Official Statement Airport Commission City and County of San ...
Official Statement Airport Commission City and County of San ...
Official Statement Airport Commission City and County of San ...
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In addition to revenues received from the airlines, the <strong>Airport</strong> derives a substantial portion <strong>of</strong> its revenues<br />
from concessionaires including parking operators, merch<strong>and</strong>isers, car rental companies, food outlets <strong>and</strong> others. See<br />
“AIRPORT FINANCIAL AND RELATED INFORMATION–Concessions.” Declines in <strong>Airport</strong> passenger traffic have, <strong>and</strong><br />
may in the future, adversely affect the commercial operations <strong>of</strong> many <strong>of</strong> such concessionaires. Severe financial<br />
difficulties affecting a concessionaire could lead to a failure to pay rent due under its lease agreement with the<br />
<strong>Airport</strong> or could lead to the cessation <strong>of</strong> operations <strong>of</strong> such concessionaire.<br />
The ability <strong>of</strong> the <strong>Airport</strong> to derive revenues from its operations depends in part upon the financial health <strong>of</strong><br />
the airline industry <strong>and</strong> international relations. The financial results <strong>of</strong> the airline industry are subject to substantial<br />
volatility <strong>and</strong> many carriers have had extended periods <strong>of</strong> unpr<strong>of</strong>itability. Additional bankruptcy filings, mergers,<br />
consolidations <strong>and</strong> other major restructuring by airlines are possible. See also “SAN FRANCISCO INTERNATIONAL<br />
AIRPORT–Airline Bankruptcies.”<br />
Bankruptcy<br />
In the event a bankruptcy case is filed with respect to an airline operating at the <strong>Airport</strong>, a bankruptcy court<br />
could determine that the Lease Agreement to which such airline is a party is an executory contract or unexpired<br />
lease pursuant to Section 365 <strong>of</strong> the United States Bankruptcy Code. See “SAN FRANCISCO INTERNATIONAL<br />
AIRPORT–Existing Airline Agreements–Potential Effects <strong>of</strong> an Airline Bankruptcy.” In that event, a trustee in<br />
bankruptcy or the airline as debtor-in-possession might reject the Lease Agreement, in which case the <strong>Commission</strong><br />
would regain control <strong>of</strong> any leased facilities (including gates <strong>and</strong> boarding areas) <strong>and</strong> could lease them to other<br />
airlines. The rejection <strong>of</strong> a Lease Agreement in connection with the bankruptcy <strong>of</strong> an airline operating at the <strong>Airport</strong><br />
may result in the loss <strong>of</strong> Revenues to the <strong>Commission</strong> <strong>and</strong> a resulting increase in the costs per enplaned passenger<br />
for the airlines remaining at the <strong>Airport</strong>. In addition, the <strong>Commission</strong> may be required to repay l<strong>and</strong>ing fees,<br />
terminal rentals <strong>and</strong> other amounts paid by the airline up to 90 days prior to the date <strong>of</strong> the bankruptcy filing. The<br />
<strong>Commission</strong>’s ability to lease such facilities to other airlines may depend on the state <strong>of</strong> the airline industry in<br />
general, on the nature <strong>and</strong> extent <strong>of</strong> the increased capacity at the <strong>Airport</strong> resulting from the departure <strong>of</strong> the bankrupt<br />
airline, <strong>and</strong> on the need for such facilities.<br />
Also, under the United States Bankruptcy Code, any rejection <strong>of</strong> a Lease Agreement could result in a claim<br />
for damages for lease rejection by the <strong>Commission</strong> which claim would rank as that <strong>of</strong> a general unsecured creditor<br />
<strong>of</strong> the airline, in addition to pre-bankruptcy amounts owed. For additional information regarding bankruptcy filings<br />
by airlines operating at the <strong>Airport</strong> see “SAN FRANCISCO INTERNATIONAL AIRPORT–Airline Bankruptcies.”<br />
On January 5, 2010, Mesa Airlines (a U.S. Airlines affiliate) <strong>and</strong> on January 19, 2010, Japan Airlines, each<br />
filed for protection under Chapters 11 <strong>and</strong> 15 <strong>of</strong> the U.S. Bankruptcy Code, respectively. For Fiscal Years 2007-08<br />
<strong>and</strong> 2008-9 each <strong>of</strong> these airlines represented less than 1% <strong>of</strong> total enplanements at the <strong>Airport</strong>. Each <strong>of</strong> Mesa<br />
Airlines <strong>and</strong> Japan Airlines has deposited with the <strong>Commission</strong> a letter <strong>of</strong> credit to secure their performance under<br />
the applicable Lease Agreement. For additional information, see “SAN FRANCISCO INTERNATIONAL AIRPORT–<br />
Existing Airline Agreements–Potential Effects <strong>of</strong> an Airline Bankruptcy–Japan Airlines” <strong>and</strong> “–Mesa Air Lines.”<br />
Since the bankruptcy filings, both Japan Airlines <strong>and</strong> Mesa have continued to operate at the <strong>Airport</strong>.<br />
For a discussion <strong>of</strong> the effects <strong>of</strong> an airline bankruptcy on the collection <strong>of</strong> the passenger facility charge,<br />
see “AIRPORT’S FINANCIAL AND RELATED INFORMATION–Passenger Facility Charge–Collection <strong>of</strong> PFCs in the<br />
Event <strong>of</strong> Bankruptcy.”<br />
<strong>Airport</strong> Security<br />
The September 11, 2001 terrorist attacks resulted in increased safety <strong>and</strong> security measures at the <strong>Airport</strong><br />
m<strong>and</strong>ated by the Aviation <strong>and</strong> Transportation Security Act passed by the U.S. Congress in November 2001 <strong>and</strong> by<br />
directives <strong>of</strong> the Federal Aviation Administration. In addition, certain safety <strong>and</strong> security operations at the <strong>Airport</strong><br />
have been assumed by the Transportation Security Administration. In spite <strong>of</strong> the increased security measures, there<br />
is no assurance that there will not be additional acts <strong>of</strong> terrorism, such as the attempted December 25, 2009 terror<br />
plot, resulting in further disruption to the North American air traffic system, increased passenger <strong>and</strong> flight delays,<br />
<strong>and</strong> reductions in <strong>Airport</strong> passenger traffic <strong>and</strong>/or <strong>Airport</strong> revenues. See “SAN FRANCISCO INTERNATIONAL<br />
AIRPORT–<strong>Airport</strong> Security.”<br />
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