Allegiant Travel Company · NASDAQ:ALGT
Allegiant Travel — Investor Day (November 2011)
64 slides from Allegiant Travel's investor day presentation, Nov 10, 2011
Slide 1: ALGT Investor Day
ALGT Investor Day Maury Gallagher, Chairman & CEO November 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: 2010/2011 — Investment/transition years
2010/2011 — Investment/transition years @ Investment in: — Management—upgrades/new positions — maturing company = Senior VPs —Allard and Reichartz = Operations Management = Pricing Management — Aircraft = 166 seat project = MD-80 engines = 757 — Technology = Update/upgrading technology platform - Fl
Slide 4: 2011 — Challenges
2011 — Challenges @ Another fuel spike — Capacity adjustments — Offset by historically highest fares @ Government intervention — Consumer rule #2 — G4and others suing government over: = Fullfare advertising requirement = 24 hour hold requirement = No post purchase price increases = Flex-fare tickets
Slide 5: 2012 — Opportunities/growth
2012 — Opportunities/growth @ Hawaii — ETOPS progressing — FAA has manuals — Stillon track for Hawaii in the Summer 2012 @ 166 seat project — Stillon track for completion by end of 2012 — Benefits begin to accrue in 1* half of 2012 Updated Automation - New website — 1St quarter 2012 @ Growth — Will
Slide 6: Agenda
Agenda @ Presentation schedule — Kris Bauer — 166 seat project, 757 ETOPS — Scott Sheldon - 2012 Cost update, CAPEX — ScottAllard—IT update — Michael Reichartz—3" party ancillary revenues — Andrew Levy — Revenue and growth update
Slide 7: ALGT Investor Day
ALGT Investor Day Kris Bauer, SVP Operations November 2011 we _—— allegiant
Slide 8: 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 9: Operations
Operations @ People — Continue to build team — Preparing for growth — Enhanced technical capabilities @ Las Vegas outsourcing @ ENV startup, GRR shut down @ Pilot productivity we a allegiant_,
Slide 10: Pilot efficiency
Pilot efficiency 2010 block and soft hours paid per line pilot 100 70.4% room 28% 71.8% 85.2% ega% 84.0% 735% 72.6% eam 676% 648% 80 239 25.2 28.9 259) 322 |279 277, «(| 296 2 60 = 40 20 it) Allegiant m@BlockHours ™SoftHours — Block-to-Credit Ratio allegiant i
Slide 11: Pilot efficiency - reserves
Pilot efficiency - reserves 2010 block and soft hours paid per reserve pilot 100 46.8% 33.0% 6 49.0% — 4g.19% 45.0% 389% — 54.0% 5% 41.3% 51.3% 45.8% 2 60 69.7% 2 39.9 39.7 43.8 36.2 42.2 a6 48.1 49.6 56.0 = 40 ie) G “Allegiant mmmBlock Hours SoftHours Block-to-Credit Ratio G4 Minimum Guarantee alle
Slide 12: Operations
Operations @ Engine overhauls — #1 driver of reliability — Increased shop visits, but still pursuing opportunistic buying — By2Q12, over half of engines will have less than 1,000 cycles since shop visit @ Systems — investing in improvements m@ TWU we a allegiant_,
Slide 13: 166 seat project
166 seat project @ Currently forecasting to be under budget @ First two aircraft currently flying — positive feedback @ Forecasting 10 aircraft by year end, fleet completion 4Q12 @ Project is behind original schedule we a allegiant_,
Slide 14: ETOPS / Flag carrier status
757 ETOPS / Flag carrier status @ Made decision in 2010 to separate 757 Operating Specification and ETOPS/Flag @ Ops Spec received July 1, 2011 — successfully operating one aircraft @ ETOPS/Flag application process (estimated dates) — Letter of intent - complete — Manual development, submission — co
Slide 15: ALGT Investor Day
ALGT Investor Day Scott Sheldon, SVP & CFO November 2011 we _—— allegiant
Slide 16: 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 17: Reiterate guidance
Reiterate guidance @ Q4 11 CASM ex fuel +7 to 9% @ 2011 CASM ex fuel +12 to 14% @ Fixed fee and other revenue $11m to $13m @ Q411 PRASM +11 to 13% wet Guidance subject to revision alleai a ———— gi ‘Travel is our; tt.
Slide 18: Engines
Engines @ Change in engine strategy H Significant engine investment in 2011 @ Less time from a shop visit should increase reliability @ Provides flexibility to effectively manage our assets <= 1000 1,000 - 2,600 >2,600 Range of cycles since overhaul 7 wJan-11 =Dec-11
Slide 19: Maintenance costs
Maintenance costs ™ Secondary purchases vs repair and overhaul - Repairs of 35 engines drove higher freight costs - Increasein repairs of APUs, drove rotable costs ™ Engine expenses still influenced by used engine market @ Expenses related to revising manuals Maintenance cost /AC/ month $130 g110 §9
Slide 20: Fleet plan
Fleet plan Q112 Q2 12 Q3 12 Q412 MD-80 57 58 58 59 15t 1 af 4 4 AvgAC in period 58 60.7 62 63 MD-80 $3 54 54 55 757 1 27 4 4 AvgAC in operation 54 56.7 58 59 1 — includes 4 lines of 166 seat aircraft, Guidance subject to change
Slide 21: 2012 Cost trends
2012 Cost trends @ 2012 system ASMs +25 to 30% — Subject to how quickly 166 seat aircraft are produced = Estimated $40 per incremental passenger — mktg, labor, depr, fuel @ 2012 Utilization — scheduled block hours/AC/day +5 to 9% @ 2012 scheduled stage length - +3 to 7% m@ 2012 CASM ex fuel -5 to -1
Slide 22: 2012 - CAPEX
2012 - CAPEX Two 757s left to purchase - ~$30m @ Remaining 166 seat aircraft converted - ~$20m @ Engine purchases - $25m thru 2Q12 Historical and estimated CAPEX $105 $100 $38 §95 $60 $54
Slide 23: Balance sheet
Balance sheet @ Q3 11 Cash + marketable securities = $303m @ Debt to EBITDA = 1.2x @ Interest coverage = 21.7x ‘!) @ Return on capital employed = 15.7% m@ Rated BB- and Ba3 ®) @ $46m in current share repurchase authority (1) See GAAP reconciliation in Appendix Q) Rated BB- by Standard & Poor's, rate
Slide 24: GAAP reconciliation
GAAP reconciliation $mm YTD 2011 YTD 2008 LTM3Q11 2010 2009 2008 2007 Netincome 38.6 17.2 51.0 65.7 763 364 315 +Provision for Income Taxes 225 93 30.6 376 442 198 19.2 +Other Expenses 43 6 46 13 16 7 38 +Depreciation and Amortization 307 17.2 39.9 36.0 29.6 235 16.0 =EBITDA 96.1 443 126.1 1396 ©151
Slide 25: GAAP reconciliation
GAAP reconciliation turn on capital employed calculati $mm LTM3Q11 2010 2009 2008 +Net income 51.0 65.7 763 364 + Income tax 30.6 376 442 198 + Interest expense 58 25 AT 54 + Interest income (1.2) (1.2) (2.5) (47) EBIT 86.2 104.6 122.7 55.9 + Interest income 12 12 25 AT Tax rate 37.5% 36.4% 36.2% 35
Slide 26: ALGT Investor Day
ALGT Investor Day Scott Allard, ClO November 2011 we _—— allegiant
Slide 27: 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 28: Allegiant technology
Allegiant technology @ Joined as CIO in Q1 2011 — Priceline.com, Spirit Airlines, TheLadders.com, Travelworm, American Express @ Proprietary technology platform — Integrated operations, distribution, and finance — Control over platform allows product changes and innovation @ Mission — Preserve advan
Slide 29: Leveraging software to our advantage
Leveraging software to our advantage @ Enhance proprietary (our) system — Develop new highly-scalable eCommerce platform — Renovate core reservation system @ Enhanced resources — On-shore/off-shore team, ex-PCLN architects and engineers — Emphasis on well-engineered core platform = Focus on foundati
Slide 30: Technology roadmap
Technology roadmap Current State End State System needs enhancement Phased move to new architecture + Modern architecture will provide + Separate, loosely-coupled OTA system and Air scalability, enhanced functionality, and Reservation System for flexibility agility + Individual AIS modules are eithe
Slide 31: Driving revenue — competitive advantage
Driving revenue — competitive advantage @ Web services architecture is key - allows: — Rapid deployment of incremental functionality — Ability to test, measure and learn in A/B environment — New distribution platform - ability to sell incremental products — New website - additional purchase channels
Slide 32: Software development strategy
Software development strategy @ Distributed web services architecture separates: — Airline operations and eCommerce activities — Federation of distinct modules — Provides agility/speed for future upgrades @ Business logic contained in web services leveraged — By variety of client devices — User appl
Slide 33: Reducing cost
Reducing cost @ eCommerce platform includes resource-saving features — Integrated content management system — Automated ad-server — Self-service tools for passengers " Reservation system enhancements will drive savings — Next-generation airport automation — Mobile tools instead of kiosks — Mobile ap
Slide 34: Building infrastructure to support scale
Building infrastructure to support scale @ Two new data centers in progress — “Private cloud” infrastructure — Flexible provisioning and configuration of assets — Geographically disbursed and load balanced in a “live-live” configuration @ First data center deployed in Q3 2011 — Located in Switch’s V
Slide 35: Technology timeline
Technology timeline Q1 2012 Q2 2012 Q3 2012 2H 2012 1H 2013 2H 2013 New Website Mobile App Additional Air Ancillary ‘Pricing Tools Hote-only Airport Automation International We giant
Slide 36: ALGT Investor Day
ALGT Investor Day Michael Reichartz, SVP Marketing November 2011 we _—— allegiant
Slide 37: 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 38: This is 'our store'
This is ‘our store’ allegiant ‘Travel is our deal” DEAL OF THE WEEK
Slide 39: This is our 'new store'
This is our ‘new store’ allegiant ‘Travel is our deal” Deals Worth Bragging About Get free extras ond t0-30% off hotels, 1,013. « 10*BONUS » Under Construction » SoftLaunch q1 2012 » 100% traffic by q2 2012
Slide 40: How do we grow the hotel business in 2012?
How do we grow the hotel business in 2012? @ HOTELS - HOTELS - HOTELS — Adding More Hotels — Adding Hotel Only functionalit ing Hotel Only functionality = — NewStore — Merchandising — User Generated Content
Slide 41: Merchandising — Merchandising - Merchandising
Merchandising — Merchandising - Merchandising @ Wewill grow our marketplace that gives suppliers a venue to showcase their product in our store and to our email database. — Weekly campaigns featuring exclusive package offers: = Limited Time Offers (48 hour sales) = Free upgrade promotions = Fifth Ni
Slide 42: Execution matters...
Execution matters... ADD MORE > NEGOTIATE HOTELS GREAT DEALS PRODUCE MORE ROOM ail anes teaical NIGHTS allegiant ii
Slide 43: Talking to the Consumer
Talking to the Consumer @ Email with Consistent Delivery, Consistent Messaging, & Great Value @ Weekly emails with exclusive offers @ Pre-trip with weather and activities @ Post-trip for hotel reviews
Slide 44: Old Email New Email
Old Email New Email allegiant ‘Trawetsour gaat ens [ee | savil NGsI
Slide 45: Media Sales will monetize our traffic
Media Sales will monetize our traffic ™@ Impressive average monthly traffic at 2.5 MM Unique Users (TTM) — Consumers are looking for deals — Hotels are looking for a way to increase exposure — Hotels will pay for additional exposure in our store — Adswill lead to better deals — Generate incremental
Slide 46: Micro-Site example
Micro-Site example
Slide 47: More than just a phone
More than just a phone July 16, 1969 June 24, 2010 allegiant a
Slide 48: And Mobile is growing...fast
And Mobile is growing...fast Website Visits, Mobile Devices Last 12 Months, Year over Year 600,000 500,000 400,000 300,000 200,000 100,000 ot 3 3 7 ie s g z zg = % 5 5 —Now 2010 - Oct 2011 ——Now 2009 - Oct 2010 . Allegiant Web Traffic; Source: Google analytics ik 2 © ‘a FA a i 2 FE
Slide 49: Our Mobile store..
Our Mobile store.. allegiant Travel is our deal.’ Offering new value, deals & more, to the thousands of travelers sent every day to many popular destinations, while also generating significant new non-air revenues.
Slide 50: Mobile main menu
Mobile main menu sa AR 90420 = (eallegiant £E veals > x Flight Reservations > » Deals launch q1 2012 22) check-in > > Flight Status 1H 2012 © Fiohtstaus > > Fulllaunch 2H 2012 = Ss Car Rentals > fam Hotel Reservations > we — allegiant”
Slide 51: Mobile dining
Mobile dining
Slide 52: Geo targeted deals
Geo targeted deals 1 Bouchon
Slide 53: Sponsored ads
Sponsored ads wall LUXAR 3G 4:20 PM. = — Sponsors are always looking for new and interesting ways to reach an engaged audience. yellowtail — Sponsors can be incorporated in JAPANESE RESTAURANT & LOUNGE Ge AeA BACK the application in several “non- MIZBASHO intrusive ways” or via any SAKE DINNER metho
Slide 54: ALGT Investor Day
ALGT Investor Day Andrew Levy, President November 2011 we _—— allegiant
Slide 55: 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 56: Revenue momentum
Revenue momentum H@ Significant changes in our pricing/capacity planning group @ Past four quarters have had record total fare Average total fare $130 $128 $125 $125 $121 $120 $119 $116 Str $115 $113 iit $110 $105 + a4 at a2 O38 e200e 8200/2011 4 is 4% quarter 2010, remaining quarters 2011
Slide 57: Revenue 3Q11
Revenue 3Q11 3Q10 3Q11 YoY $ change PRASM (cents) 6.89 8.58 25% TRASM (cents) 10.20 21s 20% Avg fare — scheduled service $69.99 $84.94 21% $14.95 Avg ancillary - total $33.66 $35.69 6% $2.03 Avg total fare $103.65 $120.63 16% $16.98 Fuel expense per passenger $40.07 $53.28 33% $13.21 YoY change in %
Slide 58: Demand robust
Demand robust @ October PRASM +17 to 17.4% on 5.7% growth in scheduled ASMs @ 4h quarter PRASM +11 to 13% on +5 to 9% ASM growth — 4th quarter 2010 PRASM +9.3% 40% YoY ALGT PRASM vs YoY ATA Mainline Domestic PRASM Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr11 May-11 Jun-110 Jul-11 we Sep-11 Year o
Slide 59: Capacity plan
Capacity plan @ Fuel relatively stable, demand strong @ More aircraft @ 166 seat and 757 contribution @ More utlization 30% 25% 0% | 17% ay 17% 15% 9, - a 11% 10% 8% 49 ES 7% 9 g % 3% 9 5% 2% on “s | i 10% 8% 16 “18% 24% 713%, (st Qtr 2010 2nd Qtr 2010 Std Gtr 2010 Ath Gtr 2010 tet Gtr 2011 2nd GANT
Slide 60: Better equipped to handle higher fuel
Better equipped to handle higher fuel YTD 2008 YTD 2011 % change System ASMs (billions) 3.40 4.79 41% Average aircraft 36.1 514 43% Avg fare — scheduled service $85.59 $88.36 3% Avgancillary - total $28.34 $36.34 28% Avg fare - total $113.93 $124.70 10% Pre-tax margin 7.0% 10.4% $mm20 $4.00 $3.58 10
Slide 61: and more growth
and more growth , growth, Growth 55 2 3 25 Route & aircraft growth 180 160 140 2 100 somos jo # 80 60 —Routes. —Average aircraft
Slide 62: Future network plans
Future network plans @ More of same Connect the dots (Appleton, WI to Phoenix, AZ) New small cities, 50+ on current list (Asheville, NC to ORL) New destinations (Cancun, Caribbean, New Orleans, NYC) Frequency growth (Minot, Grand Forks) @ Hawaii @ International small cities (Merida, Mex to LAS, Regi
Slide 63: Ancillary revenue — third party products
Ancillary revenue — third party products Ancillary revenue - third party @ Bundled vacation packages sia products @ Very high margins s00 p08, Ty — 35% LTM pre-tax income 800) G73 oe — $102mm gross revenue LTM $70.0 USD mm H Wholesale price for hotel & car, *”° we manage margin, no inventory °° risk
Slide 64: We're not just an airline
We’re not just an airline @ We are a travel company @ Third party @ Website @ Other air related ancillaries @ Travel club — Credit card / loyalty program