Chicago Midway 

International Airport 

Request for Qualifications 

January 2013 
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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
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I. Overview of RFQ 

Introduction 

The City of Chicago (the “City”) invites interested parties to respond to this Request for Qualifications (“RFQ”) 

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

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

to assist the City in determining qualified 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 will 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 proposed transaction would be implemented under the Airport Privatization 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 Airport 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 Agreement for Midway Airport. The City and its Advisor will seek 

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

Protecting the public interest 

 Establish a Traveler’s Bill of Rights to protect the public’s interest and maintain 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 development 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 efficiency 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 
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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 report 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 FAA. It is expected that there will be a 60 day public 

comment and a 60 day review period, followed by financial closing 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 respond to this RFQ no later than 4:00 pm CT on February 

22nd, 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 paragraph. Based on the RFQ submissions, the City will determine those interested 

parties that are qualified to bid on the Agreement. The City reserves the right to qualify, at its absolute discretion, a 

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

For the purposes of this RFQ, the 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 responses from complete Teams or Bidders that fulfill the requirements outlined 

in sections V and VI of this RFQ. 

However, individual firms, including those that would provide 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, financing capable of providing and 

rationale for interest. 

Restricted parties 

Restricted Parties (as identified below), their respective directors, officers, partners, employees 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 consultant or otherwise in connection with any Team. Each 

Team will ensure that each Team 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 
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 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 determine Qualified Bidders. 

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

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

The City will provide Qualified Bidders with information and may request information 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 process integrity, best value for 

taxpayers and assuring a high quality airport operation. 

Qualified Bidders will have the opportunity to conduct due diligence of Midway through: (i) access to an on-line 

data room; (ii) Midway tours and additional inspections by Bidder representatives; (iii) management presentations; 

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

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

serving Midway, and other Airport stakeholders. Following this due-diligence 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 required 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.cityofchicago.org. (Please click “Chicago Government: 

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

If one or more final, binding submissions 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 required to assume the new Use Agreement 

with the Airlines upon the effective date of the Agreement. 

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

action to be in its best interests. The receipt of proposals or other documents at any stage of either the RFQ or the 

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

Oversight of the procurement process 

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

proposed lease of Midway Airport, the terms of the Agreement, and the qualifications of the proposed Private 

Operator are consistent with the interests of the City, its residents and its taxpayers. 

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

business and civic leaders. The Panel has been asked to select 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. 
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The City will also provide additional opportunities for the general public to learn about and provide input and 

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

information about the proposed transaction 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 proposed 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 aeronautical, concession, customer facility 

charges (“CFC”), passenger facility charges (“PFC”) and federal grants, subject to restrictions imposed by the 

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

operating at Midway Airport which will govern the relationship between such airlines and the Private Operator. This 

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

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

and female-owned business (“MBE” and “WBE”) requirements, 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 Agreement, 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 area (“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 capitalized upon its geographic location to foster the 

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

wires, interstate highways, and air travel. As a home rule unit of local government under the Illinois Constitution of 

1970, the City “may exercise any power and perform any function pertaining to its government 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 elected 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. 
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II. Investment highlights 

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

today, Midway does not currently provide any direct financial benefit to the taxpayers of Chicago and the City 

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

benefit of current and future Chicago taxpayers. 

At the same time, the Agreement provides the private sector with a significant 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 global 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 downtown Chicago and is strategically positioned as the premier point-to-point 

airport in the US, providing service 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 enplanements 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 4th 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 fastest growing airport in the large airport category (airport with over 10 million annual 

passengers). 

 O&M expenses remained level between 2007 and 2011 as the 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, Canada, 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 significantly 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 integration of AirTran Airways and the end of certain “Wright 
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Amendment“ regulatory restrictions that prohibit nonstop 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 affiliate of Southwest), Delta Air 

Lines (and its regional affiliates), Frontier Airlines, Porter Airlines, Volaris Airlines, and various public charter 

flight airlines. 

Long-term, high-quality investment opportunity 

 Midway is an important US dollar-denominated 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 development to the Private Operator, subject to the terms and conditions of the 

Agreement. All ongoing relationships with 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 million residents. The Metropolitan Area is home to over 400 major corporate 

headquarters, including 29 Fortune 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 transaction. 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 obtain the benefits of its ability to maximize 

non-airline revenues from increased passenger volume. 

Significant performance upside 

 There is significant potential to increase commercial revenue 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 contracts for offerings within the terminal provide for operational flexibility. 

 A Federal Inspection Services ("FIS") facility offers significant 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 Airlines provides service to Toronto City Airport. Travel between Midway 

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

 Since 1997, the City has invested nearly $1 billion in structure improvements at Midway, limiting the need for 

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

are resurfaced on a continual basis. In 2005, the Airport 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 airfield 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 fully phased out by the end of 2014. 
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III. Midway description 

Overview 

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

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

based on passengers. Midway's 5 runways handled almost 19 million passengers in 2011. Midway is one of the 

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

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

one of the most diverse 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 downtown 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 significant 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. 
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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 Midway year serving 19.2 million passengers 

 Airport Terminal Development (projected); City files Revised Preliminary 

 Program, which was launched the Application 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 aviation 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 business 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. 
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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 runways at 6,522 feet and 6,445 feet, respectively, and 

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

used by small commuter and general aviation aircraft. Runway 13R / 31L, the shortest runway, is used for small 

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

Midway's terminal opened in June 2004, increasing total gates from 29 to 43. Terminal 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 features 2,800 feet of curb front. 
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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 Steakhouse, Manny's Deli and Pegasus (a Greek tavern), among others. In 

addition, the Airport has completed construction of the Concourse A Infill project which includes 5,850 square feet 

of new concession areas for future opportunities. In total, Midway has 49,954 square feet of retail and food and 

beverage space in its terminals. 

Parking 

Currently, Midway has 3 airport parking lots providing 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 parking garage opened in 2005. The economy lots have another 2,542 surface spaces. 

Midway also operates a “cell phone” lot, which enables drivers 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 Facility. This project has four components – 

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

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

2013. Once the consolidated rental car facility is open, the rental car agencies will vacate 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. 
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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 include 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 Allegiant 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 weekday in December 

2012, Mitchell offered air carrier service to/from 31 airports 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 Environmental Impact Statement for an airport located near Peotone, Illinois (in 

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

expect that a future south suburban airport would compete with Midway. 
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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 number of enplanements grew from 8.6 million to 9.4 million. Although 

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

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

In 2011, Midway experienced 7.1% growth 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 compared 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, helicopter 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 
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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 accounting principles and as required by the provisions of the 

Airport Use Agreements, bond ordinances and indentures. 

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

charges. Under this methodology, total operating and 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 certified 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 expenses, fund deposits and net debt service requirements. In 2011, Midway 

generated $157.4 million of operating revenue (excluding PFC and CFC revenues), plus $36.9 million of PFC 

revenue, $6.2 million of CFC revenue, and $0.8 million of other non-operation revenues broken 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 
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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 approximately 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 
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Earnings before interest, taxes, depreciation and amortization (“EBITDA”) 

Midway’s historical EBITDA performance 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 the AIP grant program, which is administered by the 

FAA. AIP grants include entitlement grants, which are allocated 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 forfeiture 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 are 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 legislation (the “Aviation Safety and Capacity Expansion Act of 1990”) 

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

passenger enplaning at the airport (subject to limited exceptions) 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 funding 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 mitigate noise impacts resulting from an airport; or furnish 

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

agency must receive FAA approval. 

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

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

from funds reasonably expected to be available through the 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 the impact of aviation on people living near the airport. 

Effective January 1, 2007, the City began imposing PFCs at Midway at $4.50. Under the Pilot Program, the 

Private Operator will be considered a “public agency” for purposes 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 debt 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, review and approval to meet statutory requirements. 

Customer Facility Charges (“CFC”) 

The City of Chicago adopted a CFC ordinance on July 27, 2005 and first implemented 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 lowest rates in the US, and led to total CFC collections of approximately $48 

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

financing, designing, constructing, operating and maintaining the consolidated rental car facility and common use 

transportation equipment facilities and cannot be used for any other purposes. Based on the current City 

ordinance, the Commissioner of CDA has the authority to adjust 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 regional affiliates and code share partners). Collectively, these airlines offer service to/from more 

than 60 markets with nearly 510 daily flights. The following tables identify the market shares 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, international service at Midway is modest. 

However, in 2012, AirTran started operating two daily nonstop flights between Midway and Cancun, Mexico. In 

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

2012) and Porter began service to Toronto City Airport. Additionally, AirTran 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 Reauthorization Act of 2003) and implemented 

regulatory guidance and application procedures adopted by the FAA Airport Privatization Pilot Program: Application 

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

Under the 2012 Reauthorization Act, the FAA increased the number of airports that can 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 ending that arrangement. In August 2012, a final application was submitted 

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

currently reviewing the final application for that transaction. 

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

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

revised and updated this Preliminary Application. 

The Pilot Program permits a private operator to become the airport sponsor eligible to assess a Passenger Facility 

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

future discretionary grants is 30% for 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 Airport will not be interrupted if a private operator experiences bankruptcy or other financial 

difficulty; 

 A private operator will maintain, improve, and modernize Midway facilities through capital 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 maintained 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 employees 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 Airport to a private operator will not result in unfair and deceptive practices or 

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

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

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

revenues for non-Airport purposes by the City and the Private Operator; and the requirement 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 serving 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 least 65 percent of the total landed weight of all aircraft 

landing at Midway during such year. The City and the 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 commencement of formal bidding for the Agreement. 

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

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

days. Approval by the FAA of the final application and the proposed transaction may not occur until the conclusion 

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

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

City and state approvals 

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

the selection of the Private Operator. It is expected that the City Council will adopt an ordinance authorizing the 

Agreement, the Use Agreement and the selection of the Private Operator, upon the completion of the bidding 

process described in Section 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: labor 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 requirements of Public Act 94-750. Public Act 94-750 imposes certain 

conditions on a transaction involving Midway by the City but does not otherwise 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 (the “Compact”) in 1995. The 

compact established an Interstate Airport 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 consummate the Agreement. 
 Page 24 of 30 

V. Minimum bidder qualification requirements 

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

detailed further in Section VI. Upon receipt, all RFQ submissions will be reviewed for completeness 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 areas of (i) operational and 

management capability and (ii) financial capability. There will be no restriction as to the 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 entity (e.g., joint venture, partnership, etc.). 

Operational and management capability 

The evaluation of operational 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 critical pieces of transport 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 requirements, including those of the Transportation 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 whether the RFQ submission adequately responds to the 

financial capability requirements of the Agreement with respect 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 not 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 soon as possible by providing 

contact information via e-mail to both representatives of the Advisor listed below. RFQ submissions 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@credit-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 written addenda to this RFQ, modify, amend, cancel, and / or 

reissue this RFQ. If an addendum is issued prior to the submission date, it will be made 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 responsible for costs or damages incurred by Bidders, Teams, Team Members, 

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

costs associated with preparing responses, qualifications, and proposals and of participating in any conferences, 

oral presentations, or negotiations. 

Modification and termination rights 

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

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

or the tender process will 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 specifically authorizes the City and its advisors to make any 

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

and to seek clarification from the Bidder’s officers, employers, 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 this 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 exempt if disclosure would result in competitive harm; and 

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

competitive harm, you must mark any such document as “proprietary, privileged and confidential.” If you mark a 

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

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

Illinois Attorney General and judicial review. 

No personal liability 

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

charged personally with any liability by a respondent or another or held liable to a respondent or another 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 format outlined below and should be submitted in English. All submissions 

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

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

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

3. Description of bidder 

a. Description of Bidder: Provide a description 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, client-consultants, etc.) as appropriate. 

b. Roles of team members and 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 security, 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 minimum bidder qualification requirements 

a. Operational and management capability: Teams should address the following areas with respect to 

operational and 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 facilities, 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 necessity for remedial maintenance 

action; 

− Familiarity with FAA regulations and procedures, airport operations, construction and 

maintenance standards; 

− Experience with facilitating airport passenger growth via route 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 relates to extreme winter weather; and 

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

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

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

obligations in infrastructure projects to appropriate and competent 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 entities, 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 relations functions targeted at travelers, taxpayers and airport 

tenants. 

iii. Safety and Security: Teams must demonstrate their ability to address and resolve safety and 

security issues. Specifically, the Team should have: 

− Knowledge of airport safety and security management and methodologies, including TSA 

security plan approval process; 

− Experience in emergency response support; and 

− Background in relevant traffic engineering standards, specifications, policies, practices and 

processes. 

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

i. Financial capacity: Teams must demonstrate their financial capacity to pay the 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 copies of audited financial statements for the past 

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

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

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

Financial factors which will be assessed include (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 nature 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 experiences on past transactions; 

and 

− Level of commitment shown by the project sponsors 

5. Indicative sources of funds: Please 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 contact 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 individuals who are expected to act as legal, financial, 

technical or other advisors for the Team. 

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

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

Midway and other US airports. 

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

relationship with a lender related to this transaction. 

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

comparable projects in which Team Members have participated. Bidders should 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 Members who would take a leading 

role in the operation and maintenance of Midway. 

RFQ submission instructions 

RFQ submission (including all attachments) should be delivered via electronic mail to the email address below no 

later than 4:00 P.M. CT on February 22nd, 2013. The City may determine in its 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@credit-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 - CITY OF CHICAGO, ILLINOIS CHICAGO MIDWAY INTERNATIONAL AIRPORT STATEMENTS OF NET ASSETS AS OF DECEMBER 31, 2011 AND 2010 ($ in thousands) 2011 2010 2011 2010 ASSETS AND DEFERRED OUTFLOWS LIABILITIES CURRENTASSETS: CURRENTLIABILITIES: Cash and cash equivalents (Note 2) 35,366 $ 21,552 $ Accounts payable and accrued liabilities 12,443 $ 16,645 $ Investments(Note 2) 26,709 44,917 Due to otherCity funds 7,516 6,373 Accounts receivable—net of allowance for doubtful accounts Advancesfor terminal and hangar rent 2,534 2,214 of approximately $365 in 2011 and $4,275 in 2010 12,211 10,235 Deferred revenue 18,943 32,908 Due from otherCity funds 2,119 1,051 Prepaid expenses 2,175 299 Total current liabilities 41,436 58,140 Interest receivable 81 126 LIABILITIES PAYABLEFROM RESTRICTEDASSETS (Note 3): Total current assets 78,661 78,180 Current portion of revenue bond payable (Note 4) 22,305 7,885 Interest rate swap premium (Note 4) 13,854 14,631 RESTRICTEDASSETS (Note 3): Accounts payable 35,062 13,043 Cash and cash equivalents (Note 2) 106,280 228,236 Due to otherCity funds 308 374 Investments(Note 2) 286,015 189,161 Interest payable 28,162 24,604 Due from other governments 2,732 1,857 Due from otherCity funds 13 Total liabilities payable fromrestricted assets 99,691 60,537 Accounts receivable (Note 1) 5,169 2,767 Interest receivable 463 457 NONCURRENTLIABILITIES: Revenue bonds payable—net of discount (Note 4) 1,432,613 1,454,662 Total restricted assets 400,659 422,491 Capital lease 9,036 9,408 Notes payable—commercial papers 4,005 NONCURRENTASSETS: Derivative instrument 35,000 20,077 Other assets —deferred noise mitigation program costs and financing fees 118,733 110,873 Total non current liabilities 1,476,649 1,488,152 Property and facilities(Note 5): Total liabilities 1,617,776 1,606,829 Land 109,446 107,287 Buildings and other facilities 1,371,443 1,362,200 NETASSETS (Note 1): Construction in progress 52,173 20,229 Invested in capital assets —net of related debt (70,876) (39,755) Total property and facilities 1,533,062 1,489,716 Restricted net assets: Debtservice 19,976 11,860 Less accumulated depreciation 380,538 338,401 Capital projects 12,661 11,438 Passenger facility charges 5,177 5,437 Property and facilities —net 1,152,524 1,151,315 Airport use agreement 23,943 24,744 Noise mitigation program 110,691 102,429 Deferred outflows 35,000 14,896 Other assets 35,652 34,733 Derivatives instrument 6,647 Total restricted net assets 208,100 190,641 Total non current assets 1,312,904 1,277,084 Unrestricted net assets 37,224 20,040 Total net assets 174,448 170,926 TOTAL 1,792,224 $ 1,777,755 $ TOTAL 1,792,224 $ 1,777,755 $ See notesto basic financialstatements.
- 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 $ 44,372 54,748 $

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 $ 44,374 54,749 $

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 - CITY OF CHICAGO, ILLINOIS CHICAGO MIDWAY INTERNATIONAL AIRPORT HISTORICAL OPERATING RESULTS EACH OF THE TEN YEARS ENDED DECEMBER 31, 2002–2011 (UNAUDITED) ($ in thousands) 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 OPERATING REVENUES: Landing fees 20,934 $ 14,524 $ 15,585 $ 15,668 $ 20,834 $ 19,606 $ 28,901 $ 21,939 $ 35,299 $ 38,583 $ Rental revenues: Terminal area use charges 19,073 12,089 13,714 17,179 21,804 17,308 26,084 30,701 42,895 40,862 Other rentals and fueling system fees 9,837 8,688 11,055 12,942 14,520 17,784 15,683 20,367 21,488 24,978 Subtotal rental revenues 28,910 20,777 24,769 30,121 36,324 35,092 41,767 51,068 64,383 65,840 Concessions: Auto parking 23,443 25,348 25,939 25,675 27,433 29,740 31,561 27,902 27,849 29,112 Auto rentals 8,039 7,808 8,001 8,417 7,698 8,440 8,355 8,505 8,182 8,776 Restaurant 5,249 6,057 6,715 6,879 7,391 8,136 8,099 7,396 8,151 8,875 News and gifts 2,287 2,968 3,272 3,852 3,905 3,876 3,816 3,437 3,488 3,551 Other 996 1,490 1,328 1,616 1,985 2,363 2,486 2,054 1,704 2,634 Subtotal concessions 40,014 43,671 45,254 46,439 48,412 52,555 54,317 49,294 49,374 52,948 Reimbursements Total operating revenues (1) 89,858 78,972 85,608 92,228 105,570 107,253 124,985 122,301 149,056 157,371 OPERATING AND MAINTENANCE EXPENSES: Salaries and wages (2) 34,036 36,582 32,316 32,259 35,316 39,998 36,931 39,521 42,105 43,554 Repairs and maintenance 24,562 26,770 28,065 31,690 32,762 36,863 37,399 37,967 31,942 40,732 Energy 4,143 3,621 4,869 6,040 5,076 7,495 7,228 8,245 6,724 6,415 Materials and supplies 811 616 663 1,170 437 1,751 2,377 1,252 1,522 1,418 Professional and engineering services 9,536 9,214 10,678 11,274 13,326 14,780 19,775 6,727 15,832 15,650 Other operating expenses 4,467 6,390 4,940 5,794 10,466 10,395 5,942 5,929 10,211 2,320 Total operating and maintenance expenses before depreciation and amortization (3) 77,555 83,193 81,531 88,227 97,383 111,282 109,652 99,641 108,336 110,089 NET OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION (4) 12,303 $ (4,221) $ 4,077 $ 4,001 $ 8,187 $ (4,029) $ 15,333 $ 22,660 $ 40,720 $ 47,282 $ DEBT SERVICE COVERAGE RATIO (5) 1.19 1.05 1.16 1.23 1.23 1.12 1.14 1.08 1.10 1.07 (1) Average annual compound growth rate for 2002–2011 for Total operating revenues is 6.5%. (2) Salaries and wages includes charges for pension, health care and other employee benefits. (3) Average annual compound growth rate for 2002–2011 for Total operating and maintenance expenses before depreciation and amortization is 4.1%. (4) Amount for 2011 may be reconciled to operating loss of $3,785 reported in the 2011 Statement of Revenues, Expenses and Changes in Net Assets by deducting depreciation and amortization of $51,067. Amount for prior years may be reconciled through similar calculations. (5) Represents debt service coverage ratio on first and second lien bonds. Source: Chicago Midway Airport Audited Financial Statements and City of Chicago Comptroller’s Office.
- 44 - CITY OF CHICAGO, ILLINOIS CHICAGO MIDWAY INTERNATIONAL AIRPORT DEBT SERVICE SCHEDULE (UNAUDITED) ($ in thousands) The following table sets forth aggregate annual debt service of principal and interest for outstanding Midway Airport Revenue Bonds: Year Debt Service Debt Service Debt Service (First Lien) Debt Service Debt Service Debt Service (Second Lien) Ending Series 1996 Series 1998 Series 2001 Total Series 1998 Series 2004 Series 2010 Total Total December 31 First Lien Bonds First Lien Bonds First Lien Bonds Debt Service Second Lien Bonds Second Lien Bonds Second Lien Bonds Debt Service (1) Debt Service 2012 10,519 $ 22,719 $ 21,124 $ 54,362 $ 119 $ 11,868 $ 12,034 $ 24,021 $ 78,383 $ 2013 10,529 22,702 21,112 54,343 119 12,041 12,038 24,198 78,541 2014 10,522 22,705 21,097 54,324 119 12,180 12,934 25,233 79,557 2015 10,509 22,684 21,083 54,276 119 12,383 13,972 26,474 80,750 2016 10,504 22,694 21,071 54,269 119 12,448 19,564 32,131 86,400 2017 10,502 22,684 21,058 54,244 119 12,734 19,554 32,407 86,651 2018 10,494 22,674 21,040 54,208 119 12,923 19,543 32,585 86,793 2019 10,488 22,671 21,022 54,181 119 13,128 19,532 32,779 86,960 2020 10,480 22,664 21,029 54,173 119 13,334 19,521 32,974 87,147 2021 10,473 22,658 21,016 54,147 119 13,448 41,494 55,061 109,208 2022 10,467 22,646 21,005 54,118 119 13,761 19,477 33,357 87,475 2023 17,334 22,643 20,981 60,958 119 7,619 19,565 27,303 88,261 2024 17,313 22,632 20,968 60,913 119 7,885 19,448 27,452 88,365 2025 17,294 24,150 20,944 62,388 119 6,581 77,869 84,569 146,957 2026 17,274 24,137 20,926 62,337 119 6,872 19,367 26,358 88,695 2027 17,252 24,126 20,915 62,293 119 7,113 19,346 26,578 88,871 2028 17,230 24,113 20,888 62,231 119 7,454 19,334 26,907 89,138 2029 17,204 24,107 20,868 62,179 132,539 7,769 19,314 159,622 221,801 2030 51,656 20,840 72,496 8,134 19,298 27,432 99,928 2031 51,607 20,810 72,417 8,473 19,280 27,753 100,170 2032 51,550 51,550 8,837 19,256 28,093 79,643 2033 51,494 51,494 9,201 19,236 28,437 79,931 2034 51,439 51,439 9,614 19,211 28,825 80,264 2035 51,375 51,375 10,051 12,235 22,286 73,661 2036 12,215 12,215 12,215 2037 12,206 12,206 12,206 2038 12,179 12,179 12,179 2039 12,165 12,165 12,165 2040 12,143 12,143 12,143 2041 12,120 12,120 12,120 2042 236,388 $ 724,530 $ 419,797 $ 1,380,715 $ 134,562 $ 245,851 $ 585,450 $ 965,863 $ 2,346,578 $ (1) Assumes an interest rate effective at December 31, 2011 on $365,150,000 of Second Lien Bonds that are variable-rate demand obligations. Note: The annual debt service tables in the Official Statements for the above debt were presented with a year ended January 1. The information above is presented with a year ended December 31. The change has been made to facilitate reconciliation to revenue bonds payable at December 31, 2011. Source: City of Chicago Comptroller’s Office.
- 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 - CITY OF CHICAGO, ILLINOIS CHICAGO MIDWAY INTERNATIONAL AIRPORT ENPLANED COMMERCIAL PASSENGERS BY AIRLINE EACH OF THE TEN YEARS ENDED DECEMBER 31, 2002–2011 (UNAUDITED) % of % of % of % of % of % of % of % of % of % of Enplanements Total Enplanements Total Enplanements Total Enplanements Total Enplanements Total Enplanements Total Enplanements Total Enplanements Total Enplanements Total Enplanements Total Southwest Airlines 3,348,624 40.9 % 3,651,618 40.5 % 3,967,477 41.2 % 5,542,890 63.6 % 6,666,986 72.5 % 7,147,154 75.9 % 6,941,870 83.1 % 7,188,750 83.9 % 7,561,053 85.4 % 8,196,402 86.7 % American Trans Air (4) 3,032,663 37.0 3,473,581 38.5 3,668,159 38.1 1,714,873 19.6 783,224 8.5 686,065 7.3 54,650 0.7 AirTran 296,909 3.6 248,891 2.8 229,040 2.4 338,057 3.9 681,936 7.4 645,363 7.0 512,429 6.1 487,087 5.7 465,237 5.3 413,717 4.4 Northwest Airlines 329,709 4.0 357,425 4.0 349,161 3.6 290,080 3.3 285,310 3.1 280,911 3.0 237,969 2.8 267,433 3.1 14,726 0.2 Frontier 101,035 1.1 134,593 1.4 154,120 1.8 189,216 2.1 206,675 2.2 207,674 2.5 164,749 1.9 151,440 1.7 158,405 1.7 Shuttle America (Delta Express) 144,539 1.5 223,153 2.7 181,356 2.0 90,544 1.0 8,874 0.1 Atlantic Southeast 99,373 1.1 61,460 0.6 882 3,715 0.1 29,314 0.3 Continental Airlines (1) 148,946 1.8 140,100 1.6 162,823 1.7 63,433 0.7 84,153 0.9 48,478 0.5 6,601 0.1 Continental Express 53,458 0.6 53,363 0.6 37,500 0.4 4,372 0.1 Comair 23,818 0.3 17,655 0.2 5,123 0.1 4,371 0.1 19,264 0.1 21,135 0.1 14,156 0.2 American 116,071 1.4 153,043 1.7 143,211 1.5 113,818 1.3 60,793 0.7 164 Delta (2) 175,323 2.1 163,104 1.8 184,166 1.9 86,621 1.0 144,037 1.7 176,231 2.0 239,357 2.5 United 106,951 1.3 74,520 0.8 American Eagle/Simmons 22,267 0.2 7,599 0.1 27,863 0.3 U.S. Airways (3) 17,644 0.2 25,293 0.3 14,116 0.1 Chicago Express 564,951 6.3 570,580 5.9 41,410 0.5 Mexicana 33,045 0.4 5,786 0.1 All other airlines 709,578 8.6 91,728 1.0 162,652 1.7 187,370 2.2 187,424 2.0 136,608 1.5 147,552 1.8 134,720 1.6 353,324 3.9 442,055 4.6 Total 8,208,512 100.0 % 9,000,373 100.0 % 9,625,900 100.0 % 8,705,803 100.0 % 9,198,532 100.0 % 9,414,181 100.0 % 8,358,287 100.0 % 8,571,847 100.0 % 8,856,025 100.0 % 9,458,810 100.0 % (1) Continental includes commuter affiliate Continental Express for the years 1999–2004. (2) Delta includes commuter affiliate Comair for the years 1999–2004. Delta commenced scheduled service to Atlanta from Midway in September 2001. (3) U.S. Airways ceased operations at Midway on March 2005. (4) American Trans Air ceased operations at Midway on April 3, 2008. 2011 2008 2002 2003 2009 2010 2006 2007 2004 2005
- 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 - CITY OF CHICAGO, ILLINOIS CHICAGO MIDWAY INTERNATIONAL AIRPORT NET ASSETS BY COMPONENT EACH OF THE SIX YEARS ENDED DECEMBER 31, 2006–2011 (UNAUDITED) ($ in thousands) 2006 2007 2008 2009 2010 2011 Net assets: Invested in capital assets — net of related debt 48,388 $ 31,251 $ 40,352 $ (1,936) $ (39,755) $ (70,876) $ Restricted 215,589 232,344 184,019 201,158 190,641 208,100 Unrestricted 31,561 18,795 19,614 5,792 20,040 37,224 Total net assets 295,538 $ 282,390 $ 243,985 $ 205,014 $ 170,926 $ 174,448 $ Ten year information will be provided prospectively starting with year 2006.
- 54 - CITY OF CHICAGO, ILLINOIS CHICAGO MIDWAY INTERNATIONAL AIRPORT CHANGE IN NET ASSETS EACH OF THE SIX YEARS ENDED DECEMBER 31, 2006 - 2011 (UNAUDITED) ($ in thousands) 2006 2007 2008 2009 2010 2011 Operating revenues 105,570 $ 652,763 $ 124,985 $ 122,301 $ 149,056 $ 157,371 $ Operating expenses 135,276 544,890 155,596 147,308 161,103 161,156 Operating (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) gain before capital grants (35,031) 126,236 (45,182) (38,971) (36,549) 461 Capital grants 22,217 48,253 6,777 2,461 3,061 Change in net assets (12,814) $ 174,489 $ (38,405) $ (38,971) $ (34,088) $ 3,522 $ Ten year information will be provided prospectively starting with year 2006.
- 55 - CITY OF CHICAGO, ILLINOIS CHICAGO MIDWAY INTERNATIONAL AIRPORT LONG TERM DEBT EACH OF THE SIX YEARS ENDED DECEMBER 31, 2006–2011 (UNAUDITED) ($ in thousands) 2006 2007 2008 2009 2010 2011 First lien bonds 849,400 $ 835,780 $ 821,275 $ 806,015 $ 783,595 $ 780,205 $ Second lien bonds 422,715 422,715 422,715 399,140 685,780 681,285 Commercial paper notes 10,269 10,674 10,674 61,360 4,005 Total revenue bonds and notes 1,282,384 $ 1,269,169 $ 1,254,664 $ 1,266,515 $ 1,473,380 $ 1,461,490 $ Ten year information will be provided prospectively starting with year 2006.
- 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.

2011 (1) 2002 (1)
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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).
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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.