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2	FY 2006 Proposed Budget Overview Agenda Background Impact of CDP and Other Cost Drivers 102 Fund Revenue and Expense Budget Overview Summary
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4	FY 2006 Budget in Summary DFW has made significant cost reductions since 9/11 to keep airline costs as low as possible The opening of the CDP has been planned for many years. The CDP accounts for $135 million or 88% of the total 102 Budget Increase in FY 2006 DFW has taken over responsibility for Terminal E that adds $15 million of annual operating costs The airlines share of the budget has been reduced from 40% to 39% due to the growth of non-airline revenues DFW is still very competitive from a cost standpoint compared to other hub airports
5	DFW is a Residual Airport DFW is funded solely from airport revenues No local tax revenues Signatory Airlines pay the residual “net cost” of operating the Airport Landing fee revenue is the “ultimate balancer” between revenues, operating expenses, and debt service costs DFW has an end of the year settlement with the Signatory airlines for the differences between collections and expenses
6	Since 9/11 DFW Has Focused on Keeping “Net Cost” to Airlines as Low as Possible Discontinued discretionary spending Scaled back preventive and scheduled maintenance at many facilities Reduced staffing levels by 11% Returned $104 million in rate relief and capital transfers to the Airlines since 9/11
7	Delta Pull-Down Required Further Budget Reductions Absorbed $20 million of lost revenues during FY 2005 without passing rate increases on to Airlines Announced $0.43 landing fee reduction for last 5 months of FY 2006 - $7.5M savings Projected year end settlement is expected to be approximately $8 million By year end, the Airlines will have received approximately $139M of rate relief from DFW since 9/11
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9	Capital Development Program The Skylink high-speed airport train opened to the public on May 21 24 two-car trains; 12 in each direction Trains arriving every 2 minutes Average passenger ride 5 minutes Guideway elevated an average of 50 feet above ground Two stations in each terminal
10	Capital Development Program International Terminal D will provide service for approximately 11.0 million passengers in FY 2006
11	Impact of CDP Opening and Terminal E Since Terminals D and E increase the square footage that DFW manages by 319 percent, the related energy and facility maintenance costs will triple in FY 2006 as compared to FY 2004
12	102 Budget Impact of CDP – $261Million Annually PFCs and Other Revenues pay for $153 million (59%) of the CDP impact PFCs will cover 75% ($111M) of the CDP debt service Concessions, Board gates, FIS fees and other revs will cover $42M
13	Capital Development Program The increase in CDP operating/debt service costs represents 88% of total budget increase for FY 2006
14	Other Major Cost Drivers for FY 2006 The remaining $18 million of cost increases result from the following two projects Terminal E DFW assumed responsibility for Terminal E and baggage system after Delta pull-down in January Incremental cost impact – $9.6 million (offset by increased terminal rentals) Approved pension plan changes Plan changes approved last year to eliminate the social security offset to make plan more competitive with market Total pension contribution increases $7.4M
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16	FY 2006 Revenues - $635.2 Million Total revenues are projected to grow 32%, with non-airline revenues increasing from 60% to 61% of total revenues
17	Non-Airline Ops Revenues - $254 Million FY 2006 non-airline operating revenues are projected to grow 19.8% compared to FY 2005 Budget⁽¹⁾
18	102 Fund Expenditure Budget - $635.2 Million The 102 Expenditure Budget increase is due primarily to the opening of CDP and the payment of debt service on the CDP
19	Increase in Budget Was Planned Leigh Fisher Analysis (completed June 2004) projected total costs for FY 2006 of $620 million, plus $17 million impact of Terminal E, for total of $637 million
20	FY 2006 Operating Budget Rollforward Primary cost drivers in FY 2006 are annualization of the CDP, Terminal E, and approved pension plan modifications
21	Cost Impact of CDP Opening $42.9 Million Increase
22	Annualization of Maintenance, Energy, ITS, and Transportation Contracts (non-Term D) Annualization includes fixed price increases and an increase in the number of months under contract
23	Miscellaneous Cost Drivers for FY 2006 $12.4 Million Increase
24	FY 2006 Budget Summary Over $99 million of the increased budget is projected to be covered by PFCs and increases in non-airline revenues; reducing the Airlines share to 39%
25	Preliminary Cost/Enplaned Passenger - $8.33 Cost per Enplaned Passenger is projected to be 7.1% below the Leigh Fisher estimate for FY 2006 due to growth on non-airline operating revenues
26	Cost per Enplaned Passenger Comparison DFW’s preliminary cost per passenger positions DFW below the average of other Airports before and after CDP planned capital improvements
27	FY 2006 Budget in Summary DFW has made significant cost reductions since 9/11 to keep airline costs as low as possible The opening of the CDP has been planned for many years. The CDP accounts for $135 million or 88% of the total 102 Budget Increase in FY 2006. DFW has taken over responsibility for Terminal E that adds $15 million of annual operating costs The airlines share of the budget has been reduced from 40% to 39% due to the growth of non-airline revenues DFW is still very competitive from a cost standpoint compared to other hub airports