Allegiant Travel Company · NASDAQ:ALGT
Allegiant Travel — Investor Presentation (August 2008)
19 slides from Allegiant Travel's investor presentation, Aug 18, 2008
Slide 1: Management Presentation August 2008
Management Presentation August 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: cities, routes, aircraft
3 Nationwide At August 8, 2008: 63 cities, 104 routes, 37 Aircraft
Slide 5: Minimal Direct Competition
4 Minimal Direct Competition In 2007, head-to-head competition on nine routes Today: six In October, only remaining head-to-head 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 6: Competition Diminishing
5 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 (Vegas to Fresno) Compe
Slide 7: Competition Diminishing: Orlando, Las Vegas, Tampa Bay & Phoenix
6 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 8: Increasing Ancillary Revenues & Pax/Departure
7 Increasing Ancillary Revenues & Pax/Departure Scheduled service 2Q comparison: 2Q07 2Q08 Change Revenue/Passenger $87.06 $83.56 (4%) Ancillary/Passenger 20.94 27.75 33% Total Revenue/Passenger $108.01 $111.31 3% Passengers/Departure 123 133 8% Average Stage Length 921 881 (4%) Fuel Cost/Passenger
Slide 9: Industry-Leading Ancillary Revenue/Passenger
8 $1.06 $3.40 $5.87 $11.55 $16.11 $20.94 $21.53 $27.75 $0 $5 $10 $15 $20 $25 2002 2003 2004 2005 2006 2Q07 2007 2Q08 Industry-Leading Ancillary Revenue/Passenger Since 2002, ancillary/passenger has grown at over 75% CAGR
Slide 10: Ancillary Revenue
9 Ancillary Revenue Voluntary extra spend > $27 net per pax 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 multiple syste
Slide 11: Ancillary Products
10 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 ($10+/
Slide 12: Control the Customer
11 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 13: Low Operating Cost – Simplicity Critical
12 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 14: Low Aircraft Utilization – Rising Fuel Cost
13 Low Aircraft Utilization – Rising Fuel Cost 6.4 7.1 6.1 6.7 6.7 6.8 $102 $100 $103 $101 $97 $104 $78 $70 $60 $55 $50 $49 $0 $20 $40 $60 $80 $100 $120 $140 0 1 2 3 4 5 6 7 8 2003 2004 2005 2006 2007 YE2Q08 Daily Utilization (BHs) Cost/pax Declining Non-Fuel Cost/Pax Utilization Cost/Pax Cost/Pax e
Slide 15: Best Operating Margins – YE2Q08
14 Best Operating Margins – YE2Q08 YE2Q08 Operating Margins YE2Q08 Pre-Tax Margins Source: public filings of the respective companies. Without Southwest Hedge (12.4pp)
Slide 16: Capitalization
15 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 17: Protected from Credit Card Holdbacks
16 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-equivalents, short-term investments & restricted cash (2) Air Traffic Liability (advance ticke
Slide 18: Goal: Maintain Double Digit Operating Margins
17 Goal: Maintain Double Digit Operating Margins Reduce stage length – Eliminated underperforming long-haul routes – Frequency reductions on other long-haul routes – Add more short-haul routes Temper growth: reduce supply, increase yield Fill up airplanes: bias towards higher load factors Increase a
Slide 19: Management Presentation August 2008
Management Presentation August 2008
Allegiant Travel — Investor Presentation (August 2008) on 6ix