SFO

ANNUAL REPORT 2017 FISCAL YEAR 2016-2017

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San Francisco Mayor Edwin M. Lee (1952 - 2017) dedicated much of his life serving the people of the San Francisco Bay Area, including nearly 30 years of public service. Starting with his first job as an attorney advocating for affordable housing and immigrants, rights, he was always working on behalf of others, particularly those who did not have a voice of their own or means to advocate for their needs.

Mayor Lee was a man of great courage, always pushing for momentous change and encouraging boldness and innovation. He took on challenges with great commitment and passion especially those issues close to his heart such as homelessness, the environment, and the safety and security of our City. His enthusiasm, dedication and commitment to improving the lives of all San Franciscans was an inspiration. He truly loved our City, and wanted all residents to take pride in its wonder and beauty, and share in its success.

Mayor Lee was proud of our Airport. He liked to tell people that coming to SFO was like coming to a 5-star luxury hotel. He viewed SFO as the global gateway to our entire region, one which should reflect all the values that make us great: equality, diversity, inclusion and innovation. We will honor his legacy by continuing to champion those ideals.

TRIBUTE TO SAN FRANCISCOMAYOR EDWIN M. LEE

Larry Mazzola President, Airport Commission

Linda S. Crayton Vice President, Airport Commission

Richard Guggenhime Member, Airport Commission

Eleanor Johns Member, Airport Commission

Peter Stern Member, Airport Commission

Ivar C. Satero Airport Director

1994.09.02 poster: United Air Lines, San Francisco 1951 Collection of SFO Museum

On the 90th anniversary of SFO, we took time to celebrate our past, but we also took important steps to ensure the future of our airport. SFO’s iconic landmark, the new air traffic control tower, became operational and we began construction of the new Terminal 1 facility and an on-airport hotel. These projects are at the forefront of our $6.2 billion Capital Plan, which reflects my commitment to revolutionize the passenger experience at SFO.

As we build for our future, we also reinforce our status as an industry leader in environmental sustainability. We established aggressive goals to achieve carbon neutrality, zero waste in landfill, zero net energy, and helped Airport tenants to achieve their Green Business Certification from the State of California. This history of climate action and sustainability reporting was recognized in March 2017, when Acterra announced the selection of SFO for their top honor, the 2017 Business Environmental Award. SFO continued to break new ground during this period, partnering with Singapore Airlines to launch the longest flight in the world using sustainable biofuel.

We remain firmly committed to be an Airport in service to our communities. We hosted another “Ready Set Fly” event to provide a real-world experience of air travel to individuals and families with autism and developmental disabilities. We celebrated 20 years of airport internship programs with the largest level of participation ever, offering opportunities to more than 150 individuals ranging from high school to post-graduate levels. We partnered with the FAA and two airlines to demonstrate a new GPS landing technology which offers potential to reduce aircraft noise over communities around SFO.

As they were 90 years ago, safety and security remain our highest priorities, and we continue to be innovators in these pursuits. We achieved perfect scores in our annual FAA inspection, and launched a new ID badge program to allow vendors and visitors occasional access at the airport while tightening security. The Quality Standards Program (QSP), our industry-leading wage and benefit policy, continues to reduce turnover and increase workforce stability among service providers whose employees perform services impacting safety and security at SFO.

I appreciate the guidance of the Airport Commission and the support of former San Francisco Mayor Edwin M. Lee. I am also grateful to my staff for their hard work and dedication. The same hard work and perseverance which created our Airport 90 years ago is today focused on building a vital future.

LETTER FROM THE AIRPORT DIRECTOR

Ivar C. SateroAirport Director

31994.09.01 TWA (Trans World Airlines), Los Angeles c. 1955 Collection of SFO Museum

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Larry MazzolaPresident Airport Commission

I am pleased to report that SFO set a new all-time record for traffic with nearly 54 million passengers served. SFO continues to be one of the fastest-growing airports in North America for international traffic, with double-digit growth for three straight years. What began nine decades ago as a muddy field constructed to transport air mail has since evolved into a global gateway to the world’s foremost center of technology, innovation, culture and tourism.

Growth at SFO has benefited more than the travelers who use our Airport. This growth powers local economies, driving job creation and business revenue. During this period, SFO directly accounted for more than 42,800 jobs at the Airport, and more than $8.4 billion in business activity. Off-site business activities that depend directly on local air service for staff movements, cargo deliveries, or visitor spending collectively raised the direct airport economic contribution to the Bay Area to $35.7 billion in business sales with approximately 165,000 jobs. The indirect and direct spin-off activities associated with suppliers of goods and services to directly affected businesses, and the re-spending of additional worker income on consumer goods and services, raises the total regional economic impact to more than $62.5 billion in business sales, including $20.9 billion in total payroll and more than 300,300 jobs.

These contributions all reflect increases over previous figures, thanks to the addition of new airlines and new routes, both in the U.S. and around the world. New airlines included Finnair, with nonstop service to Helsinki, and Thomas Cook Airlines, along with incumbent airline Virgin Atlantic, launched new nonstop service to Manchester, England. This period also witnessed the acquisition of Virgin America by Alaska Airlines, and the newly-combined company has demonstrated its commitment to SFO with the largest announcement of new markets in its history; 10 new routes from SFO, including service to Mexico City. This effort has promoted a healthy competitive environment with United, the largest airline at SFO, as it continued to invest in the Airport by introducing new routes and expanding frequency.

On behalf of the Airport Commission, I congratulate SFO on the achievements and awards they have garnered over the past year. These accolades are further evidence of the exceptional leadership provided by Airport Director Ivar C. Satero, and the dedication of the employees at SFO.

LETTER FROM THE COMMISSION PRESIDENT

1994.09.03 poster: Pan American World Airways, Mexico 1950s Collection of SFO Museum

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ABQ Albuquerque, NM

ACV Eureka, CA

ANC Anchorage, AK

ASE Aspen, CO

ATL Atlanta, GA

AUS Austin, TX

BDL Hartford, CT

BFL Bakersfield, CA

BNA Nashville, TN

BOI Boise, ID

BOS Boston, MA

BUR Burbank, CA

BWI Baltimore, MD

BZN Bozeman, MT

CLE Cleveland, OH

CLT Charlotte, NC

COS Colorado Springs, CO

CVG Cincinnati, OH

DAL Dallas Love Field, TX

DCA Washington-Reagan, VA

DEN Denver, CO

DFW Dallas/Fort Worth, TX

DTW Detroit, MI

EUG Eugene, OR

EWR Newark, NJ

FAT Fresno, CA

FCA Kalispell, MT

FLL Fort Lauderdale, FL

GEG Spokane, WA

HDN Hayden, CO

HNL Honolulu/Oahu, HI

IAD Washington-Dulles, VA

IAH Houston, TX

IND Indianapolis, IN

JAC Jackson Hole, WY

JFK New York, NY

KOA Kona/Hawaii, HI

LAS Las Vegas, NV

LAX Los Angeles, CA

LGB Long Beach, CA

LIH Lihue/Kauai, HI

MCI Kansas City, MO

MCO Orlando, FL

MDW Chicago-Midway, IL

MFR Medford, OR

MIA Miami, FL

MKE Milwaukee, WI

MMH Mammoth, CA

MRY Monterey, CA

MSO Missoula, MT

MSP Minneapolis/St. Paul, MN

MSY New Orleans, LA

MTJ Montrose, CO

OGG Kahului/Maui, HI

OKC Oklahoma City, OK

OMA Omaha, NE

ONT Ontario, CA

ORD Chicago-O’Hare, IL

OTH North Bend, OR

PDX Portland, OR

NON-STOP DOMESTICDESTINATIONS

2005.119.006 poster: Air France, Paris 1947 (reproduced 1993) Collection of SFO Museum, gift of Air France

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PHL Philadelphia, PA

PHX Phoenix, AZ

PIT Pittsburgh, PA

PSC Pasco/Tri-Cities, WA

PSP Palm Springs, CA

RDD Redding, CA

RDM Redmond, OR

RDU Raleigh-Durham, NC

RNO Reno, NV

SAN San Diego, CA

SAT San Antonio, TX

SBA Santa Barbara, CA

SBP San Luis Obispo, CA

SEA Seattle/Tacoma, WA

SLC Salt Lake City, UT

SMF Sacramento, CA

SMX Santa Maria, CA

SNA Orange County, CA

STL St. Louis, MO

STS Sonoma, CA

SUN Sun Valley, ID

TPA Tampa, FL

TUS Tucson, AZ

XNA Arkansas, AR

NON-STOP DOMESTICDESTINATIONS CONT.

2014.166.086 poster: Scandinavian Airlines System (SAS), Copenhagen 1960s Collection of SFO Museum, gift of Captain Jon Simmonds

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AKL Auckland, NZ

AMS Amsterdam, NL

AUH Abu Dhabi, AE

CAN Guangzhou, CN

CDG Paris-De Gaulle, FR

CPH Copenhagen, DK

CTU Chengdu, CN

CUN Cancun, MX

DEL Delhi, IN

DUB Dublin, IE

DUS Dusseldorf, DE

DXB Dubai, AE

FRA Frankfurt, DE

GDL Guadalajara, MX

HEL Helsinki, FI

HGH Hangzhou, CN

HKG Hong Kong, HK

HND Tokyo-Haneda, JP

ICN Seoul-Incheon, KR

IST Istanbul, TR

KEF Reykjavik, IS

KIX Osaka-Kansai, JP

LHR London-Heathrow, GB

MAN Manchester, GB

MEX Mexico City, MX

MNL Manila, PH

MUC Munich, DE

NAN Nadi, FJ

NRT Tokyo-Narita, JP

PEK Beijing, CN

PTY Panama City, PA

PVG Shanghai, CN

PVR Puerto Vallarta, MX

SAL San Salvador, SV

SIN Singapore, SG

SJD San Jose Cabo, MX

SYD Sydney, AU

TAO Qingdao, CN

TLV Tel Aviv, IL

TPE Taipei, TW

TXL Berlin, DE

WUH Wuhan, CN

XIY Xi’an, CN

YUL Montreal-PET, CA

YVR Vancouver, CA

YYC Calgary, CA

YYJ Victoria, CA

YYZ Toronto, CA

ZRH Zurich, CH

NON-STOP INTERNATIONAL DESTINATIONS

2002.073.018 poster: Pan American World Airways, India 1950s Collection of SFO Museum, gift of Constance Ogilvie

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PASSENGERSTotal Passengers (7th in North America, 23rd in the world in 20161)

53,985,826

Total Bay Area Market Share 69%

Domestic Enplaned and Deplaned Passengers

41,046,640

Domestic Bay Area Market Share 64%

International Enplaned and Deplaned Passengers

12,922,418

International Bay Area Market Share 91%

Through (In-transit2) 16,768

CARGOTotal Cargo3 (metric tons) 466,921

Domestic 166,445

International 300,476

TOP 5 AIRLINES AT SFOUnited Airlines 44%

Alaska Airlines/Virgin America 9%

American Airlines 8%

Delta Air Lines 8%

Southwest Airlines 7%

Fiscal Year July 2016 to June 20171 Source: Airports Council International2 Passengers who fly in and out on the same aircraft3 Excludes mail

FACTS & FIGURES

Los Angeles

New York

Chicago

Seattle

Las Vegas

London

Hong Kong

Taipei

Vancouver

Tokyo

TOP 5 DOMESTICDESTINATIONS

TOP 5 INTERNATIONALDESTINATIONS

1994.09.05 poster: Pan American World Airways, Hong Kong 1960s Collection of SFO Museum

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Aer Lingus

Aeromexico

airberlin

Air Canada

Air China

Air France

Air India

Air New Zealand

Alaska Airlines

All Nippon Airways (ANA)

American Airlines

Asiana Airlines

Avianca

British Airways

Cathay Pacific Airways

China Airlines

China Eastern Airlines

China Southern Airlines

Copa Airlines

Delta Air Lines

Emirates

Etihad Airways

EVA Air

Fiji Airways

Finnair

Frontier Airlines

Hawaiian Airlines

Japan Airlines

JetBlue Airways

KLM Royal Dutch Airlines

Korean Air Lines

Lufthansa German Airlines

Philippine Airlines

Qantas Airways

Scandinavian Airlines (SAS)

Singapore Airlines

Southwest Airlines

Sun Country Airlines

Swiss International Air Lines

Thomas Cook Airlines

Turkish Airlines

United Airlines

Virgin America

Virgin Atlantic

Volaris

WestJet Airlines

WOW Air

XL Airways France

PASSENGER

Ameriflight

Asiana Airlines

Atlas Air, Inc.

China Airlines

EVA Air

FedEx

Kalitta Air

Korean Air Lines

Nippon Cargo Airlines (NCA)

Redding Aero Enterprises

CARGO

PASSENGER &CARGO AIRLINES

2015.109.067 poster: Qantas Airways, Australia 1950s Collection of SFO Museum, gift of Thomas G. Dragges

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PLATINUM AWARDS PRINT AND SOCIAL MEDIA CAMPAIGNSHermes Creative Awards

AWARDS & RECOGNITION

INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS (ITT) TEAMCIO 100

SUSTAINABILITYActerra

PRINT COMMUNICATIONSAirports Council International

MOST INNOVATIVE INDIVIDUAL IN AIRPORTSAmerican Association of Airport Executives

GOLD AWARDS ADVERTISING CAMPAIGNSHermes Creative Awards

GOLD AWARDS DIGITAL MARKETING CAMPAIGNSHermes Creative Awards

AIRPORT WITH THE BEST MANAGEMENT TEAMAirport Revenue News

2000.102.002 poster: Northwest Orient Airlines, Philippines 1950s Collection of SFO Museum

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Larry Mazzola, President

Linda S. Crayton, Vice President

Eleanor Johns

Richard J. Guggenhime

Peter A. Stern

AIRPORT COMMISSION

AIRPORT COMMISSION & MANAGEMENT

Ivar C. Satero, Airport Director

Chris Arrigale, Executive Assistant to the Airport Director

Jon Ballesteros, Chief External Affairs Officer

John Bergener, Planning & Environmental Director

Sheryl Bregman, Airport General Counsel, Legal

Jean Caramatti, Commission Secretary

Leo Fermin, Chief Business & Finance Officer

Ian Law, Chief Information Officer

Jeff Littlefield, Chief Operating Officer

Bill Loeffler, Acting Director of Facilities

Geoff W. Neumayr, Chief Development Officer

Julian Potter, Chief Administration & Policy Officer

Blake Summers, Director & Chief Curator, SFO Museum

Linda Yeung, People, Performance & Development Director

AIRPORT MANAGEMENT

1995.55.05 poster: Pan American World Airways, Hawaii 1948 Collection of SFO Museum

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HIGHLIGHTS OF AIRLINE OPERATIONS AT THE AIRPORT

FINANCIAL SUMMARY

Fiscal year 2017 passenger traffic at SFO concluded with 26.9 million enplanements, an increase of 4.9% compared to the prior fiscal year, establishing a new peak for the Airport. Domestic growth was from increased service, mainly by a combination of Low Cost Carriers (LCCs) and legacy carrier United Airlines (United). The international sector also experienced service additions. These included new services commenced by Finnair, Thomas Cook, Virgin Atlantic, Volaris, United and WOW Air, and aircraft size or frequency increases by Air Canada, airberlin, KLM, SWISS, Korean Air, and United. Total cargo and U.S. mail tonnage increased by 18.6% due to increases in both domestic and international shipments.

The 4.9% fiscal year-over-year enplanement increase at SFO compares to increases of 8.3%1 at Oakland International Airport and 12.8%2 at Mineta San Jose International Airport, resulting in relatively stable Bay Area passenger market share of 69.1% for SFO, compared to 70.2% in fiscal year 2016.

To view the entire fiscal year 2016-2017 audited financial statements, visit www.flysfo.com/fy1617.

1 Source: Oakland International Airport Traffic Report2 Source: Mineta San Jose International Airport Traffic Report

2012.147.248 poster: Pan American Airways, Golden Gate International Exposition 1937 Collection of SFO Museum, gift of the Captain John B. Russell Family

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NET POSITION SUMMARY (IN THOUSANDS)

FINANCIAL SUMMARY

FY 2017 FY 2016

Percentage Increase

(Decrease) FY 2017

Assets: Unrestricted current assets $ 440,930 $ 467,577 (5.7)%

Restricted current assets 437,934 282,371 55.1

Restricted non-current assets 726,310 640,970 13.3

Capital assets, net 4,282,629 4,045,636 5.9

Total assets 5,887,803 5,436,554 8.3

Deferred outflows of resources: Unamortized loss on refunding of debt 76,789 68,100 12.8

Deferred outflows on derivative instruments 54,870 83,614 (34.4)

Deferred outflows related to pensions 145,743 43,982 231.4

Total deferred outflows of resources 277,402 195,696 41.8

Liabilities: Current liabilities 284,221 309,888 (8.3)

Current liabilities payable from restricted assets 356,535 494,128 (27.8)

Noncurrent liabilities 5,033,314 4,372,604 15.1

Net pension liability 359,599 144,271 149.3

Derivative instruments 65,965 96,132 (31.4)

Total liabilities 6,099,634 5,417,023 12.6

Deferred inflows of resources: Deferred inflows related to pensions 15,402 48,154 (68.0)

Total deferred inflows of resources 15,402 48,154 (68.0)

Net position: Net investment in capital assets (284,761) (117,377) 142.6

Restricted for debt service 109,554 35,462 208.9

Restricted for capital projects 296,188 212,931 39.1

Unrestricted (70,812) 36,057 (296.4)

Total net position $ 50,169 $ 167,073 (70.0)%

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HIGHLIGHTS OF CHANGES IN NET POSITION (IN THOUSANDS)

FINANCIAL SUMMARY

FY 2017 FY 2016

FY 2017Percentage

Increase(Decrease)

Operating revenues $ 926,800 $ 866,991 6.9%

Operating expenses (808,860) (640,473) 26.3

Operating income 117,940 226,518 (47.9)

Nonoperating expenses, net (201,020) (144,463) 39.1

Income loss before capital contributions and transfers (83,080) 82,055 (201.2)

Capital contributions 11,212 10,424 7.6

Transfers to City and County of San Francisco (45,036) (42,542) 5.9

Changes in net position (116,904) 49,937 (334.1)

Total net position - beginning of year 167,073 117,136 42.6

Total net position at end of year $ 50,169 $ 167,073 (70.0)%

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OPERATING REVENUES (IN MILLIONS)

FINANCIAL SUMMARY

Aviation $545.3 59%

Concession 149.7 16

Parking & Transportation 150.6 16

Net Sales & Services 81.2 9

Total $926.8 100%

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FINANCIAL SUMMARY

Personnel $364.8 45%

Depreciation 265.8 33

Contractual Services 73.9 9

Light, Heat & Power 23.1 3

Services Provided by Other City Departments 21.6 3

Repairs and Maintenance 34.9 4

Materials & Supplies 16.2 2

General & Administrative 4.4 1

Environmental Remediation 4.2 0

Total $808.9 100%

OPERATING EXPENSES (IN MILLIONS)

SAN FRANCISCOINTERNATIONAL AIRPORT

P.O. BOX 8097SAN FRANCISCO, CA 94128

(650) 821-5000

SFO