APM and Related Financing Update. May 3, 2018

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1 APM and Related Financing Update May 3, 2018

2 Overview The LINXS team, LAWA s APM developer, has posted notice that it intends to price approximately $1.2B in bonds to finance a portion of the APM during the week of June 4 th through its conduit issuer, the California Municipal Finance Authority The Board has recently taken actions or will be brought actions for consideration in the near future that add projects to LAWA s capital plan over and above those projects considered in the last airport consultant financial forecast dated February 21, 2018 LINXS financing will occur prior to the finalization of a new or updated airport consultant financial forecast, expected with our next bond issue in July 2018 LAWA s payments under the APM DBFOM Agreement may support all or a portion of LINXS bonds and LAWA has agreed to provide LINXS with certain LAWA financial and operational information to include in the offering documents for their bonds The information provided by LAWA in connection with the LINXS bond offering document may include updates to LAWA s capital plan, notwithstanding that an updated airport consultant financial forecast will not be completed prior to the publication of the LINXS bond offering documents 2

3 Additional Capital Projects LAWA historically has engaged an airport consultant to prepare a financial forecast in connection with each new issuance of LAWA Bonds Each airport consultant financial forecast typically includes consideration of those LAWA capital projects that have been approved by the Board or are likely to be approved by the Board in the near future The following projects or commitments of note have, since the publication of the last airport consultant financial forecast, been approved or are expected to be submitted to the Board for consideration in the near future: Airport Police Facility Project Intermodal Transportation Facility West Project including structured parking facilities adjacent to the APM LADWP agreement for new receiving station serving LAX American Airlines Lease (pursuant to a June 2017 LOI between AA and LAWA) including near term provisions for a new vertical core supporting the APM and other improvements to terminal facilities over a longer period of time at LAX Alaska Airlines Lease Amendment including provisions for additional improvements to terminal facilities at LAX 3

4 Capital Project Costs/Sources of Funds Final capital project budgets are in development, but total costs of these additional capital projects are currently estimated at approximately $2.3 billion over the next 5-10 years LAWA expects capital project funding to require: Approximately $1.5 billion in additional LAWA Bond proceeds Approximately $0.8 billion in LAWA revenue (cash) Revenue supporting additional projects: Capital costs for the police facility and power receiving station are expected to be allocated to LAX cost centers and recovered from users Parking garage costs are expected to be supported by revenues generated at the new garage Terminal facilities costs are expected to be recovered through airline rates and charges and terminal concession revenues 4

5 Anticipated Updates from Last Airport Consultant Financial Forecast LAWA staff currently anticipates that the next airport consultant financial forecast will, among other things: Include only those capital projects that are: Already underway, but not yet completed at LAX; or Expected to be completed during the forecast period contained in the airport consultant financial forecast (including the additional $2.3B in capital projects) Reflect APM availability payments (capital) below the subordinate lien level (although O&M payments continue to be treated as LAX Maintenance and Operations Expenses) in LAX s flow of funds Update project cash flows for tenant acquisitions Reflect slightly higher future interest rates for financings Exclude those capital projects where: The specific scopes, costs, approvals, funding sources, and/or commercial arrangements have not advanced sufficiently to permit LAWA to fully estimate the costs, funding plans and commercial arrangements for purposes of the financial forecasts; or Such projects are in early planning stages, have not undergone proper environmental review or whose schedule for delivery has not yet been identified 5

6 Possible Order of Magnitude Impacts on Financial Metrics LAWA staff currently anticipates that the impact of the changes to next airport consultant financial forecast may include, but not be limited to the following: Updated financing plan will assume an additional approximately $1.5 billion in LAWA bond proceeds over the forecast period Total LAX Master Senior Indenture debt service coverage in FY2024 is expected to remain above 3.4x (from 4.36x previously) Total LAX debt service coverage (under Master Senior and Subordinate Indentures) in FY2024 is expected to be in the 1.8x-1.9x range (from 1.91x previously) Airline cost per enplaned passenger (CPE) in 2024 is expected to increase to approximately $27-28 per enplanement (from $25.82 previously) LAX debt per enplaned passenger (DPE) in 2024 is expected to increase to approximately $230 per enplanement (from $196 previously) 6

7 Upcoming Events LINXS is expected to release its bond offering document on or about May 23 rd LINXS bond pricing is expected in sometime in the week of June 4 th Board to consider of financing documents for the next issuance of LAWA Bonds late June 2018 LAWA Bond pricing late July 2018 LAWA Bond closing early August 2018 In connection with potential future LAWA Bonds: LAWA staff expects that it will be required to obtain additional City Council and Board approvals LAWA staff anticipates quarterly LAWA Bond financings of approximately $500 million or greater over next months in order to finance: New money for capital projects. Refunding (refinance) of LAWA Bonds issued in 2009 and

8 Disclaimer This presentation is provided as of May 3, If you are viewing this presentation after May 3, 2018 there may have been events that occurred subsequent to such date that would have a material adverse effect on the information that is presented in this presentation, and LAWA does not undertake any obligation to update this presentation. The information provided in this presentation is not warranted as to completeness or accuracy and is subject to change without notice. All numbers contained in this presentation are approximate. The specific principal amount, if any, of any maturity of any LAWA bonds to be refunded will be determinedby the LAWA at the time the LAWA and the underwriters for any additional LAWA Bonds execute a bond purchase agreement for such transaction, if any. The issuance of any such additional LAWA Bonds and the refunding of any LAWA Bonds is subject to market conditions, and LAWA will only issue such LAWA Bonds to refund any of LAWA Bonds if such issuance and refunding result in acceptable debt service savings to LAWA. Nothing contained in this presentation constitutes a notice regarding the potential refunding of any LAWA Bonds under any LAWA Indenture. The statements contained in this presentation that are not purely historical, are forward-looking statements, including statements regarding the LAWA s expectations, hopes, intentions or strategies regarding the future. Such statements are generally identifiable by the terminology used such as plan, expect, estimate, budget, project, forecast, will likely result, are expected to, will continue, is anticipated, intend or other similar words. Recipients of this presentation should not place undue reliance on forward-looking statements. All forward-looking statements included in this presentation are based on information available to LAWA on the date hereof, and LAWA assumes no obligation to update any such forward-looking statements with new forward-looking statements. It is important to note that LAWA s actual results likely will differ, and could differ materially, from those in such forward-looking statements. The forward-looking statements in this presentation are based on various assumptions and estimates and are inherently subject to various risks and uncertainties, including risks and uncertainties relating to the possible invalidity of the underlying assumptions and estimates and possible changes or developments in social, economic, business, industry, market, legal and regulatory circumstances and conditions and actions taken or omitted to be taken by third parties, including airlines, customers, suppliers and competitors, among others, and legislative, judicial and other governmental authorities and officials. Assumptions related to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of LAWA. Any of such assumptions could be inaccurate and, therefore, there can be no assurance that the forward-lookingstatements included in this presentation willprove to be accurate. RESTRICTIONS ON USE This presentation may not be reproduced, disseminated, quoted or referred to, in whole or in part. By accessing or otherwise accepting this presentation, you agree not to duplicate, copy, screen capture, electronically store or record this presentation, nor to produce, publish or distribute this presentation in any form whatsoever. 8