Allegiant Travel Company · NASDAQ:ALGT
Allegiant Travel — Investor Presentation (September 2011)
40 slides from Allegiant Travel's investor presentation, Sep 1, 2011
Slide 1: Management Presentation
Management Presentation September 2011 we _—— allegiant
Slide 2: Forward looking statements
Forward looking statements This presentation as well as oral statements made by officers or directors of Allegiant Travel Company, its advisors and affiliates (collectively or separately, the "Company’) will contain forward- looking statements that are only predictions and involve risks and uncertai
Slide 3: Unique business model and results
Unique business model and results ME ceITDA® ~— I Free cash flow® 1) Pre-tax Profit [~] Pre-tax Margin @ Highly resilient and profitable mm) 11.0% 21.6% 15.6% 11.9% — Profitable last 34 quarters (") 160 82 — $127mm LTM EBITDA ©) $140 — LTM ROE 17% “~ M4 sar 120 120 @ Very strong balance sheet a sins
Slide 4: Built to be different — highly profitable
Built to be different — highly profitable Air transportation Travel Business, VFR, leisure Leisure = vacation Large cities Small cities High frequency Low frequency Fixed capacity Variable capacity High cost assets Low cost assets Competition Little competition Unprofitable / Marginally profitable H
Slide 5: MD-80 operating cost and EBITDA per aircraft
MD-80 m Operating ot MD-60s EBITDA/ Aircraft — Avgage — 33k cycles smm) - Avg utilization — 1k cycles/yr — Certificated to 60k cycles $3.5 @ Purchase for ~ $3.5m $3.6 $2.9 — Purchase price + induction $2.5 H Stilloperated at DAL 2 AMR $25 on — DAL- 117 AC (41k cycles) — AMR -224 AC (29k cycles) l m
Slide 6: Nationwide footprint
Nationwide footprint Hingham Pasco 2, Qonat Fall rend Fagks n rn Re isgolla.. Billings |Min a Plattsbus Coy eo i on QD Bitmarch Fa =a Medi , _s ra Stockton foungs re oakianat, Monterey@ @Froxno rt Santa Mari Qsregilsboro Los Angeles Long Beath' mentee San Diego’ iyrtle Beach lando/Sanford ‘ort Laude
Slide 7: Minimal head to head mainline competition
Minimal head to head mainline competition Other airlines view us as an annoyance, not a threat Bellingham 165 5 159
Slide 8: Best pre-tax margins
Best pre-tax margins 25.0% ALGT 20.0% nee RYAAY ALGT 15.0% ALGT a ALK Ryaay ALT 10.0% ALK SAVE u RYAAY! o SAVE ALK BI 5.0% oy cele save | LUVMMeL AVEC LK aR 0.0% 7 r 1 1 1 JBLU 5.0% RYAAY “10.0% 2007 2008 2009 2010 2011 YTD “Normal” Runaway Recession Recovery Runaway Oil Oil AvgACin period 28 36 43
Slide 9: Revenue model
Revenue model @ Scheduled service Total erenue — Airfare from small cities to leisure destinations oe — $472m LTM $600 @ Ancillary air — Unbundled air product $900. — $175m LTM $400 @ Ancillary 3rd party — Hotels, rental cars $300 — $28m net revenue LTM $200 @ Fixedfee - Charter flying Revenue growt
Slide 10: Ancillary — air related
Ancillary — air related Ancillary air rev per scheduled H Checked bag ($15 - $30) #32 passenger $142 ™ Convenience fee ($15) #8 -_ $29.07 @ Call-center booking fee ($1 5) $28 @ Assigned seat ($6 - $35) $26 @ Priority boarding ($10) wo pa @ Trip flex ($8) $22 @ On-board sales $20 2008 2009 2010 2011
Slide 11: Ancillary — third party
Ancillary — third party @ Bundled vacation package offers (opaque pricing) — Hotels, car rentals, show tickets @ Very high margins — 32% of LTM pre-tax income — $97m gross revenue LTM @ Wholesale price for hotel & car, we manage margin @ Noinventory risk @ “Expedia with wings” $5.50 $5.25 $5.00 $4.7
Slide 12: Our website is our only store
Our website is our only store Welcome! | Signin | Need Help? allegiant deal’ [Peed sox vision vows Conon Devnaont Acne Talon Chin My Agar ™ Book Your Travel Deal @ 21mm unique visitors (last 12 months) HB 33% new visits ™@ 6.5 average page views CUCKTHE ARROWS FoR RE GREAT DEALS m@ ~5.5 minon site @
Slide 13: Excellent cost discipline - CASM
Excellent cost discipline - CASM Total cost per ASM (cents) 1.5 10.5 Total cost/ASM (CASM) vs stage length Wi * Layer 800 900 1,000 1,100 Average stage length (miles) 1,200 (1) LUVis average length of passenger haul Q) ALKis mainline statistics ime periad —LTM Q211, ASM — available seat miles, Total
Slide 14: Structural cost advantage
Structural cost advantage @ Low aircraft acquisition costs @ Simple product Cost-based scheduling — aircraft bases — Outand back — Nocrew overnights @ Labor efficiencies — 31 FTEs per aircraft H Closed distribution H Small cities — Lower airport costs — Lower marketing costs we a allegiant_,
Slide 15: Low cost drivers
Low cost drivers LTM Q211 cost per passenger Total Allegiant = $105 Spirit = $104 Southwest = $134 JetBlue =$151 Other Aircraft | $67 |_¢59 sae of r 1 1 ALGT SAVE LUV JBLU @ Fuel © Ownership Maintenance i Labor Other Source: Company filings Ownership includes depreciation & amortization + aircraft r
Slide 16: Fuel hedging
Fuel hedging @ We are not fuel derivative traders — Can only hedge cost not revenue — Speculation @ At any given fuel price we can make money by reducing capacity @ One key strength is the ability to quickly adjust due to low fixed costs — superior way to manage fuel risk @ No liquidity or balance s
Slide 17: Aggressive capacity management
Aggressive capacity management Avg. daily scheduled flights by month 160.00 2010 140.00 July 2008 120.00 high fuel price 100.00 80.00 60.00 40.00 Jan Feb = Mar Apr May = Jun Jul. = Aug Sep Oct) = Now Dec Jan allegia nt ‘Travel is our deal. 2007 2008 2009 2010 201 (1) Projected schedules through Janu
Slide 18: High fuel prices — déja vu? No...better!
High fuel prices — déja vu? No...better! 1H 2008 1H 2011 % change System ASMs (billions) 2.45 3.19 30% Average AC 35.6 51.0 43% Avg fare — scheduled service $85.29 $90.09 6% Avg fare - total $112.03 $126.77 13% Pre-tax margin 7.1% 11.7% $mm 80 $550 $3.19 63 94 70 $69 $3.00 60 $2.50 50 $46 $2.00 éise
Slide 19: MD-80 network growth
MD-80 network growth @ Currently analyzing/negotiating — 50 new routes, 30 new small cities ® International cities as origins — Small cities in Mexico and Canada to Las Vegas, Orlando @ International vacation destinations — Caribbean, Mexico @ 166 seat — Adding 16 seats by eliminating monuments — St
Slide 20: Fleet
757 fleet @ Contracted to purchase 6 757 aircraft — Have completed purchase on 4 aircraft — Financed $21mm on 3 aircraft — Expect to purchase remaining 2 in Q4 2011 @ Leased 3 aircraft to European operators — Expected return from lease in Q3 2012 — Should receive between $15 - $18m over life of 3 le
Slide 21: Fleet and Hawaii
757 fleet and Hawaii @ Anticipating Hawaii service in 2H 2012 @ Initial request to FAA — simultaneous approval — 757 on certificate — July 2011 — Flag status (needed for Hawaii) - pending — ETOPS 180 (needed for Hawaii) - see below @ ETOPS application — Operate 757 in domestic mainland, non-ETOPS fl
Slide 22: Projected growth — scheduled ASMs
Projected growth — scheduled ASMs @ FY 2011~O0to+4% — 51MD-80s and 1 757 operating aircraft through the end of year -— 166 seat MD-80 and additional 757 aircraft begin to operate 2H 11 @ FY 2012 ~+18to 20% — 166 seat upgrade completed Q4 12 - 4additional MD-80s Q4 12 (initial aircraft used to start
Slide 23: Guidance
Guidance @ Q3 11 PRASM +19to 21% @ 51 MD-80s and 1 757 operating in Q3 11 @ Schedule currently selling through January 2012 @ Aaircraftin 166 induction lines @ 4aircraft in storage — can react to opportunities quickly 34 Quarter 2011 4th Quarter 2011 System departures (5) to (1)% 4to 8% System ASMs
Slide 24: Appendix
Appendix we _—— allegiant
Slide 25: GAAP reconciliation
GAAP reconciliation $mm YTD2011 YTD2008 LTMQ211 2010 2009 2008 2007 Netincome 29.41 123 54.6 65.7 763 364 315 +Provision for Income Taxes 174 65 313 376 442 198 19.2 +Other Expenses 24 1 34 13 16 7 36 +Depreciation and Amortization 20.0 11.0 38.0 36.0 29.6 23.5 16.0 =EBITDA 686 299 1270 © 139.6 1518
Slide 26: GAAP reconciliation
GAAP reconciliation turn on equity $mm Netincome (mm) Total shareholders equity ($mm) Return on equity LTMQ211 June 2011 June 2010 Dec 2010 Dec 2009 29% 16% we Travel ls; 2009 2008 76.3 354 Dec 2008 Dec 2007 292.0 233.9 210.3 nt ‘our deal.
Slide 27: GAAP reconciliation
GAAP reconciliation Free cash flow calculations $mm LTMQ211 2010 2009 2008 Netincome 546 657 76.3 354 + Provision for income tax 31.3 376 44.2 19.8 + Other expenses 34 13 16 x +Depreciation & Amortization 38.0 35.0 29.6 23.5 =EBITDA 127.0 139.6 151.8 79.4 -Capital Expenditures 86.5 98.5 a1? 53.0 =FC
Slide 28: GAAP reconciliation
GAAP reconciliation eturn on capital employed calculatio! $mm. LTMQ211 2010 2009 2008 + Netincome 546 657 76.3 354 + Income tax 313 376 44.2 19.8 + Interest expense 44 25 47 54 - Interest income. 45 12 25 47 EBIT 89.0 104.6 1227 55.9 + Interest income Vet 12 25 47 Tax rate 36.7% 36.4% 36.2% 35.9% Nu
Slide 29: History
History @ Current management took control June 2001 @ MD-80s @ Hotel packages since 2002 @ Pioneered US unbundled airline product starting in 2003 @ Profitable 2 quarters of 2002, every quarter since 2003 @ Disciplined, consistent growth (oonaaad a d Dd 2002 2003 2004 2005 2006 2007 2008 2009 2010 2
Slide 30: Small cities, leisure
Small cities, leisure @ Low prices stimulate leisure travel @ Small, underserved (and sometimes un-served) markets @ Value proposition — Non-stop — Local airport (avoid long drives, long lines, hassles) — Big, comfortable airplane vs. small, cramped airplane — Low, low fares — Bundled vacation packa
Slide 31: Our customers
Our customers How favorable do you view Allegiant'2) @ Demographics” 100% — Mean income > $104k 90% — 75% married ae 70% — Mean age = 49 60% — 86% own home 50% - 75% employed _ - 54% professional 30% @ Our customers consider us 20% — Reliable 10% 0% + — Trustworthy — Agood value Satisfaction =Veryfa
Slide 32: Pricing
Pricing @ We manage our network for a target load factor @ Lock down one variable — load factor — Willrun +/- 90%; have done so for 13 consecutive quarters @ Manage capacity to solve for price @ High load factor enables — Ancillary revenue — Lower cost per pax we a allegiant_,
Slide 33: Unit revenue gains vs ASM growth
Unit revenue gains vs ASM growth 40% 35.0% 35% 30% 25% 23.9% 24.7% 23.9% 20% 18.5% 9, | 13.8% 13.9% 15% 11.5% 10% 71% 55% 6.0% 5% d or 13 or 0% -5% -3.0% 2% -3.0% 10% 71% Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 dul-11—-Q3.2011 Q4 2011 allegia nt ‘Travel is our deal. mScheduledASM growth = P
Slide 34: 3rd party initiatives
3'4 party initiatives ™ Continued focus on supplier costs @ Pricing @ Adding inventory @ New programs — Branson, Missouri (service to SGF from 5 destinations) — Ski packages — Small cities @ Automation — Improve pricing tools — Land only products — Improve car module we a allegiant_,
Slide 35: Growth and pre-tax margin vs fuel
Growth and pre-tax margin vs fuel 60% 40% 20% 0% -20% -40% i - Se cescsas -60% Q1-2008 G2-2008 @3-2008 Q4-2008 1-2009 O2-2009 O3-2009 Q4-2009 Q1-2010 2-2010 O3-2010 a4-2010 G1-2011 @2-2011 — Scheduled ASMs growth ——P-RASM growth © — — System fuel price growth allegiant’
Slide 36: Seat project economics
166 seat project economics Revenue (actuals LTM Q211) Average scheduled fare $82.90 Average ancillary fare $35.56 Total scheduled fare $118.46 Assumptions 75% load factor (16 x .75) 12 pax $ per pax fuel ($3.46 gal x 40 gal/dept) $11.53 $ per pax non fuel (inflight, D&A, marketing, etc.) $30.00 Tota
Slide 37: Managed fuel efficiency
Managed fuel efficiency LTM Q211 fuel gallons per passenger a JBLU 20 9 199 ALK 19 195 5 2 ALGT @150 seats o 18 177 s ry & g17 ALGT @166 seats ° Luv 2 163 17.0 oO 2 16 18 SAVE e448 14 800 900 4,000 4,400 4,200 Source: Company filings Average stage length (miles) ALKis mainline statistics, LUV is ave
Slide 38: Labor costs vs peers
Labor costs vs peers Labor cost per passenger — LTM Q211 45 40 5 30 25 20 16 10 $40 $37 $19 Allegiant Jetblue Southwest Source: company filings Employees are full time equivalents 80 70 Employees per aircraft — Q211 70 63 31 . Allegiant Southwest JetBlue
Slide 39: Credit metrics
Credit metrics Return on capital employed Return on equity 30% 1 95.0% 40% 29.0% 20% 30% 20% 10% 10% 0% On 2009 = 2010 LTM.@211 LUVLTM 2009 = 2010: LTM@211 LUVLTM a2tt a2t Interest coverage Debt / EBITDA 60 55.4x 4 37x 50 37.2 3 ee 30.6 x 30 2 20 at 12x 10 a 1) 04x ox ‘a ot | o_ = = 2009 = 2010: LTM
Slide 40: Management changes
Management changes @ Kris Bauer - SVP Operations (May 2010) — SVP of Technical Operations at Northwest/Delta @ Greg Rehwaldt— VP of Stations (Dec 2010) — Director of Stations at Northwest @ Greg Baden — VP of Flight Operations (Jan 2011) — Managing Director of Flying at Delta @ Kurt Carpenter — VP o
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