THE CHICAGO AIRPORT SYSTEM 2003 ANNUAL REPORT€¦ · YOUR TICKET AN VEL “EXPERIENCE” ... Travelers can take advantage of Sky Cap services, check-in kiosks or ticket counters

T H E C H I C A G O A I R P O R T S Y S T E M

2 0 0 3 A N N U A L R E P O R T

CHICAGO

AIRPORT

SYSTEM

GROUP 11837 1A

BOARDING PASS

FROM:

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YOU

CHICAGO

YOUR DESTINATIONYOUR DESTINATION

2003 1ST 10:30AM

YOUR TICKET TO AN

UNPARALLELED TRAVEL “EXPERIENCE”

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PASSENGER NAME:

FROM:

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YOUFLIGHT CLASS DATE DEPARTS

1837 1ST 2003 10:30AM

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DATE CLASS DEPARTS

FLIGHT SEAT

E X E C U T I V E M E S S A G E

The strength of the Chicago Airport System relies heavily on our travelers. As a passenger-focused operation,

we strive to offer exceptional amenities and the latest technology to enhance safety and security and to

establish a world class customer experience.

In the following pages, you will see O’Hare and Midway International Airports from the perspective of the

traveler – convenient check-in options, award-winning shops and restaurants, seamless security and helpful

aviation personnel.

We are committed to providing our travelers an unparalleled experience when passing through our airports.

And we have taken steps to accommodate them for the future.

Planning for growth at Midway several years ago has paid off. Once an airport struggling to survive, Midway

has seen enormous growth in both passengers and operations. Travelers choose Midway for its ease,

convenient location and many flight options. In 2003, the airport’s Terminal Development Program was near

completion with expanded baggage claim and ticketing areas, new parking facilities, larger airline gates and

more shops and restaurants than ever.

Richard M. DaleyMayorCity of Chicago

John A. RobersonCommissionerChicago Department of Aviation

Y O U R T I C K E T T O A N U N P A R A L L E D T R A V E L E X P E R I E N C E

E X E C U T I V E M E S S A G E

O’Hare, the world’s busiest airport, is also one of the world’s best. You will find such amenities as valet

parking, a children’s museum and a business center. We’re also planning for the future and making great

progress to meet capacity demands with the ongoing O’Hare Modernization Program. For passengers, this

will mean fewer delays.

As the Chicago Airport System continues to thrive, we also recognize the ongoing success of the

Gary/Chicago International Airport and continue to value our strategic partnership with the Chicago/Gary

Regional Airport Authority. In 2003, Boeing Co. moved its entire corporate fleet to the airport and an effort

to bring passenger carriers to Gary was launched.

As always, it is our priority to provide safe and efficient operations at our airports. We also hope to make

the travel experience an enjoyable one. We invite you to turn the page and begin your journey through

O’Hare and Midway International Airports. Enjoy the experience.

Y O U R T I C K E T T O A N U N P A R A L L E D T R A V E L E X P E R I E N C E

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The Chicago Airport System strives to offer travelers an unparalleled experience whenthey pass through the city’s airports. Both O’Hare and Midway International Airportsoffer easy check-in, award-winning concessions and flights to hundreds of destinationsthroughout the world.

Turn the page and take a trip through O’Hare and Midway. Check in, pass through, takeoff. And don’t forget to visit the world-class shops and restaurants.

O ’ H A R E I N T E R N AT I O N A L A I R P O R T

M I D W AY I N T E R N AT I O N A L A I R P O R T4

The Chicago Airport System is a unique transportation center comprised of two airports – Midway, a premier point-to-point airport

M I D W A Y I N T E R N A T I O N A L A I R P O R T

O ’ H A R E I N T E R N A T I O N A L A I R P O R T

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Just 10 miles from downtownChicago, Midway is accessible bycar, taxi, bus, shuttle and theCTA’s Orange Line.

O’Hare is conveniently located 17 miles northwestof downtown Chicago and is easily reached by car,taxi, shuttle or the Chicago Transit Authority’sBlue Line.

with service provided by a variety of low cost carriers, and O’Hare, the world’s busiest airport and economic engine of the state and region.



6

Perhaps the most efficient mode for downtown travelers, theOrange Line runs every few minutes. It connects passengers toMidway in about 30 minutes or less.

O’Hare also provides valet parking, whichoffers travelers the convenience of a shortwalk to the terminals and the comfort of acovered drop-off and pick-up area.

The Chicago Airport System welcomes more travelers annually than any other airport system in the nation,



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More and more travelers are turning to MidwayInternational Airport for business and vacationtravel. In fact, 2003 marked the busiest year inthe airport’s 75-year history.

O’Hare, the world’s busiest airport, offers moreflights more often to more destinations than anyother airport in the world. And checking in wasnever easier for the 69.5 million travelers whopassed through in 2003.

underscoring the importance of O’Hare and Midway International Airports’ role in the economy and aviation industry.



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The airport saw a 7.8 percentincrease in operations andserved 18.6 million passengersseeking the ease and conven-ience of Midway.

Travelers can take advantageof Sky Cap services, check-inkiosks or ticket counters atboth airports in the city.

O'Hare Flight Operations 1999-2003

896,228 908,989 911,917 922,817 928,691

1999 2000 2001 2002 2003

O'Hare Passengers 1999-2003

72,610,121 72,145,48966,565,95267,448,064

1999 2000 2001 2002 2003

69,508,672

Midway Flight Operations 1999-2003

297,136 298,115

278,734

304,304

328,025

1999 2000 2001 2002 2003

Midway Passengers 1999-2003

13,585,262

15,681,966 15,628,88616,959,229

18,644,372

1999 2000 2001 2002 2003

Safety and security remain a top priority. In 2003, the Chicago Airport System, in partnership with the Transportation Security Administration, enhanced its security operations.



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Midway also expanded its capacityat security checkpoints to meet thegrowing demand of passenger traffic. Security lines were addedand the Transportation SecurityAdministration made staffingadjustments to accommodate thethousands of passengers flyingfrom Midway each day.

In 2003, O’Hare and Midway launched a program tobring Segways to the airports for Chicago policeofficers. The use of the high-tech scooters givespolice officers greater visibility and speed whenpatrolling the airports.

These improvements streamlined the screening process, making it safer and quicker for travelers.



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By the end of 2003, Midway had a total of14 lanes at the security checkpoint, nearlydouble the eight lanes in place at thebeginning of the year.

Chicago’s airports also beganscreening 100 percent of checkedluggage. To attain this level of high-er security, the airports installed newmachines, allowing the luggage tobe inspected electronically.

The Chicago Airport System’s award-winning concessions provide travelers with an array of food, entertainment and shopping.



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Midway Boulevard, the airport’s 50,000 square foot concessions triangle, offers a central location for your Chicago craving. Somefavorites include Gold Coast Dogs, Lalo’s Mexican Restaurant, HarryCaray’s and Greektown’s Pegasus Restaurant.

Many shops at Midway represent Chicago’sinstitutions as well, including George’s MusicRoom and Viva’s Chicago Treasures.

O’Hare has it all – Billy Goat cheeseburgers,Goose Island beer, Eli’s cheesecake andsavory dishes at Wolfgang Puck. Not hungry?Enjoy a massage or work out at the O’HareHilton Athletic Club.

Travelers can also visit the currency exchange,post office and many shops, including TheChicago Field Museum Store and the ChicagoHistorical Society Gift Shop.

These concessions create thousands of jobs and a strong economic impact for Chicago and the region.



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Both O’Hare and Midway received honors in 2003from the Airport Revenue News’ best airport con-cessions eighth annual poll. O’Hare Internationalgarnered 1st place for Airport with the BestRedeveloped Concessions Program and 1st placefor Best Single Terminal for Terminal 1.

Midway International received the1st place award for Airport with theBest Redeveloped Concessions.

Located in Terminal 2, the KIDS ON THE FLY exhibit,designed by the Chicago Children’s Museum, educatesand entertains children with an air traffic control tower,a cargo plane and games and toys.

The Chicago Airport System enjoys a strong partnership with the many airlines committed to serving passengers and the growing demands of the aviation industry.



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In 2003, Mayor Richard M. Daley announceda historic agreement between the city and more than a dozen airlines to fund the first phase of the O’Hare Modernization Program, which will reduce delays and allowfor an increase in capacity.

Southwest and ATA Airlines share the city’s vision for thefuture of Midway and have supported the MidwayAirport Terminal Development Program since its incep-tion in 1997. In 2003, the project was near completion.

O’Hare and Midway’s airlines offer spacious gates, friendly personnel and a vast selection of flights.



14

By August, all gates in the newConcourse B opened, offering passen-gers spacious hold rooms and a shorterwalking distance from the new Terminalto gates. By fall, the old terminal build-ing was completely demolished.

The funding effort was led by United and American Airlines, whorecognized the plan would reduce delays and costs, improve traveler convenience and enhance the economic vitality of theChicago region.

City officials are committed to maintaining Chicago as the nation’s premier

P L A N N I N G F O R T H E F U T U R E

P L A N N I N G F O R T H E F U T U R E

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Midway has experienced record-breakinggrowth, serving 18.6 million passengers in2003, a direct result of the MidwayAirport Terminal Development Program.

Launched in 1997, the revitalization plansought to bring the airport’s landsidecapacity in line with its airside capacity.

Mayor Daley’s plan to modernize O’Hare by reconfiguring the airfield’soutdated runways into a more modern parallel configuration ensures anairport that will operate more efficiently.

The new O’Hare will experience fewer delays,save money for the airlines and passengers, andgenerate $18 billion in additional annual economic activity to the region’s economy.

In 2003, the O’Hare Modernization Programmade great strides with continued planning andpublic support.

In May, the state legislature passed the O’HareModernization Act and Illinois Governor RodBlagojevich signed it into law on August 6, 2003.

The city also submitted to the Federal AviationAdministration its final Airport Layout Plan, which,once approved, becomes the official planningdocument for the development of O’Hare.



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Mayor Daley had a vision for Midway and thatforesight paid off. By 2003, the project wasnearly complete with enhanced concessions,added ticket counters and curbside check in, afederal inspection facility, a new parkinggarage and a flyover entrance ramp toimprove vehicle access.

transportation center. To achieve this takes vision and a bold plan.

Travelers passing throughO’Hare may notice ongoingchanges at the airport. In May2003, the FACE (Facade andCirculation Enhancement) proj-ect was launched. New canopieswill be installed over the upperlevel roadway in front ofTerminals 1, 2 and 3. In addition,installation of new glass walls inTerminals 2 and 3 will expandbaggage claim and ticketingareas to create an open andbright atmosphere.

G E T C O N N E C T E D I N C H I C A G O

G E T C O N N E C T E D I N C H I C A G O

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The “Get Connected In Chicago” marketing campaign was

launched, featuring creative concepts representing a blend of

Chicago’s advantages – business, tourism and quality of life. This

multi-media campaign can be seen throughout the airport in the

form of banners, kiosks and signs.

More than 38 million business and leisure travelers connect through

O’Hare Airport each year. In 2003, Mayor Daley invited them to

experience what Chicago has to offer outside the terminals.

D E S T I N A T I O N S

A I R L I N E S

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Acapulco, Mexico

Ahmedabad, India

Akron, Ohio

Albany, New York

Albuquerque, New Mexico

Allentown, Pennsylvania

Amman, Jordan

Amsterdam, Netherlands

Anchorage, Alaska

Appleton, Wisconsin

Aruba, Netherlands Antilles

Atlanta, Georgia

Auckland, New Zealand

Austin, Texas

Baltimore, Maryland

Bangalore, India

Bangkok, Thailand

Beijing, China

Birmingham, Alabama

Birmingham, England

Boise, Idaho

Boston, Massachusetts

Brussels, Belgium

Buenos Aires, Argentina

Buffalo, New York

Burlington, Vermont

Calgary, Canada

Cancun, Mexico

Caracas, Venezuela

Cedar Rapids, Iowa

Champaign, Illinois

Charleston, South Carolina

Charleston, West Virginia

Charlotte, North Carolina

Chattanooga, Tennessee

Cincinnati, Ohio

Cleveland, Ohio

Colorado Springs, Colorado

Columbia, South Carolina

Columbus, Ohio

Copenhagen, Denmark

Curacao, Netherlands Antilles

Dallas/Ft. Worth, Texas

Dayton, Ohio

Delhi, India

Denver, Colorado

Des Moines, Iowa

Detroit, Michigan

Dublin, Ireland

Dubuque, Iowa

Durango, Mexico

Dusseldorf, Germany

El Paso, Texas

Evansville, Indiana

Fargo, North Dakota

Fayetteville, Arkansas

Flint, Michigan

Fort Lauderdale, Florida

Fort Myers, Florida

Fort Wayne, Indiana

Frankfurt, Germany

Glasgow, Scotland

Grand Cayman, Cayman Islands

Grand Rapids, Michigan

Green Bay, Wisconsin

Greensboro, North Carolina

Greenville, South Carolina

Guadalajara, Mexico

Guatemala City, Guatemala

Harrisburg, Pennsylvania

Hartford, Connecticut

Hong Kong

Honolulu, Hawaii

Houston (Hobby), Texas

Houston (Intercontinental), Texas

Huntsville, Alabama

Indianapolis, Indiana

Iron Mountain, Michigan

Islamabad, Pakistan

Istanbul, Turkey

Ixtapa, Mexico

Jackson Hole, Wyoming

Jackson, Mississippi

Jacksonville, Florida

Kalamazoo, Michigan

Kansas City, Missouri

Karachi, Pakistan

Kingston, Jamaica

Knoxville, Tennessee

Krakow, Poland

Kuwait City, Kuwait

La Crosse, Wisconsin

Lahore, Pakistan

Lansing, Michigan

Las Vegas, Nevada

Leon/Guanajuato, Mexico

Lexington, Kentucky

Lincoln, Nebraska

Little Rock, Arkansas

London, England (Heathrow)

Long Beach, California

Long Island, New York

Los Angeles, California

Los Cabos, Mexico

Louisville, Kentucky

Madison, Wisconsin

Madrid, Spain

Manchester, England

Manchester, New Hampshire

Marquette, Michigan

Maui, Hawaii

Memphis, Tennessee

Mexico City, Mexico

Miami, Florida

Mid America, Illinois

Milan, Italy

Milwaukee, Wisconsin

Minneapolis, Minnesota

Moline, Illinois

Montego Bay, Jamaica

Monterrey, Mexico

Montevideo, Uruguay

Montreal, Canada

Montrose, Colorado

Morelia, Mexico

Mumbai (Bombay), India

Munich, Germany

Myrtle Beach, South Carolina

Nashville, Tennessee

New Orleans, Louisiana

New York (JFK), New York

New York (LaGuardia), New York

Newark, New Jersey

Newburgh, New York

Norfolk, Virginia

Oakland, California

Oklahoma City, Oklahoma

Omaha, Nebraska

Orange County, California

Orlando, Florida

Osaka, Japan

Oshkosh, Wisconsin

Ottawa, Canada

Palm Springs, California

Paris, France

Peoria, Illinois

Philadelphia, Pennsylvania

Phoenix, Arizona

Pittsburgh, Pennsylvania

Portland, Maine

Portland, Oregon

Providence, Rhode Island

Puerto Vallarta, Mexico

Punta Cana, Dominican Republic

Raleigh, North Carolina

Reno, Nevada

Richmond, Virginia

Roanoke, Virginia

Rochester, Minnesota

Rochester, New York

Rome, Italy

Sacramento, California

Saginaw, Michigan

Saint Louis, Missouri

Saint Petersburg, Florida

Saint Thomas, US Virgin Islands

Salt Lake City, Utah

San Antonio, Texas

San Diego, California

San Francisco, California

San Jose, California

San Jose, Costa Rica

San Juan, Puerto Rico

San Pedro Sula, Honduras

Sao Paulo, Brazil

Sarasota, Florida

Saskatoon, Canada

Savannah, Georgia

Seattle, Washington

Seoul, South Korea

Shanghai, China

Shannon, Ireland

Singapore

Sioux Falls, South Dakota

South Bend, Indiana

Spokane, Washington

Springfield, Illinois

Springfield, Missouri

Steamboat Springs, Colorado

Stockholm, Sweden

Sydney, Australia

Syracuse, New York

Tampa, Florida

Tel Aviv, Israel

Teterboro, New Jersey

Tijuana, Mexico

Tokyo, Japan

Toledo, Ohio

Toronto, Canada

Traverse City, Michigan

Tucson, Arizona

Tulsa, Oklahoma

Vail, Colorado

Vancouver, Canada

Warsaw, Poland

Washington (Dulles), DC

Washington (National), DC

Waterloo, Iowa

Wausau, Wisconsin

West Palm Beach, Florida

Westchester County, New York

Wichita, Kansas

Wilkes-Barre, Pennsylvania

Winnipeg, Canada

Zacatecas, Mexico

Zurich, Switzerland

Aer LingusAeroMexicoAir 2000Air CanadaAir ChinaAir FranceAir Jamaica Air TranAir WisconsinAirborne ExpressAlaskaAlitaliaAmerica WestAmericanAmerican EagleAsianaATAAtlantic CoastAtlantic Southeast(ASA)Atlas AirAviacsabmiCAL CargoCathay PacificCayman AirwaysChautauquaChicago ExpressChina AirlinesChina CargoAirlinesChina EasternChina SouthernComairCondorContinentalContinentalExpressDeltaDHL

El AlEmery/ACFEva AirwaysFedExFrontierGreat LakesGreat PlainsIberiaIndigo AviationJapan AirlinesKalittaKLMKuwaitKorean AirwaysLOT PolishLufthansaLufthansa CargoMartin Air/Holland MexicanaNipponNorthwestPakistanInternationalPolar Air CargoRoyal JordanianRyan InternationalSASSingaporeSingapore CargoSky WestSouthwestSpiritSWISSTACATurkishTransmeridianUnitedUPSUS AirwaysUSA 3000

AIRLINES ATCHICAGO’S AIRPORTS

NON-STOP AND DIRECT DESTINATIONS FROM CHICAGO’S AIRPORTS – 2003

T H E C H I C A G O A I R P O R T S Y S T E ME X E C U T I V E T E A M

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Front Row: John A. Roberson – Commissioner of AviationSecond Row, left to right: Angela Manning-Hardimon –Managing Deputy Commissioner, Support Services; DaveOchal – Chief Operations Officer – O’Hare; Pat Harney –First Deputy Commissioner; Erin O’Donnell – ManagingDeputy Commissioner – Midway; John Townsend –Managing Deputy Commissioner, Safety and SecurityNot pictured: Michael McCue – Managing DeputyCommissioner, Planning and Development

Deputy and Assistant CommissionersNafees Ahmed – Deputy Commissioner, FinanceWilliam Brogan – Assistant Commissioner, Noise AbatementDeborah Capraro – Deputy Commissioner, Landside OperationsAnthony Dawson – Assistant Commissioner, Strategic InitiativesFrank Grimaldi – Assistant Commissioner, DevelopmentDuane Hayden – Assistant Commissioner, Airfield

Operations – O’HareAicha Johnson – Assistant Commissioner, Real EstateJames Joyce – Assistant Commissioner, Security – O’HareSusan Joyner – Assistant Commissioner, FacilitiesMichael Klein – Deputy Commissioner, Real EstateKristen Lobbins-Cabanban – Deputy Commissioner,

CommunicationsWilliam Lonergan – Deputy Commissioner,

Airfield Operations – O’HareAnnette Martinez – Assistant Commissioner, Media RelationsGreg McGhee – Assistant Commissioner,

Landside Operations – MidwayDaryl McNabb – Deputy Commissioner, Capital FinanceJoseph O’Connor – Assistant Commissioner, Safety and SecurityTom O’Donnell – Assistant Commissioner,

Intergovernmental AffairsWilliam Palivos – Assistant Commissioner,

Airfield Operations – O’HareAl Perez – Assistant Commissioner, Airfield Operations – MidwayJames Sachay – Assistant Commissioner, Terminal 5Tom Sheahan – Assistant Commissioner, Security – MidwayGrafe Smith – Deputy Commissioner, IT/TelecommunicationsNancy Takata – Deputy Commissioner, ConcessionsJohn Teele – Deputy Commissioner, FacilitiesValerie Walker – Assistant Commissioner, ProcurementPaulette White – Assistant Commissioner, Personnel Don Zoufal – Deputy Commissioner, Safety and Security

FINANCIAL RESULTSCHICAGO AIRPORT SYSTEM 2003 ANNUAL REPORT

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F I N A N C I A L R E S U L T S

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Operating Results

Operating revenues consist primarily of landing fees,

terminal rental and use charges, fueling system fees, parking

fees and concession fees. Total operating revenues at

O’Hare increased 6.9 percent from $451 million in 2002 to

$482 million in 2003. Landing fees and terminal area use

charges are assessed to the airlines each year to yield

collections adequate to cover operating and maintenance

expenses, required debt service and fund deposits per the

Airport Use Agreement.

Parking revenue showed a modest 2 percent increase from

$81.6 million in 2002 to $83.2 million in 2003. Overall

concession revenue, however, increased 5.3 percent, from

$146.6 million in 2002 to $154.4 million in 2003. This is the

result of continually enhanced concession offerings at the

airport with local and national favorites well represented.

The following table shows how concession revenue has

performed over the last five years.

Operating expenses consist primarily of salaries and wages,

repairs and maintenance, materials and supplies, and

professional, contractual and engineering services.

Operating expenses before depreciation and amortization

during 2003 were $331.5 million, a 1.9 percent increase over

the 2002 level of $325.4 million. This virtually flat growth in

expenses is the result of management’s objective to hold

operating expenses consistent with the prior year.

Capital Development

The centerpiece of capital development at O’Hare is the

O’Hare Modernization Program (OMP). The OMP preserves

and enhances the capacity of O’Hare and the national air

transportation system. The Program will also reduce delays;

mitigate noise impacts; provide sufficient terminal, landside

and support facilities to accommodate existing and future

passenger and cargo demand; provide efficient surface

access for existing and future airport users; and provide

opportunities for enhanced competition among air carriers.

This program consists of the development of one new

runway, the relocation of three existing runways, the exten-

sion of two existing runways, addition of a western access

road and a new western terminal facility at an estimated cost

of $6.6 billion unescalated. These improvements are

designed to reduce weather delays by 95 percent, reduce

overall delays by 79 percent, and meet projected aviation

demand beyond 2030. The first phase of the OMP, which

O'Hare Concessions Program

1999 2000 2001 2002

$146,597$162,651

$151,094 $146,553

2003

$154,368

$ M

illio

ns



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includes the construction of the new runway, the relocation

of one existing runway and the extension of another, is

estimated to cost approximately $2.9 billion escalated. The

City is currently in planning and design stages for these

Phase 1 components.

The City is also implementing an ongoing five-year Capital

Improvement Plan (CIP) at O’Hare in the approximate

escalated amount of $1.72 billion. The CIP is comprised of

the following types of projects: airfield improvements,

concession and terminal area improvements, noise mitiga-

tion projects, parking and roadway improvements, heating

and refrigeration plant improvements, safety and security

improvements and planning initiatives.

The City expects that capital programs at O’Hare will be

funded from the following sources: proceeds of airport

revenue bonds, Passenger Facility Charges (PFC) revenues

on a pay-as-you-go basis, PFC-backed bonds, federal grants

and other available airport funds. The following graph

presents the annual growth in PFC revenue over the past five

years, with O’Hare initiating a PFC of $4.50 per enplaned

passenger on April 1, 2001.

O'Hare PFC Revenue

$88,200 $90,395

$110,604

$126,548

$ M

illio

ns

1999 2000 2001 2002

$129,324

2003

1999 2000 2001 2002 2003

Operating Revenues $469,856 $455,351 $465,759 $451,046 $481,957

Operating and Maintenance Expenses 305,118 317,807 325,393 325,370 331,550

Net Operating Income beforeDepreciation and Amortization $164,738 $137,544 $140,366 $125,676 $150,407

Debt Service Coverage Ratio (1) 1.10 1.10 1.10 1.28 1.65

Histor ical Operat ing Results – O’Hare(000 Omitted)

(1) For 1998 through 2001, the 1983 General Airport Revenue Bond Ordinance requires that revenues in each fiscal year in which bonds are outstanding shall equal an amount at least sufficient to produce net revenues for calculation of coverage, as defined, ofnot less than an aggregate amount equal to 1.10x the aggregate first and second lien debt service for the bond yearcommencing during such fiscal year. For 2002 and 2003, the Master Indenture of Trust securing the Third Lien Obligations requires that Revenues in each fiscal year, together with Other Available Moneys and cash balance held in the Revenue Fund on the first day of that fiscal year will be at least sufficient to provide for Operation and Maintenance Expenses for the fiscal year and to provide for 1.10x Aggregate First, Second and Third Lien Debt Service for the bond year commencing during the fiscal year.



23

Operating Results

Operating revenues consist primarily of landing fees, termi-

nal area use charges, rent, parking fees and concession fees.

Operating revenues during 2003 were $79 million, a

decrease of $10.9 million (12.1 percent) from the 2002 level

of $89.9 million. This is largely the result of increased termi-

nal use charges and concession revenues, the latter of which

increased 9.3 percent, from $40 million in 2002 to $43.7

in 2003. This is only a continuation of the successes in

concessions as depicted in the following chart showing

increases in concession revenue over the past five years.

Operating expenses consist primarily of salaries and wages,

repairs and maintenance, materials and supplies, and

professional, contractual and engineering services. Total

operating expenses before depreciation and amortization

during 2003 were $83.2 million, an increase of $5.6 million

(7.2 percent) from 2002. Contributing factors for this

increase were salary wage increments, maintenance costs of

new terminal and concourse space, and increases in

insurance premiums.

Capital Development

The City has recently completed the Midway Airport

Terminal Development Program and is implementing an

ongoing capital improvement program at the airport. The

terminal development component consisted of the

construction of a replacement terminal and concourse

complex of approximately 941,000 square feet, 43 aircraft

gates, new ticket counters and passenger processing and

baggage claim facilities. The terminal program also included

additional concession opportunities, a dual-level roadway

improving vehicular access to the terminal building and a new

parking structure providing 3,000 parking spaces on six levels.

The ongoing capital program includes development of a

parking garage in the economy lot to address the continu-

ally increasing demand at Midway. The ongoing capital

program also includes noise mitigation projects, airfield

rehabilitation and completion of a fuel farm for airline use.

The City is financing both capital programs through bond

proceeds, federal grants, passenger facility charge revenues

and other available airport funds. The City is leveraging its

collection of approximately $25.2 million in annual PFC

revenue through a commitment to Midway carriers to pay

debt service associated with the extensive capital program.

This approach will maintain the cost-effectiveness of

operating at Midway even after the state-of-the-art terminal

1999 2000 2001 2002

$32,068

$37,847 $37,254$40,014

2003

$43,671

Midway Concessions Program

$ M

illio

ns

facility is in place. The strength of this revenue source can be

seen in the following graph, showing results over the past

five years.

The City has also received a $94 million “Letter of Intent”

from the federal government to assist in the financing of the

program. This commitment, as well as that of the airlines

serving Midway, displays the underlying support for the

objectives of the program and Midway’s continued viability.



24

1999 2000 2001 2002 2003

Operating Revenues $50,878 $67,580 $77,468 $89,858 $78,972

Operating and Maintenance Expenses 49,961 55,902 67,720 77,555 83,193

Net Operating Income beforeDepreciation and Amortization $917 $11,678 $9,748 $12,303 ($4,221)

Debt Service Coverage Ratio (1) 1.29 1.30 1.27 1.19 1.05

Historical Operating Results – Midway(000 Omitted)

(1) The Master Indenture of Trust securing the Midway Airport Revenue Bonds requires that revenues, together with other available moneys with the trustee and any cash balance held in the Revenue Fund on the first day of the calendar year will be at least sufficient to provide for the payment of Operation and Maintenance Expenses for the fiscal year and an amount not less than 1.25x the aggregate debt service for the bond year commending such fiscal year.

$ M

illio

ns

Midway PFC Revenue

$17,805

$21,342 $21,368$22,936

1999 2000 2001 2002

$25,239

2003

C H I C A G O A I R P O R T S Y S T E M


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2003 Condensed Balance Sheets(000 Omitted)

O'HARE MIDWAY

Assets

Cash, Cash Equivalents and Investments (Restricted and Unrestricted) $1,725,896 $522,257

Accounts Receivable(Net of Allowance for Doubtful Accounts) 34,521 4,830

Other 328,149 59,205

Property and Facilities (Net) 3,026,228 997,675

Total Assets $5,114,794 $1,583,967

Liabilities

Accounts Payable $103,036 $37,687

Revenue Bonds and Notes Payable 4,037,332 1,148,630

Interest Payable 100,073 25,382

Deferred Revenue 24,842 10,409

Other 16,358 24,691

Total Liabilities $4,281,641 $1,246,799

Net Assets

Invested in Capital Assets – Net of Related Debt $332,512 $102,235

Debt Services 14,651 0

Capital Projects 51,476 76,312

Passenger Facility Charges 157,395 58,088

Airport Use Agreement 83,960 47,002

Other Assets 127,384 44,918

Unrestricted Net Assets 65,775 8,613

Total Net Assets $833,153 $337,168

SUMMARY OF POLICIES

O’Hare and Midway International Airports are included in the

City’s reporting entity as enterprise funds. The condensed

statements present a summary of the O’Hare and Midway funds as

of December 31, 2003. The following disclosure, which is substan-

tially less than that contained in the audited financial statements,

summarizes information contained in each airport’s annual

audited financial statements and Comprehensive Annual Financial

Reports, which are separately available.

Airport funds (O’Hare and Midway) are accounted for using the

flow of economic resources measurement focus and the accrual

basis of accounting. This measurement focus emphasizes the

determination of net income. Revenues are recognized when

earned and expenses are

recognized when incurred.

2003 Condensed Statements of Cash Flows(000 Omitted)

O'HARE MIDWAY

Cash Flows from Operating Activities:

Operating Income $19,654 ($23,034)

Depreciation and Amortization 130,753 18,813

Net Changes in Other Balance Sheet Accounts (10,476) (1,540)

Total Operating Activities $139,931 ($5,761)

Cash Flows from Capital and Related Financing Activities:

Proceeds from Debt Issuance $1,317,365

Proceeds from Commercial Paper $25,528

Payments to Refund Bonds (555,096)

Acquisition and Construction of Capital Assets (202,478) (105,802)

Debt Service, Capital Grants and Other (129,715) (33,360)

Total Capital and Related Financing Activities $430,076 ($113,634)

Cash Flows from Investing Activities:

Net Sales of Investments ($363,491) $80,538

Interest Received on Investments 23,343 7,876

Total Investing Activities ($340,148) $88,414

Net Increase in Cash and Cash Equivalents $229,859 ($30,981)

Cash and Cash Equivalents Beginning of Year 599,156 370,851

Cash and Cash Equivalents End of Year $829,015 $339,870

2003 Condensed Statements of Operations(000 Omitted)

O'HARE MIDWAY

Operating Revenues:

Landing Fees and Terminal Area Use Charges $291,577 $26,613

Rent, Concessions and Other 190,380 52,359

Total Operating Revenues $481,957 $78,972

Operating Expenses:

Salaries and Wages $148,861 $36,582

Repairs and Maintenance 65,870 26,771

Professional and Engineering Services 35,759 9,214

Other Operating Expenses 81,060 10,626

Total Operating Expenses

Depreciation and Amortization $331,550 $83,193

Depreciation and Amortization 130,753 18,813

Total Operating Expenses $462,303 $102,006

Total Operating Income $1,108 ($5,085)


C H I C A G O A I R P O R T S Y S T E M

26

LONG-TERM DEBT AT O’HARE

On March 31, 1983, the City Council adopted the General

Airport Revenue Bond Ordinance. This Ordinance authorized

the issuance and sale of Chicago O’Hare International Airport

General Airport Revenue Bonds for the purpose of financing or

reimbursing the cost of improvements and expansion of the

airport and to redeem outstanding bond obligations of the

airport. Net revenues of the airport, as defined, are pledged

for first lien bond principal and interest payments. The

Ordinance further permits the issuance of second lien notes,

bonds and other obligations which are payable from, and

secured by, a pledge of amounts deposited in the junior lien

obligation debt service account created under the Ordinance.

First Lien, Second Lien and Third Lien revenue bonds have

been issued under the Bond Ordinance, Master Indenture

Securing Second Lien Obligations and Master Indenture

Securing Third Lien Obligations, respectively.

On March 26, 1996, the City Council adopted the Passenger

Facility Charge Revenue Bond Ordinance, authorizing the

issuance and sale of Chicago O’Hare International Airport

Passenger Facility Charge Revenue Bonds for the purpose of

financing improvements at and in the vicinity of the airport.

Bonds in the principal amount of $250 million were issued

under this ordinance and the Master Trust Indenture

Securing Chicago O’Hare International Airport Passenger

Facility Charge Revenue Bonds.

Cash, Cash Equivalents and Investments

Cash, Cash Equivalents and Investments were as follows for the year ended December 31, 2003 (000 omitted):

O’HARE MIDWAY

Unrestricted

Cash and Cash Equivalents $96,714 $33,319

Investments 12,895 0

Restricted

Cash and Cash Equivalents 732,301 306,552

Investments 883,986 182,329

Total Cash, Cash Equivalents and Investments $1,725,896 $522,200

Property and Facilities

Properties and Facilities were as follows for the year ended December 31, 2003 (000 omitted):

O’HARE MIDWAY

Land $124,758 $100,257

Buildings and Other Facilities 4,045,414 579,964

Construction in Progress 254,696 413,358

Total Property and Facilities $4,424,868 $1,093,579

Less: Accumulated Depreciation (1,398,640) (95,905)

Property and Facilities(Net of Depreciation) $3,026,228 $997,674


In 2000, the City initiated a commercial paper program to

provide for financing all carrier-approved capital project cash

flow requirements on an interim basis, prior to establishing a

long term financing plan. On December 31, 2003, $1.3

million in Commercial Paper Notes were outstanding.

In August 2003, the airport sold $248,910,000 of Chicago

O’Hare International Airport Third Lien Revenue Refunding

Bonds, Series 2003A-1 and A-2, at a net premium. The

Bonds have interest rates ranging from 4.50 percent to 6.00

percent and maturity dates ranging from January 1, 2013, to

January 1, 2034. Certain net proceeds of $225,673,004 were

deposited in escrow account to defease all of the outstand-

ing Series 1984A Bonds ($32,000,000) and Series 1988A

Bonds ($98,300,000) and to defease a portion of the Series

1993A Bonds ($111,800,000); certain proceeds of

$21,801,249 were used to fund debt service reserve require-

ments; and certain proceeds of $9,689,423 were used to pay

the cost of issuance of the bonds.


O’Hare International Airport Third Lien Revenue Bonds,

Series 2003B-1 and B-2, at a net premium. The Bonds have

interest rates ranging from 5.25 percent to 6.00 percent and

maturity and mandatory redemption dates ranging from

January 1, 2022, to January 1, 2034. Certain net proceeds of

$290,477,783 will be used to finance the planning, design,

acquisition, construction and equipping of various airport

capital projects; certain proceeds of $33,402,911 were used

to fund debt service reserve requirements; certain proceeds

of $55,288,513 were used to fund capitalized interest

deposit requirements and certain proceeds of $14,263,884

were used to pay the cost of issuance of the bonds.

O ’ H A R E I N T E R N A T I O N A L A I R P O R T27

Year Principal Interest Total

2004 $1,865 $14,654 $16,519

2005 4,435 13,093 17,528

2006 4,650 12,873 17,523

2007 12,759 12,759

2008 12,759 12,759

2009–2013 94,985 59,102 154,087

2014–2016 160,190 12,274 172,464

Total $266,125 $137,514 $403,639

* For issues with variable rates, interest is imputed at the percent rate effective at December 31, 2003.

Debt Service Requirements to maturity of First Lien Bondsare presented as follows (000 omitted):

Year Principal *Interest Total

2004 $10,500 $68,121 $78,621

2005 33,100 66,941 100,041

2006 54,380 64,404 118,784

2007 93,900 60,289 154,189

2008 105,915 55,063 160,978

2009–2013 529,710 188,538 718,248

2014–2018 510,620 67,489 578,109

Total $1,338,125 $570,845 $1,908,970

Debt Service Requirements to maturity of Second LienBonds are presented as follows (000 omitted):



28



Series 2003C-1 and C-2, at a net discount. The Bonds have

interest rates at 5.25 percent and maturity and mandatory

redemption dates ranging from January 1, 2030, to January

1, 2034. Certain net proceeds of $250,803,160 were used to

pay all of the outstanding Commercial Paper Notes

($250,551,000); certain proceeds of $28,798,190 were used


of $47,297,912 were used to fund capitalized interest

deposit requirements and certain proceeds of $12,834,817

were used to pay the cost of issuance of the bonds.

In December 2003, the airport sold $149,330,000 of Chicago


Series 2003D, E and F, at a net premium. The Bonds have

interest rates ranging from 2.125 percent to 5.5 percent and

maturity and mandatory redemption dates ranging from

January 1, 2005, to January 1, 2034. Certain net proceeds of

$49,397,805 will be used to finance the planning, design,

acquisition and construction of various airport capital

projects; certain net proceeds of $78,871,799, together with

$2,505,298 transferred from the debt service account

established for the First Lien Bonds were deposited in

escrow account to defease a portion of outstanding Series

1993A Bonds ($58,145,000) and Series 1993B Bonds

($17,520,000); certain proceeds of $11,178,850 were used


of $9,055,492 were used to fund capitalized interest deposit

requirements and certain proceeds of $4,200,672 were used

to pay the cost of issuance of the bonds.


2004 $77,942 $77,942

2005 $2,440 88,501 90,941

2006 10,475 88,281 98,756

2007 465 88,093 88,558

2008 475 88,082 88,557

2009–2013 22,360 438,542 460,902

2014–2018 147,510 418,405 565,915

2019–2023 347,070 347,273 694,343

2024–2028 455,365 235,989 691,354

2029–2033 549,540 94,374 643,914

2034 90,455 2,361 92,816

Total $1,626,155 $1,967,843 $3,593,998



2004 $24,680 $48,152 $72,832

2005 26,025 46,764 72,789

2006 27,460 45,274 72,734

2007 28,995 43,773 72,768

2008 30,460 42,220 72,680

2009–2013 178,765 183,873 362,638

2014–2018 157,665 133,151 290,816

2019–2023 119,455 98,737 218,192

2024–2028 154,455 62,834 217,289

2029–2032 155,915 155,915 172,944

2034 90,455 2,361 92,816

Total $903,875 $721,807 $1,625,682

Debt Service Requirements to maturity of the Passenger Facility Charge Revenue Bonds

are presented as follows (000 omitted):



29

* For issues with variable rates, interest is imputed at the percent rate effective at December 31, 2003.

On April 1, 1994, the City Council adopted an ordinance

that established the Master Indenture of Trust Securing

Chicago Midway Airport Revenue Bonds (Indenture).

The Indenture governs the issuance and sale of bonds

secured solely by revenues generated at the airport and

contemplates the issuance of both senior lien bonds and

subordinated bonds. The Indenture also establishes the

debt service requirements for those bonds and requires the

City to generate sufficient revenues at the airport to meet

certain coverage levels and make certain fund deposits.

Some of the fund deposit requirements have since been

modified in connection with airline support of the Midway

Airport Terminal Development Program.

In October 2003, the City initiated a commercial paper

program to provide for financing all carrier-approved capital

project cash flow requirements on an interim basis, prior to

establishing a long term financing plan. On December 31,

2003, $25.5 million in Commercial Paper Notes were

outstanding.


2004 $6,610 $50,137 $56,747

2005 7,425 49,759 57,184

2006 7,850 49,331 57,181

2007 14,165 48,727 62,892

2008 15,080 47,945 63,025

2009–2013 88,340 226,366 314,706

2014–2018 115,295 198,610 313,905

2019–2023 150,755 162,252 313,007

2024–2028 195,360 116,366 311,726

2029–2033 253,775 56,362 310,137

2034–2035 97,780 5,033 102,813

Total $952,435 $1,010,888 $1,963,323


Year Principal *Interest Total

2004 $2,527 $2,527

2005 2,527 2,527

2006 2,527 2,527

2007 2,527 2,527

2008 2,527 2,527

2009–2013 12,637 12,637

2014–2018 198,610 313,905

2019–2023 $22,000 12,004 34,004

2024–2028 11,372 11,372

2029 171,000 1,137 172,137

Total $193,000 $62,422 $255,422

Debt Service Requirements to maturity of Second LienBonds are presented as follows (000 omitted):



30

PENSION PLANS AND DEFERRED

COMPENSATION PLAN

Eligible City employees participate in one of two single-employer defined benefit pension

plans. The vast majority of full-time airport employees become members of either the

Municipal Employees’ or the Laborers’ and Retirement Board Employees’ Annuity and

Benefit Funds. The City also offers its employees a deferred compensation plan created in

accordance with Internal Revenue Code Section 457. No amounts have been recorded in

the accompanying financial statements for the net pension assets of the pension plans or

the assets of the deferred compensation plan.

VACATION AND SICK LEAVE

Employee vacation leave that vests is recorded when earned. Accumulated sick leave is not

accrued because employee rights to receive compensation for the unused portion

terminate upon severance of employment.

CONTINGENCIES AND COMMITMENTS

The airports have certain contingent liabilities resulting from litigation, claims and

commitments incident to the ordinary course of business. It is the opinion of the City’s

management that final resolution of such contingencies will not have a material adverse

effect on the financial position or results of operations of the airports.

Photography by Peter Schulz, City of Chicago; Scott McDonald@Hedrich-Blessing and

Sandy Kowerko, Department of Aviation

Design and Printing by City of Chicago – Graphics and Reproduction Center

www.flychicago.com

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