Allegiant Travel Company · NASDAQ:ALGT
Allegiant Travel — Investor Presentation (September 2008)
21 slides from Allegiant Travel's investor presentation, Sep 25, 2008
Slide 1: Management Presentation September 2008
Management Presentation September 2008
Slide 2: Notice on Forward Looking Statements
1 Notice on 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 a
Slide 3: Allegiant Travel Company Highlights
2 Allegiant Travel Company $mm Highlights – Best operating margins – Excellent balance sheet – Lowest costs – Profitable last 22 quarters (1) Unique, expandable & defensible – Leisure, small cities, MD-80s – Ancillary revenue Excellent 2007 results: – Revenues up 48% – Pre-tax up 222% to $51mm – Net
Slide 4: Nationwide
3 Nationwide At September 24, 2008: 68 cities, 113 routes, 37 Aircraft
Slide 5: And Growing: New Routes Announced Since August
4 And Growing 19 New Routes Announced Since August 1
Slide 6: Minimal Direct Competition
5 Minimal Direct Competition In 2007, head-to-head competition on nine routes To-day: six In October, only remaining head-tohead competition will be Las Vegas-Fresno By October, head-to-head competition on only one route • To date, only one airline has entered one of our routes • That attempt lasted
Slide 7: Competition Diminishing
6 Competition Diminishing Elimination of head-to-head competition – eight routes so far – Orlando to Tri-Cities, Greenville, Greensboro (already) – Orlando to Knoxville (Sep 08) – Vegas to Medford, Eugene, Co. Springs, Santa Barbara (Sep 08) Reduction in head-to-head capacity (Las Vegas to Fresno) C
Slide 8: Competition Diminishing
7 Competition Diminishing Orlando, Las Vegas, Tampa Bay & Phoenix hit particularly hard Las Vegas – Significant room additions thru 2010 – Room rates already dropping & believe will drop further – Lower room rates offset necessary higher airfares Opportunity to improve terms in rental cars and other
Slide 9: Responding to High Fuel: Las Vegas Case Study
8 Responding to High Fuel: Las Vegas Case Study As fuel prices increased in 4Q07, we cut aircraft hours in Vegas – Note: 2Q08 hours below 2Q07 But we primarily cut long-haul routes while adding short-haul flying, meaning the average flight now absorbs fewer aircraft hours – 2Q08 stage length well be
Slide 10: Increasing Ancillary Revenues & Pax/Departure
9 Increasing Ancillary Revenues & Pax/Departure Scheduled service Q2 comparison: Ancillary revenues increased 33% year over year – Stage length independent Significant increase in year-over-year pax/dept benefits include: – More passengers mean more ancillary – Reduces gallons/passenger Key revenue
Slide 11: Industry-Leading Ancillary Revenue/Passenger
10 Industry-Leading Ancillary Revenue/Passenger Since 2002, ancillary/passenger has grown at over 75% CAGR $1.06 $3.40 $5.87 $11.55 $16.11 $20.94 $21.53 $27.75
Slide 12: Ancillary Revenue
11 Ancillary Revenue Voluntary extra spend > $27 net per passenger segment – Traditional airline product unbundling – high margins – Third party product sales How do we do it: – Product innovation – Custom reservation system – key advantage Obstacles for other carriers: – Legacies limited by multipl
Slide 13: Ancillary Products
12 Ancillary Products Third Party Products – Hotels – Car rentals – Shuttle bus transfers – Show tickets – Theme park tickets – VIP night club access Unbundling the traditional product – Convenience fee ($11.50/pax; use of website) – Assigned seat ($10-25/seg; priority boarding) – Checked bag ($15+/
Slide 14: Control the Customer
13 Control the Customer www.allegiantair.com – Leverage direct relationship with customers – Maximize e-commerce opportunities – 2Q08 unique visitors 3.1mm, up 48% year-over-year – Instantly relevant to leisure customers in our small cities – Accounts for almost 90% of sales – Generates email lists
Slide 15: Low Operating Cost – Simplicity Critical
14 Low Operating Cost – Simplicity Critical Key Drivers: Cost-driven schedule Simple product, no connections Comprehensive automation Direct distribution, almost 90% web No CRS / GDS – Expedia, etc. Highly productive work force Low cost aircraft YE2Q08 CASM Ex-fuel (1) YE2Q08 CASM (2) (1) Source: pu
Slide 16: Low Aircraft Utilization – Rising Fuel Cost
15 Low Aircraft Utilization – Rising Fuel Cost Daily Utilization (BHs) Cost/pax Declining Non-Fuel Cost/Pax Utilization Cost/Pax Cost/Pax ex-fuel 6.4 7.1 6.1 6.7 6.7 6.8 $102 $100 $103 $101 $97 $104 $76 $70 $60 $55 $50 $49
Slide 17: Best Operating Margins – YE2Q08
16 Best Operating Margins – YE2Q08 YE2Q08 Operating Margins YE2Q08 Pre-Tax Margins Source: public filings of the respective companies. Without Southwest Hedge (12.4pp)
Slide 18: Capitalization
17 Capitalization (1) Adjusted for 7x LTM Rent Expense of $5.1M in 2006 and $3.6M in YE2Q08 As of As of 6/30/08 12/31/06 Cash, Cash Equivalents and Short-term Investments $153.8 $144.7 Total Assets 420.8 305.7 Total Debt Retained Earnings 75.2 62.8 72.8 19.1 Total Shareholders’ Equity $208.7 $153.5
Slide 19: Protected from Credit Card Holdbacks
18 Protected from Credit Card Holdbacks Cash(1) net ATL(2) as percent of LTM revenues at June 30, 2008 Source: Respective SEC filings of each company, except for Spirit, which is DOT Form 41 (1) Cash, cash-equiv alents, short-term inv estments & restricted cash (2) Air Traffic Liability (advance tic
Slide 20: Goal: Regain Margins, Resume Growth
19 Goal: Regain Margins, Resume Growth We have adapted to extraordinarily high fuel prices – Reduced stage lengths Eliminated underperforming long-haul routes Reduced frequency on other long-haul routes Added short-haul routes & short-haul frequencies – Tempered growth: reduced supply, increased yie
Slide 21: Management Presentation September 2008
Management Presentation September 2008
Allegiant Travel — Investor Presentation (September 2008) on 6ix