Allegiant Travel Company · NASDAQ:ALGT
Allegiant Travel — Investor Presentation (September 2009)
26 slides from Allegiant Travel's investor presentation, Sep 22, 2009
Slide 1: Management Presentation September 2009
Management Presentation September 2009
Slide 2: Notice on Forward Looking Statements
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 and
Slide 3: Highlights
Highlights $mm Highly profitable 2Q09 25% pre-tax margin Profitable last 26 quarters(1) Profitable every quarter of 2008 achieved without fuel hedges $148mm LTM 2Q09 EBITDAR(2) Growth: 2009 capacity est. 20% y/y Very strong balance sheet More cash than debt Ample liquidity $77 mm free cash flow 1H09
Slide 4: A Travel Company
A Travel Company Nonstop, low-frequency service from small cities to large leisure destinations 60 small cities (~50K to over ½ mm population) 11 destinations Six are bases (aircraft, crews, maintenance): Las Vegas, Orlando, Phoenix, Tampa Bay, Ft. Lauderdale, Southern California Five are not. . . y
Slide 5: Nationwide Network
Nationwide Network Published(1) November 30, 2009 schedule: 69 cities, 135 routes, 45 operating aircraft 1) As of September 14, 2009
Slide 6: Growth
Growth Current fleet, strategy: 15% CAGR over the next five years Over 300 more potential routes in the US, Canada, Mexico & Caribbean Further growth possible with additional fleet type to access markets such as longer-haul short-runway airports ASMs (bn) Large remaining unaddressed market
Slide 7: Growth
Growth 27 new routes started/announced since 1/1/09 9 new routes between existing cities 18 new routes involving five new cities New routes to new cities Connecting existing cities
Slide 8: Best Costs
Best Costs Cost / pax vs. stage length (1)(2) Cost / pax, ex-fuel vs. stage length (1)(2) Cost leader among US airlines (1) Special charges and other one-time items are excluded (2) Vertical axis= cost per pax, horizontal axis = aircraft stage length in miles $86 $51
Slide 9: Low Cost Drivers
Low Cost Drivers Aircraft, efficiency, distribution Single fleet type - MD-80, low acquisition costs, avoid flying when we can’t make money (low utilization, 6.3 hrs/day 2009E) Simple, efficient product – one class, no connections Cost-based scheduling, e.g. aircraft/crew return to base every night
Slide 10: Industry Leading RASM
Industry Leading RASM (1) Data for LTM ended 6/30/2009 Minimal direct competition Capacity management Focus on high loads World-class ancillary revenue Own reservation system Control the customer Demonstrated pricing power Total system RASM (1) Source: Company filings (¢) 11.0 10.5 10.4 10.4 ALGT AA
Slide 11: Minimal Direct Competition
Minimal Direct Competition Head-to-head competition on only five of 135 routes(1) Other airlines appear to see us as an annoyance, not a threat (1) As of September 30, 2009, according to published schedules
Slide 12: Capacity Management
We quickly adapt to seasonal, macro data Capacity Management 2008 2007 2009 July 2008 High Fuel Price Avg. daily scheduled flights by month(1) (1) Published capacity schedules for Sep thru Dec 2009 Substantial variation within months 140 120 100 80 60 40 20 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Slide 13: Price for Load
Price for Load Capacity plan (over long-term) & revenue plan (in short-term) to hit ~90% load factor $30+/pax ancillary incents us to fill airplanes Reduces cost/pax Low air fare gets potential customers to invest in transaction High load factors and high ancillary revenues permit low base fares Low
Slide 14: Ancillary Revenue
Ancillary Revenue Charging extra for the extras Source: Company financials The average exchange rate for LTM ending 6/30/2009 used to convert Ryanair figure into USD Represents 2Q09 ancillary revenue per scheduled passenger for Allegiant and quarter-ended June 30, 2009 ancillary revenue per passenge
Slide 15: Our Own Reservation System
Our Own Reservation System Vast majority of airlines use system owned by third party - GDS (e.g. Sabre) or new gen LCC system (such as Open Skies) Software enhancements driven by consensus Encourages commoditization – all can offer same products We can offer a differentiated product Uniquely (and qu
Slide 16: Control the Customer
Control the Customer www.allegiantair.com Leverage direct relationship with customers Maximize e-commerce opportunities Instantly relevant to leisure customers in our small cities Accounts for 85% of sales in 2Q09 Generates email lists for future low-cost communication Significant untapped potential
Slide 17: Reverse Traffic
Reverse Traffic We focus marketing efforts on our small cities – effectively spend $0 on advertising at our major leisure destinations But we pick up significant reverse traffic anyway – it just shows up Reverse traffic is largely VFR Believe VFR traffic less sensitive to economic conditions – you’r
Slide 18: Best Margins
Best Margins Source: Company filings (%) LTM ended 6/30/09 pre-tax margins Industry-leading margins
Slide 19: Strong Balance Sheet
All data based on reported LTM ending 6/30/2009 Quarter-end adjusted debt equals total debt plus LTM aircraft rent capitalized at 7.0x; Adjusted net debt equals adjusted debt less unrestricted cash and short-term investments End of the period data; includes aircraft on capital leases and owned aircr
Slide 20: Summary
Summary Own our own res system Direct hotel, car & third party provider relationships Low utilization of used aircraft Substantial seasonal frequency variations Minimal debt, minimal capex Creating shareholder value A Different LCC Model Sustained profitability Highly adaptable business model High g
Slide 21: Appendix
A P| pend ix
Slide 22: 2008 Low Costs Despite Low Aircraft Utilization
2008 Low Costs Despite Low Aircraft Utilization Low ALGT aircraft utilization All data based on reported FY2008 mainline metrics, except Delta which is included in the legacy average and is based on 4Q08, the first quarter after its merger with Northwest for which mainline data is available Includes
Slide 23: Same Store Growth Significantly Lower Than Nominal
Same Store Growth Significantly Lower Than Nominal True same-store departure growth for a given month excludes: Routes flown in 2009 but not 2008 or vice versa Routes flown for a partial month in one or more of 2008 or 2009 Highest true same-store scheduled growth month for 2009 is behind us Nominal
Slide 24: Dispersed, Low-Density Network
Dispersed, Low-Density Network We don’t fly much on any one route Proportion of routes by peak summer 2009 frequency (average = 3.5 / wk) (%)
Slide 25: Las Vegas Is Doing Great for Us
Las Vegas Is Doing Great for Us Casinos are in trouble, we’re not 90% of traffic on our LAS routes generated in small cities Up to ~40% decline in hotel room prices stimulates travel Sell ~52,000 rooms/month in Las Vegas, one of largest wholesalers Substantial new room supply anticipated LAS ~ 1/3 o
Slide 26: GAAP Reconciliation
GAAP Reconciliation LTM 2Q09 EBITDAR $148mm = Net Income $75mm + Provision for Income Taxes $43mm + Other Expense $1 mm + Depreciation & Amortization of $27mm + Aircraft Rent of $2mm 2H09 Free Cash Flow $77mm = Operating Income of $82m + Depreciation & Amortization of $14mm - Capital expenditures of
Allegiant Travel — Investor Presentation (September 2009) on 6ix