Chris Poinsatte, Executive Vice President/Chief Financial Officer
November 12, 2019
Dallas Fort Worth International Airport2019 Dallas Investor Conference
2
DFW - a Global Super Hub
Capable of 4
Simultaneous
Landings
164 gates
in 5 terminals
on 17,000+ Acres
7 Runways
4th Busiest
Daily
Departures
15th Busiest
Passengers
3
4
Environmental Impact
Largest Carbon Neutral Airport in the World
DFW’s ESG Reports available on
https://www.dfwairport.com/investors
5
Customer Experience & Digital TransformationIndustry Customer Service Award winner in 2016 and 2018.
66
Air Service Overview
7
Global CarriersDFW has 23 passenger carriers and 23 cargo carriers.
Passenger Airlines Cargo Airlines
Source: DFW internal statistics
8
International Destinations67 nonstop international destinations, 18 new in the last two years
Source: Diio Mi schedule data through December 2019, including announcements; DFW internal
statistics
67
International Destinations
9
Domestic DestinationsDFW serves 192 domestic destinations, 26 new in the last two years.
Source: Diio Mi schedule data through December 2019, including announcements; DFW internal
statistics
192
Domestic
Destinations
10
192192171189
11371
120 96143
66
13996
12391 84
76 6776 25
91131
67 9138
11532
6234
60 66
0
50
100
150
200
250
300
Destinations served among U.S. airports
Domestic International
Destinations GrowthDFW destinations have grown more than 30% since 2015, and now
ranks 2nd in total destinations among U.S. airports
259
Source: DFW internal statistics; Diio Mi schedule report YE Dec
2019, to include announcements
100 113 124 140 143 15019215
1829
35 40 47
67
0
50
100
150
200
250
300
CY1990
CY1995
CY2000
CY2005
CY2010
CY2015
Today
Number of destinations served from DFW
Domestic International
+30%
11
Passenger TrendingDFW traffic has grown every year since the Great Recession.
58.1 55.9 56.4 57.8 58.3 60.3 62.9 65.0 65.7 66.3 69.073.3 75.7
84.3
10
20
30
40
50
60
70
80
90
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY25
Total Passengers (Millions)
5.55.1 5.4 5.6 5.9
6.67.0
7.88.3 8.5 8.7
9.4 9.6
11.2
2
4
6
8
10
12
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY25
International Passengers (Millions)
Source: DFW Monthly Flight Activity Reports, FY20 numbers are budgeted, FY25 numbers are DFW projections
12
AA represents about 85% of DFW
passengers and 75% of operations
New AA facilities on airport property
• 300-acre headquarters campus
• Integrated Operations Center
• Training center and 600 room hotel
announced
• New parts distribution facility
Actively negotiating a new Use
Agreement
Strong Relationship with American Airlines
13
AA has aggressively grown DFW from 800 to 900 peak daily departures in Summer 2019
Source: Diio Mi schedules, June 2018 and June 2019
Bubble size denotes the size of seat capacity for each hub
13.4%
3.7%
6.2%
(2.4%)
3.6%
(1.8%)(0.2%)
2.5%2.0%
(12.9%)
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
0
100
200
300
400
500
600
700
800
900
1,000
DFW CLT ORD PHL MIA PHX DCA LAX LGA JFK
YoY
% C
hange
Depart
ure
s p
er
day
AA hubs departure per day
Depts. Per day YoY % change
14
The Hub and Spoke Maximizes Revenue
1/ American Airlines Flown O&D passengers per day each way August 2017
Market % of Daily Passengers1
DFW-LAX 49%
LIT-LAX 3%
TUL-LAX 2%
JAN-LAX 1%BNA-LAX 1%
EWR-LAX 1%
DAY-LAX 1%
SDF-LAX 1%
MSY-LAX 1%
SGF-LAX 1%
XNA-LAX 1%
SHV-LAX 1%
GUA-LAX 1%
LFT-LAX 1%
AEX-LAX 1%
LGA-LAX 1%
ICT-LAX 1%
VPS-LAX 1%
STL-LAX 1%
PNS-LAX 1%
DCA-LAX 1%
300+ <1%
Dallas Fort Worth to Los Angeles
A321
Example
15
American Airlines Estimated Profit MarginsDFW is AA’s most profitable hub and one of its highest-margin hubs*
12.7%14.3%
6.7%
11.4% 11.4%
-0.9%
9.6%
3.1%
13.6%
-0.8%
17.4%
(250)
-
250
500
750
1,000
1,250
1,500
DFW CLT MIA ORD PHL LAX PHX JFK DCA LGA Non-Hub
Ope
rating
Pro
fits
(m
illio
ns $
s)
American Airlines Estimated Profitability by Hub
Operating Profit Operating Margin
*Source: Ricondo and Associates study based on publicly available data for 2018. Also consistent with AA executive management's public comments.
1616
Financial Overview
17
DFW’s hybrid Use Agreement model
Airfield and terminal cost centers are “residual.” DFW shares profits from non-airline revenues with the airlines to reduce landing fees.
DFW Cost Center
Airfield Terminal DFW
Net Cost = Landing Fees Net Cost = Terminal Rentals Non-Airline Businesses
DFWCC Net Revenues
Joint Capital Account Debt Coverage Account DFW Capital Account
Controlled by Airlines;
includes Natural Gas
Royalties plus Sale of Land
Proceeds
DFW's Discretionary
Account can be spent for
any purpose.
Operating Revenue and Expense Fund (the "102 Fund")
Airline Cost Centers
Total Airline Cost
Capital Accounts ("Capital Improvement Fund")
Rolling Coverage, plus new
coverage funded from cost
center that drives new debt
service
$153M
$90M
$63M
Amounts are unaudited FY2019 results, excludes PFIC, Use Agreement basis, not GAAP.
18
DFW Revenues and Expenditures
Source – DFW Finance Department, Use Agreement Model, not GAAP, excludes Public Facility Improvement Corporation (PFIC). Numbers may not add due to rounding.
Non-Aviation Revenues$445.9M
Airline Revenues$501.5M
PFCs and Other
Revenues$178.1M
FY 2020 Budget RevenuesBy Source
($1.1 billion)
Operations$529.3M
Debt Service
$502.5M
FY 2020 Budget ExpendituresBy Use
($1.0 billion)
19
Non-Airline Revenues and Net Revenue Growth
57.8
73.3
0
20
40
60
80
FY 11 FY 19
Passengers (Millions)
$250.1
$399.3
$-
$100
$200
$300
$400
$500
FY 11 FY 19
DFW Cost Center Revenues (Millions)
$71.8
$152.7
$-
$25
$50
$75
$100
$125
$150
$175
FY 11 FY 19
DFW Cost Center Net Revenues (Millions)
Source – DFW Finance Department, Use Agreement Model, not GAAP, excludes Public Facility Improvement Corporation (PFIC), FY 19 unaudited..
2020
DFW’s Capital Program
21
$3.0 to 3.5 Billion of
TERMINAL DEVELOPMENT
22
OF STORMWATER SYSTEM
IS
48 YEARS
OLD
DFW Infrastructure SummaryMuch of DFW’s infrastructure is 40-50 years old.
23
DFW’s Capital Program 10-Year Program (excludes Terminals F and C)
about $3 billion.
Airside 38% Landside 31%Facilities and other
capital 31%
2424
DFW Airport Financing Program
25
Conservative Fiscal ManagementConservative practices provide significant financing flexibility in the future.
N o S w a p s
Historically 100% fixed rate
$4.0B bonds callable over next
four years providing flexibility
No swaps or other derivative exposure
Fully cash-funded debt service reserve fund
Employee pension plan closed in 2010;DPS Plan active
82.2% funded; 7.25% discount rate;
fixed amortization period
OPEB fully funded
F i x e d - R a t e B o n d s
N o S u r e t y P o l i c i e s
F u n d e d P e n s i o n P l a n s
26
DFW will retire approximately $2.2 billion by FY 2030 and has room to layer in new principal and interest in out years.
Source: DFW Treasury Department records
-
$1.0B
$2.0B
$3.0B
$4.0B
$5.0B
$6.0B
Debt Outstanding
-
$100M
$200M
$300M
$400M
$500M
$600M
Annual Debt Service
Debt Service Paid by
Passenger Facility Charges
Debt Service Paid by Airline
Rates Fees and Charges
Current Debt Profile
27
Callable Bonds*DFW has opportunity to refund $4 billion of bonds over
the next several years.
Source – DFW Treasury department records. September 1, 2019
*Note that the schedule denotes the assumed tax status when the bonds are callable.
461
959
456 417
483
352
484387
$944
$1,311
$941$804
$
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
11/1/2020 11/1/2021 11/1/2022 11/1/2023
Am
ou
nt o
f ca
llab
le d
eb
t, in
mill
ion
s
Call Dates
Tax…Taxable
28
2019A Taxable Bond OverviewPriced refunding bonds on August 6-7, 2019
Taxable refunding of $1.17 billion of AMT bonds
First US airport to receive international orders directly from international investors (awarded 14.3% of deal)
Bond Structure
• Serials in 2020-2032
• Terms in 2038 and 2045; ten-year call
• Terms in 2038 and 2045; make whole call and index eligible
$5.5 million of orders from 125 investors; 75 new
Underwriting Team: JP Morgan (lead left), Citigroup, BAML, Ramirez & Co., and Siebert Cisneros Shank & Co.
All in TIC of 3.027%
29
Why Chris sleeps well at night!DFW has sufficient cash on hand to pay debt service and
operating expenses for over 15 months with no new revenue.
Source: DFW Finance Department, as of September 30, 2018.
1.17x
.09x
.25x
1.51x
.00x
.20x
.40x
.60x
.80x
1.00x
1.20x
1.40x
1.60x
1.80x
2.00x
FY 2018
Debt Service Coverage Ratio
Rolling Coverage and Transfers
Coverage from PFIC and Other Revenues
Real Coverage
600
0
100
200
300
400
500
600
700
FY 2018
Days Cash On Hand
Current Bond Ratings:
Kroll(AA), Moody’s(A1), S&P(A+), Fitch(A+)
30
Bondholder’s Security – Revenue PledgeNo US Airport has ever defaulted on a bond payment due to this structure.
CASH RESERVES
INVESTOR
BOND
HOLDER
FAA REGULATIONS
AIRLINE USE AGREEMENTS
BOND COVENANTS
31
Refunding of existing $4 billion of debt
• $1.5 billion tax exempt
• $2.5 billion taxable
Funding of next capital program
• Taxable bonds – about $3.5 billion for
terminals
• Tax-exempt – $1.0-$1.5 billion for other
capital
• Cash – $1.0 to $1.5 billion
• Federal Funding – $250+ million
• Taxable commercial paper – interim
financing
10-year Financing Outlook
PRELIMINARY
Negotiations underway
32
DFW Commercial Paper Series I
$750 million authorized amount
• Self-liquidity
• Outstanding CP limited to 65% of market value of unrestricted cash and investments
• Limited to about $500M outstanding
• A-1/P-1 rating
• Subordinate lien - 1.1x coverage
Plan to use the proceeds as interim financing for upcoming capital program
CP to be refunded periodically with both taxable and tax-exempt fixed-rate debt
Issued first $50 million on 11/6/2019
Dealers: Loop, Wells Fargo, Jefferies and RBC
33
THANK YOU