Global Infrastructure & Project Finance. Metropolitan Washington Airports Authority, District of Columbia

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1 District of Columbia Reagan National and Dulles International Airports New Issue Airports / U.S.A. Ratings New Issues $351,230,000 Airport System Revenue Refunding Bonds Series 2016A (AMT) AA $23,800,000 Airport System Revenue Refunding Bonds Series 2016B (Non-AMT) AA Outstanding Debt $4,780,260,000 Airport System Revenue Bonds AA Rating Outlook Stable Summary of Fitch Key Rating Drivers Key Rating Drivers Infrastructure Development/ Renewal and Renewal Average Rating Case Leverage (x) Revenue Risk Revenue Risk Debt Lien Volume Price Structure Aviation Revenue Bonds Stronger Stronger Stronger Stronger 8.8 Source: Fitch Ratings. Summary: The rating reflects Metropolitan Washington Airports Authority s (MWAA) very strong credit attributes, including the resilience of its complementary dual-large hub airport system serving the strong and growing District of Columbia air service area; well-balanced system-wide carrier mix; largely complete capital program with a new, smaller program that can serve projected demands; and stable financial profile. The large debt burden and rising airline cost profile, particularly at Dulles International Airport (IAD), remain concerns. However, this has been partially mitigated by the authority s new airline use and lease agreement (AUL) with enhanced revenue sharing between airports. Strong Market Position: MWAA s large traffic base is anchored by a strong underlying economic region and diverse, complementary domestic and international service offerings at Dulles and Reagan National Airport (DCA). Following the most recent recession, enplanement declines at IAD have been offset by steady, solid growth at DCA. United is the lead carrier at IAD with a 62.4% carrier market share, while American handles approximately half of DCA. Favorable Rate-Setting Approach: MWAA s current AUL continues a hybrid compensatory model, providing an overall favorable airport system cost recovery approach by bridging the significant cost imbalances at the airports. Revised terms allow for tiered surplus revenue sharing from DCA to subsidize IAD's costs tied to substantial debt-financed capital investments. Related Criteria Rating Criteria for Airports (February 2016) Rating Criteria for Infrastructure and Project Finance (September 2015) Major Capital Needs Addressed: The $5 billion capital construction program (CCP) is nearly complete, requiring practically no additional debt. The new $1.3 billion CCP is predominantly for DCA and will be approximately 94% bond funded, however DCA should have the debt capacity. Both airports are modern facilities in good condition. Largely Conservative Capital Structure: Over 82% of the MWAA s debt is fixed rate, 12% is synthetically fixed variable-rate obligations and only 6% is unhedged variable-rate debt. In addition, this exposure is partially mitigated by the authority s large unrestricted cash position. Analysts Jeffrey Lack jeffrey.lack@fitchratings.com Seth Lehman seth.lehman@fitchratings.com Stable Finances, Elevated Leverage: Leverage of 8.2x net debt/cash flow available for debt service (CFADS) is elevated. The debt service coverage ratio (DSCR) has been largely stable in the 1.4x 1.5x range, with similar expectation over the medium term. Liquidity remains strong. Peers: Los Angeles International Airport (LAX: AA/Stable) and San Francisco International Airport (SFO: A+/Stable) are international gateway peers. LAX benefits from a greater, more resilient enplanement base with less carrier concentration, lower leverage and higher coverage accounting for its higher rating. SFO has a similar operational and financial profile, but these metrics are tied to a single airport whereas MWAA benefits from a dual-airport system.

2 Rating Sensitivities Negative Enplanement Profile: Significant or unanticipated changes in the airports current traffic base or shifts in commitments from leading carriers could pressure the rating. Negative Over Leveraging: Additional leveraging for the new capital program that materially affects financial flexibility may cause downward rating pressure. Negative Elevated Costs: Inability of the authority to manage the airport system cost profile, putting pressure on debt coverage metrics could negatively affect credit quality. Positive: Upward rating migration is not likely at this time given the authority s current leverage and cost profile coupled with its additional borrowing needs. Enterprise Summary Project Summary Data Financial Summary Data Project Type Airport Rated Debt Terms $4.8 billion; 82% fixed rate, 12% synthetically fixed. Project Location District of Columbia Amortization Profile Fully amortizing. Status Operational Hedging/Counterparty $574 million of interest rate swaps with Bank of America (A/Stable), JPM Chase (A+/Stable) and Wells Fargo (AA /Stable). Revenue Basis Volume Liquidity/Provider $353 million Sumitomo (A/Stable); $122.5 million TD Bank (AA /Stable); $200.5 million RBC (AA/Negative). Operator Metropolitan Washington Airports Reserves Debt Service Reserve Fund (DSRF): Lesser of 125% of average ADS, 10% of par, or MADS; cash funded at $315 million. Authority (MWAA) Triggers Rate Covenant: Net revenues equal to greater of 1.25x aggregate ADS or amount required to be deposited into all indenture funds. Additional Bonds Test: 1) Net revenues last fiscal year > 1.25x ADS for last fiscal year + MADS of new bonds or 2) consultant certification that the rate covenant will be met in at least the next five years. MADS Maximum annual debt service. ADS Annual debt service. Source: MWAA, Fitch Ratings. Overview Transaction Summary Related Research Fitch Rates Metropolitan Washington Airports Authority Revs AA ; Outlook Stable (May 2016) Peer Review of U.S. Airports (December 2015) MWAA is expected to issue approximately $375 million of series 2016A (AMT) and 2016B (Non-AMT) airport system revenue refunding bonds for debt service (DS) savings. The bonds will be 20-year, fixed-rate bonds and will not extend the final maturity of the refunded bonds. The series 2016A bonds will currently refund the series 2006A&B bonds while the series 2016B bonds will currently refund the series 2006C bonds. DS savings are estimated to total a net present value of approximately $74 million (or 16% of refunded par). Airport System Profile MWAA was created in 1985 under the Virginia Act and the District Act, with the consent of the U.S. Congress, for the purpose of operating, maintaining and improving IAD and DCA, which are federally owned. Under the acts, the authority maintains the ability to develop, construct and enlarge the airports; issue self-supporting revenue bonds; and fix, revise and collect airport user rates and charges. Fully independent from the District of Columbia, the commonwealth of Virginia, and the federal government, the authority does not have any taxing power. District of Columbia 2

3 DCA opened in Located approximately three miles from downtown Washington, D.C., on approximately 860 acres along the Potomac River in Arlington County, Virginia, it is the longest operating commercial airport serving the air trade area. A strong 84% of DCA s passenger traffic is O&D in nature. DCA is subject to slot restrictions, instrument flight rule restrictions, and other FAA regulations that limit the number of flights taking off and landing at DCA and the stage length of such flights. Consequently, DCA serves primarily short to medium haul markets District of Columbia 3

4 (since most flights are prohibited from flying nonstop to airports more than 1,250 statute miles away). IAD opened for service in It is situated on approximately 11,830 acres in Fairfax and Loudoun Counties, VA. IAD is located 26 miles from downtown Washington, DC, from which it is primarily accessible via a limited access highway. IAD provides a full range of domestic and international air service (international gateway with long-haul and connecting hub operations) that complements DCA s stage length limitations). Project Analysis Revenue Risk Volume Service Area Fitch favorably views the strong and diverse demographic and economic profiles that underpin the Washington-Arlington-Alexandria (DC-VA-MD-WV) MSA served by DCA and IAD. Collectively 24 jurisdictions comprise the MSA. Growing to over 6.1 million, the population within the service area has consistently outpaced population growth both in the surrounding area and the nation. Since 2007, the population of the air trade area grew at an annual CAGR of 1.6%, compared with the national average of 0.8%. This trend is expected to continue, with a projected growth rate through 2020 of 1.2% for the service area versus 0.8% for the U.S. There is considerable disposable income supporting frequent air service as the residents within the service area among the most affluent in the U.S. A highly educated workforce drives strong per capita income levels of more than $63,000 for 2014 (37% higher than the national average). The MSA is home to 15 Fortune 500 company headquarters and nearly 1,000 foreign-owned companies that together support a large and diverse employment base with no industry comprising more than 23%. Further, governmental jobs provide additional stability accounting for 22% of employment. As a result, the region s unemployment rate has consistently been below the national average and was 4.6% for 2015 compared with 5.3% for the U.S. The MSA, containing the nation s capital and center of the federal government, also benefits from a strong international tourist base; Washington, DC was the eighth most visited U.S. city among international travelers in Enplanement Trends and Airline Activity In Fitch s view, MWAA s complementary dual large-hub airport system and resilient traffic base affords it strong franchise strength and are key underlying credit strengths. Total Enplanements at DCA and IAD Accordingly, the authority's two airport Reagan National (Total) Dulles (Dom.) Dulles (Int'l) (Mil.) system experienced system-wide 25 enplanement growth of 5.1% in 2015, well above the more tepid growth 20 experienced in the recent past. 15 Enplanements now total 22.2 million 10 and have approximately recovered to the 2005 peak level, with a five-year CAGR of 1.3%. 5 0 DCA (up 9.9%) continues to benefit from increased service and carrier Source: MWAA. District of Columbia 4

5 competition as Southwest Airlines Co. (BBB+/Stable), JetBlue Airways Corp. (BB /Stable) add destinations following the American Airlines slot divestitures (BB /Stable). Collectively, lowcost carrier (LCC) enplanements increased 37.5% in 2014 and the growth carried over into 2015 and This growth has been necessary to offset the losses in domestic traffic at IAD as United Airlines, Inc. (BB /Positive) reduced seat capacity and LCCs serve DCA and Baltimore-Washington International Airport (BWI). IAD has experienced 12 consecutive years of international passenger growth to a record 3.6 million enplanements in 2015, yet domestic enplanements have fallen more than 23% since Frontier Airline s entrance has helped to mitigate some of the domestic service reduction by United and total enplanements at IAD have levelled out in 2015 and are expected to begin growing. Fitch believes the diverse mix of airlines serving the two airport system is another credit strength. Although American maintains a 51% majority at DCA and United a 62% majority at IAD, on a system-wide basis no carrier maintains more than a 35% share of enplanements. The presence of LCCs and ultra-low-cost carriers (ULCCs) have spurred additional service and increased market share diversity. That trend is likely to continue in In addition, the 76% O&D traffic base ensures a relatively stable underlying demand for air service. Airport System Carrier Market Share in Airports System (%) DCA IAD Enplanements (Mil.) % Origin and Destination Top Carriers United American Delta Southwest JetBlue Frontier JetBlue 5.0% Southwest 8.1% Frontier 2.1% Delta 9.1% Foreign Flag 9.8% Other 3.1% American 28.7% United 34.1% Foreign Flag Source: MWAA, Report of the airport consultant (May 5, 2016). In addition to general economic conditions, Fitch believes that MWAA s service also faces ongoing competitive threats for its domestic O&D traffic from nearby BWI, just 30 miles northeast of Washington, DC. BWI currently has a lower cost profile than both DCA and IAD and is the third-ranked airport in the Southwest system (after Chicago-Midway and Las Vegas) as measured by departing seats. While this poses some risk, Southwest recently added slots at DCA, such that it is now second-largest at the airport from an allocation standpoint and continues to add destinations at both DCA and IAD. Further, MWAA has maintained a relatively stable regional market share of approximately 65% since 2010 and average fares between BWI and DCA are tightening. Revenue Risk Price In Fitch s view, MWAA s current AUL provides a sound structure for continued stable operating performance independent of underlying traffic performance, while also addressing the issue of a rising cost profile, especially at IAD. The new hybrid commercial compensatory agreement builds on the prior 25-year hybrid agreement that was in place since The new AUL will be effective for all airlines serving at both airports, but will extend to a 10-year term at DCA and a three-year term at IAD. MWAA is presently in negotiations to extend the AUL at IAD to match the term of DCA. Effective Jan. 1, 2015, the new agreement is structurally similar, but contains District of Columbia 5

6 several key revisions that benefit both MWAA and the signatory carriers, as well as afford bondholders additional protection. Key revisions under the AUL include new provisions to increase MWAA's debt service coverage to higher levels than were previously permitted. The agreement also modifies the revenue-sharing arrangements from surplus cash flow between the authority and the signatory airlines as well as introduces a new formula to subsidize IAD s debt costs that are passed on to carriers using a portion of the surplus revenues derived at DCA. Fitch sees the new mechanics for revenue sharing as the most important revisions delivered in the new airline agreement. Revenue sharing between the authority and the signatory airlines from surplus cash flow will be modified to allow for MWAA to keep higher percentages of such surpluses in the earlier periods and with lower percentages to retain later on. MWAA will also be able to apply a portion of the net revenues derived from DCA to subsidize IAD s overall debt costs passed on to carriers, subject to maximum annual amounts. Further, to the extent there are changes with regards to the federally mandated DCA perimeter rule, additional surplus cash flow diversions from DCA to IAD would be allowed. Overall rate setting at airline cost centers will incorporate a sliding scale of hard coverage levels over the 10-year term for MWAA's debt service: 1.35x coverage from , 1.30x from and 1.25x in In Fitch's view, these coverage factors are higher than what is typically seen in airline agreements implemented at most U.S. large hub airports. Further, the agreement will keep its previously existing extraordinary coverage protection provision that protects the overall cost recovery even in times of weaker than expected operational activities. Fitch believes that the current agreement brings more flexibility to MWAA to manage the uneven cost structures at IAD and DCA that have resulted from the significant capital investment at IAD over the past 15 years. Fitch notes that management has already taken strides to contain cost per enplanement (CPE) at both airports, managing costs to levels below what the airport consultant forecast CPE to rise to by The current AUL proved effective in its first year, lowering CPE at IAD to $23.67 from $26.55 in 2014, while maintaining that of DCA at $13.32, a historically consistent level. Further, indenture-based coverage increased to 1.69x from 1.45x. Looking forward, the new agreement should provide for continued stability in the CPE at DCA, despite taking on a new $1.3 billion capital program for the airport, and keep CPE at or below the present level at IAD through the 2021 forecast period. This represents several dollars in savings to carriers compared with forecasts under the prior agreement and is considered reasonable compared with other major international gateway airports. Further, the fact that both American at DCA and United at IAD command close to or better than average-fare yields compared to the rest of their networks on nearly all passenger trip lengths provides an economic advantage that should help retain service despite the cost profiles. Infrastructure Development and Renewal In Fitch s view, MWAA s infrastructure has seen significant investments in recent years and is known to be in good shape and poised to deal with the recent and forecast passenger growth. Both airports have been either renovated or newly expanded, and the authority is nearing completion of its 15-year, $5 billion CCP that was primarily focused on modernizing Dulles. Key Dulles projects in the $4.5 billion allocation included: the aerotrain system, fourth runway, international arrivals building expansion, concourse expansion and rehabilitation, and in-line baggage screening, among others. In addition, a major concession (food and retail) District of Columbia 6

7 redevelopment is underway at both airports that is already proving to be revenue accretive and these trends should continue as construction progresses. With the prior capital program nearing completion at IAD, the authority has turned its focus to DCA in developing its new $1.3 billion, 10-year CCP. The new capital program contains $1.2 billion in projects for DCA, including most notably a new regional airline concourse, moving security areas outside of the main national hall and a new parking garage. Similar to some of the projects at IAD, the new CCP for DCA should enhance MWAA s revenue generating capabilities in the future. Fitch notes that the majority of the CCP has already been funded and there are virtually no additional bonding needs. However, MWAA will be primarily debt financing its new CCP with 94% of funds coming from previous bond proceeds and future bonds. Fitch believes that MWAA s debt profile associated with DCA should have the capacity to take on this additional leverage. However, to the extent MWAA takes on additional debt beyond that already contemplated or the system s net debt/cfads fails to migrate downward, the rating may be pressured. Financial Analysis Debt Structure In Fitch s view, the airport has a conservative debt structure. Of the $4.8 billion currently outstanding senior-lien aviation revenue bonds, over 82% are traditional fixed rate debt. With another 12% synthetically fixed with counterparties rated A or higher, only 6% (or $276.4 million) of MWAA s debt remains unhedged variable-rate debt. Further, this interest rate risk is partially mitigated by the authority s strong $705 million of unrestricted cash and investments that exceeds its exposure by more than 2.5x. Annual Debt Service and Debt Outstanding ($ Mil.) Debt Service (LHS) Debt Outstanding (RHS) ($ Mil.) 6,000 5,000 4,000 3,000 2,000 1, Source: MWAA. Fitch notes that MWAA s debt burden is elevated, and its debt service obligations will rise as a result of the current and new CCP borrowings, yet the authority continues to look for refunding opportunities for savings and $1.9 billion of bonds will be callable from 2016 through Revenues and Costs In Fitch s view, 2015 airport-pledged gross revenues of $736.5 million are well balanced between airline payments (59%), concession revenues (34%) and other operating and nonoperating revenues (7%). Separately, MWAA collects nearly $90 million in passenger facility District of Columbia 7

8 charge (PFC) revenues, of which $42.5 million was applied against debt service payments in the past year. Over the past five years, aviation revenues grew at a 5.3% CAGR, reflecting the rising debtrelated and operating costs, coupled with airport traffic growth. With much of the current CCP already in the rate base and increasing concession revenues, airline fees are forecast to climb by a more moderate annual rate of 3.4% through 2021 in Fitch s rating case. Concession revenues have risen at a similar 5.5% average rate since However, they were up 12.8% most recently in 2015 and 7.3% for 2014 as the concession redevelopment continues. Auto parking and rental car combined comprises nearly 60% of the receipts in this non-aeronautical category. However, terminal concessions and passenger services are also major contributors and have been growing at accelerated levels. These revenues are instrumental to the airport s stable debt service coverage levels and unrestricted fund balances. With the slight growth in traffic (prior to 2015 s 5.1% system growth) and significant investments at the terminals, airport operating expenses have grown at an average of approximately 5% per annum since Going forward, the sponsor forecast assumes a similar 4% annual growth rate, which seems to be reasonable. Airport CPE is slightly elevated, especially at Dulles, but has been contained in recent years. CPE at DCA grew from the $10.50 range in 2007 to $13.50 in 2010 and has remained relatively constant since. CPE at IAD more than doubled to $25 by 2012 from the $12 range in However, that spike was tied to increased costs from the airport s capital program and management has taken strides to manage the CPE such that CPE only increased another $1.50 in 2013 and was held flat in Further, MWAA negotiated the current AUL to address this elevated cost profile and the sizeable difference between airports leading to an almost $3 reduction to IAD s CPE in The ability to share portions of net remaining revenues in each fiscal year also provides a mechanism to manage airline costs over time without impairing MWAA s cost recovery abilities. As a result, under conditions of modest traffic growth through 2021, CPE is likely to increase slightly at DCA but remain in the $13 $15 range, remaining largely consistent with levels charged over the past few years. CPE at IAD should actually drop slightly over the next few years before stabilizing in the $24 $25 range, a level below the $30-plus range forecast under the prior AUL. While IAD s average CPE will remain relatively high, Fitch notes that the rate will still be competitive when compared with the expectation of rates and charges at other international gateway airports as their capital program costs come online. Key Financial Metrics In Fitch s view, MWAA s recent financial performance has been largely stable, albeit at a slightly lower level than prerecession, with indenture-based DSCR including transfers in the range of 1.35x 1.49x since The current AUL has provided for stronger coverage, improving to 1.69x for 2015, with the expectation of a few years of slightly higher coverage followed by a return to the 1.3x 1.4x range. Liquidity remains strong at 822 days cash on hand. In addition to the indenture-based calculation, Fitch calculates coverage whereby it treats PFC receipts as revenue rather than debt service offsets. Employing this methodology, and excluding fund balance transfers, DSCR was still a solid 1.31x. The hybrid rate-setting methodology as well as passenger stability and increased concession revenues per enplanement have allowed for financial performance to remain at steady levels over the last several years, even with the growing debt burden to support the capital plans at IAD. MWAA s leverage metrics have been slightly elevated for the AA category on a historical basis, but District of Columbia 8

9 have evolved down to 8.2x net debt/cfads in 2015 and should decrease to the 7.5x range by 2021 despite the plans for more borrowings. In Fitch s view, a combination of the current AUL, healthy cash balances and growth in airport traffic should collectively help stabilize the airport s fiscal and leverage position in the coming years. Fitch evaluates MWAA s financial performance using a base case and rating case set of assumptions. The base case applies the same traffic assumptions as provided by the feasibility consultant, as the average annual system-wide traffic growth rate of 1.5% appears reasonable in Fitch s view given the socioeconomics of the region, Fitch s view on GDP and recent scheduling decisions of signatory carriers. DSCR under the Fitch methodology is 1.37x 1.55x with fund transfers and 1.03x 1.16x without. CPE remains stable through 2021 in the $13 $15 range at DCA and the $20 $25 range at IAD, while leverage rises, but drops back to 8x. The rating case assumes an overall 9% traffic reduction over (in line with the aggregate loss experienced between 2006 and 2009) followed by recovery in the form of 2.5% annual growth rates through Coverage metrics are marginally lower on an indenture basis (more so when PFCs are treated as revenues), but CPE would trend around $1.50-$2.00 higher at DCA and $4 $5 dollars higher in each year at IAD, while leverage still evolves below 8x by Overall, the loss in traffic will have the greatest impact on CPE. District of Columbia 9

10 Historical Financials ($ 000, Fiscal Year Ended Dec. 31) Operating Revenues Airline Revenues % Change CAGR Landing and Apron Fees 101, , , , , ,741 (11.0) 0.8 Terminal Rents and User Fees 191, , , , , , Other Airline Revs (IAB/Pass Convey) 24,666 29,085 32,423 32,369 32,883 29,623 (9.9) 3.7 Sub-Total Airline Revenues 317, , , , , , Concession Revenues Terminal Concessions 49,122 50,274 51,355 54,406 58,687 73, Auto Parking 73,391 74,163 74,931 77,171 81,529 94, Auto Rental and Ground Transportation 52,372 44,083 44,029 46,187 48,941 54, FBO/Inflight Kitchen 19,329 21,282 23,392 25,548 29,363 29, Sub-Total Concession Revenues 194, , , , , , Other Non-Airline Operating Revenues 46,162 48,448 47,082 47,492 53,045 54, Total Operating Revenues 558, , , , , , Interest Income/Other 16,991 18,615 15,563 16,187 12,597 16, (0.5) Total Gross Revenues 575, , , , , , Operating and Maintenance Expenses 292, , , , , , Net Revenues 282, , , , , , Transfers from General Purpose Fund (Rev Share) 65,849 61,614 61,561 61,907 78, , Total Pledged Revenues and Funds 348, , , , , , Gross Senior DS 319, , , , , ,212 PFC Offsets to Senior DS (82,013) (50,815) (40,010) (42,000) (40,000) (42,500) Net Debt Service 237, , , , , ,712 PFC as a % of Gross Senior DS Coverage Ratios (Indenture Approach) (x) DSCR with GP Fund Transfers DSCR without GP Fund Transfers Coverage Ratios (PFCs as Revenue) (x) DSCR with GP Fund Transfers DSCR without GP Fund Transfers Enplanements 20,784 20,892 20,973 21,059 21,137 22,210 % Change CPE Calculations Reagan National Airline Payments 120, , , , , ,110 Signatory Enplanements (000) 8,924 9,359 9,794 10,201 10,462 11,496 CPE Dulles Airline Payments 191, , , , , ,129 Signatory Enplanements 11,668 11,391 11,134 10,796 10,608 10,654 CPE MWAA Debt 5,205,636 5,268,857 5,036,470 4,950,835 4,870,030 4,780,260 Debt per Enplanement Debt per Enplanement (O&D) Net Debt/CFADS (x) Days Cash on Hand IAB International arrivals building. FBO Fixed base operators. DS Debt service. PFC Passenger facility charge. CPE Cost per enplanement. CFADS Cash available for debt service. Source: Metropolitan Washington Airports Authority (MWAA). District of Columbia 10

11 Base Case Metropolitan Washington Airports Authority Historical Budgeted Forecast CAGR ($ 000, Fiscal Year Ended Dec. 31) Airline Revenue 405, , , , , , , , Concession Revenue 218, , , , , , , , Other Operating Revenue 53,045 54,598 54,838 56,111 57,608 58,601 60,175 61, Investment Earnings 12,597 16,558 16,445 18,459 20,117 20,224 20,673 20, Subtotal 690, , , , , , , , Transfer from General Purpose Fund 78, , , , , , , , Total Revenues 768, , , , , , , , Less: Operation and Maintenance Expenses 320, , , , , , , , Net Revenues 447, , , , , , , , Bond Debt Service 349, , , , , , , , Less: Irrevocable PFC commitment (35,000) (35,000) (35,000) Less: Intended PFC commitment (5,000) (7,500) (8,500) (45,000) (44,000) (45,000) (46,000) (47,000) Less: Approved Debt Service (2,951) (2,923) (3,830) (4,163) (4,223) (4,466) Less: Future Debt Service (5,851) (28,983) (28,985) (28,984) (28,984) Total Annual Debt Service 309, , , , , , , ,444 PFC as a % of Gross Senior DS Coverage Ratios (Indenture Approach) (x) Debt Service Coverage Ratio Debt Service Coverage Ratio (no Transfers) Coverage Ratios (PFCs as Revenue) (x) Debt Service Coverage Ratio (PFC as Revenue) Debt Service Coverage Ratio (PFC as Revenue; no Transfers) Enplanements 21,137 22,150 22,489 22,838 23,187 23,536 23,885 24, % Change CPE System ($) DCA ($) IAD ($) IAD Domestic ($) IAD International ($) Debt per Enplanement ($) ND/CFADS (PFCs as Rev) Fitch Rating Case Enplanements 21,137 22,150 22,489 21,516 20,568 21,082 21,609 22,149 (0.0) Revenues 768, , , , , , , ,541 Expenses 320, , , , , , , ,406 Senior DS with GP Fund Transfers (Indenture Approach) (x) Senior DS with GP Fund Transfers (PFCs as Revenues) (x) Cost per Enplanement ($) DCA IAD Net Debt to CFADS (x) DS Debt service. PFC Passenger facility charge. DSCR Debt service coverage ratio. CPE Cost per enplanement. DCA Reagan National Airport. IAD Dulles International Airport. CFADS Cash available for debt service. Source: Report of the airport consultant (May 5, 2016), Fitch Ratings. District of Columbia 11

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