APPENDIX B FORM OF OPINION OF BOND COUNSEL



### New Jersey Economic Development Authority**~6** 

### West State Street P.O. Box 990 Trenton, New Jersey 08625 Re: New Jersey Economic Development Authority Special Facility Revenue Bonds (Continental Airlines, Inc. Project), Series 1999 Ladies and Gentlemen:· [Date of Closing]

We have acted as

### b~nd**~ounsel** to the. ·New Jersey Economic Development Authority (the "Authority") in connection With the issuance by the Authority of its Special Facility Revenue Bonds (Continental Airlines, Inc. Project), Series 1999 in the principal amount set forth in the Indenture (as defined below) (the "Bonds"). The Bonds are dated, mature, bear interest and are subject to redemption and tender prior to maturity upon the terms and conditions stated therein and in the Indenture. All capitalized terms used herein and not defined herein shall have the meaning ascribed to such tenms in the Indenture. The Bonds are issued under and pursuant to the New Jersey Economic Development Authority Act, constituting Chapter 80 of the Pamphlet Laws of 1974 of the State of New Jersey, approved August 7, 1974, as amended and supplemented (the "Act"), resolutions adopted by the members of the Authority on April 14, 1998 and July 13, 1999, authorizing, among other things, the issuance of the Bonds, and an Indenture of Trust dated as of September 1, 1999 (the "Indenture") between the Authority and Chase Bank of Texas, National Association, as trustee. Concurrently with the issuance of the Bonds, the Authority and Continental Airlines, Inc., a Delaware corporation· ("Continental") have entered into two Lease Agreements each dated as of September 1, 1999 (collectively, the "Lease") which provide for, inter alia, the sub-sublease of the Leased Premises from Continental to the Authority, the sub-sub-sublease of the Leased Premises from the Authority to Continental, the proceeds of the Bonds to be used by Continental to finance the costs of the Project (as defined below), and for the lease of the personal property financed with the proceeds of the Bonds from the Authority to Continental.

.· . Pursuant to the Indenture, the Authority has tran-sferred and assigned to the Trustee certain of its right, title and interest in the Continental Sublease (as defined in the Lease), subject to certain reserved rights as described therein. The Bonds are also secured by a Guaranty Agreement dated as of September 1, 1999 from Continental to the Trustee for the benefit of the Owners of the Bonds (the "Guaranty") and Continental's obligations under the Guaranty are secured by a Leasehold Mortgage dated as of September 1, 1999 from Continental to the Trustee. The Bonds are being issued for the purpose of financing: (i) the construction of a new concourse and related facilities to be known as Concourse C-3 and related improvements and certain subsurface improvements; (ii) the renovation and modification of the existing concourses and support areas at Concourses C-1 and C-2 and related improvements, including but not limited to, the renovation of the Presidents' Club, the renovation of public restrooms, modifications designed to improve passenger flow, the refurbishing of elevators, the relocation of administrative offices, the renovation of flight attendant crew areas, the modification of baggage claim areas, the installation of preconditioned air units at certain jet bridges, the construction of an international ticket counter and bag systems, the reconfiguration of the 

### B-1lobby to expand electronic ticket processing capabilities and the renovation of ramp level airport service facilities and also including certain subsurface improvements; (iii) the renovation and modification of gates at Concourse A-2 and related Improvements and certain subsurface improvements; (iv) the purchase and installation of machinery and equipment for all of the foregoing, and (v) the payment of issuance costs incurred by Continental for the Bonds and the capitalization of interest on the Bonds (collectively the "Project"). As Bond Counsel to the Authority, we have examined the Act and the proceed·lngs relat"lng to the authorization and issuance of the Bonds including, among other things: (a) certified copies of the resolutions of the Authority authorizing the issuance of the Bonds, execution and delivery of the Indenture, the Lease, and other necessary action; (b) an executed Bond; (c) the executed Indenture and Lease; (d) the opinions of Jeffery A. Smisek, Executive Vice President and General Counsel of Continental and Jones, Day, Reavis & Pogue, special counsel to Continental, on which we have relied, with your permission, as to the matters set forth therein; (e) the opinion of Charles Waters, Esq., counsel to the Trustee, on which we have relied, with your permission, as to the matters set forth therein; (f) the Representation Letter of Continental, on which we have relied in expressing the opinion set forth in the following Paragraph 5; and (g) various certificates executed by the Authority and Continental including a certificate pursuant to Section 

### 148 of the Internal Revenue Code of 

### 1986, as amended (the "Code"). The Code imposes certain requirements which must be met on a continuing basis subsequent to the issuance of the Bonds ih order for interest on the Bonds to be excluded from gross income for federal income tax purposes under Section 103 ·of. the Code, including, among other things, requirements relating to rebate of arbitrage, investment limitations; use of proceeds for qualtfying airport facilities, limitations with respect to payment of issuance costs and acquisition of land, used property and prohibited facilities. Failure of the Authority or Continental to comply with such requirements may cause interest on. the Bonds to be included in gross income for fedimil income tax purposes, retroactive to the date of issuance of the Bonds. Except as otherWise expressly permitted by the Bond Documents, the Authority and Continental have covenanted not to take any action or fail totake any action which would cause the interest on the Bonds to be included ·in gross income under Section 

### 103 of the Code as in effect 

# on the "date of issuance of the Bonds. We have assumed, with your permission, continuing compliance by the Authority and Continental with the above covenants in rendering our federal income tax opinion with respect to the exclusion of interest on the Bonds from gross income for federal income tax purposes. Based upon and subject to the foregoing and· the further assumptions and qualifications set forth below, we .are of the opinion that: - . 

### 1. The Authority is a public body corporate and politic and an instrumentality of the.·State of New Jersey, duly and legally organized and validly existing under the Act, and is authorized to issue the Bonds for the purpose of financing, among otherthings, the Project. The Project is authorized to be financed under the Act. · '
. ·' · 

### 2. The Bonds have been duly authorized, issued and sold by the Auth.ority, are valid and binding special, limited obligations of the Authority, enforceable ·,n accordance with their terms and payable as to principal, interest and all otherobligations thereunder solely from, and enforceable only against, amounts payable by Continental under the Lease and the other revenues arid rights assigned or pledged to the Trustee pursuant to the Indenture as security for the debt ev·ldenced by ihe Bonds. · · · · 

### 3. The Authority has the powerto enterlnto and perform its obligations under the Indenture and Lease, which have been duly authorized, executed and delivered by the Authority and are valid and binding obligations of the Authority, enforceable ih accordance with their respective terms. 

### 4. The Authority has duly and validly assigned to the Trustee, as security for the Bonds, its rights and benefits under the.Continental Sublease, as and to the extent provided in the Indenture. B-25. Based upon. existing law, intere.st on<the Bonds is.· excluded from the gross income of the ·owners of the Bonds for federal income lax purposes pursuantto Section 103 of the Code, except as to interest on any Bond for any period during which such Bond is held I;Jy a person who is either a "sui;Jstanlial user" of the facilities financed.with the proceeds of the Bonds or a "related person" of such "substantial user," within the meaning of Section 147(a) of the Code. The difference between the initial public offering price.of the Bands at which price a substantial amount of each of the Bonds was sold and the principal amount payable at maturity of each of the Bonds constitutes original issue discount. The appropriate portion of the original issue discount allocable to the original and each subsequent owner of the Bonds will be treated for federal income tax purposes as interest not includable in gross income under Section 103 of the Code to the same extent as stated interest on the Bonds. The Bonds are "specified private activity bonds" under Section 57(a) (5) of the Code and, therefore, interest onthe Bonds will I;Je taken into account as an item of tax preference, for purposes of computing alternative minimum taxable income under Section 55(a) (2) of the Code. We express no opinion regarding any federal income tax consequences arising with respect to the Bonds other than the exclusion of interest on the Bonds for federal income tax purposes and the treatment of interest on the Bonds as an item of tax preference. We also express no opinion as to the treatment for purposes of federal income taxation of interest on the Bonds (i) upon a Determination of Taxability or (ii) the occurrence of any change or taking of any action upon the advice or approval of bond counsel other than McCarter & English, LLP. 6. The interest on the Bonds and any gain on the sate thweof are exempt from the tax imposed by the existing New Jersey Gross Income Tax Act. We express no opinion as to the treatment for purposes of the New Jersey Gross Income Tax Act of interest on the Bonds or any gain on the sale thereof upon (i) a Determination of Taxability or (ii) the occurrence of any change or taking of any action upon the advice or approval of bond counsel other than McCarter & English, LLP. 7. All consents, approvals and authorizations of any governmental or regulatory authority which are required to be obtained by the Authority in connection with the issuance or delivery of the Bonds or its entering into and performing its obligations under the Bonds, the Lease and the Indenture have been obtained, except that no opinion is expressed concerning compliance with state or federal securities law. The foregoing opinions are qualified to the extent that the enforceability of the Bonds, the Lease and the Indenture may be limited under bankruptcy, insolvency, moratorium or other similar laws or equitable principles affecting creditors' rights or remedies generally. The opinions expressed herein are limited to the taws of the State of New Jersey, exclusive of conflicts of taw provisions, and the taws of the United States. The opinions expressed herein are based upon the taws and judicial decisions of the State of New Jersey and the United States as of the date hereof and are subject to any amendment, repeal or other modification of the applicable laws or judicial decisions that served as the basis for our opinions, or taws or judicial decisions hereafter enacted or rendered. Our engagement by the Authority with respect to the opinions expressed herein does not require, and shall not be construed to constitute, a continuing obligation on our part to notify or otherwise inform the addressee hereof of the amendment, repeal or other modification of the applicable laws or judicial decisions that served as the basis for this opinion letter or of laws or judicial decisions hereafter enacted or rendered which impact on this opinion tetter.' ' 

### We have made no investigation of, and express no· opinion on, the legality of. the proposed construction or use ofthe Project under applicable lederal, state or local laws or the compliance· of the proposed construction or use with ariy such laWs.

.

**~.'** 

### Very truly Y?urs,

,_;•.



### B-4,-. r " APPENDIX C

. SUMMARY OF CERTAIN PROVISIONS OF THE CONTINUING

. DISCLOSURE AGREEMENT Continental Airlines, Inc: ("Continental") will enter into a Continuing Disclosure Agreement (the "Disclosure Agreement") with Chase Bank of Texas, National Association, as trustee (the "Trustee") in connection·with the issuance and sale 'of the Bonds. The Disclosure Agreement will require Continental to provide specified financial and operating data to several repositories described below on a continuing basis for owners of the Bonds:· No financial or operating data concerning the New Jersey Economic Development Authority. (the "Authority") wiHbe provided on. a continuing basis, and the Authority assumes and will have no. liability with ,respeqt to any of the information provided by Continental pursuant to the Disc;losure Agreement. Certain Definitions Used in the Disclosure Agreements The following terms, when used in the Disclosure Agreement or in this summary thereof, will have the meanings set faith below: ''Dissemination Agent'' will mean the Trustee, acting. in its capacity as dissemination agent, or any successor dissemination agent designated in writing by Continental and which has filed with the Trustee a· written acceptance of such designation. "Exchange Act" will mean the Securities and Exchange Act of 1934, as amended. "Indenture" shall mean the Indenture of Trust, dated as ofSeptember 1, 1999, by and between the Authority and the Trustee pursuant to which the Bonds are being issued, as amended from time to time. "Lease Agreements" means, collectively, the Lease Agreement (Concourse C-3) and the Lease Agreement (Concourses C-1, C-2 and A-2), both dated as of September 1, 1999, between the Authority and Continental, as amended from time to time. ''National Repository" will mean any nationally recognized municipal securities information repository identified by the SEC for purposes of the Rule.

· "Repositories" will mean each National Repository and each State Repository.

"Rule" will mean Rule 15c2:12 (b) (5) adopted by. the SEC under the Exchange Act, 

### i7 CFR 240.15c2-12, as the same may be amended from time to time. "SEC" will mean the Securities and Exchange Commission. "State Repository" will mean any public or private repository or entity designated from time to time by the State of New Jersey as a state repository for purposes of the Rule. As of the date of the Continuing Disclosure Agreement, there is no' State Repository. "Underwriters" shall mean Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith Inc., Salomon Smith Barney Inc., Apex Securities, Inc., Bane of America Securities LLC, Chase Securities Inc., CIBC'World Markets Car[)., Gibraltar Securities Co.,



### J~B. Hanauer 

### & Co. and Lehman Brothers Inc
.



### . -... ·' Obligation to Provide Annual Reports Continental has agreed that not later than the last day of the sixth month following the end of each of its fiscal years, commencing with the fiscal year ending December 31, 1999, it will file, or will cause the Dissemination Agent (il any) to file,_with each Repository an "Annual Report." Continental will give notice of any change in its fiscal year in the same manner as for a "Listed Event" described below. C-1

### Continental's Annual Report will consist of Continental's report on Form 

### 10-K and the materials physically included .therewith or incorporated by reference therein, filed. by Continental with the SEC, or an incorporation by reference of such Form 

### 1 0-K arid such other materials phys.ically included therewith or incorporated by reference therein. Continental has agreed that if it ceases to be a reporting company under the Exchange Act, it shall provide (a) its auditeo financial statements and operating data of the typewh'1ch would be-provided to the. SEC if Continental were a reporting company

# as well as (b) the information otherwise required in th.e Annual Report. The Disclosure Agreem'ent provides that ariy of the materials to· be



### provid~d by Continental under the Disclosure Agreement may be incorporated by reference from materials on file with the SEC or with each of the Repositories. Continental's audited financier statements shall be prepared· (a) so long as Continental· is a reporting company·'under the Exchange Act, in accordance with the rules of the SEC for preparing audited financial statements to be filed as a part of a Form 10-K, 

### and (b) if Continental shall·cease to be a reporting company, in accordance with generally accepted accounting principles. Oblig;ations to Report Certain Events 

### Continental has agreed that when it has actual knowledge of the occu;rence of a. "Listed



# E~ent", it will determine if such event would constitute material information for owners of the Bonds and, if knowledge of the occmrence of such Listed Event is material, it will promptly report, or cause the Dissemination· Agent (if one is appointed) to report, the ·occurrence with (a) either the National Repositories or the Municipal Securities Rulemaking Board, (b) each State Repository and (c')' the Trustee. The "Listed Events" with respect to the Bonds include the following: 

## ' (a) principal and interest payment delinquencies·, (b) non-payment related defaults; (c) unscheduled draws on any debt service reserves (if any) established with respect to the Bonds reflecting financial difficulties; (d) unscheduled draws on any credit enhancements (if any) with respect to the. Bonds reflecting financial difficulties; (e) substitution of credit or liquidity providers (if any) with respect to the Bonds or theirfailure to perform; (f)· adverse tax opinions or events affecting the tax-exempt status of the security;. (g) modifications to the rights of security holders; (h) Bond calls; 

### (i) defeasances; 

### (i) release, substitution or sale of property securing repayment of the securities; or (k) rating changes

.. The Trustee has agreed in the Disclosure,)\greement that it will, within three business days of obtaining actual knowledge of any Listed Events, contact Continental and inform Continental of the Listed Event. Disclosure of Failure to Provide Annual Report ' ' 

### If by (a) 

### 15. business days prior to the date specified for provision of an Annual Report to each Repository, the Trustee has not received a copy of the Annual Report to be provided by 

### Continental orthe appropriate Dissemination Agent,. or (b)- the last day of the sixth month following the end of the 

### C-2applicable fiscal year of Continental, the Trustee has not received notification from Continental that· an Annual Report has been filed with each Repository as required by the Disclosure Agreement, the Trustee will contact Continental and the appropriate Dissemination Agent (if any) to determine if Continental has complied with the obligation under the Disclosure Agreement to file an )\nnwil Report. In the ·event that Continental Has not complied with its obligation under the Disclosure Agreement to file an·Annual Report, the Disclosure Agreement obligates the Trustee to notify the State Repository and the National Repositories or the Municipal Securities Rulemaking Board of such failure. 

### Termination of Continuing Disclosure Obligations The Disclosure Agreement provides that Continental's obligations thereunder will terminate on the legal defeasance, prior redemption or payment in full of the Bonds. The Disclosure Agreement further provides that if Continental's obligations under the Lease Agreements and the Disclosure Agreement are assumed in full by some other entity and Continental no longer has any liability as to the Bonds, such entity will be responsible for compliance with the Disclosure Agreement in the same manner as if it were Continental, and Continental will have no further responsibility under the Disclosure Agreement. The Disclosure Agreement further provides that it will also terminate upon (a) the Rule being withdrawn or having been found by a court of competent jurisdiction to be invalid, or (b) receipt by the Trustee and Continental of an opinion of counsel of nationally recognized expertise in matters relating to securities laws affecting municipal securities to the effect that the Rule is no longer applicable to the Bonds. 

### Amendments to and Waivers of Disclosure Obligations Continental and the Trustee may amend the Disclosure Agreement (and the Trustee will agree to any amendment requested by Continental provided such amendment does not adversely affect the rights, duties or obligations of the Trustee under the Disclosure Agreement) and any provision of the Disclosure Agreement may be waived, if (a) such amendment or waiver arises from a change in legal requirements, change in law or a change in the identity, nature or status of Continental or the type of business conducted by Continental; (b) the Disclosure Agreement, as amended, would have complied with the requirements of the Rule at the time of issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; or (c) the amendment or waiver does not materially impair the interests of the owners of the Bonds, as determined by either (1) a party unaffiliated with Continental (such as bond counsel or other counsel of nationally recognized expertise in matters relating to the application of federal securities laws to municipal obligations who (or which) is not afull time employee of Continental), or (2) the approving vote of owners ofthe Bonds obtained in the same manner as an approving vote of owners of \he Bonds of an amendment to the applicable Indenture. 

### Defaults and Remedies Under·the Disclosure Agreement If Continental fails to comply with any provision of the Disclosure Agreement, any owner of Bonds may, or the Tnustee may (and, at the request of any of the Underwriters or owners of not less than a majority in aggregate principal amount of the Bonds then outstanding, will), take such act'1ons as may be necessary and appropriate, including seeking an order· of mandamus or a court order of specific performance, to cause Continental to comply with its obligations under the Disclosure Agreement. 

### A default under the Disclosure Agreement shall not be deemed to be an event of default under the Indenture or either Lease Agreement or to result in any pecuniary liability of Continental or the Trustee, and the sole remedy in the event of any failure of Continental to comply with the Disclosure Agreement will be an action to compel performance thereunder. C-3Beneficiaries of ·Disclosure Agreement The



## Disclos~r~ Agreement will inure solelyJo the benefit of theAuthority, Coniinental, the Trustee, the,Under-Writers, imct the owners of the Bonds (including any person or entity which owns a beneficial interesi in a Bond). The Disclosure Agrf!ement cr.eates no, rights in any. other person or entity. · . . . 

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### CAAPPENDIX D SUMMARY OF CERTAIN PROVISIONS OF.THE PRINCIPAL LEGAL DOCUMENTS
. This Appendix o·contains certain information and descriptions relating to the Basic Lease, ine Port Authority Leases, the Lease Agreements, the Consent; the Indenture and the Guaranty. Such information and descriptions are not comprehensive and may not include all of the information that investors may believe isimportant. Prospective investors should read all of ihese documepts carefully before deciding to invest in the Bonds. Copies of all of. these documents are, available from Continental and the Underwriters during the ·initial offering period, and all references toany of the Bonds are

**qualifi~d** in their entirety by reference to the definitive form thereof and the information with respect thereto included in the aforesaid documentll. Capitalized terms used but not defihed in this Appendix o·shall have the me<lning given to such terms in this Official Statemimt. THE LEASES. The Basic Lease Continental leases from the Port Authority, 6ursuant to .the Port Authority



# Lease~, **t~e p~emises**  on which the Project is located. The Port Authority Leases are subject to ·the _Basic Lease under which Newark, the fee owner of much of the real property' comprising. the majority of ·the Airport and exi.sting improvements thereon, has leased the same to the Port Authority. The currentexpiration date of the Basic Lease is December 31, .2031 although it may 

## be subject to earlier



### ter.min~tion in certain circumstances. The Port Authority Leases Pursuant to the Port Authority Leases, Continental leases the sites upon which the Project is located. The portion of the Project comprised of Concourse A-2 is leased to Continental by the Port Authority pursuant to the Terminal A Facility· Lease, and the portion of the Project comprised of Concourse C-3 and improvements to Concourses C-1 and

**C~2** is leased to Continental by the Port Authority pursuant to the Terminal C Facility Lease. · · •· · The Terminal A Facility Lease. The current expiration date .of the Terminal A Facility_ Lease is December 31, 2018. The Terminal A Facility· Lease is subjeCt to earlier termination by the Port Authority in the event that: (a) Continental 

### (i) lakes the benefit of any i.nsolvency statute: (2) makes a general

. assignment for the benefit of creditors, (3) files a voluntary petition in bankruptcy or a petition or

answer seeking an arrangement or its reorganization or-the readjustment of its indebtedness under the federal bankruptcy laws or under any either la\N'or·statute ·of the United Slates of

### Of any state thereof, or (4) consents to the appointment of a receiver, trustee or liquidator of all or substantially all of its property; :. ' (b) Contlnental_is adjudged bankrupt by an order.ordecree of a court, oran order or petition filed by any of Continental's creditors or st()ckholders. seeki,ng its. reorganization or thereadjustment of its indebtedness under the federEjl bankrupky, _laws, 

### or. under-,any.Jaw or statute of the United States or of anystate thereof. is approved;and such judgment or order 

### is' not stayed orvacated within 

### 60 days after the entry thereof; (c) a receiver, trustee, or fiquidator takes possession or control bf all orsubstantially all ofthe property of Continental for a period of at least 

### 60 days by or pursuant to, or under authority of, any legislative act, resolution or rule, or any order.or decree of any' court or, governmental board, agency or officer·having jurisdiction;

### (d) Continental voluntarily has no activity at Continental's portion of Concourse A-2 for a continuous period of 30 days and fails tocuresuch default within 30 _days after receiving notice thereof, discontinues ·1is operations at



### th~- Airport, or, after_exhausting orabandoning any right of further appeal, because of an act oromission 

### ofContinentaJ,'is prevented for a period of 60 days by .action.of any governmental.agericy.other than the Port Authority having jurisdiction thereof, from conducting its operations atthe Airport, regardless of the fault of Continental; (e) any lien is filed· against· Continental's portion of Concourse A-2 or the areas of Con- . -course Ac2 at the Airport shared by Continental with other airlines leasing portions of such

Concourse because of any act oromission of Continental that is not discharged or bonded within · 60 days after Continental has 'received notice thereof;



### '
. (f) except



## a~. **~ihe;,yisEf_** prC)vided in the Terminai.,_A Facility Lease, the. letting under the Terminal A Facility Lease orthe interest or estate of Continental underthe Terminal A Facility Lease is transferred to, passes to or devolves upon any other person, firm or corporation; (g) Continental does not pay the rentals or,fees on time or does not make any other payment required underthe Terminal A Facility Lease·to ihe Port Authorityfor a period of 1 0 days after receipt of notice by it from the Port Authority to make such payments; or (h) Continental fails to observe every other agreement set forth in the Terminal A Facility Lease 6n its part within 30 days after receipt of nolice ofdefault thereunderfrom the PortAuthority (except where fulfillment onts obligation ·rei:juires activity over a ·period of time, and Continental has .. commenced to perform whal<-iver maybe'requiredforfulfillmentwithin 30 days after receipt of notice

and.contin'ues such 'performance without interruption except for causes beyond its control). . ' . i .

- 

### The Port Authority also may reallocate gates leased to Continental under the Terminal A Facility Lease to other airlines on six months' notice to Continental if Continental does not satisfy usage requirements setforth in the Terminal A Facility Lease. Continental would be compensated by such other airlines for such a reallocation. ·

.Continental may terminate the Terminal A Facility Lease prior to its expiration if: (a) Continental is
**p~evented** 

### fromoperating its air transportation system to and from the Airport by reason of its inability to use all or a substantial part of the runways and taxiways (as defined in the Terminal A Facility Lease): •.fora period of longer than 30 consecutive days as a result of any condition of the Airport not

"due to the fault'of Continental; or ·. · for a period of longer than 90 consecutive days as a result of a permanent injunction issued by any court ofcompetent jurisdiction; or •. for a


# p~riod of 

# lorgerthan.90,c~nsecutive days as a resultof any order, rule orregulation of

the FA)\ 

### qr (llher. governmental ag,ncy having jurisdiction over the operationsof Continental
. with.which Continental_.is unable .to comply at reasonable cost or expense; or (b) the Port Authority fails to perform any of its obligations under the Terminal A Facility Lease within 20 days after receipt of a notice of default thereunder from Continental ·(except where fulfillment of its obligation requires activity ovei 

# a period 'of time, and the· Port Authority has ···commenced to perform whatever may 

### be required forfulfillment within 20 days'after receipt of notice

and continues such performance without interruption except for causes beyond its control). · The Terminal A facilif:y !,.ease .is also subjectto earlier termination upon !be expiration, surrender or termination of the

**B~sit** 

### Lease. _· . . · · · . · ·· · . · · · . 

### : The Terminal C. Facility Lease.> The current expiration date of the Terminai·O Facility. Lease with respect to Concourses C-1 and 0-2 is March 31, 2013 and with respect to Concourse C-3 is March 31, D-2

### ·'

**~** -. -r • 

### 2028. The Terminal C Facility Lease is subject to earlier termination by the Port Authority in the event that: (a) Continental (1) becomes insolvent" or takes the benefit of any ·insolvency statute, (2) makes a general assignment for the benefit of creditors, (3) files a ·voluntary petition in bankruptcy or a petition or answer seeking an arrangement or. its reorganization or the readjustment of its indebtedness under the federal bankruptcy laws or under any other law or statute of the United States orany state thereof or (4) consents to the appointment of

# areceiver, trustee or liquidator of all or substantially all of its property; (b) Continental is adjudged bankrupt by an order or decree of a court or 

## em order is made approving a petition filed by any of Continental's creditors or stockholders seeking the reorganization of Continental or the readjustment of its indebtedness under the federal bankru.ptcy laws or under any law or statute of the United States or any state thereof, and such judgment or order is not stayed or vacated within 60 days after the entry thereof; (c) a receiver, trustee or liquidator takes possession or control of. all or substantially all the property. of Continental for a period of at least 60 days by or pursuant to, or underthe authority of, any legislative act, resolution or rule, or any order or decree of any col.lrt of governmental board, agency or officer having jurisdiction; · · · · · (d) Continental voluntarily abandons, deserts or vacates Terminal C or discontinues any activities permitted or required under the Terminal C Facility Lease at the Airport, or after exhausting or abandoning any right of further appeal, Continental is prevented for a period of 60 days by action of any government agency (other than the Port Authority) having jurisdiction thereof; frorn conducting its operations at the Airport, regardless of the fault of Continental, unless the same shall be or would become, with the passage of tirne, an event on the basis of which Continental could terminate the Terminal C Facility Lease as described below; (e) any lien is filed against Terminal Cor the non-exclusive areas (as defin.ed in the Terminal C Facility Lease) because of any act or omission of Continental and is not removed, discharged or bonded within 60 days after Continental receives notice thereof; (f) except as otherwise provided in the Terminal C Facility Lease, the letting under the Terminal C Facility Lease or any part thereof or the interest or estate or any part thereof of Continental under the Terminal C Facility Lease is transferred, passes to or devolves upon any other person, firm or corporation; (g) a petition under any part of the federal bankruptcy laws or an action under any present or future insolvency lawor statuie is filed against Continental and is not dismissed within 60 days after the filing thereof; · · (h) ii.-Continental ( 1 ) becomes a merged (non-surviving) corporation in a merger, a constituent corporation in a consolidation or a corporation in dissolution except with the consent of the Port Authority or as otherwise expressly permitted by the Terminal C Facility Lease or (2) Continental becomes a possessor (surviving) corporation in a merger without the consent of the Port Authority and without complying with other provisions set forth in the Terminal C Facility Lease;_

f • • '. _, • - - '. •• -. \ 

### (i). Continenlal fails to pay the rentals or

**fee~** 

### on tirne or to make any· other payment required underthe Terrn_inal C Facility Lease when due to the Port Authority for ten days after receipt of notice by Continental ,from the Port Authority to make. such payments; or . (j) 

### Coniinental fails to keep, perform.and. observe each arid every other promise, covenant or agreement made by it in the Terminal C Facility Lease within 30 days after receipt of notice of default thereunder from the Port Authority, (except where fulfillment of its obligation requires activity over a period of time and Continental has commenced to perform whatever may be required for fulfillment within 30 days after receipt of notice of default and continues to perform without interruption except for causes beyond Continental's control)
.. 

### 0-3

# l 

# l 

# I l

# I
J 

# ' 

# l i The Port Authority also may reallocate gates leased to Continental under the Tenilinal C ·Facility Lease to other airlines on six months' notice to Continental, if Continental does not satisfy usage requirements set forth _in the Te.rminal C Facility Lease, .Continental would be compensated by such other airlines for such aJeallocation. Continentar may terminate the Terminal C Facifity Lease prior to its expiration'if: · <! '· -, (a) Continental is prevented fromoperating its air transportation systemto and from the. Airport by reason of its inability to use a substantial part or all of the runways and taxiways {as, defined in the Terminal C Facility Lease):

. • for a period ot longer than 30 consecutive days as a result of any condition of the Airport not due to fhe fault of. Continental; or • for a period of longer than 90 2onsecutive days as a result of

# apermanent injunction issued by any court of competent jurisdiction; or ·· · •. for 'a period of longer than 90 consecutive days as a result 

## ofarJY"order, rulE¥ or· regulation 

### of a

governmental agency having jurisdiction over the operations of Continental with which Continental is unable to comply' at reasonable cost or expense; or · (b) the Port Authority falls to perform any of its obligations under the :Terminal C Facility Lease within 20 days after receipt of notice of default thereunder from Continental (except where fulfillment of its obligation requires activity over a. period of. time, and the Port Authority has commenced to perform whatever, may be required for fulfillment within 20 days after re10eipt of the notice of default and continues such performance without interruption except for causes beyond its control). However, neither Continental nor the Port Authority may terminate the Terminal C Facility Lease as to Concourse C-3 without the consent of the Trustee as long as the Leasehold Mortgage and the reletting rights of the Trustee'remain in effect · · The Terminal C Facility Lease is alsa subject to earlier termination upon the· expiration, surrender or termination of the Basic Lease. 

### The Ccmcourse A-2/C-1/C-2 Lease Agreement 

### General. The Authority will issue the Bonds in order to assist Continental-in financing, among other things, the costs of the Project, including the portion.thereof covered by the Concourse A-2/C-1/C-2 Lease Agreement (the "Concourse A-2/C-1 IC-2'prcijec.t"). Concurrently with the delive,Y oj the Bonds, Continental will sub-sublease to the Authority; and the. Authority will sub-sub-sublease back toContinental, the portion of the Leased Premises covered by the Concourse A-2/C-1/C-2 Lease Agreement, which does not include any subsurface rights (the· "Concourse A-2/C-1/C-2 Leased Premises''), and the Authority will lease to Continental the portion of ·the Leased Personal; Property· covered by the Concourse A-2/ C-1/C'2 Lease .Agreement (.the "Concourse A-2/C-1 

## iC'2 Leased Personal Property''), for which Continental will agree to pay Facility Rent-and Additional Rent. 

### Term. The terms ofthe Authority Sublease ana the Continental Sublease created by the Concourse A-2/C-.11C-2 Lease Agreement (the**·~concourse** A2/C'1/C-2 AuthoritY' Sublease", and the "Concourse A-2/C-1/C-2 Continental Sublease,'' re,pectively), and of the· Concourse A'2/C-1/C-2 Lease Agreement itself, will commence on the date of issuance of the Bonds and .unless terminated earlier on account of an Event of Default described under_"Default and Remedies" below, will terminate • • - • • • ; ' - •• • • < as follows: .· .**-~,** . (a) The Concourse A-2/C-1/C-2 Authority Sublease· will terminate on the earliestof:' · • 12:01 a.m. on September 16, 2029; ,,. ,.

the date on which no Bonds are outstanding under the Indenture; D-4

### the expiration or earlier surrender or termination of the last remaining Port Authority Lease in its entirety; • the expiration or earlier



### ~urrender.or termination of the Basic Lease; • 12:01 a.m. on tne·day after the date of the expiration of the Concourse A-21C-11C-2

Continental Sublease; ·'

·• the surrender or termination of the Concourse A-21C-1 IC-2 Continental Sublease; the rejection of the Concourse' A-21C-1 IC·2 Continental Su.blease pursuant to Section 365 of the Federal Bankruptcy Code or a similar provision of any state bankruptcy code upon or following the occurrence of an Act of Bankruptcy (as defined below, see

**"~Default** 

### and Remedies"), with respect to Continental;. or • the termination ·or revocation of the. Consent by the Port Authority pursuant to the terms

thereof. See

**"~Consent** 

### ofPort Authority" below. (b) The Concourse A:2.1C-1/C-2 Continental Sublease will terminate on the earliest of: • 11:59 p.m. on September 15, 2029;

the date on which no Bonds are outstanding under the Indenture; • 11:59 p.m. on the date prior to thi:f expiration of the last remaining Port Authority Lease in its

entirety; the earlier surrender .or termination of the last remaining Port Authority Lease in its entirety; • the expiration or earl.ier termination or surrender of the Basic Lease; • the expiration or earlier termination or surrender of the Concourse A-21C-1/C-2 Authority

Sublease; the rejection of the Concourse A-2/C-1 IC·2 Continental Sublease pursuant to Section 365 of the Federal Bankruptcy Code or similar provision of any state bankruptcy code upon or following the occurrence of an Act of Bankruptcy with respect to Continental; or • the



## terrllinati~n or revocatio'n of the Consent by. the Port Authority pursuant 

# io the terms

· thereof. See

**"~.Consent** 

### of Port Authority" below. ·

. . .. 

### (c) The expiration, termination orsurrender of one Port Authority Lease ("Lease A") in its entirety will have no effect on the term of the Concourse A-21C-1 IC-2 Authority Sublease or the

. Concourse A-2/C-11C-2Continental Sublease with respect to the Concourse A-21C-1/C-2 Leased

. Premises that is covered by the·o.tber Port Authority Lease ("Lease B") except in the case where

Lease 

## B either ( 1) contemporaneously therewith expires, terminates or is surrendered or (2) has previously expired, terminated or been surrendered, in which case, both the Concourse A·21 C-1 I C-2 Continental. Sublease and .the Concourse A,2 IC-1 I G-2 Authority Sublease will terminate on the expiration, termination. or surrender of Lease A in its entirety. , (d) Notwithstanding (a) and (b). above, the term of the Concourse A-2/C-1/C-2 Lease : Agreement with respect to the Concourse A-2/C-1/C-2 Leased Premises covenid by each Port

Authority Lease will expire with respect to such Concourse A-2/C-1/C-2 Leased Premises (1) under the Concourse A-2/C-1/C-2 Authority Sublease at 12:01 a.m. orie day prior to the expiration of the relevant Port Authority
.Lease in its entirety and immediately upon the earlier termination or surrender thereof.and 

### (2) under the Concourse A-2/C-1/C-2 Continental Sublease at 

### t 1:59 p.m. two days prior to the: expiration of such Port Authority Lease in its entirety and immediately upon the. earlier termination or surrender thereof. D-5

### ..·._ :-

**~ -~_::.~·~···_·_.** 

### :·_ **::-;.,•.:::)_.-_:~~-<~-~·.::.:._.;:{,~':~· ~-:':.:.:':·~-~;~:.::._::.:.·** 

### ..-_:;.;:__ :. **:~:~tsti~1~£f~%~IE~~Si:t~~~~;-~.**
(e) Notwithstanding (a) and (b} above or the-acknowledgment set forth under"- Subordination of Leasehold Estates" below, the term of the Concourse A-2/C-1/C-2 Continental Sublease with respect to the Concourse A:21C-1/C-2.LeasedPersoral Pr()pertywill not

**~xpi(e** in the event of: 

## .. -

**~** :·
- .. ;- .-· :

**'~** ' " -

**~-** ' 

## . .. ' :- ' the expiration, surrender, or termination of one or t:>oth of. the F?ort .Authority Leases in its or their entirety as a result of the expiration, surrender'or ter;ninfjtion of ·the Basic Lease so long as Continental continues to have permitted occupancy of·the·related portion of the Concourse A-2/C-1/C-2 Leased- Premises

**(including~** occupancy as a result of·a permitted holdover tenancy) or another areaof land fjt the Airport at whichContinental may operate the Concourse A-2/C-11c:2 Leased Personal Propeiiy'or<

.. · .. · .. - . . -, :C" ,- • the surrender, termination or expiration of

## ttie Terminal 

## AFacility Lease so long as Continental continues to have permitted occupancy

## of ihe premises leased' pursuani'the'ieto (including occupancy as a result of a permitted holdoveuenancy).or another area of land at the Airport at which Continental may operaie the Coricourse,A:2/C-1f,C.2 Leased Personal Property or • the surrender, termination or expiration of the Terminal C Facility Lease soJong as Continental

' continues to have permitted ·occupancy of the premises leased p-ursuant thereto (including

occupancy as a result of a permitted holdover_tenancy) or anoth.e' area of land at the Airport at which Continental may operate the Concourse A-2/C-1/C-2 Leased Personal Property. Obligations of Continental Unconditional

. . T[le ql)liga\ion of-.Continental to make the payments under the Concourse A-2/C-1/C-2 Lease Agreement is provided to be absolute and unconditional, regardless of any defense or rights of setoff, it being the intention of the Authority and Continental that the payments ·required thereunder will ·be•· paid in• full when due witnout· any delay or diminution whatsoever. Continental agrees (a)to rnake pq.yments to tl)e Trustee, which when added to amounts on hand in the Debt Service Fund will be sufficient to provide for the payment 

## 6f the principal, purchase price and redemption price, if any, of and interest on the Bondswhen due·, and (b). to pay to the Authority and the Trustee other amounts due under the Concourse A-2/C-1/C-2 Lease Agreement. Continental's obligation to make payments under the Concourse A-2/C-1/C-2 Lease Agreement shall survive termination of the Concourse A-2/C-1/C-2 Lease Agreeme-nt far·as long as any Bonds are outstanding under the· Indenture. · ' Continental's Obligation to Maintain Corporate Existence. During the term of the Concourse A-21 C-1/C-2 Lease Agreemeni,



### 'contin~ntal will maintain. its

### corporati/~xfstence, and will n6t;;ell, assign, transfer or otherwise dispose of (whether in 

# cine t}ansaGtion 

# or' ii(a series"of iransactions) substantially all of its assets without the priorwritten consent of the Authority, which consent shall not be withheld unreasonatii'/; prbvided, however, Continental



### nia:/~·merge with 

# or into or con-solidate ··with another entity or sell, assign, transfer or otherwise dispose of (whether irt or\e"hahsaction or i.[l a series of transactions) substantially all of its assets, 1 and the ConcbiJrse A-2/C-1' IC-2'lease Agreement may·be transferred pursuant to such merger, consolidation, sale;· assignment, transrehir other'di'spositibn without obtaining such consenl'and.without violating the Concourse A-21C-11(;-2liia?e- Agreement if' ·-· (a) Continental causes· the proposed surViving, resulting. or -transferee company to furnish the Authority and the Trustee with a change of ownership information form; (b) the



### n~t \North of the'surviving; resulting or tia_nsferee company following the merger, consolida-



### " :ticiil oi"'trajlSfer' is at least95% 

## o(the 'net woiif(of Continental immediatelyyreceding the merger, consolidation or transfer;: · 

# .. . 

### . . . 

### (c)· any litigation or' investigation in ·which the surviving,:resulting or transferee company or its '
.officers and directors are-irivorved,'-and any court, administrative or other orders to which the

·surviving; resulting or transferee c'ompany onts'officers and directors are subject1 'relate to matters assumed from Continental or arising in the ordinary 'course of business; D-6 **~'**;';;- , -c'


### (d) the Authority receives an opinion of Bond Counsel that the merger, consolidation or transfer shall not impair the excludability of interest paid on the Bonds from the gross income of the holders thereof for purposes of federal income taxation or cause a reissuance of the Bonds; (e) the surviving, resulting or transferee company assumes in writing all of the obligations of Continental under the Concourse A-2/C-1 /C-2 Lease Agreement, the Consent and the Port Authority Leases; (f) after the merger, consolidation or transfer, the Concourse A-2/C-1 /C-2 Project shall be operated as an authorized project under the Act; (g) no event of default by Continental under the Guaranty, the Indenture, ihe Lease Agreements, the leasehold Mortgage or an Administration Expense Guaranty Agreement between Continental and the Authority relating to certain administrative expenses of the Authority (the "Administration Expense Guaranty'') (collectively, the "Bond Documents'') or the Port AuthoritY Leases has occurred and is continuing; and · (h) such merger, consolidation or transfer will not cause Continental to be in default under either or both of the Port Authority Leases. CovenantAgainst 

### Sale and Removal. 

### Continental covenants in the Concourse A-2/C-1/C-2 Lease Agreement that if it disposes of any of the Concourse A-2/C-1/C-2 Leased Personal Property in exchange for cash or cash equivalents, Continental shall either (a) cause the Bonds to be redeemed pursuant to the optional redemption or extraordinary optional redemption provisions ofthe Indenture in an amount at least equal to the disposition proceeds, (b) purchase· the Bonds in the open market for delivery to the Trustee as paying agent for cancellation in the amount that will retire·all nonqualified bonds withinthe meaning ofTreasury Regulations Section 1.142-2(e) or (c) expend such disposition proceeds within six months of the date of the disposition to acquire similar replacement or other property that will constitute property thatis part of an airport or property that is functionally related and subordinate thereto within the meaning of· Section 142 of the Internal Revenue Code and continue to operate the Concourse A-2/C-1/C-2 Project as an "authorized project" under the Act. Subordination of Leasehold Estates. 

### The Authority, the Trustee (by its acceptance of the trust estate), all holders of the Bonds (by the purchase and acceptance of a Bond) and Continental acknowledge in the Concourse A-2/C-1/C-2 Lease Agreement that the Concourse A-2/C-1/C-2· Lease Agreement is subject in all respects to the terms of the Basic Lease and the Port Authority Leases and that (a) the termination, surrender or expiration of the Basic Lease or (b) the termination, surrender or expiration of both of the Port Authority Leases in their entirety having occurred whether at the same time or at different times, shall automatically result in the terminatiOn of the Concourse A-2/C-1/C-2 Lease Agreement and, further, that the termination, surrender or expiration of either Port Authority Lease in its

**ent~rety** 

### shall automatically result in the release of that portion of the Concourse A-2/C-1/C-2 Leased Premises subject to such terminated, surrendered·or expired ·Port- Authority Lease from the Concourse A-2/C-1/C-2 Lease Agreement, and from and after such expiration, surrender or termination such portion of the Leased Premises shall no longer be a part of the Concourse A-2/C,1/C-2 leased Premises. Preservation of Project as Qualified Exempt Facility. 

### Subject to "- Covenant Against Sale and Removal" above, Continental covenants in the Conqourse A-2/C-.1/C-2. Lease Agreement that if all or a portion of the Project (as defined on the date of issuance of the Bonds) no longer qualifies as an airport that is an exempt facility within the meaning of Section 142(a) (1) of the Internal Revenue Code, it will, within 90 days, either (a) cause the Bonds to be redeemed pursuant to the extraordinary optional redemption provisions of the Indenture in an amount that will retire all nonqualified Bonds within the meaning of Treasury Regulations Section

**-1.142~2** 

### (e); (b) establish a defeasance escrow within the meaning of Treasury Regulations Section 1.142-2(c) and deposit therein sufficient funds to defease all nonqualified Bonds; or (c) purchase Bonds in the open market for delivery to the Trustee as paying 

### 0-7

### agent for cancellation in the amount that will retire all nonqualified Bonds within the meamng of Treasury Regulations Section 1.142-2(e). Insurance; 

### Damage, Destruction, Condemnation and Other Payment. 

### Continental must maintain property insurance and liability insurance .in respect of the Concourse A-21C-i IC-2 

### Project in accordance with the terms of the Port Authority Leases

.. Except.to the extent the Port Authority Leases provide otherwise, if at any time during the term of the Concourse A-21C- i I

### C-2 Lease Agreement the whole or a portion of the Concourse A-21C-11C-2 

### Project is damaged or destroyed, or taken or condemned by a competent authority for any public use or purpose, or by agreement between the Port Auth"cirity and I

### or Continental and those authorized to exercise such right, or if the temporary use of the Concourse A-21 

### C-11 C-2 Project shall be so taken by condemnation or agreement, the Authority has no right or obligation to rebuild, replace, repair or restore the Concourse A-21C-11C-2 

### Project, and Continental has no obligation under the Concourse A-21C-11C-2 

### Lease Agreement to. rebuild, replace, repair or restore the Concourse A-21C-11C-2 Project. Continental is required to give written notice of sLi.ch damage, destruction or condemnation to the Authority and the Trustee, but there is to be no abatement, postponement or reduction in the rent or other amounts payable by Continental under the Concourse A-21

### C-11C,2 Lease Agreement. In the event that the whole or a part of the Project is damaged or destroyed or taken or condemned by a competent authority, and Continental elects not to rebuild, replace, repair or restore the Project, Continental must then redeem all outstanding Bonds unless it receives the opinion described in clause (b) under·"THE BONDS- Extraordinary Mandatory Redemption by the Authority" in this Official Statement. If Continental does elect to rebuild; replace, repair or restore the Concourse A-21 C-1/C-2 Project;. it.will do so at its own cost and. expense and shall not by reason of payment of any excess cos.ts be entitled to reimbursemenHrom the Authority, the Trustee or any Bondholder, nor shall the rent or other amounts payable by Continental under the Concourse A-21 C-i IC-2 

### Lease Agreement be abated, postponed or reduced. Any proceeds received by or payable to Continental or the Authority as a result of such damage, destruction or condemnation (whether from insurance, as a condemnation award or otherwise) will be paid to Continental and applied in accordance with the terms of the .Port Authority Leases. Holders of the Bonds will have no pledged or other security interest in the proceeds of any insurance or condemnation awards received or receivable by Continental or the Authority. Indemnification and Expenses of the Authority, the Tender Agent and the Trustee. 

### Continental agrees to indemnify and hold harmless the Authority, any person who "controls" the Authority (within the meaning of Section 15 of the Securities Act of 1933, as amended), the Trustee, the Tender Agent, the Paying Agent, the Registrar and any member, principal, officer, director, official, employee, agent and attorney thereof or of the Authority or- the State of New Jersey from any loss, claim, damage or liability (including all·costs, expenses and reasonabl.e counsel. fees incurred in investigating or defending such claim), caused by, relating to, arisingoufof; resulting from, or in any way connected with (a) the condition, use, ownership, possession, conduct, management, planning, design, acquisition, construe-. lion,.installation or financing (except with respect .to information provided by the Authority under the captions "THE AUTHORITY" and., "NO LITIGATION" (as it relates to the Authority) in this Official Statement) of the Concourse A-21C-11G-2 Project or any part thereof including the payment of rebatable arbitrage to.· the United. States federal-gove.mment; or, (b) any untrue statement of 

### a material fact contained in information provided by Continental with respect to the transactions contemplated by the Concourse A-21C-i IC-2 

### Lease Agreement; or (c) any omission of any material fact necessary to be stated therein in order to make any such statement not misleadirig or incomplete (except with respect to information provided by the Authority under the captions "THE AUTHORITY" and "NO LITIGATION" (as it relates to the Authority) in this 'Official Statement), except to thfr extent cei.used by the gross negligence or willful misconduct of an indemnified party. · As part of the Addtt'1onal Rent, Continental agrees to pay_the administrative fees and expenses of the Authority incurred in connection with the issuance of the Bonds and the performance by the Authority of its duties under the Concourse A-21

### C-1/C-2 Lease Agreement and the Indenture. Continental agreeS to pay the Trustee's and the Tender Agent's compensation and expenses under the Indenture.0 " Assignment and Amendment of the Concourse A-2/C-1 /C-2 Lease Agreement Except in the circumstances described above under "-Continental's Obligation to Maintain Corporate Existence" and in accordance with the Leasehold Mortgage, Continental may not assign the Concourse A-21 C-1/ c,2 Lease Agreement in wholeor in part or sublease its_interest inthe Concourse A'2lC-11C-2 Project in whole without the pri'or written consent of the Autho'rifY, ·which consent may not**b~** unreasonably withheld. No consent of the Authority will be required for ·any assignment to an affiliate of Continental, provided however, that Continental remains jointly and severally liable with the proposed assignee. With respect to any subletting in whole or in part of the Concourse A-21C-11C-2 Project or any permitted assignment of the Concourse A-2/ C-1/C-2 Lease Agreement, Continental shall nevertheless remain liable to the Authority for the payment of all rent and for the full performance of all of the terms, covenants and conditions of the Concourse A-2/C-1/C-2 Lease Agreement and of any other Bond Document to which it is a party. The Concourse A-2/C-1/C-2 Lease Agreement may be amended only with the written consent of the Authority, Continental and the Trustee and in accordance with the provisions of the Indenture, as described under "THE INDENTURE- Amendments to the Lease Agreements, the Leasehold Mortgage or the Guaranty" in this Appendix D. Assignment ofAuthority's Interest in Concourse A-2/C-1 /C-2 Leased Premises. The Authority may not assign or transfer the Concourse A-21 C-1 IC-2 Lease Agreement, or the rents to be received thereunder, without the consent of Continental and the Trustee except to the Trustee as provided in the Indenture and the Concourse A-21C-1/C-2 Lease Agreement Release ofPortions ofthe Concourse A-2/C-1 /C-2 Leased Premises. The Authority and the Trustee will, upon written direction from Continental (as long as there is no uncured event of default under the Concourse A-2/C-1/C-2 Lease Agreement) or upon direction from the Port Authority with the consent of Continental, grant such rights of way or easements over, across or under the Concourse A-2/C-1/C-2 Leased Premises, or grant such permits or licenses with respect to the use thereof, free from the terms and conditions of the Concourse A-2/C-11 C-2 Lease Agreement a's shall be necessary or convenient for the operation or use of the Concourse A-2/C-1/C-2 Project or desirable for the use by Newark, the Port Authority or a public utility of another parcel of property at the Airport; provided, that in order to grant such ·rights of way, easements, permits or licenses, the Authority and the Trustee must receive (a) a certificate froin Continental to the effect that such grant will not materially adversely affect the use or operation of the Concourse A-2/ C-1/C-2 Project and (b) an opinion of afirm with a national reputation in the field of municipal finance law selected by .Continental and reasonably acceptable to the Authority to the effect that such grant is permitted by the Act, the Indenture and the Concourse A-2/C-1/C-2 Lease Agreement, and will notfor purposes offederal income taxation adversely affect the exclusion from gross income of interest on the Bonds. Additionally, as long as there is no uncured event'of default under the Concourse A-2/C-1/C-2 Lease Agreement or if directed bythe Port Authority, Continental may direct the Authority and the Trustee to release and remove from the Concourse A-2/C-1/C-2 Lease Agreement any unimproved partof the Concourse A-2/C-11C-2 Leased Preniises;-provided, that in order to release and remove such. Concourse·A-2/C-1/C-2 Leased Premises, the Authority and the Trustee must receive (x) a certificate from Continental to the effect that such release or removal will not materially adversely affect the use or operation of the Concourse A-2/C-1/C-2 Project and· (y) an opinion of a firm with a national reputation in the field of municipal finance law selected by Continental and reasonably acceptable to the Authority to the effect that such release or removal is permitted by the Act, the Indenture and the Concourse A-2/ C-1/C-2 Lease Agreement, and will not for purposes of federal income taxation adversely affect the exclusion from gross income of interest on the Bonds. Tax Covenant Except as otherwise expressly permitted by the Bond Do.cuments, Continental and the Authority agree not to take any actlon or fail to take any action that would cause the interest paid on the Bonds to be included in gross income for federal income·tax purposes under the Internal Revenue Code as in effect on the date of issuance of the'Bonds, except during a period in which any Bond is held D-9by a '.'substantial user" of a facility financed with the proceeds of the Bonds or "related person" to such "substantial user" within the meaning of Section 14T(a) of the Internal Revenue Code. Neither the Authority nor Continental shall have any liability to Bondholders or the Trustee or otherv.iise as a result of its or their failure to comply with this covenant, exceptthat in the event of a Determination ofTaxability, the ·Bonds will be'subject to redemption as described iii this Official Statement under "THE BONDS- SpeciaiRedemption Upon a Determination ofTaxability". 

### ·... . Public Purpose Covenant. Continental covenants to operate and maintain the Concourse A-2/C-1/ C-2 Project 

### tis provided in the Concourse A-2/C-1./c:2 Lease Agreementand to maintain and preserve the Concourse'A-2/C-11C'2 Project as an authorizedprojectunder the Act' · · Default and Remedies. The Concourse.A-21C-1/C-2 Lease Agreement provides that any Dne or rnore of the following constitutes an "Event of Default" thereunder: · ·• (a) any material representation or warranty by or on behalf of Co.ntinental made .in the Concourse A·21C-11C-2 Lease Agreement or. in any report, certificate, financial statement or other

. instrument furnished in connection with the Concourse A-2/C-liC-2 Lease Agreement proves to

have been false or misleading in any material respect when made; or (b). default in the payment of principal, purchase price or redemption price, if any, of or interest on the Bonds when due; provideq that such a default will. not occur until jive Business Days after such payment is due; or (c) except as provided in clause (b) above,·default in the duEi payment of any other amounts or the due observance or performance of any other covenants, conditions or agreements on the part of Continental requ(red to be observed. or performed pursuant to the terms of the Concourse A-2/ C-1/C-2lease Agreement or pursuant to any. certificate or other instrument furnished in connection with the Concourse A-2/C-1/C-2 Lease Agreemen·t (including .the Administration Expense Guar- ·anty) and continuation of the detaul( unremedied for 

## 3o days aflerwritten notice thereof to Continental from the Authority or the Trustee, provided that if said default cannot be correCtedwithin such period it will not constitute an Event of Default if corrective action is
..institwted by Continental within such period and diligently pursued .until the default is corrected; and provided further that in no event will the failure of Continental _to, comply with and carry out the provisions of the continuing disclosureagreement described in Appendix C hereio be deemed to constitute an Event of Default
· under the Concourse A-2./C-1 IC-2 Lease Agreement; or

. . ' 

## . . · ·(d) the occurrence· of any event of'default under the Indenture; or

. 

### .

**·-~~** (e) .,either ( 

### 1) a petition in bankruptcy is filed by> Continental under the federal or a state bankruptcy code or .a receivership, .c_onser.vatorship, insolvency; assignment for the benefit. of creditors 

### or other similar proceeding·;is commenced by Continental under the federal or. a state bankruptcy code or (2) a petition,:in ban.kruptcy .is tiled against Continenta.l under the federal or a state bankruptcy code or a receivership, conservatorship, insolvency, assignment ofthe benefit of creditors or other similar proceeding is commenced against Continental under the federal or 

### a state bankruptcy code which is (x). consented to or nottimely contested by Continental,. (y) results in the entry of an order for relief or (z) is not dismissed within 

### 60 days (each, 

### an '.'Act of Bankruptcy" of Continental). Upon the occurrence of an Event of-Default under·lhe Concourse A-2/.C'1/C-2 Lease Agreement, and at any time thereafter during the continuance of such Event of" Default, the Authority and Ior the Tnustee, as assignee of the Authority, may take one or more of the following remedial steps without limiting any rights and remedies that may be·available under the'Leasehold Mortgage: (a) subject to the terms of the Indenture, in tne case of a default in the payment of principal of or interest on the Bond.s when due, declare the entire unpaid· amount payable under the ConD-10course A-2/C-1 IC-2 Lease Agreement to be immediately due and payable, whereupon such amount shall become due and payable, without presentment, demand, protest or other notice of any kind; or (b) subject to the limitation on interests, rights and remedies described under"- Consent of Port Authority" and to the terms of the Indenture, take any action at law or in equity to collect the payments then due and thereafter to become due under the Concourse A-2/C-1/C-2 Lease Agreement or to enforce performance and observance of any obligation, agreement or covenant of Continental under the Concourse A-2/C-1/C-2 Lease Agreement; or (c) after 30 days: notice to. Continental by the Authority or Trustee, perform for the account of Continental any covenant in the performance of which Continental is in default without entry on the Concourse A-2/C,1/C-2 Leased Premises or make any payment for which Continental is in default; provided, however, that the Authority shall have no right to cure a default, breach or performance

. obligation· of Continental under either of the Port Authority Leases. Continental shall pay to· the

Authority and the Trustee upon demand any amount paid by them in the performance of such covenant and any amounts which shall have been paid by reason of failure of Continental to comply with any covenant or provision of the. Concourse A-2/C-1/C-2 Lease Agreement, including reasonable counsel fees incurred in con.nection with the prosecution or defense of any proceedings instituted by reason of default of Continental, plus interest in accordance with the Concourse A-2/ C-1/C-2. Lease Agreement; or (d) discontinue disbursement of any portion of the Bond proceeds. ln. addition to other remedies permitted by law, subject to the limitations described under"- Conse.nt,.of Port Auttioiity- Limitation. on Interests, R.ights and Remedies", the following .constitute additionalandexclusive remedies of the Authority.

. (a) Continental shall, at the direction of the Authority, prepay all amounts due 'under the Con·course A-2/C-1/C-2 Lease Agreement in fuli together with interest accrued and to accrue to the redemption date upon the occurrence of any of the following: ( 1) Continental ceases to operate the Project or ceases to cause the Project to be operated as an authorized project under the Act, in ·either case, for twelve consecutive months, ·without first obtaining the written consent of the Authority, (2) an Event of Default described under clause (a) of the d-efinition of "Event of Default" above or described in clause (a) of the definition of "Event of Default" in "-The Concourse C-3 Lease Agreement" tielow, (3) Continental ceases to maintain or cause to be maintained the liability insurance required by the Lease Agreements·for the benefit of the Authority for 30 .consecutive days alternotice of such failure by the Authority and three Business Days to· cure or (4) the Authority is ·uniible to exercise its right to specific performance'of any covenani

..of Continental pursuant to the Lease Agreements due to the fact that such specific performance would constitute a breach or default of or would conflict with or violate the Port Authority Leases or either of them or involve the specific enforcement of any covenant of Continental under the Bond Documents relating to or of a property interest ifthe performance of such covenant would constitute a breach of the Port Authority · Leases or either of them. The Authority shall give notice to Continental and the Trustee of any such occurrence whereupon the Trustee shall give notice to the Bondholders of the redemption, of the Bonds pursuant to the terms of the Indenture and will set a

**red~mption** date pursuant to the terms of the Indenture, but in no event later than 60 days alter the Authority gives notice to the Trustee of the · · occurrence. (b) In addition to the .remedy specified in paragraph (a) above, if Continental commits a breach or threatens to commit a breach of any of the provisions of the Concourse A-2/C-1/C-2 Lease Agreement or any of the other Bond Documents, the Authority shall have the right and remedy, without posting bond or other security, to have the provisions of the Concourse A-2/C-1/ C-2 Lease Agreement specifically enforced by any court having equity jurisdiction, Continental having acknowledged and agreed that any such breach or threatened breach will cause immediate and irreparable injury to the Authority and that money damages will not provide an adequate remedy. D-11therefor; provided; however, the Authority shall not exercise any right of specific performance if such

..performance would constitute a breach or default of or be in conflict With or violate the Port Authority

Leases or either of them nor shall the Authority have any right to specifically enforce any covenant of
·

### Coniine~ta! underthe 'Bond Documents relating to_ or of a property interest if

### th~ 'performance of

such_covenant would 'constitute a breach of Pori Authority Leases or either of them. The liability

### ol the

### A~thority**u~de[\he** Concourse A-2/C-

### i1 C-2 Lease Agreement Shall be limited to the Authority's interest in the Concourse A-2/C:1/C-2 Lease Agreement and there 'shall be no other recourse·.against the Authority, its·members, officers, and employees, past, present'or future, or against the properties .or any other· projects·.of the Authority. In the performance of the agreements: of the Authority contained in the Concourse A-2/C-.1/C-2 Lease Agreement, any obligation it may'incur for the payment of money.shall nbt be a debt or obligation of the State of New Jersey or any political subdivision thereof. The Authority does not assume general liability for the repayment of the Bonds or for the costs, fees, penalties, taxes, interest;chargesi insurance, or any other payments· recited in the Concourse A-2/ · C- 1IC'2 Lease Agreement, but shall be obligated to pay the same only out otthe amounts payable by Continental underthe Lease Agreements. The Authority shall not be required to do any act whatsoever or exercise any diligence whatsoever to. mitigate the damages to Continental iUm Event of Default shall occur under ·the Concourse- A-2/C- 1/C-2 Lease• Agreement Nothing iri the Concourse A-2/C- 1/C-2 Lease Agreement shall preclude Continental from proceeding againstthe Authority for specific performance (or other equitable rE!medy in the nature of specific performance) of the Authority's obligations under the Concourse A-2/C-i./C-2 Lease Agreement · · - THE STATE OF NEW JERSEY IS NOT OBLIGATED TO PAY, AND NEITHER THE FAITH AND CREDIT NOR TAXING POWER OF THE STATE OF NEW JERSEY IS PLEDGED TO THE PAYMENT OF, THE PRINCIPAL, PURCHASE PRICE OR REDEMPTJON PRICE, IF ANY, OF OR INTEREST ON THE BONDS. THE. BOND$ ARE**S~ECIAL,** LIMITED OBLIGATIONS OF THE AUTHORITY, PAYABLE SOLELY OUT OF THE REVENUES OR OTHER RECEIPTS, FUNDS OR MONEYS OF THE AUTHOR

# tTY PLEDGED UNDER. THE INDENTURE AND FROM ANY AMOUNTS OTHERWISE AVAILABLE UNDER THE INDENTURE FOR THE PAYMENT OF THE BONDS. THE BONDS DO NOT N.OW AND SHALL NEVER CONSTITUTf: A CH,ARGE AGAINST THE GENERAL CREDIT OF THE AUTHORITY. THE AUTHORITY HAS NO TAXING POWER. Notwithstanding anything to the contrary contained in theConcourse A-2/C-1/C:2 Lease Agreement, upon,the.9ccurrence of an Event of Default by Continental,un_der the Concourse A-2/ C'1/C-2 Lease.-Agr.eelllerit, theAuthority- shall, have rio right or obligation to re-let the Leased Premises or, otherwise_ lie ieq.,ired to mitigate 11ny. damages to Continental as_ a result of_ such Event.

# ofDefauli.

. . . '
. . . .. . . . -· . . ·,. - 

# . i ;'·
.. ·, ro· The

### Concour~e C;;l LeaseAgreellJent.



### '

## Ge~era/,' The

## A~thoritywill issuethe Bonds in order to assist Continental in financing, among other things: the

### cost~: of-the Project, including the portion thereot'covered by the Concourse C-3 Lease Agreement (thEl ''Concourse C:3

### ~roject:') _Concurrently with the delivery of the Bonds, Continental will sub-sublease to the-AuthoritY, an·d the-Authority will sub-sub-suplease back to Continental,_ the portion of the Leased Premises covered by

### th~ Concourse C-3 Lease Agreement, which does noi .include any subsurface rights (the "Concourse C-3 Leased Premises"), and the Authority will lease to Continental the portion of the Leased Personal Property-' covered by the Concourse· C-3 Lease Agreement (the ''Concourse C•3' Leased' Personal Property"), for which C6ntinental will agree to pay Facility Rent and Additional Rent:- ·· · 

### Term. The terms of.the Authority Sublease and the Continental Sublease created by the Concourse C-3 ·Lease Agreement' (the. "Concourse C-3 Authority Sublease" and the "Concourse C-3 Continental Sublease'',. respectively), and ofthe Concourse C-3 Lease Agreement itself, will commence D- 12on the date of issuance ot the Bonds and unless terminated earlier on· account of an Event of Default described under "Default and Remedies" below, will terminate as follows: (a) The. Concourse C-3 Authority Sublease will terminate on the earliest of: • 12:01 a.m. on September 16, 2029; • the date on which no Bonds are outstanding under the Indenture;

the expiration or



## e~rlier surrende.r



## ~r termination of the Terminal C Facility Lease in its entirety;
• the expiration or earlier surrender or termination of the Basic Leese;
• 12:01 a.m. on the.day aitertlie date of the expiration of the Concourse C-3



### Cq~tinental

Sublease; the surrender or termination of the Concourse C-3 Continental Sublease; the rejection of the Concourse C-3 Continental Sublease pursuant to.Section 365 of the Federal·

**Bi~nkruptcy** Code or a similar provision of any state bankruptcy code upon or following' the occurren'ce of an Act of Bankruptcy with respect to· Continental; or the termination or revocation of the Consent by the Port Authority pursuant to the terms thereof. See

**':_~Consent**of Port Authority" below. (b) The Concourse C-3 Continental Sublease will terminate on the earliest of:
• 11:59



### P·ni·.o~ **S~ptember15,** .2029;

the date on which no Borid.s are outstanding



### ~ndei the Indenture;


### • ·t1 :59'p.m. on the date prior to the expiration- 

### cit the Terminal C Facility Lease in its entirety;

the earlier surrender or termination of the Terminal C Facility Lease in its entirety; the expiration or earlier termination or surrender of the Basic Lease; the expiration or earlier termination or surrender of the Concourse C-3 Authority Sublease; the rejection of the Concourse C-3 Continental Sublease pursuant to Section 365 ·of the Federal Bankruptcy Code or similar provision of any state bankruptcy code upon or following the occurrence olan· Act of Bankruptcy with respect to Continental; 

# or the termination or revocation of the Consent by the Port Authority pursuant to the terms thereof. See "-Consent of Port Authority'; below. · · · ' .

**.-~** . . '• ' . . . - .

**~-** 

## .' - . ·(c) Notwithstanding:(a) and (b) above, the term ofthe Concourse C-3 Lease Agreement with respect to the Concourse C-3 Leased Premises covered by the Terminal C Facility Lease will expire with respect to ·such Concourse C-3 Leased_ Premi.ses (1) under the Concowrse' C-3 Authority

.. Sublease at 12:01 

# a.m. one day·prior to' the expiration of the Terminal C Facility Lease in its entirety

and immediately upon the earlier termination or surrender thereof and (2) under the Concourse C-3 ·Continental Subleasec at 11:59 p.m. two days prior t.o.the expiration of the Terminal C Facility Lease in its entirety and immediately upon the earlier termination or surrender thereof. (d)· Notwithstanding. (a)• and (b) above and the acknowledgment set forth under"- Subordination of Leasehold Estates" below, the term of the Concourse C-3 Continental Sublease with respect to the Concourse C-3 Leased Personal Property will not expire in the event of:

. . . ' 

### . . . . . ·- . . . . 

## . . the expiration, surrender, or termination of the Terminal C Facility Lease in its entirety as a result of the expiration, surrender or termination of the Basic Lease so long as Continental continues to have ·permitted· occupancy of- the related-portion of the Concourse C-3 Leased Premises (ihduding occupancy as a result of a·permitted holdover tenancy) or another area or land at the Airport at which Continental may operate the Concourse C-3 Leased Personal Property or D-13. • the expiration, surrender, or termination of the Terminal C Facility Lease in its entirety so long as Continental continues to have permttted. occupancy of the premises leased pursuant thereto (including occupancy as a result of a permitted holdover tenancy) or another area or land at the Airport ai whicn Continental may operate the Concourse C-3 Leased Personal Property. Obligations of Continental Unconditional. The obligation of Continental to make the payments under the Concourse C-3 Lease Agreement is provided to be absolute and unconditional, regardless of any defense or rights of setoff, it being the intention of the Authority and Continental that the payments required thereunder will be paid in full when due withdut any deiay or diminution whatsoever. Continental agrees (a) to make payments to the Trustee, which when added to amounts on handin the Debt Service Fund will be sufficient to provide for the payment of the principal, purchase price and redemption price, if any; ·of and interest ori th.e Bonds wheri""due, arid (b) ·to pay to the Authority and theTrustee other amounts due under the Concourse C-3 Lease Agreement. Continental's obligatiorf to make payments under the Concourse C-3 lease Agreement shall survive termination of the Concourse C-3 Lease Agreement for as long ·as· any Bonds are outstanding wider the Indenture.

. .Contine(lta/'s Obligationio.Maintain Corporate Existence. During theterm of the c;oncourse C-3 Lease Agreement,. Continental will maintain its.corporate existence, and will not sell, assign, transfer or otherwise dispose· of (whether in one.



### trans~ction or··in a series of transactions) substantially all of its assets without the prior written consent of the Authority, which consent shall not be withheld unreasonably; provided, however, Continental may merge with or into or consolidate with'another entity or sell, assign, transfer or otheiwise dispose

### of (whether in one transaction or ·,n a series of transactions) substantially all of its assets, and the Concourse C-3 Lease Agreement may be transferred pursuant to such merger, consolidation, sale, assignment, transfe(. or other disposition without obtaining such consent and without violating the Consourse,C-3 Lease Agreement if;

.. (a). Contin.ental causes the proposed surviving, resulting or transferee company to furnish the Autho.rity and the Trustee with a change of ownership information form; (b) the net worth of the surviving, resulting or transferee company following the merger, consolidation or transfer is ·at least 95% of the net worth of Continental immediately preceding the merger, consolidation qr transfer; (c) any litigation or investigation in which the surviving, resulting or transferee company or its ·officersand directors are invoived, and any court, administrative or other orders to which the surviving, resulting. or transferee company or its officers and directors are subject, relate to matters assumed from Continental or aiising in the ordinary course of business; (d) 

### (e) the Au.tliority receives an



### opini~n ·at Bond ·Counsel that the merger,



### co~solidation or transfer shall not impair the excludability of interest' paid on the Bonds from the gross income of the holders thereo'f for purposes of federal· income· taxation or cause a reissuance of the Bonds; th:e ,SUNiVing, 'resQiting N,transfefee Company assumes in writing 

### aiJ Of the Obligations Of Continental "under the Concourse C-3 Lease Agreemenf, 'the Consent and the Terminal C

**Fa~ilii]** Leas'l; · · · · ·. , , · · · · (f). 'after the-merger, consolidation or transfer, the Concourse C-3 Project shall be operated as an authorized project under the Act; (g) no event of default by Continental under the Bond Documents or the·Terminal C Facility Lease has.accurred'and is continuing; and ( h

### J such



## ~~rg·er, consolidation or transfer will not cause



## continent~! to be in default under the Terminal C Facility Lease

.

..

Covenant Against Sale and Removal. Continental covenants in the Concourse C:3 Lease Agreement thi)t i,f 

### it disposes of any ofthe Concourse C-3 Ueased);'ersonal Property in exchange for cash or cash equivaiEmts, Continertte.l shall either (a) .cause the Bonds to be redeemed pursuant to the optional D-14redemption or extraordinary optional redemption provisions of the Indenture in an amount at least equal to the disposition proceeds, (b) purchase the Bonds in the open market for delivery to the Trustee as paying agent for cancellation in the amount that will retire all nonqualified bonds within the meaning of Treasury Regulations Section 1.142-2 (e) or (c) expend such disposition proceeds within six months of the date of the disposition to acquire similar replacement or other property that will c-onstitute property that is part of an airport or property that is functionally related and subordinate thereto within the meaning of Section 142 of the Internal Revenue Code and continu·e to operate the Concourse C-3 Project as an "authorized project" under the Act 

### Subordination of Leasehold Estates. The Authority, the Trustee (by its acceptance of the trust estate) , all holders of the Bonds (by the purchase and acceptance of a Bond) and Continental acknowledge in the Concourse ·c-3 Lease Agreement that the Concourse C-3 Lease Agreement is subject in all respects to the terms of the Basic Lease and the Terminal C Facility Lease and that (a) the termination, "surrender or expiration of the Basic Lease or (b) the termination, surrender or expiration of the Terminal C Facility Lease in its entirety shall automatically result in the termination of the Concourse C-3 Lease Agreement. 

### Preservation of Project as Qualified Exempt Facility. Subject to "- Covenant Against Sale and Removal" above, Continental covenants in the Concourse C-3 Lease Agreement that if all or a portion of the Project (as defined on the date of issuance of the Bonds) no longer qualifies as an airport that is an exempt facility within the meaning of Section 142(a) (1) of the Internal Revenue Code, it will, Within 90 days, either (a) cause the Bonds to be redeemed pursuant to the extraordinary optional redemption provisions of the Indenture in an amount that will retire all nonqualified Bonds within the meaning of Treasury Regulations Section 1,142-2(e); (b) establish a defeasance escrow within the meaning of Treasury Regulations Section 1. 142-2(c) and deposit therein sufficient funds to defease all nonqualified Bonds; or (c) purchase Bonds in the open market for delivery to the Trustee as paying agent for cancellation in the amount that will retire all nonqualified Bonds within the meaning of Treasury Regulations Section 1,142-2 (e), 

### Insurance; Damage, Destruction, Condemnation and Other Payment. Continental must maintain property insurance and liability insurance in respect of the Concourse C-3 Project in accordance with the terms of the Terminal C Facility Lease. Except to the extent the Terminal C Facility Lease provides otherwise, if at any time during the term of the Concourse C-3 Lease Agreement the whole or f! portion of the Concourse C-3 Project is damaged or destroyed, or taken or condemned by a competent authority for any public use or purpose, or by agreement between the Port Authority and I or Continental and those authorized to exercise such right, or if the temporary use ofthe Concourse C-3 Project shall be so taken by condemnation or agreement; the Authority has no right or obligation to rebuild, replace, repair or
· restore the Concourse C-3 Project, and Continental has no obligation under the Concourse C-3 Lease

Agreement to rebuild, replace, repair or restore the Concourse C-3 Project. Continental is recuired to give written notice of such damage, destruction or condemnation to the Authority and the Trustee, but there is to be no abatement, postponement or reduction in the rent or other amounts payable by Continental under the Concourse C-3. Lease Agreement In the event that the whole or a part of the Project is damaged or destroyed or taken or condemned by a competent authority, and Continental elects not to rebuild, replace, repair or restore the Project, Continental must then redeem all outstanding Bonds unless it receives the opin,ion described in clause (b) under "THE BONDS- Extraordinary Mandatory Redemption by the Authority" in this Official Statement If Continental does elect to rebuild, replace, repair or restore the Concourse C-3 Project, it will do so at its own cost and expense and in accordance with the terms of the Terminal C Facility Lease and shall not by reason of payment of any excess costs be entitled to reimbursement from the Authority, the Trustee or any Bondholder, nor shall the rent or other amounts payable by Continental under the Concourse C-3 Lease Agreement be abated, postponed or reduced_ Any proceeds received by or payable to.Continental or the Authority as a result of such damage, destruction or condemnation (whether from insurance, as a condemnation award or otherwise) will be paid to Continental and applied in accordance with the terms of the Terminal C Facility Lease. Holders of D- 15the• Bonds will haye nO' pledged or other security interest in the proceeds of any insurance or condemnation awards received or receivable by Continental or the Authority. Indemnification and E;penses of the Authority, the Tender Agent and the Trustee. Continental agrees to indemnify and hold harmless.the Authority, any person who "controls" the



### Auth~rity (within t(1e meaning ofSection 15 of the Securities ACt of 1933, as amended), the Jrustee, the Tender Agent, the Paying Agent and the Registrar and any member, principal, officer, director, official, employee, agent and attorney-thereof or of the Authority or the State of New Jersey from any loss, .claim, damage or liability (including all costs, expenses and reasonable counsel fees incurred in investigating or defending such claim), caused by, relating·to, arieing out of. resulting from, or in any.way connected with (a) the condition, use, ownership, possession, conduct, management, planning, design, acquisition, construc.- tion, installation,or financing (except with respect to Information provided by the Authority under the captions 'THE AUTHORITY" and ."NO LITIGATION". (as it relates to the Authority)_in this Official Statement) of theConcourse C-3 Project or any part thereof including thE! payment of rebatabie arbitrage to the United States federal government: or (b) any untrue statement of a material fact contained in information provided by Continental with respect to the transactions contemplated by the Concourse C-3 Lease Agreement: or (c) any omission of any material fact necessary to be stated therein in order to make any such statement not misleading or incomplete (except with respect to information provided by the. Authority under the captions 'THE AUTHORITY" and "NO LiTIGATION" (as it relates to the Authonty) in this Official Statement), ·except to. the extent caused by the gross negligence or willful misconduct of an indemnified party
.. As part ofthe Additional Rent. Continental agrees to pay the administrative fees and expenses ofthe Authority incurred in connection with the issuance of the Bonds and the performance by the Authority of ·,ts duties under the Concourse C-3 Lease Agreement and the Indenture. Continental agrees to pay the Trustee's and Tender Agent's compensation and expenses under the Indenture. Assignment andAmendmentofthe Concourse C-3 Lease Agreement. Except in the circumstances described above under"- Continental's Obligation to Maintain Corporate Existence" and in accordance with the Leasehold Mortgage, Continental may not assign the Concourse C-3 Lease Agreement in whole or in part or sublease its interest in the Concourse C-3 Project in whole without the prior written consent of the Authority, which consent may not be unreasonably withheld. No consent of the Authority will be reqvired for any assignment to an affiliate of Continental, provided however, that Continental remains jointly andseverally liable with the proposed assignee. ·With respect to any subletting in whole or in part ofthe Concourse C-3 Project or any permitted assignmentof the Concourse C-3 Lease Agreement, Continental shall nevertheless remain liable to the Authority for the payment of all rent and·for the full performance of all of the terms, covenants and conditions of the Concourse C-3 Lease Agreement and ofany other Bond Document to which it is a party.

. . . 

### -. . . 

### ·-
. - . The Concourse C·3 Lease Agreement may be amended only with the written consent of the Authority, Continental and. the :Trustee and in accordance with the provisions of: the Indenture, as described under "THE INDENTURE **~.Amendments** to the Lease Agreements, the Leasehold Mortgage or the Guaranty" in this Appendix D. Assignment of Authofity's Interest in.Concourse C-3 Leased Premis.es

.. The Authority may not assign or transfer the Concourse C-3 Lease Agreement. or the rents to _be (eceived thereunder, without the consent of Continental and the Trustee except tci the Trustee as providec;l_in the Indenture and the Concourse C-3 Lease Agreement. · Release ofPortions of the Concourse C-3 Leased Premises. The Authority and the Trustee will, upon written direction from·· Continental (as long as there is no uncured event of default under the Concourse C-3 Lease Agreement) .or upon direction from the Port .Authority with the consent of Continental, grant such rights of way or easements over, across or under the Concourse C-3 Leased Premises, or grant such permits or licenses w'1th respect to the use thereof, free from the terms and conditions of the Concourse C-3 Lease Agreement as shall be micessary 

### or convenient for the operation D-16or use of the Concourse C-3 Project or desirable for the use by Newark, the Port Authority or a public utility of another parcel of property at the Airport; provided, that in order to grant such rights of way, easements, permits or licenses, the Authority and the Trustee must receive (a) a certificate from Continental to the effect that such grant does not materially affect the use or operation of the Concourse C-3 Project and (b) an opinion of a firm with a national reputation in the field of municipal finance law selected by Continental and reasonably acceptable to the Authority to the effect that such grant is permitted by the Act, the Indenture and the Concourse C-3 Lease Agreement, and will not for purposes of federal income taxation adversely affect the exclusion from gross income of interest on the Bonds. Additionally, as long as there is no uncured event of default under the Concourse C-3 Lease Agreement or if directed by the Port Authority, Continental may direct the Authority and the Trustee to release and remove from the Concourse C-3 Lease Agreement any unimproved part of the Concourse C-3 Leased Premises; provided, that in order to release and remove such ·concourse C-3 Leased Premises, the Authority and the Trustee must receive (x) a certificate irom Continental to the effect that such release or removal will not m"aterially adversely affect the use 

### oi operation of the Concourse C-3 Project and (y) an op·lnion of afirm with a national reputation in the field of muh·lcipal finance law selected by Continental and reasonably acceptable to the Authority to the effect that such release or removal is permitted by the Act, the Indenture and the Concourse C-3 Lease Agreement, and will not for purposes of federal income taxation adversely affect the exclusion from gross income of interest on the Bonds. Tax Covenant. Except as otherwise expressly permitted by the Bond Documents, Continental and the Authority agree not to take any action or fail to take any action that would cause the interest paid on the Bonds to be included in gross income for federal income tax purposes under the Internal Revenue Code as in effect on the·date of issuance of the Bonds, except during a period in which any Bond is held by a "substantial user" of a facility financed with the proceeds of the Bonds or "related person" to such "substantial user" within the meaning of Section 147(a) of the Internal Revenue Code. Neither the Authority nor Continental shall have any liability to Bondholders or the Trustee or otherwise 

### as a result of its or their failure to comply with this covenant, except that in the event of a Determination of Taxability, the Bonds will be subjectto redemption as described in this Official Statement under "THE BONDS - Special Redemption Upon a Determination of Taxability". Public Purpose Covenant. Continental covenants to operate and maintain the Concourse C-3 Project as provided in the Concourse C-3 Lease Agreement and to maintain and preserve the Concourse C-3 Project as an authorized project under the Act. Default and Remedies. The Concourse C-3 Lease Agreement provides that any one or more of the following constitutes an "Event of Default" thereunder: (a) any material representation or warranty "by or on behalf of Continental made in the Concourse C-3 Lease Agreement or in any report, certificate, financial statement or other instrument furnished in connection with the Concourse C-3 Lease Agreement proves to have been false or misleading in any material respect when made; or

· (b) default in the payment 

### cit prinCipal, purchase price or redemption price, if any, of or interest on lhe Bonds when due; provided that such a default will not occur until five Business Days after such payment i_s due; or (c)- except as provided in clause (b) above, default in the due payment of any other amounts or the due observance or performance of any other covenants, conditions or agreements on. the part of Continental required to be observed or performed pursuant to the terms of the Concourse C-3 Lease Agreement or. pursuant to any certificate or other instrument furnished in connection with the Concourse C-3 Lease Agreement,(including the Administration Expense Guaranty) and continuation of the default unremedied for 30 days after written notice thereof to Continental from the Authority or.the Trustee, provided that if said default cannot be corrected within such period it will not constitute an Event of Default if corrective action is instituted by Continental within such period and diligently pursued until the ·default is corrected; and provided further that in no event will the failure of Continental to comply with and carry out the provisions of the continuing disclosure D-17" ' 

### agreement described in Appendix C hereto be deemed to constitute an Event of Default under the Concourse C-3 Lease Agreement; or (d} the occurrence of any event ofdefault under the Indenture; or (e) the occurrence of an Ad oi Bankruptcy by Continental. Upon the occurrence of an Event of Default under the Concourse C-3 Lease Agreement, and at any time thereafter during the continuance of such Event of Default, the Authority and/or. the Trustee, as assignee of the Authority, may take one or more of the following remedial steps without limiting any rights and remedies that may be available under the Leasehold Mortgage: · (a} subject to-the ter!T]s of the Indenture, in the case of a defaultin the payment of pri.ncipal of or interest on the Bonds when,.due, declare the entire unpaid amount payable under the Con-

. course C-3 Lease Agreement'io be immediately due and payable, whereupon such amount sh-all

become due and payable, wi,thout presentment, demand, protest or other notice of any kind; or . (b) subjeCt to the limitation on interests, rights and remedies described· under"- Consent of Port Authority" and to the terms ofthe Indenture, take any action at law 

### or in equitY to collect the payments then due and· thereafter to become due under the-Concourse C-3 Lease Agreement or to enforce performance and.observance of any obligation, agreement or covenant of Continental under the Concourse C-3 Lease Agreement; or · (c} alter 30 days' notice to Continental by the Authority or Trustee, perform for the account of Continental any covenant ·in the performance of which Continental is in default without entry on the Concourse C-3 Leased Premises (except as permitted pursuant to the Leasehold Mortgage) 

### or make any payment lor which Continental is in default; provided, however, that the Authority shall have no. right to cure a default, breach or performance obligation of Continental under the Terminal C Facility·Lease.·continental shall pay to the Authority and the Trustee upon demand any amount paid by them in the performance of such covenant and any amounts which shall have been paid by reason of failure of Continental to comply with any covenant or provision of the Concourse C-3 Lease Agreement, including reasonable counsel fees incurred in connection with the prosecution or defense of any proceedings instituted by reason of default of Continental, plus interest in accordance with the Concourse C-3 Lease Agreement; or (d} discontinue disbursement of any portion of the Bond proceeds. In addition to other. remedies permitted by law, subject to the limitations described under"- Consent of J?ortAuthority- Limitation on Interests, Rights and Remedies" below, tjle following constitute additionaland exclusive.remedies of the_ Authority, (a} Continental shall, at the direction of the Authority, prepay all amounts due under the Concourse C-3 Lease Agreement in full together with interest accrued and to accrue to the redemption date upon the occurrence of any of the following: (1} Continental ceases to operate the Project or



### ce~ses to cause the Project to be operated as an authorized project under the Act, in either case, for twelve consecutive months, without first obtaining the written consent of the Authority, (2} an Event of Default described under clause (a} of the definition of "Event of Default" above or described in clause (a} of·the-·definition of "Event of Default" in "--'-Concourse A-2/C-1/ C'2 Lease Agreement" above, (3} Continental ceases to maintain or cause to be maintained the liability insurance required by the Lease Agreements for the benefit of the Authority lor 30 consecutive days alter-notice of such failure by the' Authority and three Business Days to cure or (4} the Authority is unable to exercise its right to specific performance of any covenant of Continental pursuant to the Lease Agreements due to the fact that such specific performance would constitute a breach or default of or would conflict with or violate the Port Authority Leases 

### or either of them or involve the specific enforcement of any covenant of Continental-under the Bond Documents relating to or of a property interest if the performance of such covenant would constitute a breath of D-18''

·the Port ·Authority Leases or either of them. The Authority shall give notice to Continental and the ·Trustee of any such-occurrence whereupon the-Trustee shall give notice to the Bondholders of the redemption of the Bonds pursuant to the terms of the Indenture and will set a redemption date pursu-ant to the terms of.the Indenture, but in no event later than 

### 60 days after the Authority gives notice to the Trustee'of the occurrence. (b) In addition to the remedy specified in paragraph (a) above, if Continental commits a breach or threatens to commit a breach of any of the provisions of the Concourse· C-3 Lease Agreement cir any ·of the other Bond Documents, the Authority shall have the right and remedy, without posting bond or other security, to have the ·provisions of the Concourse C-3· Lease

**Agre~ment** specifically enforced by any court having equity jurisdiction, Continental having ackriowl-

.·edged and agreed that any such breach or threatened breach will cause immediate and ·irreparable

injury to the Authority· a'nd· that money' damages will not provide an adequate remedy therefor; provided, however,' the Authority shall not exercise any right of specific performance if such ·performance would constiiute:a breach or default of or be in conflict witt1 or violate the Terminal C

Facility Lease nor shall the Authority have any right to specifically enforce any covenant of Continental under the Borrd Documents relating to or of a property interest if the performance of such covenant.would _constitute a breach of the Terminal C Facility Lease. The liabiliiy of the Authority under the Concourse· C-3. Lease Agreement shall be limited to the Auihority's interest in the Concourse

**C~3** Lease Ag'reement and there shall be no other recourse against the Authoriiy, its members,



### offic~rs, and employees, past, present or future, or against the properties or any other projects of the Authority. In \he performance of the agreements of the Authority contained-in the



### C~ncourse C-3 Lease-Agreement, apy obligation it may incur!or the payment 

# cit money shall not be a debt or obligation of the State of·New Jersey or any political subdivision thereof. The Authority 'does not assume general _liability for the repayment of the Bonds· or for the costs, fees, penalties,_ taxes, interest, charges, insurance, or any other payments recited in the. Concourse C-3 Lease Agreement, but shall be obligated to pay the same only out of the amounts payable by Continental under the Lease Agreements. The Authority shall not tie required to do any act whatsoever or exercise any diligence whatsoever to mitigate the damages to Continental if an Event of Default shall· occur under the Concourse C-3 Lease Agreement. Nothing in the Concourse C-3 Lease Agreement shall preclude Continental from proceeding against the Authority for specific performance (or other equitable remedy in the nature of specific performance) of the Authority's obligations under the Concourse C-3 Lease Agreement. THE STATE OF NEW JERSEY IS NOT OBLIGATED TO PAY, AND NEITHER THE FAITH AND CREDIT NOR TAXING POWER OF THE STATE OF NEW JERSEY IS PLEDGED TO THE PAYMENT OF; THE PRINCIPAL, PURCHASE PRICE OR REDEMPTION PRICE, IF ANY, OF OR INTEREST ON THE BONDS. THE BONDS ARE SPECIAL, LIMITED OBLIGATIONS OF THE AUTHORITY, PAY ABLE SOLELYOUT OF THE REVENUES OR OTHER RECEIPTS, FUNDS OR MONEYS OF THE AUTHORITY PLEDGED UNDER THE INDENTURE AND FROM ANY AMOUNTS OTHERWISE AVAILABLE UNDER THE INDENTURE FOR THE PAYMENT OF THE BONDS. THE BONDS DO NOT NOW AND SHALL NEVER CONSTITUTE A CHARGE AGAINST THE GENERAL CREDIT OF THE AUTHORITY. THE AUTHORITY HAS NO TAXING POWER. . '•J
. . :- •-,. . 7 '
· Notwithstanding anythin'g to the contrary contained in the Concourse C-3, Lease Agreement, upon· the _occurrence of an Event of Default by Conti.nental under the Concourse· C-3 Lease Agreement, the Authority shall have no right. or obligation to re-let the Leased Premises or otherwise, be required to mitigate any damages to Continental as a result of such Event of Default. Consent ofPort Authority 

### Consent; · The Port Authority ·Leases require that th6 Port- Authority consent in writing to the Lt>ase Agreements and the Leasehold Mortgage. Such consent is provided under the Consent. D-19Limitation on Interests, Rights and Remedies
.. 

### Notwithstanding the Lease Agreements, the lnden-
. ture or any of the other Financing Documents (as defined below), or any of the provisions of the Lease Agreements, the ln.denture or any other Financing Documents, or any other facts or circumstances to the contrary, the
..Authority, each Bondholder (by the. purchase or transfer and acceptance of a Bond) and the Trustee (all of the foregoing hereinafter collectively called the "Financial Parties"):

. (a) acknowledge and agree, together with Continental, that the only property intE)rest (other

.than the Leasehold Mortgage) that the Authority shall have had in the whole or any portion of the

Leased Premises, the PortAuthority Leases and the premises thereunder (thewhole and any portion of the foregoing being herein collectively called the "Properties") is to have subleased the Leased ·Premises to Continental and imposed upon Continental the ·obligations set .·forth in- the Lease Agreements and that upon the. subleasing of.the Lea.sed Premises to Continental all property interests of the Authority 'llfillbeforever extinguished, and.except for s.uch limited property interest which will no longer exist and ca,nnot be revived and except as permitted under the. Leasehold Mortgage and as desccibed under. "SECURITY F;OR 

### JHE B,ONDS**~Leasehold** 

### Mortgage and Reletting" in this Official Statement or as permitted under the Port**A~thority** 

### Leases, none of the Financial Parties has, has had, nor shall have any property interests in theProperties;
.. (b) acknowledge· and agree,· together with Continental, that except as set forth under "SECURITY FOR THE _BONDS- Leasehold Mortgage a,nd Reletting" in this Official Statement, none of the Financial Parties has nor shall have any rights to performthe promises arid covenants of

... 'Continental under the Port Authority Leases nor any rights to enforce the rights. 

### and remedies of Continental against the Port. Authority under the Port Authority Leases or otherwise or any right to sell, convey, transfer, mortgage, acquire or pledgethe Properties, or to in any way 'or by any means disturb Continental's use, occupancy, possession or quiet enjoyment of the Properties; 

### (c} agree, together with Continental, to the extent permitted by law; to waive now and at all times in the future all legal, security and equitable (1) 

### interests, rights and remedie·s, if any, claimed under the Consent or otherwise in law or in equity in, with respect to or against the Properties and the Port Authority in connection with the Financing Documents and the Financing Transaction (except to enforce the Consent, the rights of the Trustee and the Bondholders under the Leasehold ·Mortgage and the rights of Continental under the Terminal C Facility Lease relating to the Leasehold

Mortgage) and (2) interests, rights and remedies (other than under or pursuant to the Leasehold Mortgage), if any, in, with respect to or against the Properties under the Lease Agreements, the Indenture, any other Financing Documents or otherwise in connection with )he. Financing .Transaction;· .::**~** -·' ;- '**-~** ··:j,_'=: ,:..

". J- 

### {'B)' ..agiee, tb- 

### the .extent pe-rrhitted 

### by laW;· .tO

### ·waive n6W' and 

### at.all· times iil-

### the·tutt..ir·e all legal, secuitty··and equitable ( 

### 1)·interests; rights and: remedies under Title 

### 46 ofthe· New Jersey Statutes**··~--'Annotated** 

### ·and under all other laWs of the· State of New Jersey in, with respeCt to or· against the ·' <Properties· (except to Concourse C-3 as provided under the Leasehold Mortgage)';**and:~(2)'** 

### all property interests; 

### if'any, not setforth In (c) (1) 

### and (2rand (d) (1) 

### above; ..•,

.. ' ·'· (e) understand and agree, together with Continental

## a~d the. Port Authority, that

## n~thing contained in the Consent shall affect the Authority's ( 1) 

### right to cause an extraordinary mandatory ·redemption oftheBonds pursuant to the extraordinary mandatory redemption provisions setforth in ·:the Indenture or (2) 

### right to specific performance pursuant to either of the Lease Agreements;

provided, however, the,Authodty shall not exercise such right o! specific: performance if·SU<)h "
.performance would constitute a breach:· or· default of or would .conflict with or violate. the Port Authority Leases or either of them; and

· (f) acknowledge and agree that neither the Financial Parties nor any of. them shall have the right to specifically enforce any covenant of Continental under the Financing Documents ii the performance: of such.covenant would, constitute a breach ot the Port Authority Leases or either of them. · D-20· · In addition, Continental, the Authority and the Trustee agree that none· of the Financial Parties or Continental shall have any claim, interest, remedy or right of action agafnst the Port Authority '(except to enforce the Consent) or against, under or with respect to the Properties (other than the interests, remedies and rights:under the Leasehold Mortgage) or the Basic Lease, at law or in equity arising out of or in connection l'iith the Financing Documents or the Financing Transastion.. · ··· ·· ..., .. "Financing Documents" means all the agreements and documents that relate to or <1re part of the Financing Transaction, including, but not limited to, the resolutions .of the Authority authorizing the issuance and sale of the Bonds; the Lease Agreements; th!l Leasehold Mortgage; the certificate of the Authority relating toarbitrage; the Purchase Agreement between Golqriw.n, S<1c.h,'3 

### & 

## cO:: as



### repre~ **enta,;** tive of. the Underwriters and the Authority relating to the Bonds; the lnpenture; the Bards; the Guar,anty,; the Administration



### E~pense Guaranty; the Preliminary OffiCial Statement; and the Official



### Sta!eme~f''• ' ''Fimincing Transactibn'' means the Lease Agreements and the



# fi~~~~/ng **transa~ti6n** qf



# ):Yhl~h:thE)y are

**a~p~j-f.** 

## ··,,:- .. . . . ...

**~- ':_':.~**  **.;C~---~** 

### -.,

. . . . - ;·. -- ' il '-- Similar covenants to the above are included in the Indenture and the Lease Agreements: · · ' ·• Consent Not To Be Used

# As Bl'lsis For Suit. Continental, the AuthoritYand the Trustee agree that they shall not introduce or claim that they or the holders of the Bonds are entitled in law·or equity: (a) to introduce in any forum the Consent, the permission granted thereunder,



### qri~donsisten· cies between the Port Authority Leases, the Consent and the Basic lease,

# on the'drie hand, and the Financing Documents on the other hand, against the Port Authority" (except' 

## ici 'ehfaide the Consent) , the Properties or the rights or obligations of Continental and the Part·Authority unde'r the Port Authority Leases, or as the basis for a contention that the Financing

**.Document~** or any of them apply,to, affect, control, effect or are determinative as to the Port:Authority or the Prof)ertjes §except to enforce the Consent); or .... (b) to any compensation, award, suit, action, estoppel, injunction, proceeding or other iegal or equitable right or remedy against the Port Authority {other .than enforcement of the
..Consent) or the Properties based on the Consent, the permission granted thereunder or any inconsistency or 9onflict between the Financing Documents and the Consent, the Basic Lea

### 0 e. or the Ppr\,Authority.,L.e.ases. Any introduction in any forum by the Bondholders or any ofthem of theConsent, the permission granted thereunder or any inconsistency or. conflict between the Financing Documents and the Consent, the Port Authority Leases or the Basic Lease (except to'enforce the Consent) shall be and· is deemed to be a breach of the Consent. • · · Revocation Upon Default. If Cohtinental does riot cure orcause to be cured (or ifa breach or default cannot be cured within 15 days and Continental has not promptly commenced t6 perform', Or·has not diligently continued to perform without interruption,-whatever may be .required to.c;ure such breach or default) any breach or default of the Consent by Continental, the Authority, the Trustee or any holder of the Bmds·within 15 days after receipt of notice of such default from the PortAuthorityi the Consent may be revoked upon 15<•days' written notice to Continental; but no such revocation·shalt<'affectthe·Port Authority Leases or either of them or the Leasehold Mortgage or the Port Authority's consent thereto
.

. -'
.- ;::··· - . '
. <··· --. '
. - ... . .. ,; . .. .''·· :,· .. ·; ... ;!: .•

**-~; ~,,**  -··.:.' f::-' j. ··. ":_•, ··: '·' Termination ofConsent. The Consent and the consent ofthe Port Authority granted thereunder shall automatically terminate with respect to the Lease Agreements without-•notice to Continental, the Authority, the. Bondholders. or .the Trustee, upon the eaniesHo <occur of the following: .,.' •·:

. (a) the expiration,



# surrend~roi**t~rmin?iiori'**of

# both of.ttie Port Authority



# L~~~e~. whetqer at



# th~ same or at different times, provided,

**howe~er,.it** bqth of the Port AuthorityLef;lses expire on . .\he

**s~me** d?te, then the Consent will terminate piiJhe day prior tp such expira\(on



### a.a~e; _ . .•. . ·. . . ; ..

·· (b) the expiration or earlier termination 

## dr' surrender of both of 

## Hie· Authority Subleas'es; whether at the same time or at different times; ·." •·· · ··· · · D-21(c) .thE! ,expiration or eariier termination or surrender of both of the Continental Subleases, w_hether at the pame time orat different times; (d) the date on whic_h the redemption, 6ancellation,

**defeasaric~.** discharge or payrrien\ of all 'the Bon'ds and any additional parity bonds issued pursuant to the Indenture shall occur or

## 'on 'any other event which shall rescilt in none of the Bonds or such paritf bonds- being outstanding; or (e) the termination, surrender or expiration of the Basic Lease
.. The termination of the



### Cons~nt and the consent of Port Authority granted-thereunder would resUlt 'in atermihat'1on· of the Lease· Agreements. See ''THE LEASES__::__ The Concourse A-2/C-1/C-2. Lease Agreement---:- Term" arid 

### ,..:c._.The Concourse 

# c-:3 Lease Agreement- Term''in this Appendix 

## b:' - . . . . ·;--·

. ,, - - ,_-, 

### ..... ·-.-:. . - ·- . The Consent mayalso be revoked with respect to the Leasehold Mortgage upon the expiration, caricellatibn or termin-ation oftt\ihiustee;s reletting 'rights urider the Leas;jhold Mortgage. The Leasehold Mortgage and the right of the Trustee to seek the reletting of Concourse C-3 will automatically terminate on the earl_iest to occur of the following:,_- , ·'· :' (a) the expiration, swrender or termination. -of the Terminal .C Facility Leas_e as to Concourse

**C~3;** · _, · ·· · ' · ·" · ·

# < :

._ (b) ,the _expiration, revocat)on or termination of the Consent as to Concourse C-3, except if the Terminal C Facility Lease and the Guaranty remain in effectancj the Consent is revoked or terminated because of the rejection of either or both of the Lease Agreements by Continental or a bankruptcy trustee in bankruptcy; · · · · - · 

## (c) the expiration 

## or earlier termination or surrender

.of the· Concourse C-3 Continental ·Sublease or the AuthoritY Sublease; as to Concourse C-3, or the Concourse C-3 Le'ase Agreement except if the Terminal C Facility Lease and the Guaranty remain in effect and the leaseAgreements are terminated by their rejection .by Continental or a bankruptcy trustee in bankruptcy; (d) the date 

### cih which the redemption, cancellation, defeasance, discharge or payment of all the Bonds and any additional parity bonds issued pursuant to the Indenture shall occur oi on any other event which shall result in none of the Bonds or.any such.parity bonds being outstanding; (e) tHe termination, surrender or expiration of the· Basic Lease; (f) the failure of the. Trustee to deliver 

### a Foreclosure Notice _30 deys after a Leasehold Mortgage Event of Default; (g) .the _date of any notice gi\(en by the Trustee that it

**,~lects** not tp_exercise. its reletting rights under the

**Lea~ehold** Mortgage; (h) ·the effective date_oi the reletting of Concourse C-3 to a Qualifying Replacement Tenant;· (i) the effective-date of. the assignment and assumption agreement pursuant to. which a Qualified Replacement Tenant agrees to take possession of Concourse C-3:·and (j) the expiration or earlier



### termi~ation or cancellation of theForeclosure Perioii' '



### '- Acknowledgement ofLeasehold Mortgage._ In the Consent; the Trustee acknowledges and agrees to the terms of Section 

### 96 of the Terminal C Facility Lease,with respect to its Reletting Rights (as defined in the Terminal C Facility Lease) as Leasehold Mortgagee (as defined in the Terminal C Facility Lease) and its rights and obligatfons with respect thereto, including' wiihout limitation its rights and obligations to perform the Leasehold Mortg'agee's Foreclosure Period Obligations (asdefined in the Terminal C Facility Lease) and to pay to the Port AuthoritY the Leasehold Mortgagee's Foreclosure Period Payment;·, the Foreclosure Period Extension Fees and the Deferred Reletting Fee Ceach as defined in

**th~** Terminal C Facility Lease) as set forth in such Section 

### 96. D-22Deemed Mortgagee. Upon the Bankruptcy Rejection Date (as defined in the Terminal C Facility Lease), the Trustee, as Leasehold Mortgagee, sha.ll be the "deemed Lessee" under the Terminal C Facility Lease with respect to Concourse C-3 and shall simultaneously with the service of its Reletting Election_Notice (as defined in the Terminal CFacility Lease) pay the Leasehold Mortgagee:s Foreclosure P<lriod Commencement Payment (as defined in the Terminal C Facility Lease) and shaJI·satisfy all of the Leasehold Mortgagee's Foreclosure Period Obligations. · . THE GUARANTY Obligations Guaranteed Under the Guaranty, Continen;al wili unconditionally guarantee' to the Trustee, for the benefit of the owners of the Bonds, the full and prompt payment of the principal of, and premium, if any, on the Bonds when and as the same shall become due and payable as provided in the Indenture, whether at the elated maturity thereof, by redemption, acceleration or otherwise, the full and prompt payment of the interest on the Bonds when and as the same shallbecome'due ·and payable as provided in the Indenture and the full andprompt payment of the purchase price of any Bonds required to be tendered pursuant to the terms of the Indenture. · · The obligations covered by the Guaranty are intended by the parties to be independent of those set out in the Lease Agreements and to be enforceable without regard to the validity or 'enforceability of the Lease Agreements or any obligation of Continental contained therein. In the event a bankruptcy case were filed with respect to Continental, a bankruptcy court could determine that the Trustee's claim under the Guaranty is limited to the same extent as the claim that the Trustee would have under the Lease Agreements. Events of Default and Enforcement An "Event of Default" shall exist under the Guaranty if any of the following occurs and is continuing: (a) Continental defaults in any payment under the Guaranty referred to under ''-Obligations Guaranteed" above and such default continues for more than two business days after written notice has been given to Continental by the Authority or the Trustee of the occurrence of an event of default under the Indenture or any other Bond Document; (b) Continental fails to observe .and perform any covenant, c.on<]ition or agreement (other than as referred to in paragraph (a) above) of the Guaranty and such default or failure continues for more than 30 days after written notice of such default or failure has been given to Continental by the Authority or the Trustee unless Continental is proceeding with reasonable diligence to cure the failure; (c) any material warranty, representation or other statement made or given by or on behalf of Continental to .the Authority, the·Trustee or the initial purchaser of the Bonds contained in the Guaranty or in any of the other Bond Documents is false, misleading or incorrect. in any material respect as of the date made; (d) Continental ( 1) applies for or consen.ts to the appointment of or the taking of possession by a receiver, liquidator, custodian or trustee of itself or of all or a substantial part of its property, (2) admits in writing its inability, or is generallY unable, io 

### pay its.debts as such debts generally become due, (3) makes a general assignment for the benefit of its creditors, 

### (4) commences a voluntary case under the federal Bankruptcy Code (as now or hereafter in effect), (5) files a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, rehabilitation, reorganization, winding-up, or composition or adjustment of debts, (6) fails to controvert in a timely or appropriate manner, or acquiesce in writing to, any petition filed against itself in an involuntary case under the federal Bankruptcy Code (or' under any other laws referenced in clause 

### (5) above)', D-23

### ' ' 

### J\l.liihes any action. for,.the purpose of effecting any. of the foregoing, or (8) is. adjudicated a .'; ,,,bankrupt or ir)Solven.t by any court of competent jurisdiction; or

·. ·· ·•·. ·• 1(;,), a proceeding orcase is commenced, ;,ithout the application or



## ~onsent of Continenta{lii ·,,f)ny,

**cou~,pf.co'iripe)e,it** 

### jurisdiction,. seeking (1 ) liquidation, reorganization, dissolution, V!inding-up

or-coriiposiiion or adjustment of debts, (2) the appointment of a trustee, receive(; liquidator', custodian or the like of Continental or of all or'any substantial part-at its assets, or (3) similar relief under any law relating to bankruptcy, insolvency, rehabilitation, reorganization, winding-up, or composition or adjustment of debts, and such proceeding or case shall continue undismissed, or an order, judgment or decree approving or ordering any of the foregoing shall be entered and continue unstayed and in effect, for a period of 60 days; or Continental consents in writing to any ofJhe foregoing; or any order for relief against Continental shall be entered in an involuntary case under the ·

**-fecterai.san~ruptcy** 

### c.octe. · · ·

._; .,

**;:cr~·** :·· . . . , = .·· · · .. . • . - .


### .Upoo. an event of default under the Guaranty, the Trustee will

**hav~** 

### the right to proceed against



### ,Co~jine~tal under the Guaranty. All moneysreceived bythe_Trustee pursuant tci any right given or action taker\ J.inder.t.he provi.sions 

## qf the Gwiran.ly will be.deposited by.the Trustee in the funds established under !he·lndentti're forthe benefit of the Bondholders and applied by the Trustee ·1ri accordance with ihe terms of the Indenture. ·

'< ·-

**.:T~e** 

### Trustee.will be under no obltga(ion to institute any suit or to take any remedial action under the Guaranty,, or to e9ter any appearance or iri any way defend in any suit in which it· may be madea defendant, or to take any stepsjn the enforcement of any rights and. powers under the Guaranty until the Trustee is indemnified.to its satisfaction against any and all liability (including, without limitation, reasonable compensation for services, costs and expenses, outlays, and counsel fees and expenses and other disbursements) not due to its gross negligence or willful misconduct. Covenants Relating to Corporate

**Existe~ce** 

### Continental. !las. covenanted in the Guaranty that it will maintain its corporate existence, will not dissolve or otherwise.

**disp ~e**  

### ofall or substar:>tially all of its assets and will not consolidate with or merge into another entity or permit one or more other entities to consolidate with or merge into it; provided, that Continental is permitted to consolidate with or merge into another entity, 

### ex to penmit one or more other enf1ties to consolidate with or merge into it, or to sell or otherwise dispose of all or substantially all of its assets:as·an entirety'and thereafter dissolve, provided, it Continental is not the surviving corporation, the surviving;' resulting or transteree.corpotation, as the case may be, (a) assumes in. writing all Continental's obligations under the Guaranty; (b) qualifies or is qualified to do business in the State of New Jersey; ':"d (c) obtains an opinion ot nationally recognized bond counsel to the effect that such consolida-

. lion, merger, sale or other disposition does not adversely affect the tax exempt status of the Bonds. Amendments

. The Guaranty may be amended by



## Contine~tal and the. Trustee only' .in accordance with the



### f?'?Vi~ions oi ihe lridenfure

.. Beneficiaries

. ,··The Guaranty is en.tere.d into by Continental solely for the benefit of the Trustee, the owners of the Bonds.;1nd any.successor t;ustee or trustees under the Indenture.,

## THE INDENTURE Pledge of Revenues · Pursuant to the lndentu(e, Continental's obligation to pay Facility Rent and its payments of Facility Reni under the Lease' Agreements will be pledged by the Authority to the Trustee to secure the payment of the

**principal~** 

### purchase price and redemption price, if any;'of and interest on the Bonds. The Authority will also pledg<i and assign io the Trustee all its rights, title and interest under the Continental Sublease (other than the "Reserved Rights" as hereinafter defined, the right to receive payment of certain cOsts and expenses of the Authority, the right to indemnification by Continental, the· right to speCiiic performance and the right to approve assignments of the Lease Agreements,·tenants of any part of the Project and those actions of Continental described under "THE LEASES- The Concourse A-2/C-1/C"2

**Le"-~.8.** 

### _Agr<:>ement- Continental's Obligation to Maintain Corporate Existence" an9 "-The Con

### cour~e C-3 Lease Agreement- Continental's Obligation to Maintain Corporate Exisience"), imd will pledge to



### the·Tr~stee

# all moneys



### a~d. obligations deposited or to be deposited in the funds established wiUi Jhe Trustee (other than the Rebate Fund and the Bond Purchase Fund) : · ·

' ..

### , .' -_ . . ._ 

### ·-:_. ·-'

. . 

### "Reserved Rights" means th·e rights of the Authority to (a) release and indemnification, (b) receive payment of certain costs and expenses, (c) enforce certain public purpose covenants undertaken by Continental pursuant to the Lease Agreements, (d) receive certain notices and reports or obtain information pursuant to the Lease Agreements, and (e)· exercise certain rights and remedies, including, without limitation, the· right to require an extraordinary mandatory redemption of the Bonds. 

### Application of Proceeds Proceeds from the sale of the Bonds, other than interest accrued on the Bonds to the date of delivery, will be deposited in the Construction Fund and Capitalized Interest Fund established with the Trustee. Accrued interest, if any, will be deposited in the Debt Service Fund. See "APPLICATION OF BOND PROCEEDS" in this Official Statement. 

### Construction Fund Moneys on deposit in the Construction Fund will be applied to payment of certain costs of acquiring, improving and equipping the Project, including reimbursement to Continental forcertain costs paid or incurred.by Continental prior to.delivery of the Bonds and certain costs and expenses· incident to the issuance and delivery of the Bonds. The Trustee will disburse moneys· in the Construction Fund in accordance with the Indenture and the Lease Agreements. All proceeds of the Bonds deposited into the Construction Fund and any investment earnings thereon in the Construction Fund (except for punch-list items, amounts needed to pay costs:of construction for the Project which are not due and payable or if due and payable are not paid, amounts to be deposited in the Rebate Fund and amounts to be used for additional capital projects selected by Continental and eligible to be financed with the proceeds of the Bonds) (the "Surplus") shall be used (a) to purchase Bonds in .the open market for delivery to the Trustee, as a paying agent, for cancellation in the amount that will retire all nonqualified bonds within the meaning of Treasury Regulations Section 1.142-2(e) 

### or '(b) to cause an ·extraordinary optional redemption of the Bonds. 

### Capitalized Interest Fund A Capitalized lnterest'Fund is.established and maintained with theTrustee under the Indenture. The moneys deposited in the Capitalized Interest Fund shall be held: in trust by the Trustee and shall be transferred to the Debt Service Fund on each Interest Payment Date and applied as a credit against the Jnterest then due and payable on the Bonds. On November 1,·2002, any moneys on deposit in the Capitalized Interest Fund shall be transferred to the Construction Fund and applied as Surplus as described under the caption "-Construction Fund" above. D-25<' ' ' Debt Service Fund A Debt Service Fund is established and maintained with the Trustee under the Indenture. The amounts with respect to the payment of principal of and interest on the Bonds derived under'the"lease Agreements andcertain other amounts specified in t.he lndentwe will be deposited in the DebLService Fund: While the Bonds are outstanding, moneys in the Debt SerVice Fund will-be used solely for the



### paymen~i of the principal and redemption price, if any, of and interest on the Bonds as the same become payable. Any.amounts: remain'lng ·In the ,Debt Service. Fund after payment in full of the.principal and
.· b
... .· . - . . . • . .. redemption price,. if any, of and interest. 

### m, the_Bonds (or provision for the payment thereof), .shall ,be paid to, Continental.
- · · - · · · · · · Leasehold Mortgage Reserve Fund
. '.·;- Th.? Indenture estabJishes a



## Le~~enold **M~rtgage** Reserve



## Fu~c( for tlie benefit of the



## irusl~e'**an(f·j~e** Bondholders" to be used in the event that a foreclo'sure undecthe Lea'sen'Oid Mortgage



### be¢ome~ necessary



### ~arid the Trustee



### !~curs·payment



### o~ligations to thePcirt



### 1\~thority pursuant to the Leasehoict Mortgage to preserve its effectiveness while 

# aQualifying Successor "Tenant 

## "is bein.g secured, or to pay debt service on the Bonds in the event that the Trustee determines that, it is not in the best interests of the holders.,<;Jf the Bonds_toforeclose on the Leasehold Mortgage. Upon completion of- the Project, Continental is required under the Concourse C-3 Lease Agreement to fund-and maintain the Leasehold Mortgage Reserve-Fund.with a cash depositordirect pay letter of creditor· surety bond with avalue equal to $9,600,000. Upon withdrawal of any.moniesJrom or ,any_drawingon any letter of credit or surety bond on deposit in the Leasehold Mortgage Reserve Fund, Continental shall be obligated to replenish any such mon·les or to have any such letter of credit or surety bond reinstated to the initial.amount required under the Concourse C-3 Lease Agreement, but only to the extent it cures the event(s) giving.rise to th.e Leasehold Mortgage Event of Defaultprior.to the earlier of (a) the end of the Foreclosure Period or (b) the date that the foreclosure occurred:

. • · Investments Any moneys held as a part of the funds established under the Indenture shall be invested in Investment Securities (as defined below) by the Trustee, at the direction of Continental, as prbvide2(in the Indenture; provided that all money received by the Trustee or the· .Tender Agent as remarketing proceeds shall be held uninvested in the applicable account of the Bond Purchase Fund by the Tender Agent in trustfor the benefit of tendering Bondholders, separate and apart from and not commingled with any other money held· by the Tender Agent, to be used solely for the payment of the purchase price: Any such investments for any fund shall be held by or under the control.of the Trustee and shall be deemed at all times a part of such fund. The interestand income received upon; and any profit or loss resulting from, the investment of moneys in a fund shall be credited to or charged to such fund, subject, however (a)·to the provisions of the Indenture. relating· tO'defeasance .and (b)' in, the case of. the Leasehold Mortgage Reserve Fund, all investment earnings shall be transferred ori each Interes! Payment Date (as defined in the Indenture) to the Debt Service Fund. '·-· ;:1 "Investment Securities;' means any of the following obligations 'or



### se~urities:

- ' c - • • •

**~** '··· '· (a) Governmental Obligations (as defined below); '.·:..:, (b) interest bearing deposit accounts (which may be represented by-certificates of deposit) in national, state or foreign commercial banks (which may include the Trustee and other fiduciaries) whose outstanding long· term debt is rated at leastA by Standard & Poor's Rating Services ("S&P") and at leas!A by Moody's Investors Service, Inc: ("Moody's"); ·


# .. :. ,:. -

(c) bankers' acceptances ·drawn·.on and. accepted _by, any domestic or toreign commercial

_

bank_s (which may include the Trustee and otherfiduciaries) whose outstanding long term debt is rated at least A by S&P and at least A by Moody's;. D-26

### (d) (1) direct obligations of, (2) obligations the principal of and interest on which are unconditionally guaranteed by and (3) any other obligations the interest on which is excluded from gross income for federal income tax purposes issued by, any state of the United States, the District of Columbia or the Commonwealth of Puerto Rico, or any political subdivision, agency, authority or other instrumentality of any of the foregoing, which are rated at least A or the equivalent by S&P and Moody's; (e) commercial paper issued by any corporation which is rated aUeast A-2 or the equivalent by S&P or at least P-2 or the equivalent by Moody's; (f) instruments issued by investment companies having·a portfolio 95% or more of'which

**consist~** 

### of the securities described in (a) through (e) .above; ·(g) repurchase agreements with banking institutions· and securities dealers recognized as primary dealers by the Federal Reserve Bank of New York whose outstanding long term and short term debt is rated at least A or the equivalent by S&P or Moody's (which may include the Trustee and other fiduciaries); (h) money market funds (including·; w'1!hout limitation, those for which the Trustee or any affiliate thereof receives compensation with respect to such investment), the assets of which are obligations of, or guaranteed by, the United States of America and which funds are rated in one of the two highest rating categories of money market funds at the time of purchase; (i) certain qualifying guaranteed investment contracts; and (j) 

### corporate bonds that are rated at least A or the equivalentbyS&P.and Moody's and mature within two years from the date of acquisition; · - provided, that each of the investments described in clauses (g) and (i) above shall contain a provision for th'e immediate unwinding of such investment if the long term or short term debt rating of the bank, primary dealer or other financial institution, as the case may be, providing such investment falls below A or the equivalent by S&P orMoody's or such entity defaults on the payment of any of its obligations to Continental, unless such investment is immediately collateralized with Governmental Obligations in an amount equal to 102% of the face amount of such investments. · "Governmental Obligations" means any of the following which are noncallable and which at the time of investment are legal investments under the laws of the Slo.le for the moneys proposed to be invested therein: · · · · . (a) direct obligations of, or obligations the paymentof principal of and interest on which are unconditionally guaranteed as to full and timely payment by, the United States; (b) direct obligations of, or participation certificates guaranteed by; the Federal National · Mortgage Ass,ociation, Government National Mortgage Association, or Federal-Home Loan Mortgage

Corporation so long as such entities shall be federally chartered or any other comparable federal agency hereafter created to the extent that said obligations i:ir certificates are unconditionally guaranteed by the Unitea States; (c) obligations of any state of the United States, any political subdivision thereof or any agency or instrumentality thereof, if such obligations are secured by direct obligations of, or obligations the principal and interest .on whis;h 01re fully or unconditionally guaranteed by, the United States, and the principal of and interest on which will be sufficient to pay as due the principal of and interest on such obligations; or · ·· (d) prefunded obligations rated 

### MA by Moody's or Aaa by S&P of any· state of the United States, any political subdivision thereof or any agency or instrumentality thereof, if such obligations are secured by direct obligations of, or obligations the principal and interest on which are fully or D-27. - .. . --
- -· ' ·.. 

### . _

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unconditionally guaranteed by, the United States, and the principal of and interest on which will be sufficient to pay as due the principal of and interest on such obligations. Defaults The Indenture provides that each of the following events will constitute an "Event of Default" thereunder: (a) default in the due and punctual payment of interest on any Bond after such payment has become due and payable; provided, that no defaulf in the payment of interest shall occur until five Business Days after such payment is due; (b) default in the due and punctual payment of the principal or premium, ifany, on any Bond .• whether at the stated maturity thereof, upon redemption, or upon acceleration thereof; provided, that no default in such payment <>hall occur until five Business Days after such payment is due; 

### ·(C::) an ·"event of default" under the Guaranty; (d) default in the due and punctual payment of the purchase price, if any, of any Bond tendered or deemed tendered for purchase on any Tender Date; or (e) a Leasehold Mortgage Event of Default During the continuation of an Event of Default under (a), (b) or (d) above, the Trustee may, and upon the written request of the Bondholders of not less than 51% in aggregate principal amount of outstanding Bonds and satisfactory indemnity shall, declare the principal of all outstanding Bonds and the interest accruecHhereon immediately due and payable, and such principal and· interest will thereupon become and be immediately due and payable. If there is a declaration of acceleration, the Trustee must establish the date, which will be the earliest practicable date upon which the payment of the principal of and the interest· on :an outstanding Bonds is to be made; provided, however, that interest on the outstanding Bonds will cease to accrue upon the date of declaration of the acceleration. The Trustee will give notice by first-class mail, postage prepaid, of such declaration of acceleration and of the fixing of the date for payment to all holders of outstanding Bonds. Upon anydeclaration of acceleration, the Authority and the Trustee will immediately declare an amount equal to all amounts then due and payaible on the Bonds to be immediately due and payable under the Lease Agreements, the Trustee will cause Continental to pay accrued interest and principal on the Bonds and the Trustee shall deposit into the Bond Redemption Fund created under the Indenture all amounts remaining in the Construction Fund, with notice to the Auttioriiy and Continental ·of sucli action. The provisions of the preceding paragraph, however, are subject to the condition that if, after the principal of the Bonds has been so declared to be due and payable, and before any judgment or decree for the payment of the moneys due has been obtained or entered, the Authority causes to be deposited with the Trustee a sum sufficient to pay all matured installments of interest upon all Bonds and the principal of any and all Bonds vyhich shall have become due otherwise than by reason of such declaration (wiit1 interest upon such principaL and, to the extent permissible by law, on overdue installments of interest, at the rate per annum specified in the Bonds) and such amount as shall be sufficient to cover reasonable compensation and reimbursement of expenses payable to the Trustee, the Tender Agent, and the Remarketing Agent and certain other expenses and all Events of Default under the Indenture other than nonpayment of the principal of Bonds which shall have become due by said declaration shall have been remedied; then, in every' such case, such Event of Default shall be deemed waived and such declaration and its consequences rescinded or annulled, and the Trustee will promptly give written notice of such waiver, rescission or annulment to the Authority, the Paying Agent and Continental and shall give notice thereof to all holders of outstanding Bonds; but no such waiver, rescission or annulment shall extend to or affect any subsequent Event of Default or impair any right or remedy consequent thereon. Subject to the· limitation on interests, rights and remedies described under "THE LEASESConsent of Port Authority" and to the terms ofthe Indenture, upon the occurrence of an Event of Default D-28under the Indenture, the Trustee may pursue any available remedy at law or in equity to enforce the payment of the principal, purchase price and redemption price, if any, oLand interest on the outstanding Bonds and to enforce compliance with the covenants under the Indenture. The Trustee may also, or instead, pursue payment under the Guaranty and Ior allowable remedies. under the Leasehold Mortgage. If an Event of Default underthe Indenture shall have occurred and be continuing and if requested to do so by the Bondholders of not less than 51% in aggregate principal amount of outstanding Bonds and upon being indemnified to its satisfaction, including, but not limited to, indemnity for environme·ntalliability, the Trustee shall be obligated to exercise such one or more ofthe rights and powers conferred by the Indenture as the Trustee, being advised by counsel, deems most expedient in the interests of the Bondholders. · . . No Bondholder shall have any right to institute any suit, action or proceeding at law or in equity for the enforcement of the Indenture, unless an Event of Default under the Indenture has occurred of which the Trustee has been notified or is deemed to have notice as provided in the Indenture unless the Bondholders of not less than 51% in aggregate principal amount of outstanding Bonds have made written request to the Trustee and have offered it reasonable opportunity either to proceed to exercise the powers therein granted or to institute such action, suit or proceeding in their own name or names, nor unless they also have offered to the Trustee satisfactory indemnity as provided in the Indenture, nor unless the Trustee thereafter fails or refuses to exercise the powers therein granted, or to institute such action, suit or proceeding in its own name. However, nothing contained in the Indenture shall affect or impair the right of any Bondholder to enforce the payment of· the principal, purchase price, and redemption price, if any, of and interest on any Bond at and after the maturity or tender thereof, or the ·obligation of the Authority to pay the· principal, purchase price and redemption price, if any, of and interest on each of the Bonds. The Trustee shall waive any Event of Default underthe Indenture and its consequences and rescind any declaration of acceleration of principal upon the written request of. the Bondholders of (a) not less than 51% in .aggregate principal amount of all outstanding Bonds in respect of which default in the payment of principal or interest, or both, exists or (b) not less than 51% in aggregate principal amount of all outstanding Bonds in the case of any other Event of Default under the Indenture; provided, however, that there shall not be waived any Event of Default under the Indenture in the payment of the principal of or interest on any outstanding Bonds unless, prior to such waiver or rescission, all arrears of principal and interest (other than principal of or interest on the Bonds which became due and payable by declaration of acceleration), and all fees and expenses of·the Trustee in connection with such Event of Default shall have been paid or provided for·;.and provided further that there· shall not be waived any Event of Default under the Indenture caused by a violation of a public purpose covenant of Continental contained in one. or both of the Lease Agreements without the prior written consent 

### ot the Authority, which consent may be withheld in the Authority's sc)le.discretion. ··,: Modifications and Amendments -,;' The Authority and the Trustee may, without consent of, or notice to, any of the Bondholders, enter



### i~to an indentureor indentures supplemental (a "Supplemental Indenture") to the Indenture for any one or more of the following purposes, provided that the prior consent of the Trustee, the Paying Agent, the Remarketing Agent, the Tender Agent and the Registrar shall be obtained for any amendment affecting their respective rights or obligations under the Indenture: (a) to cure any ambiguity or formal defect or omission in the Indenture; (b) .to grant to or confer upon the Bondholders or the Trusteefor the benefit of the Bondholders any additional rights, remedies, powers or authorities that may lawfully be granted to or conferred upon the Bondholders or the Trustee; (c) to subject to the Indenture additional revenues or collateral; D-29_,_.__J(

(d) to modify, amend or supplement the Indenture or any Supplemental Indenture in such manner as to permit the qualification thereof under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect or to permit the qualification of the Bonds for sale under the securities laws of any of the states of the United States; (e) to evidence the appointment of a separate or co-Trustee or the succession of a new Trustee thereunder; (f) to make any other change iri the Indenture which does not materially adversely affect the Trustee or the Bondholders; ·· (g) to secure or maintain the rating for the Bonds; (h) to cure any defects in the Indenture which would, if not cured, cause the interest on the Bonds to be included in gross income of the holders thereof for federal income tax purposes other than for a person who is a "substantial user" of the Project or a "related person" within the meaning of Section 147(a) of the Internal Revenue Code; (i) to issue any series of additional bonds on a parity with the Bonds; and (j) to enter into an amendment or amendments described in the first paragraph of"- Amendments to the Lease Agreements, the Leasehold Mortgage or the Guaranty" below. Except for Supplemental Indentures permitted as described above, the Bondholders of not less 51% in aggregate principal amount of the outstanding Bonds which would be affected thereby shall have the right, from time to time, to consent to and approve the execution by the Authority and the Trustee of such other indenture or indentures supplemental thereto as shall be deemed necessary and desirable by the Authority for the purpose of modifying, altering, amending, adding to or rescinding, in any particular, any ot the terms or provisions contained in the Indenture or in any Supplemental Indenture; provided, however, that nothing in the Indenture shall permit, or be construed as permitting, without the consent of the holders of all Bonds outstanding, (a) an extension of the maturity ofthe principal of or the interest on any Bond, (b) a reduction in the principal amount or purchase price ot, or redemption premium on, any Bond or the rate of interest thereon, or a change in the terms of redemption or tender of the Bonds, (c) a privilege or priority of any Bond or Bonds over any other Bond or Bonds, (d) a reduction in the aggregate principal amount of the Bonds required for consent to Supplemental Indentures or any. modification or waiver of the provisions of the Lease Agreements, (e) the creation of any lien ranking priOr 

### toor on a parity with the lien of the Indenture on the trust estate pledged under the Indenture or any part thereof, except as expressly permitted under the Indenture or (f) the deprivation of the Bondholder of any outstanding Bond of the lien created on the trust estate; provided further that the prior consent of the Trustee, the Paying Agent, the Remarketing Agent, the Tender Agent and the Registrar shall be obtained for any amendment affecting their respective rights or obligations under the Indenture. No Supplemental Indenture shall become effective unless and until Continental shall ,have consented to the execution and delivery of such Supplemental Indenture;_ provided, however, that if Continental is in

**defa~lt** with respect to a payment required under the Lease Agreements, the consent of Con)inental shall not be required. 

### Amendments to the Lease Agreements, the Leasehold Mortgage or the Guaranty The Authority and the Trustee may without the consent of or notice to the Bondholders consent to any amendment, change or modification of the Lease Agreements,· the Leasehold Mortgage or the Guaranty as may be required: (a) for the purpose of curing any ambiguity or formal defect or omission in either of the Lease Agreements, the Leasehold Mortgage or the Guaranty; D-30

### (b) so as to more precisely identify the Project or to add additional rights or interests in property acquired in accordance with the provisions of either of the Lease Agreements; the Leasehold Mortgage or the Guaranty; (c) to enter into any Supplemental Indenture to the extent so permitted'under the Indenture; (d) in connection with any other Qhange therein which does notmaterially adversely affect the Trustee or the Bondholders (including, without limitation, any change in the descript'1on of the Project}; or · - (e) to cure any defects in either of the Lease Agreements, the Leasehold Mortgage or the Guaranty which would, if not cured, cause the interest on the Bonds to be includable in gross income for federal income tax purposes other than with respect to a person who is a "substantial user" of the Project or a "related person" wHhin the meaning of Sect'1on 147(a) of the Internal Revenue Code; provided that the prior consent of the Trustee, the Remarketing Agent, the Paying Agent, the Registrar and the Tender Agen't shall be obtained for any amendment affecting their respective rights or obligations under the Indenture, ·the Guaranty, the Leasehold Mortgage or either 

### oi the Lease Agreements. Except for the amendments, changes or modifications described above, neither the Authority nor the Trustee shall consent to any amendment, change or modification of either of the Lease Agreements, the Leasehold Mortgage or the Guaranty without the written approval or consent of the holders of not less than 51% in aggregate principal amount of the Bonds.at the time outstandin'g that wou-ld be affected thereby, provided that the consent of the holders of all Bonds outstanding is required for'any amendment, change or modification of either of the Lease Agreements, the Leasehold Mortgage or the Guaranty that would permit the termination or cancellation of either of the Lease Agreements, the Leasehold Mortgage or the Guaranty or a reduction in or postpon_ement of. the rental payments under either of the Lease Agreements, guaranteed obligations under the Guaranty or security under the Leasehold Mortgage or any change in the provisions relating to payment of rent under either of the Lease Agreements; provided further, however, that the consent of the holders of not less than 75% in aggregate principal amount of the Bonds at the time outstanding that would be affected thereby shall be required to make any concessions under the Concourse C-3 Lease Agreement or the Leasehold Mortgage in connection with a foreclosure thereunder or a reletting of the Concourse C-3 Leased Premises. 

### Discharge of Indenture

.
. 

### The Indenture provides that when the prinCipal d,and premium, if any, ol,'and interest on the Bonds have been paid, or provision has been made-for their payment and if all amounts due uricjer the Indenture have been paid, the right, title and interest of the Trustee shall cease and the Trus1ee will release the lien of the Indenture. If payment or provision for payment is made for less than all of tlie Bonds, tlie particular Bonds (or portion thereof) to be deemed paid shall be selected as provided in the Indenture, and the Trustee shall release the Indenture with respect to such Bonds. Bonds shall be deemed to have been paid within the meaning of the Indenture if (a) payment of the principal of, the premium, if any, and the interest on such Bonds to the due date thereof (whether such due date is by reason of maturity or upon redemption) either ( 1 ) shall have been made or caused to be made in accordance with the terms of the Indenture or (2) shall have been provided for by irrevocably depositing in the Bond Redemption Fund moneys sufficient to make such payment and Ior Governmental Obligations (excluding those specified in paragraphs (b) and (c) of the definition of such term). maturing as to principal and interest in such amount and at such time as will insure the availability of sufficient moneys to make such payment and (b) all necessary and proper fees, compensation, liability and expenses of the Authority, the Trustee, the Tender Agent, the Remarketing Agent and the Registrar, Paying Agent and Co-Paying Agent, if not the Trustee, pertaining to the Bonds with respect to which such deposit is made shall have been paid or the payment thereof provided for to the satisfaction of the Trustee. At such times as a Bond shall be deemed to be paid under the Indenture such Bond shall no D-31longer be secured by or entitled to the benefits of the Indenture, except for the purposes of any such payment from such moneys or Governmental Obligations, Upon the release and discharge of the Indenture, the provisions of the Indenture relating to the redemption and the tender of the Bonds shall no longecbe of any force or effect. 

### The Trustee, the Tender Agent and the Remarketing Agent
. The Indenture providesthat the Trustee shall not be answerable for the exercise .of any discretion or power underthe Indenture or for anything whatsoever in connection with the trust created, exceptonly its own willful misconduct, bad faith or negligence. The Trustee may in good faith buy, sell, own and hold any of the Bondsand may join in any action which any owners of Bonds may be entitled to takewith like effect
· as if the Trustee were not a party to the Indenture.

, The Trustee may resign and be discharged 

## by written resign_ation iiled with the Authority, Continental, the Paying Agent, the Remarketing Agent and the, Tender Agent not less than 30 .days before the da.te.when such resignation is. to take effect. Th.e Trustee. may be rem.oved at any time by:continental except during the continllarice of an Event of Default under the Lease Agreements, or at any time by the registered holders of not less than 

### 51% of the outstanding Bonds by filing with the Trustee an instrument in writing appointing a successor. Such removal shall be effective 

### ;'lO days (or such longer period as may be set forth in 'such instrument). after delivery of the instrument appointing the successor; provided, however,. that. no such removal shall be effective. until (ii) 

### <'II outst<1nding Trustee··s fees and expenses shall have. been paid. and (b) the successor Trustee appointed· under the. Indenture shall execute, acknowledge and deliver to the Authority. and Contiri;'>ntal an instrument accepting such appointment thereunder. · · . . · . · · The Tender Agent may resign and be dischiirged on 60·diiys' notice to the Authority, Continental, the.Trustee and the Remarketing Agenl and m·ay be removed by Continental at any time upor1 notice to the. Tender Agent, the Trustee and the Remarketing Agent. The Remarketing Agent may resign and be discharged· on 30 days' notice. to, the Tender Agent, Continental and the Trustee or may be removed by Continental at any ti'me · upon notice to the Remarketing Agent, ihe Te.nder Agent and the Trustee. In either case, a replacementRemarketing Agent must be appointed prior to the effectiveness of such resignation or removal. The Trustee, the Tender Agent, the Remarketing Agent, the Paying Agent, any co-paying agent or the Registrar shall have a lien prior to the lien of the Bondholders for the payment of its indemnity,.its compensation and the reimbursement of its expenses and any advances made by it, upon the moneys andsecurities·helci 

## tiy the Trustee or the Tender Agentunder the Indenture, except moneys or securities held for the redemption or payment of Bonds that are deemed to be paid in accordance ;,ith the Indenture ancifllnds held in.the

**Rabat~** Fund and the Bond Purchase Fund. 

## ,- . - . . . .

0-32.

### AppendixE ANALYSIS OF POTENTIAL GATE DEMAND 

## ContinentalAirlines Global Gateway Development NewarkInternationalAirport

Preparedfor: Continental Airlines, Inc. and 

## NewJerseyEconomic DevelopmentAuthority

Preparedby: LeighFisherAssociates

August20, 1999**.'"<'"-=·"'-'---~~--·~-**
__.r..U;;_



### [THIS PAGEINTENTIONALLYLEFT BLANK]LEIGH FISHER ASSOCIATES Consultants ft> Airport lvlllllllS:!'IIIc>lll Posr Office Box 8007 San Francisco lmernarional Airporr San Francisco. CA

**94128~8007** Tel650-57l 7722 F"' 650-571 522o 

## August20, 1999

Continental Airlines, Inc. 1600 SmithStreet, 32"" Floor Houston,Texas 77002 NewJerseyEconomic DevelopmentAuthority P.O. Box990 36WestState Street Trenton,NewJersey 08625 Re: Analysis ofPotentialGateDemand, Continental Airlines GlobalGateway Development, NewarkInternationalAirport We arepleased to 

## submitthis reportdocumentingour anaJysis ofpotential gate demandinconnection withtheproposedfinancing oftheContinental Airlines Global GatewayDevelopment atNewarkInternationalAirport. Purpose of Report 

## TheNewJersey Economic DevelopmentAuthority, onbehalfofContinental Airlines (Continental),plansto issuebondsto finance partofthe .costs ofnew terrriinal andrelated facilities for ContinentalatNewarkInternational Airport (Newark), referred tohereinastheGlobal GatewayDevelopment. TheGlobal Gate:wayDevelopment includes construction ofa new TerminalC concourse, with capacityfor up to 19 aircraftparkingpositions (gates), connected to a newFederal InspectionServices (FIS) facility toprocess arrivinginternationalpassengers. Thepurposeofthe reportis to analyze thepotential demand for gates atNewark and atthe twoother major airports servingthe NewYorkregion, John E 

## K:ennedy International (Kennedy), and LaGuardiaAirport (LaGuardia). Specifically, we analyzed gate demandunderthe hypothetical assumptionthatContinental Airlinesceases or substantiallyreduces service atNewark. We assessed the

. potentialreplacement ofContinental serviceby other airlines and the resulting

demandfor the terminal facilities being constructed inthe Global Gateway Developmentundervarious hypothetical scenarios. ·

E-1LEIGH FISHER ASSOCIATES Cnns1tltants tt1 Airport

**}villllll;(:t~IIC/11** 

## Mr. WilliamD. Dodson August 20,1999 Scope of Analysis 

## In

## analyzingpotential gate demand atthe three major NewYork airports, we considered: 

# • •


# •
• •
• Economic and demographictrendsintheNewYork region Recenthistoricaltrends and forecast growth inpassenger traffic atthe NewYork airports · Demandpatterns and other characteristics ofContinental'shub at Newark Facilities tobeprovidedbytheproposed Global Gateway Development Existing and forecast supplyversus demandrelationships for gates atthe NewYork airports Scenariosrelatingtopotential demand for Terminal C gates inthe , . hypotheticaleventthatContinentalwere to cease or substantiallyreduce service atNewark We didnot analyze and offer no opinion or otherform ofassurance regardingt):le contractual orbusiness arrangementsunderwhichthe facilities to beprovidedby theproposedGlobal GatewayDevelopmentmightbeused orleasedby'any ' successor airline or airlines, orthe feasibility ofimplementingsuch

**arrang~nients.** 

### ·-=·. Conclusions 

## Using assun:iptions thatwe believe are reasonable, theprimary conclusionsofour analysis are: , 1. 

## Aggregate demand for gates at the three major NewYork area airports as ofAugust 1999 is estimatedto amountto approximately 87% ofaggregate gate capacity. 2. Consideringlikelyfuture growthin passenger demand andplanned additions to gatecapacity, most gates atthe three airports, including those beingconstructed intheGlobal Gateway Development, willbe required duringpeakoperatingperiods.
E-2 ' I 

# i'LEIGH FISHER ASSOCIATES Co-nsultmzt5 to AirportA1anognlll'11/ 

## Mr. WilliamD. Dodson August20, 1999 3. 

## IfContinentalwereto cease orsubstantiallyreduce service atNewark, undervarioushypothetical scenarios described in ourreport, there would be demand for mostor all ofthe gatesbeingconstructed as part ofthe Global GatewayDevelopment. The attachedreport docufuents'otii analysis and.

**conclusions~** 

## The attachment shouldberead inits entiretyfor anunderstandingofthebasis for the conclusions. 

## * * 

## * * * The analyses, projections, and conclusionspresentedinthe attachmentwere preparedusingtheinformation and assumptions described. Whilewebelieve that such assumptionsprovide a reasonablebasisfor theprojections, inevitably, some ofthe assumptions willnotberealized andunanticipated events and circumstancesmay occur. Therefore, there are likely tobe differencesbetweenthe projected and actualgate demand, andthose differences maybematerial. We have noresponsibilityto update this report to reflect events and circumstances occurring after the date ofthereport. We appreciate the opportunitytoprepare this report insupport ofthe Global GatewayDevelopment. Respectfully submitted,



# ~.ftt4~J



# LEIGHFISHE~TES

E-3

### [THIS PAGEINTENTIONALLYLEFTBLANK]

E-4

### .-/ ' .



## Attachment BACKGROUND,ANALYSIS, ASSUMPTIONS,AND RATIONALE FORTHE STUDY CONCLUSIONS



## . ContinentalAirlines Global Gateway Development NewarkInternational Airport

E-5**~,.- ~-~~-**  - - ···-- --·-- .



### [TillSPAGE INTENTIONALLYLEFT BLANK]



## :E-6

## CONTENTS Page 

## NewYorkAreaAirports·'·····································...................................................... E-ll Airport ServiceRegion
...,...................................................................................... E-12 HistoricalGrowth inPassengers........................................:................................. AirportPassenger Characteristics........................................................................ Airline Shares ofPassengers.....................................................................,...........

. Projected PassengerDemand ............................................................:.................. E-14 

# { E-16 E-18 .; \ 

## E-19 

# t r '{,: •' 

## Continental'sHub Operation at Newark.......................::.:..;:................................... E-20 

# 1

.TerminalFacilities atNewark............................................................................... E-20 · Newark's Role inContinental'sRoute System ..............................:................... E-20

.Service Pattern ........................................................................................................ E-21

ShareofOrigin-DestinationPassengers.............................................................. E-24 Implications: Demandfor Continental's TerminalFacilities .......................... E-25 Continental's Global GatewayDevelopmentProject
..:.......................................... E-26 Project Components.......................................................................,....................... E-26 CostperEnplaned Passenger ............................................................................... E-27 Implications: Demandfor Continental's TerminalFacilities .......................... E-28 Analysis ofCurrentNewYorkArea Airport Gate Demand·······················'········· E-29 ScheduledFlightActivity...................................................................................... E-29 Estimated Gate CapacityUtilization................................................................... E-29 Analysis ofFuture Gate Supply andDemand......................................................... E-33 ·AssumedFutureGate Supply ........................................:..................................... E-33

AssumedFutureGate Capacity .........................................,.................................. Projected Gate Demand....................................:..................:...........................:..... E-34 E-35 PotentialDemand

**fo~** 

## NewarkConcourse C3 Gates............................................... E-36 Key Assumptions ................................................................................................... E-37 Scenario 1-ReplacementofHub bingAirline at Newark ............................... E-37 Scenario 2-Replacement ofHub bingActivity at NewYork AreaAirports E-39 Scenario 3-Replacement ofOrigin-Destination Traffic ........................,........... E-40 Scenario 4--InternationalAirline Consortium
....:............................................. E-42 Conclusions ................................................................................................................... E-43

E-7

## 1 .2

3 4 .5 6 7 8 9 10 

## 11 12 13 14 15 16 17 18 19 20 21 

# I 22 

# l 

# I 

# l I TABLES Page TotalPassengers by Airport
.................................................,......:....."............... E-12· 1997LocalTrip Origins-Top 5 Counties/Boroughs
................................... E-13 ProjectedEconomic Growth-1997-2005
.......................,:............,..........:...... E-14 Historical PassengerData
....................................................................,..........., ·E-16 PassengerCharacteristics
....................................................:....:....................;-.... E-17 1998 Airline Shares ofPassengers
....:...........................................,.................. Ec18 ProjectedPassenger Demand
..........................................;c....................::..: ..., .. · 

## E-19 ContinentalAirlines Service at SystemHubs
......................:..............,;......... E-21 Continental's SeatDistribution atNewark
.................................................... E-21 Airline Service inNewYork-Top 5 Airlines
............................................... E-22 1998 Airline Shares ofOrigin-DestinationPassengers
...,..:.:..................:,·.... E-24 Airlines with 10% orMore ofScheduled Seats inTop 10 OriginDestinationMarkets
.......................................................................................... E-25 Continental's Existing andFuture Gate Facilities atNewark
..................... E-27 Average CostperEnplaned Passenger.
.....................................................,.... E-28 Scheduled DailyFlightsper Gate
..........................................:...,..................... E-30 Estimated Gate Capacity-1999
....,.................................................................. E-32

· Projected Gate Supply
.........................................................................o ..c

..,.......**E~34**



## . Projected Gate Capacity-· 2010
....................,.................................,..............,,. E-35 Current and Projected Gate CapacityUtilization
..............:....,.........:.........:: E-36 Scenario 1-Projected2010 Gate Demand..................................................... E-38 Scenario 2-Projected 2010 GateDemand..................................................... E-39 Scenario 3-Projected2010 Gate Demand..................................................... E-41

E-8

### FIGURES 

## Page 1 AirportServiceRegion: NewYorkArea....................................................... E-11· 

## 2 DriveTimes......................................................................................................... E-15 3 

## RouteMap........................................................................................................... E-23 

## 4 HourlyJetAircraftArrivals-NewYork Airports ....................................... E-31

E-9**~·]**

**.:~** . . 

### [TillSPAGE INTENTIONALLYLEFT BLANK]

E-10

### NEW YORK AREA AIRPORTS 

## The locations ofthe three major airports servingtheNewYorkregion, Newark InternationalAirport (Newark),John

## F. KennedyInternationalAirport (Kennedy), and LaGuardiaAirport (LaGuardia), are shownonFigure 1.

NewYork

New Jersey Figure 1 AIRPORT SERVICE REGION

Newark International Airport

Connecticut , :' '



## E-ll 10 10 20 Graphic: Scale in Miles**"""-~-~"~----~'·-~-~-~--** " 

## '------------- H.D


### As of 1998,these three airports served 97.1% ofthe passengerdemandinthe NewYorkregion, as shown inTable 1:
Table 1 TOTAL PASSENGERS BY AIRPORT 

### New York Region 1998 Percent Passengers oftotal Newark 32,521,000 36.5% Kennedy 31,044,000 34.9 LaGuardia 22,849,000 25.7 Subtotal 86,414,000 97.1 Islip 905,000 1.0 Stewart 737,000 0.8 WhitePlains 940,000 

## ___u .Subtotal 2,589,000 2.9 Total 89,003,000 100.0% Source: PortAuthority ofNewY

### ark and 

### NewJersey, April1999.

This reportdeals onlywithNewark, Kennedy, and LaGuardia (referred to herein as the NewYork area airports). Airport Service Region 

### Althoughthe threemajor NewYork area airports are located in close proximity, theyeach serve distinct areas. Table 2presents data from

## a 1997PortAuthority survey onlocal trip originsbypassengers usingeach airport. The following points are ofinterest: L 

### Manhattan (NewYork County), withits centrallocationandlarge population, accounts for the highestpercentage oftrip origins for each airport.

E-12

### Table 2 

### ' h,- 

### 1997 LOCAL TRIP ORIGIN5-TOP 5 COUNTIES/BOROUGHS 

### Newark Kennedy LaGuardia %of %of %of Rank total Rank total Rank 

### total Manhattan (a) 

### 1 18% 1 42% 1 47% OtherNewYork Queens 2 

### 11 3 

### 10 Nassau 3 

### 10 2 12 Brooklyn 4 9 

### Suffolk 5 6 

### Westchester 4 7 NewJersey Bergen 2 11 Essex 3 

### 10 Morris 4 8 Middlesex· 5 6 

### Connecticut Fairfield 

## 2 _'I 

### Top 5 Counties 53% 78% 83% OtherCounties 47% 22% 17% (a) 

### New York County. Source: CompiledbyLeigh FisherAssociates from surveydata reportedbythe PortAuthorityofNewYork and NewJersey. .!•·



### 2. ForNewark, the next4 counties, comprising35% of

**passenge~s** 

### surveyed,. are all inNewJersey, whilenone ofthese countiesis a top originpoint for · Kennedyor LaGuardia. 3. The top 5 counties account for 53% ofNewark's passengers, comparedto 78% for Kennedy and 83% for LaGuardia, evidencingthatNewark'smarket area ismore geographically diverse, extending into the westernareas of NewJersey.



### E-13 1 i l t 

# H if q 

# ll t1 

# I! \R

**~~** 'l 

# tl 

# " " H 11 

# '' 

# q II 

# !I !I 1:

# I Accordingto NPAData Services, an organizationthatpreparescounty-level economicforecasts, theregionwestofNewarkis expected toexperiencefaster economicgrowththanthe area eastofNewark,as summarizedinTable3. Table3 PROJECTED ECONOMIC GROWTH-1997-2005


## WestofNewark (a) 

## East ofNewark (b) 

## Employment Income 0.9% 0.2 (a) 

## WestofNewark comprises the following counties inNewJersey andNew Yorkwestof theHudsonRiver: Bergen, Essex, Hudson, Middlesex, Morris, Passaic, Richmond, Rockland, Somerset, andUnion: (b) 

## East ofNewark comprises the following countiesinNew York and Connecticut east of the HudsonRiver: Bronx, Fairfield, Kings,· Nassau, New York, Queens, Suffolk, and Westchester. Source: NPA DataServices, 1998. Largelybecause ofground access constraints affecting Kennedy and.LaGuardia (particularly, tunnel andbridgecrossings), Newarkis more convenientfor passengerswestandnorthwestofNewark. Figure2 illustratestheareas within a one-hourdrive ofNewark, Kennedy, and LaGuardia,usingMaplnfoProfessional data on averageroadwaytravel times.· Historical Growth in Passengers

. . . 

## Since 1980,passengertraffic atNewarkhasincreasedfaster thanatKennedy and LaGuardia,primarilyattributableto thedevelopmentofhub operations atNewark (first byPeopleExpress andthenbyContinental).,

**~** 

## ._ : _ _· •.

E-14LEGEND InterstatehighWay Othermajorhighway Highlyurbanizedareas



### E-15 One-hourdrive fromEWR

15 0 One-hourdrive fromJFK

15 30One-hourdrive fromLGA

Graphic Scale in Miles

Figure 2 ONE-HOUR DRIVE TIMES FROM NEWARK INTERNATIONAL, JOHN F. KENNEDY INTERNATIONAL, AND LAGUARDIAAIRPORTS Continental Global Gateway Study Newark International Airport August1999

LEIGH FISHER ASSOCIATES 

### --~

# I ! -

### ....,. 

### Table4 ·---. HISTORICAL PASSENGER DATA 

### Newark Kennedy LaGuardia Total Passengers



### (thousar{d.~) 1980 '. 9,223- 26,796 17,459 53,479 1990 22,255 29;794

-.. 22,765 74,814 1998 32,521 ·-



### . 31,044 22,849 86,413 

### Average annual' · ,_



### , growthrate,. '

- 1980-1998 73% 0.8% 1.5% 2.7% 

### So1jtce: Airports Co,_;nci[i:nternat:ibna]and PortAuthorityofNewYork and NewJersey. · i



## In 1998, accordingto Airports CouncilInternational, the airportswere the eighth (Newark), eleventh (Kennedy), and twenty-second (LaGuardia)busiestinthe United States interms ofannualpassengers. Airport Passenger Characteristics 

## Characteristics ofthepassengers atthe threeNewYork area airports inl998 are summarized inTable 5.

E-16

### Domestic International

**Origin~destination** (a) 

### Connecting (a) 

### ·'- 

### Business (a) 

### Leisure (a) 

### Table 5 PASSENGER CHARACTERISTICS 1998 

### Percentage oftotal passengers Newark
· Continental ·Other Total Kennedy LaGuardia 83% 74% 79% 43% 95% 17 26 21 57 5 70% 84% 76% 68% 92% 30 16 24 32 

### 8 40% 42% 41% 25% 45%.· 60 

### 58 59. 75 55 (a) 

### Survey datacollected betweenApril1997 andApril1998. Total 70% 30 77% 23 37% 63

Source: CompiledbyLeighFisher Associates from datareportedbythe PortAuthority ofNewYork andNew Jersey.

Continental'spassenger traffic atNewarkis 83% domestic, higherthanthe 70% NewYork area total, and 70% origin-destination, lower thanthe 77% NewYork area total. Continental'smarketprofile atNewarkin terms ofbusiness and leisure travelers is similar to thethree-airportmarketprofile. AlthoughNewYorkis a major international gateway and Continentaloperates a major connectinghub atNewark, themajorityofpassengers forbothContinental (70%) and NewYork as a whole (77%) are origin-destination

**passengers~**



### E-17 :'i 

## ' l 

# i .f .'i

**~** 

## ' ,: 

### I"'·



# ~

**~** 

### f -f 

# f 

# ' '

### Airline Shares of Passengers 

### Continental enplanes the largest share ofpassengers atNewark and atthe three NewYork area airports combined, as showninTable 6.

Table 6 1998 AIRLINE SHARES OF PASSENGERS 

### Newark Kennedy LaGuardia Total Passengers (thousands)

, .Continental 18,096: 872 

### 18,968 

### ··.American 2,314 6,817 3,814 12,945 

### Delta 1,613 4,822 6,180 12,615 

### 'USAirways 951 6 6,379 7,336 

### ·United 2,601 1,998 1,764 6,363



### Trans World 341 3,782 727 4,850 

### Northwest 1,177 281 989 2,447 

### Other 5,428 13,338 2,124 20,890 

### Total 32,521 31,044 22,849 86,414



### .Share ofpassengers Continental 56% 

### --o/o 4% 22% 

### American 7 

### 22 17 15 

### Delta 5 16 27 15 

### US:Airivays 3 0 28 9 

### United 8 6 8 

### TransWorld 1 12 3 

### Northwest 4 1 4 

### Other 16

**~** 

### ~- 

### 23



### ·

**i~t;;r** 100"/o. 100% 100% 100% 

### Source: CompiledbyLeighFisher Associates from datareportedby the Port Authority ofNewYorkandNewJersey.



### E-18

### Projected PassengerDemand 

### F



# A.A. Forecasts..



## :rlf~ mostrecentpassengedorecastsfor the three,NewY(Jrk'' ' area airportspreparedbytheFederalAviationAdministration (FAA),

**publishe~.il;l:** 

## 1999, indicate an average annual growthrate ofabout 3% through2010. · ·· · ·

**~** 

### Assumed Growth Rates. 

## Forpurposes ofthis report, a more


## conse~~tlve projection of 1.9% average annual growththrough2010 hasbeen adopted

**(s~~·** 

## , , Table 7). Thismore conservative growthoutlookis usedbecause, for purposes of this report,wehaveconsideredconly currently.planned additionsto.airportfacilitieS, notpotentialfuture additionsthatcould supporthigher demand,
.

."'- 'J '\ ,, ::,

**~** '
...-r-·'
. 

### Table7 · . '-/ PROJECTED PASSENGER DEMAND 

## Passengers (th()usands) Newark Kennedy LaGuardia. Total 1998

## Actual · Domestic 25,700
. 13,300 2l,700' 60,700 

## International 6,800 17,700 1,100 25,700 

## Total 32,500 31,000 22,800 86,400

.. 

### 2010

## Forecast ··Domestic 31,400 '15,200 25,800 72,400 

## Intemational 11,500 22,700' 1,400 35MO • 

## Total 42,900 37,900 27,200 108,000

._ ·:,_.;. . :'.. · . ; r: . •:;, 

## Average annual

growthrate ·" ' .:

## ... •'

Domestic
.1

### c: 

### 1.7%
.. .' .. 

### 1.1%
. 1.5%. _,·,·:i

**,1.5~/h,** 

## International 4.5 2.1 1.7 2.8 .-<.- 

## Average 2.3% 1.7% 1.5% 1.9% 

## Source: LeighFisherAssociates, August 1999.



### E-).9 

# n I' 

# j: 

# I I 

# I

',._• 

## Passengertraffic atNewarkis projected to growfaster'tlian: attheother two airports primarily due to: (1) projected economic growthin the region servedbyNewark, largeiy,west

## ofthe Airport, as describedearlier, and (2)the developmentof Contii:lental service atNewark (discussed in the nextsection). CONTINENTAL'S HUB OPERATION AT NEWARK

..

### : 

### Terminal FaCilities atNewark --_;-. c·_; ..-;. ,.: 

### ·- ·- r- ., 

## There atecurrentlythree separateterll'!inal complexes atNewark:-··Terminal.Ap •. , TerminalB, andTerminal

## C.t · ' ";.

**~.:** 

## •· ''· TerminalA has.three.concourses,with a total of27.domestic gates, leasedbythe.

PortAuthorityto various airlines. Continentalcurrentlyuses 4 gates inTerminalA. Inthenearfuture, Continentalexpects toenterinto a lease arrangementfor a total of 5 gatesinTerminalA. ,, . ,.,, ..•.

.TerminalBhasthree concourses with a totalof24 gates. The 9 gates at ConcourseBlareleased

# J:>y the.PortAuthorityto airlines other thanContinental. •The 15 gates atConcourses B2 and B3 are the onlyinternational-capable gates at

.Newark, and are operatedbythePortAuthorityon a common-usebasis.

,Continentaluses TerminalBfor all its international arriving flights. TerminalC has a totalof42 domestic gates-40 gateson Concourses Cl and C2, and :2 othergates inthe area tobe developed as thenewConcourse C3. AllTerminalC

gates areleased exclusivelybyContinental. Continental'shub qperationatNewark

.isprimarily operatedusingthe gates atTerminalC, 

## with certainflights alsousing

gates atTerminalA and TerminalB.
. · · · Newark's Role in Continental's Route System 

## ·Newarkis Continental's second largesthub interms ofdaily arriving and departing
.

.seats, after GeorgeBushIntercontinentalAirportservingHouston; as shownin Table 8. · ·

.·

.. \



### ,,.·

# .. '.-

### Service Pattern Table 8

. CONTINENTAL AIRLINES SERVICE AT SYSTEM HUBS August 1999



### Houston Newark Cleveland Other Percentof scheduledairline systemseatingcapacity ''45%

37 14 __1 

### 100% 

### Source: ContinentalAirlines, Inc.



## As ofAugust 1999, Continental's dailynonstop seats from Newarkby marketwere distributed as shownin

## Table 9.

Table 9 CONTINENTAL'S SEAT DISTRIBUTION AT NEWARK August 1999 

### Destination International Transatlantic LatinAmerica/Caribbean Canada Transpacific

Subtotal Domestic Northeast Southeast West Central

Subtotal Total Percentage ofseats 13.4%



### 6.6 2.4 

### 0.7 23.1%% 20.4% 24.8 17.0 14.7 

### 76.9% 100.0% 

### Source: OfficialAirline Guides, Inc., online database.

E-21

# I**r~·**

# -·-'
..

**-'~--··**

# -·--

**--~-'**

# ..**~~~--~~~c.c:..~~~·** ·=·-·

**-.-,;.;._~~-** -: .

**-·~:** '-·<- ·.-,:,,:_.·.._,

**~ '~'v'--<-**  **::,;·:·::,.'.,c:>·ci,~-:.-:;;2~\:;.':~~~;-;.-~-~<i_i\~:.:;;<~;g?;{:j;&4;i:~~~;:c:~~j:~-;~_G'-i::§~i**



### A map showingContinental'snonstop destinationsto and from Newarkis presentedonFigure 3. Continental's service exceeds that ofthe otheri:najor airliri.es serviri.g the NewYork area market, as shownbelow:
Table 10 AIRLINE SERVICE IN NEW YORK-TOP 5 AIRLINES 

### August 1999 Number of Number of daily arrivals cities served nonstop Domestic International Domestic International Air Carrier Continental 

## 240 48 52 Delta 

## 140 20 22 

### American 

## 110 44 

## 14 US Airways 

## 132 0 24 United· 

## 81 8 8 

### Commuter Continental 

## 116 7 31 Delta 

## 76 6 21 American 

## 70 7. 13 US Airways 

## 95 0 24 United 42 

## 0 4 Source: OfficialAirline Guides, Inc., onlinedatabase, for service at Newark, Kennedy, andLaGuardia. 35 

## 19 17

0 5 4 2 1 0 0 

## 'TRANSPACIFIC

\ Tokyo {Narlta), Japan I
San Francisco

'I' N w San • Honolulu LEGEND

• Non-stop destination city EWR551 F-0003,fh8 • Vancouver LATIN AMERICA Bogata, Columbia Caracas,

Venezuela Cancun,

Mexico Guatemala

City, Guatemala Lima,

Peru Mexico

City {Juarez), Mexico Panama

City (lntemational), Panama

Rio

De Janeiro (International), Brazil

Sao

Paulo {International), Brazil

San

Jose, Costa Rica
San

Salvador, E! Salvador Santiago

(International), Chile Santo

Domingo, Dominican Republic ·;-•c.-· Nass'u Halifaxe **Berm~da** TRANSATLANTIC Amsterdam, Nether1ands Birmingham,

England Brussels,

Belgium Dublin,

Ireland Dusseldorf,

Germany Frankfurt,

Germany Glasgow,

Scotland Lisbon,

Portugal London

(GatWick), England Madrid,

Spain Manchester,

England Milan

(Malpensa), Italy Paris

{DeGaulle), France Rome

(Fiumicino), Italy Shannon,

Ireland
Tel

Aviv, Israel Zurich,

Switzerland

San Juan st. Martin

• • Antigua

• Figure 3 NON·STOP DESTINATIONS SERVED BY CONTINENTAL

AIRLINES AND CONTINENTAL

EXPRESS FROM NEWARK Continental Global Gateway Study []

Newark lntemational Airport August 1999 LEIGH FISHER ASSOCIATES

**_,,.~c.·; '-Y~?\"-?h"":<!•i'+'f:;:•c_,;•;-;»_":·:<n.,•"i**  >'·::?yf·"':i"-"'X·--:·-

**~i:---~~~:rr;>};·.~-~-~~<;w~'R·~~.._"<<\:?o"fi•~----"** · '•'-" · [ I I.

**-~.** --· : .. -.. : . - : · 

### ..·-·--·,·:.,;. ' . - ' ---

**-.;:·;j-:.'d;-z;i;.'>a!J~-.~~** -.·.·:,;_.:; ,_-·

**~~"- i>i;re<\~f;<;;t··** **-~f:>:-:s-i~-~\{e~\:::,3:;'i,·\iftfi&~;;r;:_,· ;;"::.if-~'**  

## .___ **~**


### Share of Origin-Destination Passengers 

## Anestimated 70% 

## ofContinental'spassengersusingNewark originate at or are destined for Newark; thesepassengersrepresent approximately 52% 

## ofallcirigin-- destjnationpassengers atNewark and,whencombinedwithContinental's • . · . _

**pass~ngers** 

## atLaGuardia, approximately 20% 

## ofall origin-destinationpassengers

# at the

# three NewYork area airports, as showninTable 11.
Table 11 1998 AIRLINE SHARES OF ORIGIN-DESTINATION PASSENGERS New York Airports



## Airline ,;· Continental Delta American US Airways United Others

Total ·.Estimatednumber of '
. origin-destination

passengers (thousands) 13,433 

### 10,045

. 9,950

6,318 5,565 21,029 66,340 

## ·Share of.· 

## NewYork area·

airport total 20% 

### 15 15 10



### 8 32 100% 

## Source: CompiledbyLeighFisherAssociates from data.· reportedby the PortAuthorityofNew York and NewJersey
.

. : .. Continentalhasthe largestpercentage oforigin-destinationpassengersinthebusiest

·travelmarketintheUnited States andhasthe leading share ofseatcapacityinthe top 10

**origin~destination** 

## markets from NewYork, as showninTable 12.

E-24--'.····. Table 12 AIRLINES 

### WITH 10% OR MORE OF SCHEDULED SEATS ... ·IN TOP 

### 10 ORIGIN-DESTINATION MARKETS

.. New York AreaAirports August 1999



### Number ofmarkets with
. 10% or greater share Airline Domestic International Continental 10 

### 8 

### United 4 2
·**Ari:leri~~** 

### · 

### 5. 2 USAii:Ways 3 

### 0 Delta 

### 5 4 Northwest 1 2 TransWorld 0 2

. Sources: ·U.S. DOT andOfficialAirline

.,,, \Guides,Inc., June 1999
.

. :**~**•. ': --**:'"I~** '
....· 

### Implications: Demand for Continental's Terminal Facilities**~** ....



## The purpose ofthis reportis to analyze demandfor gates atNewarkunderthe hypothetical assumption.that Continentalceases or substantiallyreducesits service atNewark The strengths ofContinental'shub operation atNewark described above are positiveindicators ofpotentialreplacementdemand, as follows:.

- 

### . . ,. . . - . 

## 1. The localmarketarea servedbyContinental at Newarkis distinctfrom the Kennedy andLaGuardiamarketareas, duetothe airportlocations al).d tl;l.eir accessibility: ·.· · · ·**·~** 

## ·· · · · · · · ·· · · · · · 

## ,.. 

## 2. The majority ofContinental'spassengers areorigin-destination, and · Continental'srange and frequency of servicehaveestablished a leading market share inNewYork'stop origin-destinationpassengermarkets. 3. The availability ofa largenumberofexclusive-use gates in a single terminal facility has facilitated Continental's developmentofservice and market sharein the New York area.

E-25

# .rtf'
..· ....

'CONTINENTAL'SGLOBAL GATEWAYDEVELOPMENT PROJECT 

## Theneed for Continental's Global GatewayDevelopment isdrivenby growthin

. Continental's service at**N:ewark;~p<,lrtict.ilai:Iy mte\'naHoila!~**  

## Contiliental's terminal ·

facilities atNewark are**curi~ntly**

## opefating:atcapacity and additional gate capacity
.

. is required to allowContinentalto implement.plaiilled service increases. ·

Project Components 

## Continental'sGlobal GatewayDevelopmentatNewark

## js scheduled to consist ofthe
· following components: .., . 

# •

• Construction ofa newTerminal C ConcourseC3 v.Yifh 12 to 19 gates (dependingonaircrafttype), allbutone capable

# _Mhandling arriving internationalflights. · ··' Constructionofa new Terminal C Federa) InspectionServices (FIS) facility, withcapacityto handle 1,500 hourly arriving internationalpassengers. • Rehabilitation and reconfiguiation ofTerminalC Concourses C1 and C2, improvingpassenger fadlities andproviding anairside connector thatwill permitpassengers to transferbetweenall TerminalC gates without security u

## recheck·.,;
. . .. . .. ... - ..... . ... - . . .. .. . .. . .
• Renovation and expansionoflandsidefacilities serving TerminalC.

.... Rehabilitation ofportions ofTerminal·A; providing5 gates for Continental. ':< /: ., 

## • · PortAuthority investments inrelatedroadway anqparking facilities.
• AdditionalContinenti!investments in

## non~teimmal facilities such as cargo

., · , . c'.' 

## buildingsand aircraftmaintenancehangars,, "''' ,_.**:c··"?:.~.·-_:-:·:··.** -· .!!
.. ' ·'
... :' - ..**""';!~-,'-:** _.,.·-. .. •.'···-**:,<:~",1~_-,** •.· 

## Table 13 presentsContinental's existing andfuture gate facilities, atN,ewark. The diagram onpage 9 ofthe Official Statementis anillustrationofthe ctirrentplans for the renovated and expandedTerminal

# G. ,., . ..

..__ , __ .· .- ·:"£.·
...

'·'·

### Table 13 CONTINENTAL'S EXISTING AND FUTURE GATE FACILITIES AT NEWARK 

### After completionofGlobal 

### As of1999 Gateway Development Newark Newark Continental total Continental total TerminalA 5 (a) 

### 27 5 (a) 

### 27 TerminalB 7 (b) 

### 24 7 (b) 

### 24 Terminal C

Concourse C1 25 25 25 

### 25 Concourse C2 15 15 15 15 Concourse C3 15 (c) 

### 15 (c) 

### Other 2 2

Subtotal 42 42 

### 55 55 Total 54 93 67 106 (a) 

### Continentalexpects tolease 5 gatesatTerminal A during 1999. (b) 

### International gates onConcourses B2 and B3 inTenninalBarecommonuse. 

### Anequivalentof7 gates was allocated to Continental for purposes ofanalyzing gate use. (c) 

### Number depends onmixofaircraft: capacityranges from 12 widebodyto 19 narrowbody aircraft simultaneously. Source: LeighFisher Associates,basedoninspections andinformation from ContinentalAirlines,June 1999.



### Cost per Enplaned Passenger ' '' 

## Based oninformationprovidedby

## Continent~!, it

## is estimated thatthe

## ~ve~~ge 'cost per enplanedpassenger for Continental'sNewarkhub operationwas approximately $8.60 as of 1998, as shownin Table 14. Included are only costs to rent andmaintain terminalfacilities, notother costs associated with airline operations. Based onthe estimated debt service andotherrentalpayments.associated with the Global Gateway Development, assumed inflation-related cost increases, andprojected growthin enplanedpassengers, itwas estimated that the average cost perenplanedpassenger mightincrease to approximately $11.80 by2010. The highercostfor international passengers showninTable 14 reflects (1) the cost ofproviding additionalfacilities only usedbyinternationalpassengers (e.g., sterile corridors and inspectionfacilities) and (2) the loweraverage facility utilizationfor international operations.

E-27',-,
Table 14 AVERAGE COST PER ENPLANED PASSENGER 

### (a) Continental Airlines at Newark 

## 1998 2010 Domesticpassengers $ 

## 5.00 $ 

## 5.50 International passengers 26.70 29.20 Overall average $ 

## 8.60 11.80 (a) 

## Includes terminal rentals andmaintenance costs only.
. .. · Source: Leigh FisherAssociates, based on informationprovidedby Continental Airlines.

Official Statements for recentfinancings ofnewinternational terminals at Kennedy .reportcostper enplanedpassenger figures of(1) between$40 and $55 for internationalpassengers and (2) between $10 and $15 for domesticpassengers.

' ' 

## The data onTable 14 and the comparablerange for Kennedy cited directly above do not include aircraftlanding fees. Jtis estimated from thePortAuthority's current landingfee rate thatlandingfees are the equivalent of$6.50 perenplanedpassenger atNewarkand $6.00 perenplanedpassenger atKennedy. DatapublishedbyAAAE indicate thatthe overall average costper

**~nplaned** 

## passenger attheNewYork area airports isbetween $15.00 and $30.00, including landingfees. Implications: Demand for Continental's Terminal Facilities 

## Withregard to potentialfuture demand for Continental'stermina] faCilities at·. Newark, positive features ofthe Global GatewayDevelopmentinclude: · 1. Terminal C willprovide-the only exclusive-useFIS facility atNewark 2.. Concourse C3 willbetheonly concourse atNewark designed and appropriately sized for widebodyinternationalflights 3. TerminalC willbelarger than ai'ly other existingsingle-airline,terminal complex, and similar in sizetoAmericanAirlines',propos(\d development atKennedy: ·
E-28·'"' 

### ANALYSIS OF CURRENT NEW YORK AREA AIRPORT GATE DEMAND 

### Current demand for gates atNewark, Kennedy, and LaGuardia was analyzed to provide a "baseline" for assessingpotentialfuture gate supply versus demand conditions, as described inthe following sections. Scheduled Flight Activity 

### Airline flight schedulespublishedbyOfficial Airline Guides, Inc.,were obtained and summarizedbyterminal complex ateachofthethree airports, as shoWnin Table 15. As ofAugust 1999 (Augustis typically thepeakmonthoftheyear), Terminal CatNewarkis estimatedto havethehighestutilization,--interms ofdaily arrivingflights per gate--of all terminals. Althoughthe averagen.umber. ofarriving •flights per gate atKennedy is lowrelative toNewark and LaGuardia, airlines

servingKennedy use larger aircraft withgreaterpassenger capacity: · Figure4 illustrates arrivingflightsbyhourofthe day for each airport, showingthat the afternoonis 

### thepeakoperatingperiodfor each ofthe airports.

**Es~imated** 

### Gate Capacity Utilization 

### The LeighFisherAssociates GateManagementModel-a computerprqgram that matches airlineflight schedules to available,gate facilities, consideringfactors such as aircraft size, gate configuration, and airline lease arrangements-was used to analyze gateutilizationofeachofthe NewYork area airports as ofAugust 1999. Theresults ofthe GateManagementModel analysis were used to calculate percent . capacityutilization, i.e., thepercent ofavailable gates occupied duringthe peak operatingperiod ateach airport. Thenumber ofgates occupied during·the peak period is greater than the number ofarrivingor departing flights inthepeakhour because many flights (particularlywidebody international flights) occupy a gate for morethan 1 hour. · ·. The estimatedpercent capacityutilization ateachairportwas then appliedto the estimatednumber of 1999 annualpassengers and comparedwiththe theoretical number ofpassengers thatwouldbe accommodated at 100%,utilization to calculate .the implied excess capacity. · ·

E-29

### Table 15 SCHEDULED DAILY FLIGHTS PER GATE 

### August 1999

Newark

Terminal A Terrrrii'lai B Terminal

# c Kennedy

Terminal1 Terminal2/3 Terminal4 Terminal 5

## I6 Terminal? Terminal8/9 LaGuardia

CentralTerminal DeltaTerminal US AirwaysTerminal Dailyarriving jetaircraft flights (a)



### 113 114 (b) 

### 259 (b) 

### 486

15 81 49 68 19 68 300 171 96 117 384 Gates 27 24 42 

### 93 10 25 

### 12 29 12 23 111 39 16 22 77 Note: Gates exclude apronhardstandpositions. (a) 

### Excluding commuter aircraftflights. .Daily arriving. flights pergate 4.2 4.8 6.2 5.2 1.5 3.2 4.1 2.3 1.6

. 3.0

2.7 4.4 6.0 5.3 5.0

(b) 

### Continental'sinternationalflights arrive atTerminal Banddepart· fromTerminal C, andfor purposes ofthis analysis are allocated 50%.'··· to eachterminal.

.. Sources:
.Arrivingflights-Official Airline Guides, Inc
... Gates-LeighFisherAssociates;basedoninformationfroni ContinentalAirlines andvariouspublishedreports.

E-30

### · · NeWark International Airport 50 40
"' 30



## ~ 

## .E c( 20 10

0 Hour ending: 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16· 17" 18" 19 20 21 22 23 24 

### John F. Kennedy International Airport 50 **~-------------------------~---------------------------------------------------------------------------** 40 ------------------- 30 

### -----------------------------------------------------------··----- 20 10 ------------------------ 0 Hourending: 1 2 3 4 5 6 7 8



### LaGuardia Airport 50 40
------- --··--- ------------------ -··--- ----.------ ..--------- ..------------- ---.-- ··-- .. --------------- "' 30 --------------------------------------------------------------------------- ---·--- -- --------------



## ~ 

# '" 

# < 20 --··"---------------------------- 10 

## -- _:__ __ --- --------------- ------- . OL... _______ _ Hourending: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Source: Offical Airline Guides, Inc., online database. Datafor'atypical peakday in August 1999, excluding commuter airline flights.



### E-31 Figure 4 HOURLY JETAIRCRAFT ARRIVALS NEW YORK AIRPORTS Continental Global Gateway Study Newark International Airport

**~** August1999



# ~ LEIGH FISHER ASSOCIATES:- )!, 

## " I: ,, I' 1, 

### ·li 

## Table 16 summarizes the results ofthe gate utilization analysis:

Table 16 

### .ESTIMATED GATE CAPACITY-1999 

## Passengers in thousands

· Newark
.Kennedy LaGuardia Annual

**p~ssenger** 

## demand Available gates · Annualpassengers

# per g'}te
..

.Estimatedpercent<;apacity utilization ·•'.
__ ._._ .....**_-,·-_·_:-.:i~·:_'** '• -<·.>_.

**,.-.·~:~_:\''<·** 

### __· .. **''4•"~.::_** .....-, ':



## . Implied·capacitf(atlOO% utilization) Annualpassengers (a) 

## Annualpassengers per gate (a) 

## Impliedexcess capacity

Annualpassengers (b)· 

### 33,200 

### 93

. 357

**93~.**



### ····,-J;~~~~:- ;'{. "



### 35,700 384 2,500 31,700



### . 111
.

286 

### 83% :::· ._.,

**~** .;_: ,

### ..



### 38,000 343 6,300 23,300 77 

### 303
28,000 364 4,700 

## Total 88,200 281 314
101,700 362 13,500 (a) 

## Calculatedbyapplying the estimatedpeakperiodpercentcapacityutilizationto

. the estimated annualpassenger demand. (b) 

## Implied capacityless actual annualpassengers. So\.lrce:

**L~igh** 

## FisherAssociates, June 1999.


### As 

## sh()WninTable 16, Newar]sJs estimatedtohave thehighestcapaciryo.utilization (93%)

# ofalithree airports; co:rlsfstent

# -0-itli'the relativelyhigh averagenun.'i.ber of arrivingflights per gate (5.2, showninTable 15) and confirmingthe need for · additionalterminal development atNewark Continental's average utilization at Newarkis estimated tobehigher than the airportaverage, about98%. 

## The estimated capacity utilization atKennedy (83%) 

## is highrelative to the average number ofarriving flights pergate (2.7) because ofthepredominance ofwidebody internationalflights thatarrivein a concentratedpeakperiod and occupygates for longerperiods thannarrowbodyflights. The estimatedcapacity utilizationfor LaGuardia (83%) 

## is lowrelative to the average number of arrivingflights per gate (5:4) because ofthepredominance ofnarrowbody domestic flights that occupy gates for relatively shortperiods oftime. · Overall, itis estimatedthatNewYork area airportterminals are currentlyoperating at 87% 

## capacity, implying a theoretical capacity to accommodate an additional
.. 13.5 millionpassengers at 100% utilization. However, inpractice 100% utilization is not achievable because muchofthe available capacity is ih

## the form ofa few spare gates atvariousterminals at certaintimes ofthe day, and not convenientoruseable E-32

## bythose airlines requiringit, particularlyfor significant expansionby amajor airline. Giventhepracticalrealities of airline operations and the actual distribution ofpassenger demand amongairlines, itis estimated that somewhere inthe range of 85% to 90% capacity utilizationis thepracticallimit. This estimatedrange of practical capacityunderscores the need for theplanned major expansionsby Continental atNewarkand American at Kennedy. ANALYSIS OF FUTURE GATE SUPPLY AND DEMAND 

## Thebaseline 1999 gate capacityutilization described in theprecedingsectionwas used to assesspotentialfuture gate supplyversus demand conditions. Forpurposes ofthis analysis, 2010 was used as thebenchmark yearbywhichboththe Global GatewayDevelopment atNewark and the AmericanAirlines expansionatKennedy areexpected to be completed. Assumed Future Gate Supply \ 

## Table 17 shows the existing (1999) andprojected (2010) gate supply atthethree NewYork area airports. Major assumed changes include: 

## • •


# • CompletionofthenewTerminal4 atKennedy, for a net additionof4 gates. ConstructionofAmerican's 59-gate terminal at Kennedy (plannedby 2006), for a net addition of36 gates. Construction ofContinental's Concourse C3 atNewark (plannedby2002), for a net addition of 13 gates. No otherplans for gateexpansionattheNewYork area airports havebeen announced. Potentialfuture gate expansionsnot reflected inTable 17include (1)

**redevelopm~t** 

## ofTerminals 2/3 atKennedy, (2) further expansionofTerminal4 atKennedy, (3) reconstructionand expansionofTerminals5

## I6 atKennedy, and · (4) constructionofadditional gates atTerminalA atNewark. Therehavebeen recentpressreports thatUnitedAirlinesandDeltaAir Lines are

## in_discussions with the PortAuthorityregardingpotential future terminal developmentatKennedy,but the scope and schedule ofthese potentialprojects arenotknown at thistime. Althoughthesepotentialexpansions arenot reflected 

# in the analysis c!escribed herein, it islikely thattheimpetusfor suchprojectswould be the resultoffaster demand growth thanthat assumedfor this report. Due to physical constraints, itisnot considered likelythatthere will

## be any material increase inthe gate supplyat LaGuardia during theforecastperiod.

E-33

### Table 17 PROJECTED GATE SUPPLY

. 

## Newark TerminalC Total Kennedy LaGuardia Total 

## 1999 gates :,

### .. 'M,,c, 

### Domestic 

## 42 78 43 77 198 International 

## 15 68

.. 

## .83

· Tofar ·_;: 

## 42 93 111 77 281'
..

.2010 gates Domestic 

## 40 

## 76 57 77
. 210 International 

## 15 30 94 124 Total 

## 55 106 151 77 334 1998-2010 increase

(decrease)

..



### Domestic 

## (2) (2) 14 12 International 

## 15. 15 26 41 Total 13 

## 13 40 53 Source: LeighFisherAssociates, August 

## 1999, based onthe assumptions described 

### inthe text.



### Assumed Future Gate.Capacity

.
"" • f- •- ' •- • •,· , •' > ' ,••, '' :" " :'c" ' " '

**-:;~** ' ' ' ' '' ·: ;' ' • ", '· ' 

## Inthe·future, averagegate:capaCity

# ateach airport, expressed in

## terms of annuaJ
. passengers

## pet gate, will

# be i-tffectedby <±tanges in

## gatesupply, as follows: · · · -: . _,. . . . . 

### . 

## . . " . 

### . . 

### 1. 

## Newark-Thenew gates atTer!ninal C:::·

## plannedto beconstructedas partof theGlobal GatewayDevelopmentaredesignedtohave greater capacity (in terms ofaircnift size accommodated) thanthe existmg gates. Basedon '
. analy?isofthefutUre mix ofgatesby aircraft size, itwasestimatedthatthe · average'gatecapa'city at Newarkwould increase from 384,000 annual
.

passengers in1999 to 419,000 m2010.
. . . . 2. Kennedy-Mostofthe assumed futurenew gates atKennedy

# atethose plannedfor theredeveloped Americanterminal complex. Accordingto published news accounts, a significant number ofthese new gates willbe designed for regionaljet aircraft, which carryfar fewer passengers than the typical aircraft operated at Kennedy. Based on analysis ofthefuture mix of
E-34

## gatesby aircraft size, itwasestimated thatthe averagegate capacity at Kennedywould decrease from 343,000 annualpassengersin 1999 to 327,000 in2010. 3. LaGuardia-Because itwas assumedthattherewouldbeno change inthe gate suppiy atLaGuardia, itwas also assumedthattherewouldbe no . change inthe annualpassenger capacitypergate estimatedfor 1999. Projected Gate Demand 

## Estimatedfuture gate supply and capacity characteristicswererelated to the ·assumedpa:ssetiger demand:growthateach ofthethree airports to assess future demandversUs supply conditions, as showninTable 18.
Table 18 PROJECTED GATE CAPACITY22010 

## Passengers in 

## thousands

Annualpassenger demand Available gates Annualpassengersper gate Estimated capacity
.. (at 100% utilization) Annualpassengers per gate Annualpassengers. Impliedpercent capacity utilization
.

- ' •. ' -, ' • • -- ',. - < ·' ' '_;

**~--** ' 

## Impliedexcesscapacity ·

Annualpassengers· Newark 42,900 106 405
419 44,400

97%

.. ·-;. 

## Kennedy 37,900 151 251
327 49,400.

77% LaGuardia 27,200 77 :353,
364

_, -;: 

## 28,000. 97% 

## _,:-· i::•

. ·j

**~~** ' 

## Total or average 108,000 334 323
365 121,800.



## (at 100%utilization) 1,500 11,500 800 1;>,800' Source: LeighFisherAssociates, August'l999:' ,,



## As shown,Newarkis projectedtohave a 97% capacity'titilizationratio in'20l0; The majority ofthe excess capacity attheNewYork airports in2010 is

## projected tobe at Kennedy, attributableprimarilyto theproposedAffierl'canterminal. · · '

E-35 

## :l ::,
_,.. 

# {

_J '

**~·**



# t '

## Table 19-presents a. comparison ofthe estimated gatecapacity in 1999.and 2010. As shoWn, despite the assumed;increases in gate supply,the average capacityutiliza- · tionfor thethree airports is projected to increase from 87% in 1999 to 89% in 2010, as a resultofincreasedpassenger demand.
Table 19 · CURRENT AND PROJECTED GATE CAPACITY UTILIZATION



## . Annual passengers

Available gates New York Area Airports Passengers in thousanqs



## Estimated peakcapacityutilization Implied excess capacity-annualpassengers Source: Leigh FisherAssociates,June 1999. . ·- .-' "•' 

## .Existing 1999 88,200 281 87% 

## 13,500 .. < ___ , 

## Projected 2010

. 108,000
. 334 89% 13,800

As mentionedpreviously, analysis ofexistinggate demand indicates thatcapacity utilizationinthe 85% to 90% rangeis thepractical limit (as theremaining available gates are not available whenand whererequired to 

## meetspecific airline needs), POTENTIAL DEMAND FOR NEWARK CONCOURSE C3 GATES · 

## Theanalysis above demonstrates an aggregate demand for gatesafthe three
. NewYork airports. Thefollowing specific scenarioswere consideredfor the

**re~use** 

## , ofConcourse C3 inthe hypotheticaleventContinentalwere to cease·orreduce service:· 

## 1. Replacementhubbingairline at Newark

.. .o:·.:. ·'
. _,

### .. - 

## 2. Replacementofhubbing activity at otherNewYork area airports3. Replacement oforigin-destinationtraffic only 4. Consortium ofinternational arrlines



## E-36' ' 

### Key Assumptions 

## The following assumptionswere used inanalyzing thepotential demand for Concourse C3 gates: 

## • The costto replacement airline(s) to lease gates on Concourse C3 wouldbe reasonablerelative to 

## the costofgates at otherNewYork area airports. See the earlier sectioninthis reporttitled "CostperEnplanedPassenger" and the sectionin;theOfficial Statementtitled "CertainBondowners' Risks"

• Replacementairline(s) would alreadyhave orwouldreceive route authority tq serve Continental'sinternationalmarkets. 

# • The proposed contractual and administrative arrangements thatwould a ply to replacement airline(s) wouldbereasonable relativetothose at other NewYork airportterminals, andwouldnot adversely affect thepotential demand for Continental's Newarkfacilities describedinthehypothetical scenariospresentedinthis report. Asnotedearlier,considerationofsuch contractual and administrative arrangementswasnot within the scope of our analysis or report. Scenario 1-Replacement of Hubbing Airline at Newark In

## Scenario 1, a single airline wouldreplace most or all ofthe airline service providedbythe Continentalhub atNewark. Candidatesmightbe Northwest Airlines orUnited Airlines. Northwest, an alliance partner ofContinental's, currentlyhas a.relativelyminor presence inNewYork andthenortheasternUnited States. A New Yorkhub would complementNorthwest's existing routesystem. Vriiteddoesnothaveits own terminalat anyofthe NewYork area airports, and could be displacedbyBritish Airways' growth atKennedy. Table 20

## presentsprojectedgate demand atNewarkin2010, 

## giventhe hypothetical replacement ofContinentalby a hubbing airline atNewark. The key assumptions and calculations summarized onTable 20 

## are explained as follows: 

## 1. Projected ContinentalPassengers atNewark-Itwas assumed that Continental'spassengers at Newarkwouldincrease at anannualrate of 3.6% from 1998 

## to 2010, 

## faster than the averageratefor Newark shown on the earlierTable 7 due to Continental's continuedhub developmentand the future available capacityinthenewTerminalC3. This assumed growth produces anincrease inContinental'spassengermarket share atNewark from 56% in 1998 

## to 64% in2010.


## E-37

## Table 20 SCENARIO 1-PROJECTED

## 2010 GATE DEMAND 

## Passengers in

**thousa~ds** 

## Scenario 1 Base (a) · .

## Low (b) 

## High (c)



## · Newarkhubpassengerdemand ·

Gate capacity-annualpassengers per gate 27,500
. 26,200 33,100 Required gates Assumptions: 410 67
(a) 

## Projected Continental passengers at Newark 410 

## 64 410 81

(b) 

## Projected United orNorthwestpassengers atNewarkplus 75% of Continental'spassengers. (c) 

## Projected United or

## Northwestpassengers atNewarkplus 100% of Continental's passengers. Source: Leigh FisherAssociates, June 1999.

2. ProjectedUnited or NorthwesfPassengers-It was assumed thatthe existing (1998) number ofNewYork areapassengers carriedbyUnited and Northwestwould increase atthe projected annualrate of 1.9% for the NewYork area shown onthe earlier Table 7.

·· 3: 

## NewarkHubPassenger Demand-Forpurposes ofthis scenario, itwas assumedthatthe averagenumber ofNewYork areapassengers carriedby United and Northwest (thatis, the sumofthe two airlines dividedby two) wouldbe combined withmostor all oftheContinentalpassengers at Newark. · 4. AnnualPassengers per Gate--Itwas assumed thatthenumber ofannual passengersper gate wouldbe equivalenttotheprojected 2010 passengerper-gate capacit:fofContinental's Newarkhub operation. 5. Required Gates-Therequired number ofgates was calculated as the animalpassengers dividedbythenumber ofannual passengersper gate. · ' The required miniberofgates shownfor the Base case is 

## the same as

' planned for Contiilental atNewark(55 atTerminal C,7atTerminal B, and 5 ·· ··. atTerminal A). ·

E-38.,• 

### .



### In

## conclusion, under Scenario 1,'a replacementhub operation atNewarkwould .likely require a number ofgates exceedingtheprojected55 TerminalC gates including the gates onConcourseC3. Scenario 2-Replacement of Hubbing Activity at New York Area Airports In

## Scenario 2, airlinesthatcurrentlyhave a strongpresenceinNewYorkwould replaceContinental'sNewarkservice atother NewYorkairports.. Facilitiesrequired bythese airlineswould .likely displace other airlines, inturn creatingdemandfor terminal space atNewark. · Candidate airlinesmightbeAmericanAirlines orDeltaAir Lines. American, the airlinewiththe secondlargestpassengermarketshare inNewYork,hasrecently lostmarket shareto Continental andhasplans for a majorterminalexpansion at Kennedy. Delta,the airlinewiththe thirdlargestpassengermarketsharein NewYork, has developedKennedy as a transatlantichub, andhastwo adjacent connected terminals (Terminals 2 and3) atKennedy. Table 2lpresentsprojected gate demand atNewarkin2010, assuminghypothetical replacementofContinental'sNewarkhub bing activity atother New York area

Table 21 

### SCENARIO 2-PROJECTED 2010 GATE DEMAND Passengers in thousands · 

## Scenario 2 Base Low (a) 

## High (b) 

## Kennedypassenger demand Kennedy
**p~sse~ger** 

## capacity Excess demand Gate c·apacity-annualpassengers per gate (e) 

## Newarkgate demand Assumptions: 37,900

**49~400.** 

### 58,500 49,400 (c)



### 9,100



## 377

24 65,400 42,000 (d) 

### 23,400 377

62
(a) 

## 75% ofContinental'sNewark passengers are accommodated atKennedy. (b) 

### 100% 

## ofContinental's Newarkpassengers are accommodated atKennedy. (c) 

## Assuming 100% 

## ofKennedy's capacityis available. · . · (d) 

## Assuming 85% 

## ofKennedy's capacity is thepractical limit. . (e) 

### 10%

## decrease from averageNewarkcapacityto reflectmultiple airline operations. Source: Leigh Fisher Associates, June 1999.

E-39

# I c

.. ,

**-~»-·" -~··s**  

## airports. Because it is

## projected thatthere willbe little orno available capacity at LaGuardiaby2010, Scenario 2 is focused on the use of available capacity at Kennedy. Thekey assumptions and calculations summarized onTable 21 are explained as follows: l. 

## Projected KennedyPassengerDemand-TheBase case showsprojected Kennedypassengersfor 2010 as presented earlier inTable 7. For the Scenario 2Lowcase andHighcase, itwas assumed thattheBase case Kennedypassengers wouldbe combined withmost or all oftheprojected
. Continentalpassengers atNewark. · 2. EstimatedKennedyPassenger Capacity-Forthe Low case, itwas assumed · that 100% oftheestimated Kennedypassenger capacity (as presented

earlier onTable 18) wouldbeavailableto accommodate increased demand. For theHigh case, itwas assumedthat 85% ofKennedy's capacity is 

## the practical limit,based onpreviously described gate occupancy analyses. 3. Excess Demand-The excess demand is calculated as the difference

. between forecast Kennedypassengers andestilnatedKennedypassenger

capacity. This isthe demandthatis assumed to require gates atNewark. 4. AnnualPassengersperGate-Becausethe excess demand is assumed tobe accommodated at Newark, the annual gate capacity estimated for Newark is used. For.purposes ofthis scenario, itwas.assumed thatthe annual gate capacity wouldbe 10% lowerthantheBase case due to thelikelihood that a combination ofairlines requiring gates atNewarkwould notutilize gates as effiCiently as thesingle-airline Continentalhub. 5. NewarkGateDemand-The resulting demand for gates atNewarkis calculatedbydividingthe excess demandbythe gatecapacity.

· As showninTable 21, itis estimated thatKennedy's availablecapacity in2010

wouldnotbe sufficientto accommodate replacementofthe Continentalhub bing activity, resulting in excess demand and demand for gates atNewark. The estimated range ofexcess demandcompareswiththeprojected 55 gates in TerminalCatNewark. Scenario 3-. Replacement of

**Origin~Destination** 

### Traffic 

## In

## Scenario 3, Continental'sNewarkprojected origin-destinationpassengers,butnot conriedingpassengers, wouldbe accommodated where capacityis available at other NewYork area airports. Candidate airlines for replacementmightbe Southwest Airlines, Delta Air Lines, orUS Airways.
E-40

## Southwestrecently initi<Jted service atLong Island M<lcArthur Airport (Islip). Delta has a strongpresence atKennedy andLaGuardia. US Airwayshas a strong presence at LaGuardia. Table 22 presentsprojected



# g~te demand atNewarkin2010, giventhe replacement oforigin-destination,butnotconnectingpassengertraffic atNewYork area airports where capacity is available.

.,, · · Tabie 22 

### SCENARIO 3-PROJECTED 2010 GATE DEMAND
·. Passengers in. thousands ' 

## ·'·

-·· .. 

## ·. Base
. ·Scenario3

**--=-I..~ow~---'-:;Hi"'-"-=h:--o-.~** 

## .... 

## g ' Kennedypassenger demand 37,900

... **:Ke~edy**

## passengercapacity 49,400 Excess demand ' Gate <:apacity;_anriualpassengersper gate Newarkgate demand Assumptions: 57,800 (a) 

### 49,400lb)



## 8,400 '

356 (d) '



### 24 

## 57,800 (a) 

### 42,0QO 

### (c) 

## 15,800' 356 (d) ' 

### ,,44
(a) 

## ProjectedKennedypassengersplusprojected ContinentalNewark origindestinationpassengers. · · " · (b) 

## Assuming availability of 100% ofKennedy capacity. (c) 

## Assuming 85% ofKennedy capacity is

## thepractical limit. (d) 

## Reducedtoreflectlower gate use for origin-destination operations.

**S9ur~e:** 

## : LeighFisherAssociates, June 1999.

• . < 

## J?ekeyilsshillptions and calculations summarized orrTable 22 are explained'as
.· follows: · · · · ,, ,• 

### 1. •

## Projected KennedyPassengerDemand-TheBase case showstheprojeded Kennedypassengers for 2010 as presented·earlier onTable 7. For theLow _and Highcases, itwas assumed thatthe Base caseKennedypassengers

.·wouldbecombinedwiththeprojectedContinentalorigin·-destination ·_

passengers atNewark. Forpurposes of

## thisscenario; it

## was assumed'tl\.a.t Continental's origin-destinationpassengerswould account

## fat approximately 72% ofContinental'stotalpassengers, a:"

## slightincrease from the
. estimated 70% in 1998. · ·· · · ·· · ·, '· ·

E-41 ' IN 

## l 

# i 

# ' 2. Estimated KennedyPdssengerCapacity..:.:::. Thesame a:ssum'ptiorts as'for · 

## Scenaiio2:l ·'i 

### .< ·-

**~~---~** 

### ;...

**··~- ...:_.·;-,·,:·--~>·**  

### ·,! ·

**.~_,,_,~;** 

### 3. Excess Demand-Thedifferencebetweenprojected demand and capacity. ----;;;

**::~_~,..** ·-· _.,, .... ·i·= :··; . .-;·_:·_ ,-.·- ·:: **_,,~_&i·r;.__~··.-·:'·'f':r~:~-** ...... -···. -·· ._.,_-· '_.-_-

__ ,

**-~**



### .4.·. AimualPassengersper·

**Gat~** 

### As forScenario2;.reducedby.10% toreflect.· lower gate utilizationfor a multi-airline operation, and a further 10% to

..reflectlower-utilizationorigin-destinationtraffic.
. 5. Newark Gate Demand-Excessdemand dividedbygate capacity. r:·:.<1

**~-':'!.::;, .'-~·:":**  ' .- ·"

**-~** :-· **''";·y-·:·_.·-,_~-~** ---- ; :
**:~·~,-\~-.:---,::;** 

### As with Scenario 2, Scenario 3 is

**fo~used**

### ·on,the available capaCity atKennedy. Underthe Scenario3 assumptions, theprojected'excess capacity atKennedy could onlyaccornrnodate.aportionofContinental'sorigin-destinationpassenger demand; ; The estipv1ted range of

**~xcess** 

### demand shown onTable22 is 

### somewhatless thanthe

. projected 55 gatesinTerminalC.
. .. , ,-,-,-,,

**t~··** 

### .. ,,, .. , ,·_, 

### However, Scenario 3

**i~** 

### likelyto lffiderstate the demand for gates at**New~kbecause,** 

### given

# the marketarea'aatapresented earlier, itis likely that Newarkwoi.ilifl:\ea preferred airportforairlinesreplacingContinental'scurrent
**origin~destination** 

### passenger service. Forexample, the 19,90Q,annualCoi\tinenta\migin,-destination · passengers assumed for Scenario 3 in 20io;ifall accomrnodafec!'atNewark,



## ·~ould :

requirebetween49 and56 gates atNewark(estimated usinga range ofvalues·for annualpassengerper gate), whichis similar to theprojected 55 gates inTerminal C 

### Scenario 4-lnternational Airline Consortium 

## InScenario4, Concourse C3:>'vould be



# u~~d by a 

# consortium~f,international airlines. · It

### was assumedfor this scenario that Continental'sinternational service atNewark · •wouldbe



## ceas~d **0~ subst~i:iaiiy** **reduc~d,** resulting inthe availability

# of
..

internationalgates on Concourse C3 andinternationalpassengerdemand tci be' accommodated onotherairlines.

**Mo~tinteJ,Tiational** 

### airlin(2S

**~~rying .th~New**  

## Yqrk area are

**e~ther** 

### sub\I'J;t<Wts at • , 

# u.s. airlineterminals'or operate at



## common~use internationaltermiml.is:.

# The.

**r~c~nf** developmentofTerminalOne at Kennedyby a consortiumofAirFrance,Lufthansa, JapanA,ir l,jnes, andKoreaJ< Airlinesis qnindication ofthe desirabilityofan exclusiveinternationaLten:nipalfora c;ohsortium.of

**inte~atipnal airlin~s.**  

### ,[

-

**~.** '1'' ;:'-"''. 

### The estimated.



## ~ual**pas~e!lger <:apa~itY**  of.



## COI]-CO~~se C3.is



## betwe~ 6



## ~lion and 7 mi!liqn. annualpassengers,bas(2d onthe analyses.desc;ribf;!<;l earlier..,This is equiyalel}ttobetween 17% \'nd

**20°~ oftJ'\~projectec!.jnt~rl}ational** 

### passengE;rs at the New,York area ai,rports:in 4010., 

## Itequid

**r~ason,al;>ly**

### be assurr)gd, for purposes of this scenario, that a consortiumofmtematl6nal


## airli!les.coUe~tively accountingfor this level ofactivity wouldbeintere.sted in occupying ConcourseC3; particularlyif

E-42\, 

## some or all

## ofthe activity represented replacementofContinental's international servtce. CONCLUSIONS 

## Thevarious scenarios presented above describethe specificcircumstances under which other airlines mightabsorb theplannedTerminalC gates, if, hypothetically Continentalwere to cease or substantially reduce service atNewark·The results of the various scenariosindicatethatfuture market growth canbeexpected to create demand for theplannedTerminalC gates, notwithstandingthe developmentof additional gates at otherNewYork airport terminals. There are certainrisks to realizingthe assumptions and results described inthe scenarios. The mostimportant ofthese risks, and associated mitigatingfactors, are: 1. National and internationaleconomicconditions 

## • 

## • Risk: Economic slowdownreducing aviation demand Mitigatingfactors: Conservative passenger growthforecasts; most NewYork area airportterminals are atornearcapacity 2. Competing airports 

## •



## • Risk: Competitionfor international gateway and connectinghub traffic fromnon-New York airports Mitigatingfactor: Size ofNewYork passengermarket 3. CompetingNewYork terminals 

## • Risk: Additional developmentofgate capacityinNewYork

0 

## Mitigating factor: Constrained airport sites at all three airports Consideringthe results of our analyses and the risk factors, our conclusions are: L Consideringlikely future growth inpassenger demand and planned additions to gate supply, mostgates atthe three airports, including those being constructed inthe Global Gateway Development,willberequired during peak operatingperiods. 2. IfContinentalwereto cease or substantiallyreduce service atNewark, various hypothetical scenarios described in ourreport suggestthatthere wouldbe demand for most or all ofthe gatesbeingconstructed as part of the Global GatewayDevelopment. For a major operator, a complete

E-43,..J.- 

## terminal, suchas Terminal C, 

## wouldlikelybe preferredto the alternative of using scattered available gates atvarious airports and terminals. 3. Although the various demand scenarios would notnecessarily create demand for all ofContinental's Newark gates, itis 

## likely that thenewer facilities onConcourse C3, with dedicatedFIS facility capacity,wouldbe thefirst tobe absorbed. Concourse C3 gates wouldbe likely more marketablethan gates atmostotherNewYork area airportterminals for a variety ofreasons outlined earlier.

E-44