority on a monthly basis:

N The debt service account is restricted to the payment of debt service.

N The operation and maintenance reserve account is restricted to make loans to the operation and

maintenance account, as needed, which are to be repaid as the funds become available.

The debt service reserve account requirement was funded upon issuance of the Series 1996 first lien

bonds, the Series 1998 first lien bonds, the Series 1998 second lien bonds, the Series 2004 second lien

bonds and the Series 2010 second lien bonds with a cash deposit. The debt service reserve account is

restricted to the payment of debt service in the event that the balance in the debt service account is

insufficient.

The junior lien obligation debt service fund is required to be established to record all transactions

associated with junior lien obligations per the First Lien Master Indenture.

The repair and replacement account must be used for paying the cost of maintenance expenditures, such

as costs incurred for major repairs, renewals and replacements at the Airport whether caused by normal

wear and tear or by unusual and extraordinary occurrences.

The emergency reserve account is restricted to make payments for certain purposes, including terminal

area use charges, landing fees and certain other charges that are deemed uncollectible and also for any

judgments or settlements against the Airport.

# - 22 -

The City has entered into arbitrage agreements under which the City has agreed to comply with certain

requirements of the Internal Revenue Code of 1986, as amended, in order to maintain the exclusion of

the interest on the bonds from the gross income of the recipients thereof for federal income tax purposes.

The rebate account relating to each series of the bonds has been established to account for any liability

of the City to make arbitrage rebate payments to the federal government relating to such series of bonds.

The special projects account is restricted to make payments of certain airline-approved capital

expenditures.

The CFC is for permitted costs and purposes related to the consolidated rental car facility.

The PFC account is restricted to fund eligible and approved PFC projects.

Other funds include the federal and state grant funds, the security for payment fund and the Airport

development fund.

At December 31, 2011 and 2010, the Airport believes it was in compliance with the funding

requirements and restrictions as stated in the Master Indentures.

# - 23 -

4. LONG-TERM DEBT (BEING REVIEWED BY OUR DEBT MANAGEMENT DIVISION)

Long-term debt at December 31, 2011 and 2010, consisted of the following ($ in thousands):

2011 2010



# First lien bonds:

$148,820 Series 1996 A Chicago Midway Airport Revenue Bonds,

issued November 7

, 1996

, due through 2029

, interest at 4

. 8 %

– 6

. 0 % 58,420 $ 58,420

$

$105,220 Series 1996 B Chicago Midway Airport Revenue Bonds,

issued November 7

, 1996

, due through 2029

, interest at 4

. 9 %

– 6

. 5 % 82,115 82,115

$397,715 Series 1998 A, B, and C Chicago Midway Airport Revenue Bonds,

issued September 10

, 1998

, due through 2035

, interest at 4

. 3 %

– 5

. 5 % 376,925 379,070

$295,855 Series 2001 A and B Chicago Midway Airport Revenue Bonds,

issued September 13

, 2001

, due through 2031

, interest at 5

. 0 %

– 5

. 5 % 262,745 263,990

Subtotal — first lien bonds 780,205 783,595

Second lien bonds:

$171,000 Series 1998 A and B Chicago Midway Airport Second Lien Revenue

Bonds, issued September 16, 1998, due through 2029, variable floating interest rate

(.09% at December 31, 2011) 132,525 132,525

$22,000 Series 2002 A Chicago Midway Airport Second Lien Revenue Bonds,

issued February 13, 2002, fully refunded on May 6, 2010

$77,565 Series 2004 A and B Chicago Midway Airport Second Lien Revenue

Bonds

, issued December 14

, 2004

, due through 2024

, interest rate at 3

. 20 %

– 5

. 00 % 69,595 74,090

$152,150 Series 2004 C and D Chicago Midway Airport Second Lien Revenue

Bonds, issued December 14, 2004, due through 2035, interest rate at 4.174% and 4.247% 152,150 152,150

$22,000 Series 2010 A-1 Chicago Midway Airport Second Lien Revenue Bonds,

issued May 6, 2010, due through 2021, variable floating interest rate

(.10% at December 31, 2011) 22,000 22,000

$58,475 Series 2010 A-2 Chicago Midway Airport Second Lien Revenue Bonds,

issued May 6, 2010, due through 2025, variable floating interest rate

(.09% at December 31, 2011) 58,475 58,475

$84,000 Series 20010 B Chicago Midway Airport Second Lien Revenue Bonds,

issued October 26, 2010, due through 2034, interest rate at 5.00% to 5.34% 84,000 84,000

$63,470 Series 20010 C Chicago Midway Airport Second Lien Revenue Bonds,

issued October 26

, 2010

, due through 2041

, interest rate at 3

. 782 %

– 7

. 168 % 63,470 63,470

$82,610 Series 20010 D-1 Chicago Midway Airport Second Lien Revenue Bonds,

issued October 26

, 2010

, due through 2041

, interest rate at 3

. 532 %

– 5

. 340 % 82,610 82,610

$16,460 Series 20010 D-2 Chicago Midway Airport Second Lien Revenue Bonds,

issued October 26

, 2010

, due through 2041

, interest rate at 3

. 532 %

– 5

. 340 % 16,460 16,460

Subtotal — second lien bonds 681,285 685,780

Commercial paper notes — Series A

, B

, C

, and D 4,005

Total revenue bonds and notes 1,461,490 1,473,380

Unamortized premium (discount) (281) 8

Unamortized deferred loss on bond refunding (6,291) (6,836)

1,454,918 1,466,552

Current portion (22,305) (7,885)

Total long-term revenue bonds payable 1,432,613 $ 1,458,667

$

# - 24 -

Long-term debt during the years ended December 31, 2011 and 2010, changed as follows ($ in

thousands):

Balance Balance Due Within

January 1, December 31, One

2011 Additions Reductions 2011 Year



# Revenue bonds 1,469,375 $

-

$ (7,885)

$ 1,461,490

$ 22,305

$

Unamortized premium (discount) 8 (962) 673 (281)

Deferred (loss) gain on refunding (6,836) 545 (6,291)

Total revenue bonds 1,462,547 (962) (6,667) 1,454,918 22,305

Commercial paper 4,005 (4,005)

Total long-term debt 1,466,552 $ (962)

$ (10,672)

$ 1,454,918

$ 22,305

$

Balance Balance Due Within

January 1, December 31, One

2010 Additions Reductions 2010 Year



# Revenue bonds 1,205,155 $ 327,015

$ (62,795)

$ 1,469,375

$ 7,885

$

Unamortized (discount) premium (8,812) (467) 9,287 8

Deferred (loss) gain on refunding (6,899) (470) 533 (6,836)

Total revenue bonds 1,189,444 326,078 (52,975) 1,462,547 7,885

Commercial paper 61,360 4,005 (61,360) 4,005

Total long-term debt 1,250,804 $ 330,083

$ (114,335)

$ 1,466,552

$ 7,885

$



# Interest expense capitalized for 2011 and 2010 totaled $6.83 million and $2.01 million, respectively.

Interest income capitalized for 2011 and 2010 totaled $.74 million and $.77 million, respectively.

Interest expense includes amortization of the deferred loss on bond refunding for 2011 and 2010 of

$.54 million and $.53 million, respectively, and amortization of $.29 million of premium, net and $.28

million of discount, respectively.

Issuance of Debt — In May 2010, the Airport sold $22.0 million of Chicago Midway Airport Second

Lien Revenue Refunding Bonds, Series 2010A-1 (Taxable). The bonds have an initial variable interest

rate of 0.29%. The Series 2010A-1 Second Lien Bonds are not subject to mandatory sinking fund

redemption prior to maturity. The bonds mature in their entirely on January 1, 2021. The net proceeds of

$22.0 million were used to refund the outstanding of the Series 2002A Second Lien Bonds

($17.6 million) and to pay a portion of the outstanding Commercial Paper Notes ($4.4 million).

In May 2010, the Airport sold $58.5 million of Chicago Midway Airport Second Lien Revenue

Refunding Bonds, Series 2010A-2 (Taxable). The bonds have an initial variable interest rate of 0.29%

The Series 2010A-2 Second Lien Bonds are not subject to mandatory sinking fund redemption prior to

maturity. The bonds mature in their entirely on January 1, 2025. Certain proceeds of $10.25 million

were deposited in an escrow account to defease a portion of the Series 1996 B First Lien Bonds

($2.58 million of principal and $0.07 million of interest), a portion of the Series 1998 A First Lien

Bonds ($0.78 million of principal, $0.01 million of premium and $0.02 million of interest), a portion of

the Series 1998 B First Lien Bonds ($0.43 million of principal and $0.01 million of interest), a portion of

the Series 2001A First Lien Bonds ($5.49 million of principal and $0.27 million of interest) and a

portion of the Series 2001 B First Lien Bonds ($0.58 million of principal and $0.03 million of interest);

certain proceeds of $43.82 million were used to pay a portion of the outstanding Commercial Paper

# - 25 -

Notes; certain proceeds of $0.39 million were used to fund capitalized interest deposit requirement;

certain proceeds of $4.0 million were used to fund debt service reserve requirement and certain proceeds

of $0.03 million were used to pay the cost of issuance of the bonds. The advance refunding resulted in a

difference between the reacquisition price and the net carrying amount of the refunded debt of

$0.5 million that will be charged to operation over 16 years using the straight-line method. The advance

refunding decreased the Airport’s total debt service payments by $6.6 million and resulted in an

economic gain (difference between the present value of the old debt and the new debt service payments)

of $0.9 million.

In October 2010, the Airport sold $84.0 million of Chicago Midway Airport Second Lien Revenue

Bonds, Series 2010 B (Non-AMT) at a premium of $8.5 million. The bonds have an initial interest rate

of 5.0% and have a mandatory tender date on January 1, 2015. Certain proceeds of $69.0 million will be

used to finance the costs of the residential sound projects; certain proceeds of $7.4 million were used to

pay a portion of the outstanding Commercial Paper Notes; certain proceeds of $8.2 million were used to

fund capitalized interest deposit requirement; certain proceeds of $7.1 million were used to fund debt

service reserve requirement and certain proceeds of $0.8 million were used to pay the cost of issuance of

the bonds.

In October 2010, the Airport sold $63.5 million of Chicago Midway Airport Second Lien Revenue

Bonds, Series 2010 C (Taxable). The bonds have interest rates ranging from 3.782% to 7.168% and

maturity and mandatory redemption maturity dates ranging from January 1, 2016 to January 1, 2041.

Certain Series 2010C Second Lien Revenue Bonds are subject to mandatory sinking fund redemption

prior to maturity. Certain proceeds of $62.9 million will be used to finance the costs of the rental car

facilities and certain proceeds of $0.6 million were used to pay the cost of issuance of the bonds.

In October 2010, the Airport sold $82.6 million of Chicago Midway Airport Second Lien Revenue

Bonds, Series 2010 D-1 (Taxable). The bonds have an initial interest rate of 3.532% and have a

mandatory tender date on January 1, 2014. Certain proceeds of $36.9 million will be used to finance the

costs of the various airport projects; certain proceeds of $37.3 million were used to pay a portion of the

outstanding Commercial Paper Notes; certain proceeds of $1.7 million were used to fund the capitalized

interest deposit requirement; certain proceeds of $6.0 million were used to fund the debt service reserve

requirement and certain proceeds of $0.7 million were used to pay the cost of issuance of the bonds.

In October 2010, the Airport sold $16.4 million of Chicago Midway Airport Second Lien Revenue

Bonds, Series 2010 D-2 (Taxable). The bonds have an initial interest rate of 3.532% and have a

mandatory tender date on January 1, 2014. Certain proceeds of $1.2 million were used to fund the debt

service reserve requirement; certain proceeds of $12.5 million were used to fund the various debt service

reserve accounts requirement; certain proceeds of $2.6 million were used to fund the coverage account

deposit requirement and certain proceeds of $0.1 million were used to pay the cost of issuance of the

bonds.

Chicago Midway International Airport Commercial Paper Notes, Series A, B, C, and D ($100.0 million

maximum aggregated authorized) outstanding at December 31, 2011 and 2010, were $0 and 4.0 million,

respectively. Note proceeds may be used to finance portions of the costs of authorized airport projects

and to repay the expenses of issuing the notes. An irrevocable letter of credit (LOC) ($111.3 million)

provides for the timely payment of principal and interest on the notes until July 12, 2014. Amounts paid

by drawing on the LOC shall be reimbursed by the Airport on said day paid; any amounts not

reimbursed shall constitute an advance and will bear interest at the greater of the most recent prime rate

or the federal funds rate, plus 0.5% (Base Rate). Advances outstanding greater than 180 days will bear

interest at the Base Rate, plus 1% beginning on the 180-first day after such advance is made. At

December 31, 2011 and 2010, there were no outstanding LOC advances.

# - 26 -

Debt Redemption — Following is a schedule of debt service requirements to maturity of the first lien

bonds ($ in thousands):

Years Ending

December 31 Principal Interest Total



# 2012 13,945 $ 40,417

$ 54,362

$

2013 14,710 39,633 54,343

2014 15,505 38,819 54,324

2015 16,330 37,946 54,276

2016 17,245 37,024 54,269

2017–2021 101,415 169,537 270,952

2022–2026 165,330 135,384 300,714

2027–2031 249,400 82,217 331,617

2032–2036 186,325 19,533 205,858

Total 780,205 $ 600,510

$ 1,380,715

$

Following is a schedule of debt service requirements to maturity of the second lien bonds. For issues

with variable rates, interest is imputed at the percent rate effective at December 31, 2011 ($ in

thousands):

Years Ending

December 31 Principal Interest Total



# 2012 8,360 $ 15,661

$ 24,021

$

2013 8,765 15,433 24,198

2014 9,160 16,073 25,233

2015 9,635 16,839 26,474

2016 15,570 16,561 32,131

2017–2021 112,500 73,307 185,807

2022–2026 142,350 56,691 199,041

2027–2031 226,505 41,784 268,289

2032–2036 96,010 23,847 119,857

2037–2041 52,430 8,382 60,812

Total 681,285 $ 284,578

$ 965,863

$

The Airport’s second lien variable rate bonds may bear interest from time to time at a flexible rate, a

daily rate, a weekly rate, an adjustable long rate or the fixed rate as determined from time to time by the

remarketing agent, in consultation with the City. At December 31, 2011, the Series 1998 A&B bonds,

the Series 2010 A-1 and 2010 A-2 bonds were in a daily rate interest mode and the Series 2004 C&D

bonds were in a weekly rate interest mode. An irrevocable LOC ($193.2 million) provides for the timely

payment of principal and interest on the Series 1998 A&B and the Series 2010A-2 bonds until

November 25, 2013. An irrevocable LOC ($176.1 million) provides for the timely payment of principal

and interest on the Series 2004 C&D and the Series 2010A-1 bonds until November 25, 2013.

In the event the bonds are put back to the bank and not successfully remarketed, or if the LOC expires

without an extension or substitution, the bank bonds will convert to a term loan. There is no principal

due on potential term loans within the next fiscal year.

# - 27 -

The 1998 A&B Chicago Midway Second Lien Bonds were converted from bank bonds to daily variable

rate demand bonds on May 6, 2010. The 2002A Chicago Midway Airport Second Lien Revenue Bonds

went into bank bond mode in February 2009, the bonds were refunded by the Series 2010 A-1 Second

Lien Bonds on May 6, 2010. The Chicago Midway Airport Series 2004 C&D Second Lien Bonds were

converted from auction rate securities to weekly variable rate demand bonds on May 6, 2010.

Hedging Derivatives:

In April 2011, the Airport novated its $60.9 million notional amount swap associated with the Midway

Airport Series 2004C&D variable rate bonds with J.P. Morgan to Wells Fargo Bank, N.A. The fixed rate

the Airport pays increased from 4.174% to 4.247%, and the Airport signed a one-way credit support

agreement (CSA) that no longer requires the Airport to post collateral if the mark-to-market exceeds the

threshold, previously defined in the J.P. Morgan agreement. A Goldman Sachs swap covers the 60%

balance of the bonds, with a current notional amount of $91.3 million, which does not have a two-way

CSA and remains unchanged.

Pay-Fixed, Receive-Variable Interest Rate Swaps:

Objective of the Swaps — In order to protect against the potential of rising interest rates, the Airport has

entered into a separate pay-fixed, receive-variable interest rate swap at a cost less than what the Airport

would have paid to issue fixed-rate debt ($ in thousands).

Classification Amount Classification Amount Notional



# Cash flow hedges:

Pay-fixed Interest Deferred outflow Deferred outflow

Rate Swaps of resources 20,104 $ of resources 35,000 $ 152,150

$ Fair Value at

Changes in Fair Value December 31, 2011



# Pay-Fixed, Receive-Variable Interest Rate Swaps — In order to protect against the potential of rising

interest rates, the Airport entered into two separate pay-fixed, receive-variable interest rate swaps at a

cost less than what the Airport would have paid to issue fixed-rate debt. The swap counterparties are

Goldman Sachs and Wells Fargo, with notional amounts of $91.3 million and $60.9 million,

respectively.

Terms, Fair Values and Credit Risk — The terms, including the fair value and credit ratings of the

outstanding swaps as of December 31, 2011 and 2010, are as follows. The notional amounts of the

swaps match the principal amounts of the associated debt. The Airport’s swap agreements contained

scheduled reductions to outstanding notional amounts that are expected to approximately follow

scheduled or anticipated reductions in the associated “bonds payable” category ($ in thousands).

Fixed Variable Fair Fair Swap Counterparty

Associated Notional Effective Rate Rate Value Value Termination Credit

Bond Issue Amounts Date Paid Received 2011 2010 Date Rating



# Series 2004 C&D Bonds 91,290 $ December 14, 2004 4.174 % SIFMA +.05% (20,564) $ (8,869)

$ January 1, 2035 A1/A

Series 2004 C&D Bonds 60,860 December 14, 2004 4.247 SIFMA +.05% (14,436) (6,007) January 1, 2035 Aa1/AATotal 152,150 $ (35,000) $ (14,876)

$

# - 28 -

Fair Value — As per industry convention, the fair value of the Airport’s outstanding swaps were

estimated using the zero-coupon method. This method calculates the future net settlement payment

required by the swap, assuming that the forward rates implied the yield curve correctly anticipate future

spot rates. These payments are then discounted using the spot rates implied by the current yield curve for

hypothetical zero-coupon bonds due on the date of each future net settlement of the swap. Because

interest rates declined subsequent to the date of execution, the Airport’s swaps had negative values.

Credit Risk — The Airport is exposed to credit risk (counterparty risk) through the counterparties with

which it enters into agreements. If minimum credit rating requirements are not maintained, the

counterparty is required to post collateral to a third party. This protects the Airport by mitigating the

credit risk, and therefore the ability to pay a termination payment, inherent in a swap. Collateral on all

swaps is to be in the form of cash or Eligible Collateral held by a third-party custodian. Upon credit

events, the swaps also allow transfers, credit support and termination if the counterparty is unable to

meet the said credit requirements

Basis Risk — Basis risk refers to the mismatch between the variable rate payments received on a swap

contract and the interest payment actually owed on the bonds. The two significant components driving

this risk are credit and BMA ratios. Credit may create basis risk because the Airport’s bonds may trade

differently than the swap index as a result of a credit change in the Airport. BMA ratios (or spreads) may

create basis risk if BMA swaps of the Airport’s bonds trade higher than the BMA received on the swap.

This can occur due to many factors including, without limitations, changes in marginal tax rates,

tax-exempt status of bonds and supply and demand for variable rate bonds. The Airport is exposed to

basis risk on the swaps if the rate paid on the bonds is higher than the rate received. The Airport is liable

for the difference. The difference would need to be available on the debt service payment date and

would add additional underlying cost to the transaction.

Tax Risk — The swap exposes the Airport to tax risk or a permanent mismatch (shortfall) between the

floating rate received on the swap and the variable rate paid on the underlying variable-rate bonds due to

tax law changes such that the Federal or State tax exception of municipal debt is eliminated or its value

reduced. There have been no tax law changes since the execution of this swap agreement.

Termination Risk — The risk that the swap could be terminated as a result of certain events, including a

ratings downgrade for the issuer or swap counterparty, covenant violation, bankruptcy, payment default

or other defined events of default. Termination of a swap may result in a payment made by the issuer or

to the issuer depending upon the market at the time of termination.

# - 29 -

Swap Payments and Associated Debt — As of December 31, 2011, debt service requirements for the

Airport’s outstanding variable-rate debt and net swap payments, assuming current interest rates remain

the same, for their term are as follows ($ in thousands):

Interest

Years Ending Rate

December 31 Principal Interest Swaps — Net Total



# 2012 3,650 $ 190

$ 6,128

$ 9,968

$

2013 3,825 186 5,976 9,987

2014 4,000 181 5,816 9,997

2015 4,200 175 5,649 10,024

2016 4,275 170 5,476 9,921

2017–2021 24,925 760 24,488 50,173

2022–2026 31,050 584 18,814 50,448

2027–2031 38,600 365 11,746 50,711

2032–2036 37,625 98 3,153 40,876

Total 152,150 $ 2,709

$ 87,246

$ 242,105

$ Variable-Rate Bonds



# Investment Derivatives

Swaptions:

Objective of the Swaptions — Effective October 27, 1999, the Airport entered into an Option on Interest

Rate Swap Agreement (the Option) in connection with $397.7 million (the Notional Amount) of

Chicago Midway Airport Series Revenue Bonds 1998 A, 1998 B and 1998 C. Pursuant to the Option,

the Airport received a premium of $23.5 million that was recorded as a deferred gain. As a synthetic

refunding of the bonds, this premium represents the risk-adjusted, present value savings of a refunding,

without issuing refunding bonds. The deferred gain is amortized over the term of the agreement

(30 years). The buyer may exercise the Option if the daily weighted average of the Municipal Swap

Index for the 180 days on the day prior to the exercise date is greater than 7.5%. If the Option is

exercised, the Airport will owe interest calculated on a floating rate equal to the Municipal Swap Index

plus 25 basis points (the Spread) to the buyer of the swap. In return, the buyer will owe the Airport

interest calculated on a fixed rate of 5.1%. The Notional Amount is not exchanged; it is only the basis on

which interest payments are calculated. The Airport’s floating rate is capped at 15%. The Airport

continues to pay interest to the bondholders at the fixed rate stated in the bonds. However, during the

term of the swap agreement, the Airport will effectively pay a variable rate on the bonds. The Option

increases the Airport’s exposure to variable interest rates. The debt service requirements to maturity for

these bonds (presented in this note) are based on the fixed rate stated in the Bonds. The Airport will be

exposed to paying fixed rates if the buyer to the swap defaults or if the swap is terminated. The Airport

or the counter-party may terminate the Option if the other party fails to perform under the terms of the

agreement. A termination of the swap agreement may result in the Airport making or receiving a

termination payment.

In May 2011, the Airport entered into a two-way Credit Support Agreement (CSA) with J.P. Morgan in

connection with the $397.7 million original notional amount swaption associated with the Midway

Airport Series 1998 A, B, and C fixed rate bonds. The CSA was required because a termination event

was triggered due to the insurer’s (MBIA) ratings downgrade. Based on the current second lien ratings at

Midway Airport (A3/A-/A- by Moody’s, S&P and Fitch ,respectively), if the mark-to-market on the

swap is against the Airport by more than $25 million, the Airport must post collateral for the difference.

# - 30 -

To mitigate the risk of posting collateral, the Airport obtained a $25 million LOC from PNC Bank as

collateral. The LOC is not expected to be drawn upon as long as there is no event of default by the bank

or the Airport. Based on the current second lien ratings at Midway Airport, if the mark-to-market on the

swaption is against the Airport by more than the combined $25 million threshold provided in the CSA

and the $25 million LOC, for a total of $50 million, the Airport must post collateral for the difference.

As of December 31, 2011, the option had a negative fair market value of $7.2 million. The option was

not exercised during 2011. Note that in the statement of net assets the combination of the $6.6 million

derivative asset and the interest rate swap premium balance of $13.8 million together represent the total

hybrid instrument of $7.2 million.

Fair Value at

Changes in Fair Value December 31, 2011

Classification Amount Classification Amount Notional



# Investment derivative

instructions:

Pay-fixed Interest Investment Outflow of

Rate Swaps Revenue 12,606 $ resources 7,207 $ 380,270

$



# Terms — The terms, including fair values of the swaptions as of December 31, 2010, are as follows

(dollars in thousands):

Bond Issue Amounts Date Paid Received Values Date Payment



# Chicago Midway Airport Revenue

Bonds (Series 1998A (AMT); Series

1998B (Non-AMT); and Refunding

Series 1998C (Non-AMT)) 380,270 $ October 27, 1999 SIFMA+25bps 6,647 $ 7,207

$ January 1, 2030 23,500 $



# Fair Value — As of December 31, 2011 and 2010, the swaptions had a negative fair value of

$7.2 million and $19.8 million, respectively. As per industry convention, the fair values of the Airport’s

outstanding swaptions were estimated using the zero-coupon method. This method calculates the future

net settlement payments required by the swap, assuming that the forward rates implied by the yield

curve correctly anticipate future spot rates. These payments are then discounted using the spot rates

implied by the current yield curve for hypothetical zero-coupon bonds due on the date of each future net

settlement on the swap. Because interest rates are below the fixed rate received, the Airport’s swaptions

had negative values. The negative value is also driven by the upfront payment received by the Airport

upon execution of the swaption agreement.

Defeased Bonds — Defeased bonds have been removed from the balance sheet because the related

assets have been placed in irrevocable trusts, together with interest earned thereon, will provide amount

sufficient for payment of all principal and interest. During 2010, the Airport defeased a portion of the

Chicago Midway Airport Revenue Bonds, Series 2001 A and Series 2001 B in the amount of

$5.5 million and $0.6 million, respectively. As of December 31, 2011, there was $0 outstanding in the

escrow.

In May 2010, the Airport entered into a two-way CSA with J.P. Morgan on its swap associated with a

40% portion of the Midway Airport Series 2004C&D variable rate bonds with a current notional amount

of $60.9 million. A Goldman Sachs swap covers the 60% balance of the bonds, with a current notional

amount of $91.3 million, which does not have a two-way CSA and remains unchanged. The J.P. Morgan

CSA was required because a termination event was triggered due to the insurer’s (Ambac) ratings

# - 31 -

downgrade. Both firms had the right to require a two-way CSA, but only J.P. Morgan exercised the

right. Goldman Sachs waived its right as long as the swap remains unchanged. Based on the current

second lien ratings at Midway Airport (A3/A-/A- by Moody’s, S&P and Fitch, respectively), if the

mark-to-market on the swap is against the City/Airport by more than $10.0 million, the Airport must

post collateral for the difference. In August 2010, the Airport was required to post as much as

$1.4 million, funded with proceeds from Midway Commercial Paper, but as of December 31, 2011, no

collateral posting was required. The swaps terminate on January 1, 2035.

No-Commitment Debt — Bonds payable on no-commitment debt are not included in the

accompanying basic financial statements because the City has no obligation to provide for their

repayment, which is the responsibility of the borrowing entities.

5. CHANGES IN CAPITAL ASSETS

During the years ended December 31, 2011 and 2010, capital assets changed as follows ($ in thousands):

Balance Disposals Balance

January 1, and December 31,

2011 Additions Transfers 2011



# Capital assets not depreciated:

Land 107,287 $ 2,159

$

-

$ 109,446

$

Construction in progress 20,229 41,187 (9,243) 52,173

Total capital assets not depreciated 127,516 43,346 (9,243) 161,619

Capital assets depreciated — buildings and other

facilities 1,362,200 9,243 1,371,443

Less accumulated depreciation for — buildings and

other facilities (338,401) (42,137) (380,538)

Total capital assets depreciated — net 1,023,799 (32,894)

- 990,905

Total property and facilities — net 1,151,315 $ 10,452

$ (9,243)

$ 1,152,524

$

Includes capitalized interest of $5,860,371

Balance Disposals Balance

January 1, and December 31,

2010 Additions Transfers 2010



# Capital assets not depreciated:

Land 106,918 $ 369

$

-

$ 107,287

$

Construction in progress 36,042 27,594 (43,407) 20,229

Total capital assets not depreciated 142,960 27,963 (43,407) 127,516

Capital assets depreciated — buildings and other

facilities 1,318,793 43,407 1,362,200

Less accumulated depreciation for — buildings and

other facilities (293,557) (44,844) (338,401)

Total capital assets depreciated — net 1,025,236 43,407 (44,844) 1,023,799

Total property and facilities — net 1,168,196 $ 71,370

$ (88,251)

$ 1,151,315

$

# - 32 -

6. LEASING ARRANGEMENTS

With Tenants — Most of the Airport’s land, buildings and terminal space are leased under operating

lease agreements to airlines and other tenants. The following is a schedule of the minimum future rental

income on noncancelable operating leases as of December 31, 2011 ($ in thousands):

Years Ending

December 31 Amount



# 2012 31,525 $ *

2013 4,337

2014 3,245

2015 724

2016 679

Total 40,510 $

* The Terminal Facilities lease will expire at the end of 2012, thus, there are no revenues

included after 2012.

Contingent rentals that may be received under certain leases, based on the tenants’ revenues, are not

included in minimum future rental income.

Rental income, consisting of all rental and concession revenues except aircraft parking fees and certain

departure fees (turns) and automobile parking, amounted to $86.5 million and $86.4 million in 2011 and

2010, respectively. Contingent rentals included in the totals were approximately $40.4 million and

$35.1 million for 2011 and 2010, respectively.

Capital Lease — The Airport leases heating and cooling equipment under a capital lease in the amount

of $7,604 net of depreciation as of December 31, 2011. The lease is for a period of 25 years and has a

stated interest rate of 7.66%. At December 31, 2011, the total capital obligation was $9,036.

As of December 31, 2011, the following is a schedule of future minimum lease payments together with

the present value of net lease payments ($ in thousands):

Years Ending

December 31



# 2012 1,080 $

2013 1,080

2014 1,080

2015 1,080

2016 1,080

Thereafter 9,088

Total minimum lease payments 14,488

Less amount representing interest (5,452)

Present value of minimum lease payments 9,036

Long-term portion 9,036 $

# - 33 -

7. PENSION PLANS

Eligible Midway Fund employees participate in one of two of the City’s single-employer defined benefit

pension plans. These plans are the Municipal Employees’ and the Laborers’ and Retirement Board

Employees’ Annuity and Benefit Funds. These plans are administered by individual retirement boards

represented by elected and appointed officials. Each plan issues publicly available financial statements

for each of the pension plans, which may be obtained at the respective fund’s office.

The funds provide retirement, death and disability benefits as established by State law. Benefits

generally vest after 20 years of credited service. Employees who retire at or after age 55 with at least

10 years of credited service qualify to receive a money purchase annuity and those with more than

20 years of credited service qualify to receive a minimum formula annuity. The annuity is computed by

multiplying the final average salary by a minimum of 2.4% per year of credited service. The final

average salary is the employee’s highest average annual salary for any four consecutive years within the

last 10 years of credited service.

Participating employees contribute 8.5% of their salary to these funds as required by State law. By law,

the City’s contributions are based on the amounts contributed by the employees. Financing of the City’s

contribution is through a separate property tax levy and the personal property replacement tax. The

Midway Fund reimburses the City’s general fund for the estimated pension cost applicable to the

covered payroll of Midway Fund employees. These reimbursements, recorded as expenses of the

Midway Fund, were $3.2 million in 2011 and $3.0 million in 2010. The annual pension costs are

determined using the entry age normal actuarial cost method and the level dollar amortization method.

The funding policy mandated by State law requires City contributions at statutorily, not actuarially,

determined rates. The rates are expressed as multiples of employee contributions. These contributions

equal employee contributions made in the calendar year two years prior to the year for which the

applicable tax is levied, multiplied by the statutory rates. The statutory rates in effect for the City’s

contributions made during the years ended December 31, 2011 and 2010 were 1.25 for the Municipal

Employees’ and 1.00 for the Laborers’ and Retirement Board Employees’ Annuity and Benefit Funds,

respectively. The City has made the required contributions under State law.

The following table as of December 31, 2011 assists users in assessing each fund’s progress in

accumulating sufficient assets to pay benefits when due. The three-year historical information for each

annuity and benefit fund is as follows ($ in thousands):

Percent of Percent of

Annual Annual Required Net Pension

Pension Pension Cost Required Contributions 

# (Asset)

Cost Contributed Contribution Contributed Obligation



# Municipal employees’:

2009 412,575 $ 35.9 % 413,509 $ 35.8 % 679,736 $

2010 482,421 32.1 483,948 32.0 1,007,406

2011 609,491 24.1 611,756 24.0 1,469,886

Laborers’:

2009 34,025$ 43.0 % 33,517 $ 43.6 % (206,361) $

2010 47,129 32.6 46,665 32.9 (174,585)

2011 57,651 22.2 57,259 22.3 (129,712)

# - 34 -

The pension benefits information pertaining expressly to Midway Fund employees is not available as the

obligation is the responsibility of the general government. Accordingly, no amounts have been recorded

in the accompanying basic financial statements for the net pension assets or liabilities of these plans.

8. OTHER POSTEMPLOYMENT BENEFITS — CITY OBLIGATION

In addition to providing pension benefits, under State law, the City provides certain health benefits to

employees who retire from the City based upon their participation in the City’s pension plans.

Substantially all employees who qualify as Municipal Employees’ or Laborers’ pension plan participants

older than age 55 with at least 20 years of service may become eligible for postemployment benefits if

they eventually become annuitants. Health benefits include basic benefits for annuitants and

supplemental benefits for Medicare-eligible annuitants. Currently, the City does not segregate benefit

payments to annuitants by fund. The cost of health benefits is recognized as claims are reported and are

funded on a pay-as-you-go basis. The total cost to the City for providing health benefits to

approximately 24,000 annuitants and their dependents was approximately $99.1 million and

$107.4 million in 2011 and 2010, respectively.

The annuitants who retired prior to July 1, 2005, received a 55% subsidy from the City and the

annuitants who retired on or after July 1, 2005, received a 50%, 45%, 40%, and 0% subsidy from the

City based on the annuitant’s length of actual employment with the City for the gross cost of retiree

health care under a court approved settlement agreement (the “Settlement Agreement”). During 2011

and 2010 the pension funds contributed $65 for each Medicare eligible annuitant and $95 for each

Non-Medicare eligible annuitant to their gross cost. The annuitants contributed a total of $68.3 million

in 2011 and $64.1 million in 2010, to the gross cost of their retiree health care pursuant to premium

amounts set forth in the above-referenced Settlement Agreement.

The City’s net expense and the annuitants’ contribution indicated above are preliminary and subject to

the reconciliation per the Settlement Agreement.

Plan Description Summary — The City is party to a written legal Settlement Agreement outlining the

provisions of the retiree health program the Settlement Health Care Plans (the “Plans”) through June 30,

2013. The Settlement Agreement does not require or extend continuation of the Plans after June 30,

2013. Pursuant to the Settlement Agreement, the City administers a single-employer defined benefit

healthcare plan (the “Health Plan”), for which the City pays a portion of the costs on a pay-as-you-go

method. Under the Settlement Agreement, the City sponsors health benefit plans for employees, former

employees, and retired employees. The provisions of the program provide, in general, that the City pay a

percentage of the cost (based upon an employee’s service) for hospital and medical coverage to eligible

retired employees and their dependents for a specified period, until June 30, 2013.

In addition, Illinois Compiled Statutes authorize the respective Pension Funds to provide a fixed

monthly dollar subsidy to each annuitant who has elected coverage under the Health Plan through

June 30, 2013. After that date, no supplements are authorized.

The liabilities for the monthly dollar supplements paid to annuitants enrolled in the retiree medical plan

by their respective Pension Funds are included in the liabilities and reports of the respective Pension

Funds (see Note 6).

Funding Policy — The City’s Health Plan is a single employer plan that operates on a pay as you go

funding basis. No assets are accumulated or dedicated to funding the Health Plan benefits.

# - 35 -

Annual OPEB Cost and Net OPEB Obligation — The City’s annual other postemployment benefit

(OPEB) cost (expense) is calculated based on the annual required contribution (ARC) of the employer.

The ARC represents a level of funding, that if paid on an ongoing basis, is projected to cover the normal

cost each year and to amortize any unfunded actuarial liabilities over a period of two years (the

remaining years of coverage under the Settlement Agreement).

The following table shows the components of the City’s annual OPEB costs for the year for the Health

Plan, the amount actually contributed to the Health Plan, and changes in the City’s net OPEB obligation

to the Health Plan. The net OPEB obligation is the amount entered upon the City’s statement of net

assets as of year-end as the net liability for the other postemployment benefits. The amount of the annual

cost for the Health Plan that is to be recorded in the statements of changes in net assets is the annual

OPEB cost (expense) at December 31, 2011 and 2010, is as follows (in thousands).

2011 2010

Health Plan Health Plan



# Contribution rates:

City Pay as you go Pay as you go

Plan members N/A N/A

Annual required contribution 200,062 $ 189,328

$

Interest on net OPEB obligation 4,567 9,871

Adjustment to annual required contribution (155,675) (116,325)

Annual OPEB cost 48,954 82,874

Contributions made 99,091 107,431

Decrease in net OPEB obligation (50,137) (24,557)

Net OPEB obligation — beginning of year 304,482 329,040

Net OPEB obligation — end of year 254,345 $ 304,483

$ Annual OPEB Cost and Contributions Made

(In thousands)



# The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the Health Plan, and

the net OPEB obligation for fiscal years 2011, 2010 and 2009 are as follows (in thousands):

Annual Percentage of Net

OPEB Annual OPEB OPEB

Years Ended Cost Cost Contributed Obligation



# December 31, 2011 48,954 $ 202.4 % 254,345 $

December 31, 2010 82,874 129.6 304,483

December 31, 2009 157,809 62.1 329,040 Schedule of Contributions,

OPEB Costs, and Net Obligations

# - 36 -

Funded Status and Funding Progress — As of December 31, 2010, the most recent actuarial valuation

date, the actuarial accrued liability for benefits for all eligible City employees and retirees was

$390.6 million, all of which was unfunded. The covered payroll (annual payroll of active employees

covered by the Health Plan) was approximately $2,475.1 million, and the ratio of the unfunded actuarial

accrued liability to the covered payroll was 15.8%.

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and

assumptions about the probability of occurrence of events far into the future. Examples include

assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined

regarding the funded status of the Health Plan and the ARC of the employer are subject to continual

revisions as the results are compared with past expectations and new estimates are made about the

future. (in thousands)

Unfunded

Actuarial

Actuarial Actuarial Actuarial Accrued

Valuation Value of Accrued Liability Funded Covered

Date Assets Liability (AAL) (UAAL) Ratio Payroll



# December 31, 2010

- $ 390,611

$ 390,611

$

- % 2,475,080 $

December 31, 2009 533,387 533,387 2,546,961

Actuarial Method and Assumptions — Projections of benefits for financial reporting purposes are

based on the substantive plan (the plan understood by the employer and plan members) and included the

types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit

costs between the employer and plan members to that point. The actuarial method and assumptions used

include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued

liabilities and the actuarial value of assets, consistent with the long term perspective of the calculations.

For the Health Plan benefits (not provided by the pension funds) in the actuarial valuation for the years

ended December 31, 2011 and 2010, the projected unit credit actuarial cost method was used. The

actuarial assumptions included an annual healthcare cost trend rate of 11.5% initially, reduced by

decrements to an ultimate rate of 10.5%. Both rates included a 3% inflation assumption. The Health Plan

has not accumulated assets and does not hold assets in a segregated trust. However, the funds expected

to be used to pay benefits are assumed to be invested for durations, which will yield an annual return

rate of 1.5%. The Unfunded Accrued Actuarial Liability, as of December 31, 2011, is being amortized as

a level dollar amount over two years.

2011 2010

Item Health Plan Health Plan



# Actuarial valuation date December 31, 2010 December 31, 2009

Actuarial cost method Projected unit credit Projected unit credit

Amortization method Level dollar Level dollar

Remaining amortization period 2 years 3 years

Asset valuation method Market value Market value

Actuarial assumptions:

Investment rate of return 1.50% 3.0%

Projected salary increases 2.5% 2.5%

Healthcare inflation rate 11.5% initial to 10.5% ultimate 12% initial to 10.5% ultimate Summary of Assumptions and Methods

# - 37 -

The OPEB benefit information pertaining expressly to the Midway fund employees is not available as

the obligation is the responsibility of the general government. Accordingly, no amounts have been

recorded in the accompanying basic financial statements. Amounts for the City are recorded within the

City’s government-wide basic financial statements.

9. RELATED-PARTY TRANSACTIONS

Included in operating expenses are reimbursements to the general fund of the City for services provided

by other City departments, employee fringe benefits and self-insured risks. Such reimbursements were

$16.4 million and $15.0 million in 2011 and 2010, respectively.

10. COMMITMENTS AND CONTINGENCIES

The Airport has certain contingent liabilities resulting from litigation, claims and commitments incident

to the ordinary course of business. Management expects that the final resolution of these contingencies

will not have a material adverse effect on the financial position or results of operations of the Airport.

The Airport provides employee health benefits under a self-insurance program, administered by the City.

Such claims outstanding, including claims incurred but not reported, are estimated and recorded as

liabilities in the financial statements.

Uninsured claim expenditures and liabilities are reported when it is probable that a loss has occurred and

the amount of that loss can be reasonably estimated. These losses include an estimate of claims that have

been incurred but not reported. Changes in the claims liability amount for the years ended December 31,

2011 and 2010, are as follows ($ in thousands):

2011 2010



# Beginning balance — January 1 433 $ 387

$

Total claims incurred 4,160 3,929

Claims paid (4,144) (3,884)

Claims liability — December 31 449 $ 432

$

The City purchases annuity contracts from commercial insurers to satisfy certain liabilities. The City

renewed its property insurance for the City’s Airports, effective December 31, 2010, at a limit of

$3.6 billion, which the City’s insurance broker advised was the highest amount commercially available

at the time. Claims have not exceeded the purchased insurance coverage in the past 10 years. Property

and casualty risks for the Airport are transferred to commercial insurers.

At December 31, 2011 and 2010, the Airport had commitments in the amount of approximately

$71.1 million and $13.2 million, respectively, in connection with contracts entered into for construction

projects.

11. SUBSEQUENT EVENTS

In January 2012, the City redeemed $3.9 million of Chicago Midway Airport Second Lien Revenue

Bonds Series 2010A-2.

# - 38 -

In April 2012, the City terminated the swaption transaction with J.P. Morgan in relation to Chicago

Midway Airport Senior Lien Series 1998 A, B and C bonds with a notional amount of $397.7 million

and a trade date of October 27, 1999. The City paid $8.25 million to terminate the swaption.

In April 2012, $8.3 million of Chicago Midway Airport Commercial Paper Notes Series 2003 were

issued. The proceeds will be used to fund the swaption termination payment.

In June 2012, Moody’s Investors Service downgraded 15 banks and securities firms with global capital

markets operations. The downgrade impacted certain LOC providers for the City’s various variable rate

demand bonds and may potentially cause credit spreads to increase or certain bonds to become bank

bonds. The City will monitor its variable rate bond issues and convert or refinance the bonds as

necessary. Additionally, the downgrade has impacted certain swap counterparties, however, no action is

required by the City.

* * * * * *

# - 39 -



# CITY OF CHICAGO, ILLINOIS

CHICAGO MIDWAY INTERNATIONAL AIRPORT

ADDITIONAL INFORMATION

CHICAGO MIDWAY AIRPORT REVENUE BONDS

DEBT SERVICE COVERAGE CALCULATIONS

YEARS ENDED DECEMBER 31, 2011 AND 2010

($ in thousands)

2011 2010



# REVENUES:

Total revenues — as defined 158,849 $ 150,009$

Other available moneys (passenger facility charges and letter of intent) 36,849 37,509

Cash balance in Revenue Fund on first day of fiscal year (Note 2) 24,685 14,976

TOTAL REVENUES 220,383 $ 202,494$

COVERAGE REQUIREMENT — Required deposits from revenues:

Debt Service Fund 54,748 $ 44,372

$

Operation and maintenance reserve account 1,412 643

Junior Lien Obligation Debt Service Fund 23,468 24,302

Repair and Maintenance Fund 1,025 1,025

TOTAL FUND DEPOSIT REQUIREMENTS 80,653 $ 70,342

$

AGGREGATE FIRST LIEN DEBT SERVICE FOR THE

BOND YEAR 54,749 $ 44,374

$

LESS AMOUNTS TRANSFERRED FROM

CAPITALIZED INTEREST ACCOUNTS

Net aggregate debt service 54,749 44,374

1.25 1.25

NET DEBT SERVICE REQUIRED 68,436 $ 55,468

$

OPERATION AND MAINTENANCE EXPENSES 110,090 $ 108,336

$

COVERAGE REQUIRED (Greater of total fund

deposit requirements or 125% of aggregate debt service) 80,653 70,342

TOTAL COVERAGE REQUIRED 190,743 $ 178,678$

TOTAL REVENUES 220,383 $ 202,494$

COVERAGE RATIO 1.16 1.13

# - 40 -



# CITY OF CHICAGO, ILLINOIS

CHICAGO MIDWAY INTERNATIONAL AIRPORT

ADDITIONAL INFORMATION

CHICAGO MIDWAY AIRPORT REVENUE BONDS

NOTES TO DEBT SERVICE COVERAGE CALCULATIONS

YEARS ENDED DECEMBER 31, 2011 AND 2010



# 1. RATE COVENANT

The Master Indenture of Trust (Master Indenture) securing the Chicago Midway Airport Revenue Bonds

(Bonds) requires that revenues, together with other available moneys deposited with the trustee and any

cash balance held in the revenue fund on the first day of the calendar year not then required to be

deposited in any fund or account, will be at least sufficient (i) to provide for the payment of operation

and maintenance expenses for the year, and (ii) to provide for the greater of (a) the amounts, if any,

needed to make required deposits into the Debt Service Fund, the Operating and Maintenance Reserve

Account, the Working Capital Account, the Debt Service Reserve Fund, the Junior Lien Obligation Debt

Service Fund, the Repair and Replacement Fund and the Special Project Fund, and (b) an amount not

less than 125% of the aggregate debt service for the Bond year commencing during such fiscal year.

2. REVENUE FUND BALANCE

The revenue fund balance includes all cash, cash equivalents and investments, which were available to

the revenue fund to satisfy the coverage requirement under the terms of the Master Indenture.

* * * * * *

# - 41 -



# CITY OF CHICAGO, ILLINOIS

CHICAGO MIDWAY INTERNATIONAL AIRPORT

ADDITIONAL INFORMATION

CHICAGO MIDWAY AIRPORT SECOND LIEN REVENUE BONDS

DEBT SERVICE COVERAGE CALCULATIONS

YEARS ENDED DECEMBER 31, 2011 AND 2010

($ in thousands)

2011 2010



# REVENUES:

Total revenues — as defined 158,849 $ 150,009

$

Other available moneys (passenger facility charges and letter of intent) 36,849 37,509

Cash balance in Revenue Fund on first day of fiscal year (Note 2) 24,685 14,976

TOTAL REVENUES FOR CALCULATION OF COVERAGE 220,383 $ 202,494

$

COVERAGE REQUIREMENT — Required deposits from revenues :

First Lien Debt Service Fund 54,748 $ 44,372

$

Operation and maintenance reserve account 1,412 643

Junior Lien Obligation Debt Service Fund 23,468 24,302

Repair and Replacement Fund 1,025 1,025

TOTAL FUND DEPOSIT REQUIREMENTS 80,653 $ 70,342

$

125% OF AGGREGATE FIRST LIEN DEBT SERVICE FOR THE BOND YEAR:

Aggregate First Lien Debt Service 54,749 $ 44,374

$

Less amounts transferred from First Lien Capitalized Interest Accounts

Net aggregate First Lien Debt Service 54,749 44,374

1.25 1.25

125% OF AGGREGATE FIRST LIEN DEBT SERVICE 68,436 $ 55,468

$

GREATER OF FUND DEPOSIT REQUIREMENTS OR

125% OF AGGREGATE FIRST LIEN DEBT SERVICE 80,653 $ 70,342

$

110% OF AGGREGATE FIRST AND SECOND LIEN DEBT SERVICE

FOR THE BOND YEAR:

Aggregate First Lien Debt Service 54,749 $ 44,374

$

Aggregate Second Lien Debt Service 36,826 25,069

Less amounts transferred from First Lien Capitalized Interest Accounts

Less amounts transferred from Junior Lien Capitalized Interest Accounts (4,943) (1,058)

Net aggregate First and Second Lien Debt Service 86,632 68,385

1.10 1.10

110% OF AGGREGATE FIRST AND SECOND LIEN DEBT SERVICE 95,295 $ 75,224

$

GREATER OF FUND DEPOSIT REQUIREMENTS OR 110% OF AGGREGATE FIRST AND

SECOND LIEN DEBT SERVICE 95,295 $ 75,224

$

GREATER OF FUND DEPOSIT REQUIREMENTS OR 125% OF FIRST LIEN DEBT OR 110% OF

AGGREGATE DEBT SERVICE 95,295 $ 75,224

$

COVERAGE CALCULATION:

Operation and maintenance expenses 110,090 $ 108,336

$

110% of aggregate First and Second Lien Debt Service 95,295 75,224

Fund Deposit Requirements

TOTAL C OVERAGE REQUIRED 205,385 $ 183,560

$

TOTAL REVENUES 220,383 $ 202,494

$

REVENUES IN EXCESS OF COVERAGE REQUIREMENT 14,998 $ 18,934

$

COVERAGE RATIO 1.07 1.10

See notes to debt service coverage calculations.

# - 42 -



# CITY OF CHICAGO, ILLINOIS

CHICAGO MIDWAY INTERNATIONAL AIRPORT

ADDITIONAL INFORMATION

CHICAGO MIDWAY AIRPORT SECOND LIEN REVENUE BONDS

NOTES TO DEBT SERVICE COVERAGE CALCULATIONS

YEARS ENDED DECEMBER 31, 2011 AND 2010



# 1. RATE COVENANT

The Master Indenture of Trust (Master Indenture) securing the Chicago Midway Airport Second Lien

Revenue Bonds (Bonds) requires that revenues, together with other available moneys deposited with the

first lien trustee or the second lien trustee and any cash balance held in the first lien revenue fund or the

second lien revenue fund on the first day of the year not then required to be deposited in any fund or

account under the first lien indenture or the second lien indenture, will be at least sufficient (a) to

provide for the payment of operation and maintenance expenses for the year and (b) to provide for:

(i) the greater of the amounts needed to make the deposits required under the first lien indenture during

such calendar year into the first lien debt service fund, the Operating and Maintenance (O&M) Reserve

Account, the Working Capital Account, the First Lien Debt Service Reserve Fund, the Junior Lien

Obligation Debt Service Fund, the Repair and Replacement Fund and the Special Project Fund, or an

amount not less than 125% of the Aggregate First Lien Debt Service for the Bond year commencing

during such year, reduced by any amount held in any capitalized interest account for disbursement

during such Bond year to pay interest on first lien bonds; or (ii) the greater of the amounts needed to

make the deposits required under the first lien indenture during such year into the First Lien Debt

Service Fund, the O&M Reserve Account, the Working Capital Account, the First Lien Debt Service

Reserve Fund, the Junior Lien Obligation Debt Service Fund, the Repair and Replacement Fund and the

Special Project Fund, or an amount not less than 110% of the sum of Aggregate First Lien Debt Service

and Aggregate Second Lien Debt Service for the Bond year commencing during such year, reduced by

(a) any amount held in any capitalized interest account for disbursement during such Bond year to pay

interest on any first lien bonds, and (b) any amount held in any capitalized interest account established

pursuant to a supplemental indenture for disbursement during such Bond year to pay interest on second

lien obligations.

2. REVENUE FUND BALANCE

The revenue fund balance includes all cash, cash equivalents, and investments which were available to

the revenue fund to satisfy the coverage requirement under the terms of the Master Indenture.

* * * * * *-43-CITYOFCHICAGO,ILLINOISCHICAGOMIDWAYINTERNATIONALAIRPORTHISTORICALOPERATINGRESULTSEACHOFTHETENYEARSENDEDDECEMBER31,2002–2011(UNAUDITED)($inthousands)2002200320042005200620072008200920102011OPERATINGREVENUES:Landingfees20,934$14,524$15,585$15,668$20,834$19,606$28,901$21,939$35,299$38,583$Rentalrevenues:Terminalareausecharges19,07312,08913,71417,17921,80417,30826,08430,70142,89540,862Otherrentalsandfuelingsystemfees9,8378,68811,05512,94214,52017,78415,68320,36721,48824,978Subtotalrentalrevenues28,91020,77724,76930,12136,32435,09241,76751,06864,38365,840Concessions:Autoparking23,44325,34825,93925,67527,43329,74031,56127,90227,84929,112Autorentals8,0397,8088,0018,4177,6988,4408,3558,5058,1828,776Restaurant5,2496,0576,7156,8797,3918,1368,0997,3968,1518,875Newsandgifts2,2872,9683,2723,8523,9053,8763,8163,4373,4883,551Other9961,4901,3281,6161,9852,3632,4862,0541,7042,634Subtotalconcessions40,01443,67145,25446,43948,41252,55554,31749,29449,37452,948ReimbursementsTotaloperatingrevenues(1)89,85878,97285,60892,228105,570107,253124,985122,301149,056157,371OPERATINGANDMAINTENANCEEXPENSES:Salariesandwages(2)34,03636,58232,31632,25935,31639,99836,93139,52142,10543,554Repairsandmaintenance24,56226,77028,06531,69032,76236,86337,39937,96731,94240,732Energy4,1433,6214,8696,0405,0767,4957,2288,2456,7246,415Materialsandsupplies8116166631,1704371,7512,3771,2521,5221,418Professionalandengineeringservices9,5369,21410,67811,27413,32614,78019,7756,72715,83215,650Otheroperatingexpenses4,4676,3904,9405,79410,46610,3955,9425,92910,2112,320Totaloperatingandmaintenanceexpensesbeforedepreciationandamortization(3)77,55583,19381,53188,22797,383111,282109,65299,641108,336110,089NETOPERATINGINCOMEBEFOREDEPRECIATIONANDAMORTIZATION(4)12,303$(4,221)$4,077$4,001$8,187$(4,029)$15,333$22,660$40,720$47,282$DEBTSERVICECOVERAGERATIO(5)1.191.051.161.231.231.121.141.081.101.07(1)Averageannualcompoundgrowthratefor2002–2011forTotaloperatingrevenuesis6.5%.(2)Salariesandwagesincludeschargesforpension,healthcareandotheremployeebenefits.(3)Averageannualcompoundgrowthratefor2002–2011forTotaloperatingandmaintenanceexpensesbeforedepreciationandamortizationis4.1%.(4)Amountfor2011maybereconciledtooperatinglossof$3,785reportedinthe2011StatementofRevenues,ExpensesandChangesinNetAssetsbydeductingdepreciationandamortizationof$51,067.Amountforprioryearsmaybereconciledthroughsimilarcalculations.(5)Representsdebtservicecoverageratioonfirstandsecondlienbonds.Source:ChicagoMidwayAirportAuditedFinancialStatementsandCityofChicagoComptroller’sOffice.-44-CITYOFCHICAGO,ILLINOISCHICAGOMIDWAYINTERNATIONALAIRPORTDEBTSERVICESCHEDULE(UNAUDITED)($inthousands)ThefollowingtablesetsforthaggregateannualdebtserviceofprincipalandinterestforoutstandingMidwayAirportRevenueBonds:YearDebtServiceDebtServiceDebtService(FirstLien)DebtServiceDebtServiceDebtService(SecondLien)EndingSeries1996Series1998Series2001TotalSeries1998Series2004Series2010TotalTotalDecember31FirstLienBondsFirstLienBondsFirstLienBondsDebtServiceSecondLienBondsSecondLienBondsSecondLienBondsDebtService(1)DebtService201210,519$22,719$21,124$54,362$119$11,868$12,034$24,021$78,383$201310,52922,70221,11254,34311912,04112,03824,19878,541201410,52222,70521,09754,32411912,18012,93425,23379,557201510,50922,68421,08354,27611912,38313,97226,47480,750201610,50422,69421,07154,26911912,44819,56432,13186,400201710,50222,68421,05854,24411912,73419,55432,40786,651201810,49422,67421,04054,20811912,92319,54332,58586,793201910,48822,67121,02254,18111913,12819,53232,77986,960202010,48022,66421,02954,17311913,33419,52132,97487,147202110,47322,65821,01654,14711913,44841,49455,061109,208202210,46722,64621,00554,11811913,76119,47733,35787,475202317,33422,64320,98160,9581197,61919,56527,30388,261202417,31322,63220,96860,9131197,88519,44827,45288,365202517,29424,15020,94462,3881196,58177,86984,569146,957202617,27424,13720,92662,3371196,87219,36726,35888,695202717,25224,12620,91562,2931197,11319,34626,57888,871202817,23024,11320,88862,2311197,45419,33426,90789,138202917,20424,10720,86862,179132,5397,76919,314159,622221,801203051,65620,84072,4968,13419,29827,43299,928203151,60720,81072,4178,47319,28027,753100,170203251,55051,5508,83719,25628,09379,643203351,49451,4949,20119,23628,43779,931203451,43951,4399,61419,21128,82580,264203551,37551,37510,05112,23522,28673,661203612,21512,21512,215203712,20612,20612,206203812,17912,17912,179203912,16512,16512,165204012,14312,14312,143204112,12012,12012,1202042236,388$724,530$419,797$1,380,715$134,562$245,851$585,450$965,863$2,346,578$(1)AssumesaninterestrateeffectiveatDecember31,2011on$365,150,000ofSecondLienBondsthatarevariable-ratedemandobligations.Note:TheannualdebtservicetablesintheOfficialStatementsfortheabovedebtwerepresentedwithayearendedJanuary1.TheinformationaboveispresentedwithayearendedDecember31.ThechangehasbeenmadetofacilitatereconciliationtorevenuebondspayableatDecember31,2011.Source:CityofChicagoComptroller’sOffice.

# - 45 -



# CITY OF CHICAGO, ILLINOIS

CHICAGO MIDWAY INTERNATIONAL AIRPORT

MIDWAY AIRPORT REVENUE BONDS

SERIES 1996 ESTIMATED BOND-FUNDED COSTS

AS OF DECEMBER 31, 2011 (UNAUDITED)

($ in thousands)

Estimated

Bond-Funded

Costs (1)



# Airfield 20,808 $

Terminal 36,173

Terminal ramp 2,374

Parking and roadways 90,551

Noise 28,984

Land acquisition 23,563

Fuel storage facilities 17,392

Total 219,845 $

(1) Includes estimated costs to be funded from investment earnings.

Source: City of Chicago Department of Aviation.

# - 46 -



# CITY OF CHICAGO, ILLINOIS

CHICAGO MIDWAY INTERNATIONAL AIRPORT

CAPITAL IMPROVEMENT PROGRAM 2012–2018

ESTIMATED SOURCES AND USES OF FUNDS

AS OF DECEMBER 31, 2011 (UNAUDITED)

($ in thousands)



# ESTIMATED SOURCES:

AIP — Entitlements 44,905 $

Airport development fund

Other airport funds 1,689

Series 2004 Bonds 488

Series 2010 Bonds 114,631

Future Bonds 159,742

TOTAL ESTIMATED SOURCES 321,455 $

ESTIMATED USES:

Terminal area projects (1) 19,570 $

Land acquisition 14,939

Airfield projects 69,547

Parking/roadway projects 94,526

Noise projects 88,766

Safety and security 3,607

Implementation 30,500

TOTAL ESTIMATED USES 321,455 $

(1) Terminal ramp is a reclassification of projects which were previously included in

Airfield and Terminal projects.

Source: City of Chicago Department of Aviation.

# - 47 -



# CITY OF CHICAGO, ILLINOIS

CHICAGO MIDWAY INTERNATIONAL AIRPORT

TERMINAL DEVELOPMENT PROGRAM

ESTIMATED SOURCES AND USES OF FUNDS

AS OF DECEMBER 31, 2011 (UNAUDITED)

($ in thousands)



# ESTIMATED SOURCES:

AIP — Entitlements 19,600 $

AIP — Discretionary 2,700

Airport development fund 6,200

Federal Highway Grant 6,500

Series 1996 Bonds 156,000

Series 1998 Bonds 359,000

Series 2001 Bonds 68,500

Series 2004 Bonds 40,800

TOTAL ESTIMATED SOURCES (1) 659,300 $

ESTIMATED USES:

Terminal projects 340,100 $

Terminal ramp projects 24,900

Airfield projects 28,600

Parking/roadway projects 149,600

Development of FIS 22,500

Implementation costs 93,600

TOTAL ESTIMATED USES 659,300 $

(1) The estimated sources and uses of the Terminal Development Program include approximately

$631 million of funds expended through December 31, 2011.

Source: City of Chicago Department of Aviation.

# - 48 -



# CITY OF CHICAGO, ILLINOIS

CHICAGO MIDWAY INTERNATIONAL AIRPORT

HISTORICAL ENPLANED PASSENGERS

EACH OF THE TEN YEARS ENDED DECEMBER 31, 2002–2011 (UNAUDITED)

Domestic Domestic Total International Total Percent

Years Air Carrier Commuter Domestic Enplanements Enplanements Change



# 2002 7,531,464 561,917 8,093,381 115,131 8,208,512 10.0 %

2003 8,228,230 658,478 8,886,708 113,665 9,000,373 9.7

2004 8,815,951 656,468 9,472,419 153,481 9,625,900 7.0

2005 8,501,430 99,991 8,601,421 104,382 8,705,803 (9.6)

2006 9,049,740 57,734 9,107,474 91,058 9,198,532 5.7

2007 9,296,778 56,764 9,353,542 60,639 9,414,181 2.3

2008 8,310,041 31,771 8,341,812 16,475 8,358,287 (11.2)

2009 8,541,786 158 8,541,944 29,903 8,571,847 2.6

2010 8,792,557 14,156 8,806,713 49,312 8,856,025 3.3

2011 9,288,332 50,489 9,338,821 119,989 9,458,810 6.8

2002–2011 2.4 % (23.5)% 1.6 % 0.5 % 1.6 %

Source: City of Chicago Department of Aviation.

Note: International traffic was added by Volaris Airline to Mexico in 2011 Average Annual Compound Growth Rates-49-CITYOFCHICAGO,ILLINOISCHICAGOMIDWAYINTERNATIONALAIRPORTENPLANEDCOMMERCIALPASSENGERSBYAIRLINEEACHOFTHETENYEARSENDEDDECEMBER31,2002–2011(UNAUDITED)%of%of%of%of%of%of%of%of%of%ofEnplanementsTotalEnplanementsTotalEnplanementsTotalEnplanementsTotalEnplanementsTotalEnplanementsTotalEnplanementsTotalEnplanementsTotalEnplanementsTotalEnplanementsTotalSouthwestAirlines3,348,62440.9%3,651,61840.5%3,967,47741.2%5,542,89063.6%6,666,98672.5%7,147,15475.9%6,941,87083.1%7,188,75083.9%7,561,05385.4%8,196,40286.7%AmericanTransAir(4)3,032,66337.03,473,58138.53,668,15938.11,714,87319.6783,2248.5686,0657.354,6500.7AirTran296,9093.6248,8912.8229,0402.4338,0573.9681,9367.4645,3637.0512,4296.1487,0875.7465,2375.3413,7174.4NorthwestAirlines329,7094.0357,4254.0349,1613.6290,0803.3285,3103.1280,9113.0237,9692.8267,4333.114,7260.2Frontier101,0351.1134,5931.4154,1201.8189,2162.1206,6752.2207,6742.5164,7491.9151,4401.7158,4051.7ShuttleAmerica(DeltaExpress)144,5391.5223,1532.7181,3562.090,5441.08,8740.1AtlanticSoutheast99,3731.161,4600.68823,7150.129,3140.3ContinentalAirlines(1)148,9461.8140,1001.6162,8231.763,4330.784,1530.948,4780.56,6010.1ContinentalExpress53,4580.653,3630.637,5000.44,3720.1Comair23,8180.317,6550.25,1230.14,3710.119,2640.121,1350.114,1560.2American116,0711.4153,0431.7143,2111.5113,8181.360,7930.7164Delta(2)175,3232.1163,1041.8184,1661.986,6211.0144,0371.7176,2312.0239,3572.5United106,9511.374,5200.8AmericanEagle/Simmons22,2670.27,5990.127,8630.3U.S.Airways(3)17,6440.225,2930.314,1160.1ChicagoExpress564,9516.3570,5805.941,4100.5Mexicana33,0450.45,7860.1Allotherairlines709,5788.691,7281.0162,6521.7187,3702.2187,4242.0136,6081.5147,5521.8134,7201.6353,3243.9442,0554.6Total8,208,512100.0%9,000,373100.0%9,625,900100.0%8,705,803100.0%9,198,532100.0%9,414,181100.0%8,358,287100.0%8,571,847100.0%8,856,025100.0%9,458,810100.0%(1)ContinentalincludescommuteraffiliateContinentalExpressfortheyears1999–2004.(2)DeltaincludescommuteraffiliateComairfortheyears1999–2004.DeltacommencedscheduledservicetoAtlantafromMidwayinSeptember2001.(3)U.S.AirwaysceasedoperationsatMidwayonMarch2005.(4)AmericanTransAirceasedoperationsatMidwayonApril3,2008.2011200820022003200920102006200720042005

# - 50 -



# CITY OF CHICAGO, ILLINOIS

CHICAGO MIDWAY INTERNATIONAL AIRPORT

HISTORICAL ENPLANED PASSENGERS

CHICAGO REGION AIRPORTS

EACH OF THE TEN YEARS ENDED DECEMBER 31, 2002–2011 (UNAUDITED)

Percent Percent

Total of Total Total of Total Total

Years Enplanements Chicago Enplanements Chicago Enplanements



# 2002 8,208,512 19.9 % 32,938,702 80.1 % 41,147,214

2003 9,000,373 20.7 34,454,921 79.3 43,455,294

2004 9,625,900 20.4 37,464,632 79.6 47,090,532

2005 8,705,803 18.7 37,970,886 81.3 46,676,689

2006 9,198,532 19.6 37,784,336 80.4 46,982,868

2007 9,414,181 19.9 37,779,576 80.1 47,193,757

2008 8,358,287 19.4 34,744,030 80.6 43,102,317

2009 8,571,847 21.1 32,047,097 78.9 40,618,944

2010 8,856,025 21.0 33,232,412 79.0 42,088,437

2011 9,458,810 22.2 33,206,867 78.0 42,665,677

2002–2011 2.7 % .0 % 0.5 %

Source: City of Chicago Department of Aviation. Average Annual Compound Growth Rates Chicago Midway

International Airport Chicago O’Hare

International Airport

# - 51 -



# CITY OF CHICAGO, ILLINOIS

CHICAGO MIDWAY INTERNATIONAL AIRPORT

HISTORICAL TOTAL ORIGIN AND DESTINATION (O&D) ENPLANEMENTS

CHICAGO REGION AIRPORTS

EACH OF THE TEN YEARS ENDED DECEMBER 31, 2002–2011 (UNAUDITED)

Total Percent Total Percent Total

O&D of Total O&D of Total O&D

Years Enplanements Chicago Enplanements Chicago Enplanements



# 2002 5,700,605 27.2 % 15,279,859 72.8 % 20,980,464

2003 6,243,039 28.9 15,331,493 71.1 21,574,532

2004 6,634,138 28.3 16,799,401 71.7 23,433,539

2005 6,431,517 26.8 17,548,038 73.2 23,979,555

2006 6,708,494 27.1 18,058,904 72.9 24,767,398

2007 6,532,362 26.4 18,223,460 73.6 24,755,822

2008 5,910,045 25.0 17,685,020 75.0 23,595,065

2009 5,647,591 26.4 15,708,291 73.6 21,355,882

2010 5,485,191 23.9 17,419,794 76.1 22,904,985

2011 (1) 5,722,804 26.2 16,082,161 73.8 21,804,965

2002–2011 % 0.6 % 0.4 %

(1) Estimated based on eleven months of activity. Average Annual Compound Growth Rates International Airport Chicago Midway

International Airport Chicago O’Hare

# - 52 -



# CITY OF CHICAGO, ILLINOIS

CHICAGO MIDWAY INTERNATIONAL AIRPORT

AIRCRAFT OPERATIONS

EACH OF THE TEN YEARS ENDED DECEMBER 31, 2002–2011 (UNAUDITED)

Domestic International Total Domestic General

Years Air Carrier Air Carrier Air Carrier Commuter Aviation Military Total



# 2002 161,401 1,965 163,366 48,102 91,880 956 304,304

2003 169,282 1,630 170,912 57,824 99,289 328,025

2004 181,750 2,472 184,222 57,905 97,381 339,508

2005 184,863 1,669 186,532 7,444 95,603 289,579

2006 199,229 1,433 200,662 3,066 94,820 298,548

2007 206,865 1,060 207,925 3,085 93,647 304,657

2008 186,840 557 187,397 1,351 77,593 266,341

2009 180,391 3,354 183,745 7 61,057 244,809

2010 175,812 3,403 179,215 572 65,746 245,533

2011 178,640 4,332 182,972 2,622 69,633 255,227

2002–2011 1.1 % 9.2 % 1.3 % (27.6)% (3.0)% (1.9)%

Source: City of Chicago Department of Aviation. Aircraft Operations

Average Annual Compound Growth Rates-53-CITYOFCHICAGO,ILLINOISCHICAGOMIDWAYINTERNATIONALAIRPORTNETASSETSBYCOMPONENTEACHOFTHESIXYEARSENDEDDECEMBER31,2006–2011(UNAUDITED)($inthousands)200620072008200920102011Netassets:Investedincapitalassets—netofrelateddebt48,388$31,251$40,352$(1,936)$(39,755)$(70,876)$Restricted215,589232,344184,019201,158190,641208,100Unrestricted31,56118,79519,6145,79220,04037,224Totalnetassets295,538$282,390$243,985$205,014$170,926$174,448$Tenyearinformationwillbeprovidedprospectivelystartingwithyear2006.-54-CITYOFCHICAGO,ILLINOISCHICAGOMIDWAYINTERNATIONALAIRPORTCHANGEINNETASSETSEACHOFTHESIXYEARSENDEDDECEMBER31,2006-2011(UNAUDITED)($inthousands)200620072008200920102011Operatingrevenues105,570$652,763$124,985$122,301$149,056$157,371$Operatingexpenses135,276544,890155,596147,308161,103161,156Operating(loss)gain(29,706)107,873(30,611)(25,007)(12,047)(3,785)Nonoperating(expenses)revenues(5,325)18,363(14,571)(13,964)(24,502)4,246(Loss)gainbeforecapitalgrants(35,031)126,236(45,182)(38,971)(36,549)461Capitalgrants22,21748,2536,7772,4613,061Changeinnetassets(12,814)$174,489$(38,405)$(38,971)$(34,088)$3,522$Tenyearinformationwillbeprovidedprospectivelystartingwithyear2006.-55-CITYOFCHICAGO,ILLINOISCHICAGOMIDWAYINTERNATIONALAIRPORTLONGTERMDEBTEACHOFTHESIXYEARSENDEDDECEMBER31,2006–2011(UNAUDITED)($inthousands)200620072008200920102011Firstlienbonds849,400$835,780$821,275$806,015$783,595$780,205$Secondlienbonds422,715422,715422,715399,140685,780681,285Commercialpapernotes10,26910,67410,67461,3604,005Totalrevenuebondsandnotes1,282,384$1,269,169$1,254,664$1,266,515$1,473,380$1,461,490$Tenyearinformationwillbeprovidedprospectivelystartingwithyear2006.

# - 56 -



# CITY OF CHICAGO, ILLINOIS

CHICAGO MIDWAY INTERNATIONAL AIRPORT

FULL TIME EQUIVALENT CHICAGO MIDWAY AIRPORT EMPLOYEES BY FUNCTION

EACH OF THE SIX YEARS ENDED DECEMBER 31, 2006–2011 (UNAUDITED)

Function 2006 2007 2008 2009 2010 2011



# Business Communication

- 7 6

- - Capital Development 4

Airfield Operations 59 60 59 75 75 70

Landside Operations 6

Security Management 64 60 61 60 60 60

Facility Management 37 37 32 28 32 33

Midway Administration 13 12 12 11 10 10

Safety Management 3 2 2 2 2

Total 183 179 172 176 179 175

Ten year information will be provided prospectively starting with year 2006.

Source: City of Chicago’s Program and Budget Summary.

# - 57 -



# CITY OF CHICAGO, ILLINOIS

CHICAGO MIDWAY INTERNATIONAL AIRPORT

STATISTICAL DATA

PRINCIPAL EMPLOYERS (NONGOVERNMENT)

CURRENT YEAR AND NINE YEARS AGO (SEE NOTE AT THE END OF THIS PAGE)

(Unaudited)

Percentage Percentage

of of

Number of Total City Number of Total City

Employer Employees Rank Employment Employees Rank Employment



# J. P. Morgan Chase (2) 7,993 1 0.77 % 6,320 4 0.57 %

United Airlines 6,366 2 0.62 8,656 2 0.79

Northern Trust 5,485 3 0.53 5,312 5 0.48

Accenture LLP 5,014 4 0.48 4,399 10 0.40

Jewel Food Stores, Inc. 4,799 5 0.46 5,249 7 0.48

Bank of America NT 4,557 6 0.44

Walgreen's Co. 4,429 7 0.43

CVS Corporation 4,159 8 0.40

ABM Janitorial Midwest, Inc. 3,629 9 0.35

Ford Motor Company 3,410 10 0.33 5,269 6 0.48

American Airlines 4,666 8 0.42

Arthur Andersen, LLP 4,570 9 0.41

SBCAmeritech 17,165 1 1.56

Exelon Corporation 7,538 3 0.68

( 1 ) Source : City of Chicago

, Department of Revenue

, Employer’s Expense Tax Returns

. (2) J.P. Morgan Chase formerly known as Banc One.

(3) Ameritech currently known as SBC/AT&T. 2002 (1) 2011 (1)

# - 58 -



# CITY OF CHICAGO, ILLINOIS

CHICAGO MIDWAY INTERNATIONAL AIRPORT

STATISTICAL DATA

POPULATION AND INCOME STATISTICS

EACH OF THE TEN YEARS ENDED DECEMBER 31, 2002-2011

(Unaudited)

Median Number of Unemployment Per Capita Total

Year Population (1) Age (2) Households(2) Rate (3) Income (4) Income (5)



# 2002 2,896,016 31.9 1,059,960 8.5 % 35,085 101,606,721,360 $

2003 2,896,016 32.6 1,067,823 8.2 35,464 102,704,311,424

2004 2,896,016 32.6 1,051,018 7.2 37,169 107,642,018,704

2005 2,896,016 33.0 1,045,282 7.0 38,439 111,319,959,024

2006 2,896,016 33.5 1,040,000 5.2 41,887 121,305,422,192

2007 2,896,016 33.7 1,033,328 5.7 43,714 126,596,443,424

2008 2,896,016 34.1 1,032,746 6.4 45,329 131,273,509,264

2009 2,896,016 34.5 1,037,069 10.0 43,727 126,634,091,632

2010 2,695,598 34.8 1,045,666 10.1 45,957 123,881,597,286

2011 2,695,598 33.2 1,048,222 9.3 N/A (5) N/A (5)

Notes:

(1) Source: U.S. Census Bureau.

(2) Source: World Business Chicago website, Claritas date estimates; Cook County’s website.

(3) Source: Bureau of Labor Statistics 2011, Unemployment rate for Chicago-Naperville-Illinois

Metropolitan Area.

(4) Source: U.S. Department of Commerce, Bureau of Economic Analysis, Per Capita Personal

Income for Chicago-Naperville-Illinois Metropolitan Area (in 2010 dollars).

# - 59 -



# CITY OF CHICAGO

CHICAGO MIDWAY INTERNATIONAL AIRPORT

STATISTICAL DATA

LANDING FEES AND TERMINAL AREA USE CHARGES

(Unaudited)

2011

Landing Fees and Terminal Area Use Charges



# Signatory Landing Fee (Rate/1000 lbs) 2.79 $

Non-Signatory Landing Fee (Rate/1000 lbs) 3.48

Signatory Joint Use Fee (Base Usage/1000 lbs) 1.28

Non-Signatory Joint Use Fee (Base Usage/1000 lbs) 1.60

Signatory Joint Use Fee (Per Capita/Annual) 179,845

Non-Signatory Joint Use Fee (Per Capita/Annual) 224,806

Signatory Terminal Rental Rate 109.26

Non-Signatory Terminal Rental Rate 136.58

Terminal Ramp Rate 3.85

Signatory FIS Fee per Deplaned Passenger 16.00

Non-Signatory F/S Fee per Deplaned Passenger 20.00

Cost per Departure Rate (1) 158.44

(1) The cost per departure is for Gates A1, A2, A3, A4A, A4B, A10, A12 and B25

Under the residual Use Agreement, these rates are the estimated rates assessed to

airlines as of 12/31/11.