Allegiant Travel Company · NASDAQ:ALGT
Allegiant Travel — Investor Presentation (June 2010)
23 slides from Allegiant Travel's investor presentation, Jun 15, 2010
Slide 1: Management Presentation June 2010
Management Presentation June 2010
Slide 2: Forward Looking Statement
Forward Looking Statement 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 uncertaint
Slide 3: Best Margins
Best Margins Pre-tax margins Industry-leading margins in all environments LUV = Southwest Airlines; AAI = AirTran Holdings; JBLU = JetBlue Airways (1) (1) (1) “Normal” Runaway Oil Recession ???
Slide 4: Debt, cash & aircraft growth
End of period data; includes aircraft on capital leases and owned aircraft on lease to third parties. Does not include aircraft owned but in storage awaiting future use. Debt, cash & aircraft growth Consistent and profitable growth with strong balance sheet Total Debt Cash & Short-Term Investments O
Slide 5: History
History Current management took control June 2001 MD-80s Hotel packages since 2002 Pioneered unbundled airline product in 2003 Profitable 2 quarters of 2002 and every quarter starting with 2003 Disciplined, consistent growth Focus on profitability
Slide 6: Built to Be Different: Highly Profitable
Built to Be Different: Highly Profitable Other airlines Allegiant vs. Business - air Unprofitable / Marginally profitable Leisure - vacations Highly profitable “NFL” cities Small cities Flights per day Complex product No pricing power Flights per week Simple product Pricing power High cost assets Lo
Slide 7: Nationwide Footprint
Nationwide Footprint Published July 31, 2010 schedule: 143 routes, ~50 operating aircraft 57 small cities 13 leisure destinations 8 bases
Slide 8: Limited Competition
Limited Competition Head-to-head competition on only ten of 143 routes Other airlines appear to see us as an annoyance, not a threat
Slide 9: Highly Efficient Cost Structure
Highly Efficient Cost Structure Structural cost advantages Low aircraft acquisition costs Simple product Cost-based scheduling – aircraft bases Out and back No crew overnights Labor efficiencies – 34 FTEs per aircraft Closed distribution – proprietary reservation system Small cities Lower airport co
Slide 10: Excellent Cost Discipline
Excellent Cost Discipline Best costs – LTM 1Q10 Cost / pax vs. stage length (1, 2) Source: Financial reports of the companies Vertical axis= cost per pax, horizontal axis = aircraft stage length in miles Operating costs / total passengers Ex-Fuel Cost / pax vs. stage length (1, 2)
Slide 11: Sources of Revenue
Sources of Revenue Scheduled air “Base” airfare (pax and price) Ancillary Air-related 3rd Party Fixed fee No fuel risk 7.6% of business Consistently profitable Diversified revenue streams LTM 1Q10 Total Operating Revenue
Slide 12: Pricing
Pricing Lock down one variable Scheduled load factor ~90% for 7 quarters High load factor enables Ancillary revenue Lower cost per pax Manage capacity to solve for base airfare We manage for a 90% load factor Load factors Allegiant 2009
Slide 13: Aggressive Capacity Management
We micro-manage capacity Aggressive Capacity Management 2008 2007 2009 July 2008 High Fuel Price (1) Published schedules through September 2010 2010E Avg. daily scheduled flights by month(1)
Slide 14: Highly Selective When We Fly
Substantial frequency variation even within a month Highly Selective When We Fly Daily scheduled flights
Slide 15: Fuel Hedging
Fuel Hedging We were able to make money during the highest fuel prices 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
Slide 16: Ancillary Revenue
Ancillary Revenue Highly predictable and inelastic Substantial revenue and profits Air-related, $29/scheduled passenger(1) Third party, $4/scheduled passenger(1) Checked bag Convenience fee Assigned seat Priority boarding TripFlex Booking fee On-board sales “Expedia with wings” No inventory risk Who
Slide 17: Attractive Customer Base
97% of our customers view us favorably Source: Customer Survey, 2009 by Penn, Schoen & Berland Associates Attractive Customer Base Who are our customers? Mean income >$104,000 73% are married Mean age = 49 84% own home 77% employed full or part-time 53% Professional – Managerial/clerical
Slide 18: Hawaii
Hawaii Largest major US leisure market untapped by ALGT Significant ancillary opportunities longer visits, higher ADRs, longer stage lengths, high attachment for hotels, cars, other attractions No service on planned routes Good time to enter the market Airline capacity down substantially and hotels
Slide 19: Fleet Growth
Fleet Growth MD-80 50 in service by end of Q2 10 more purchased, completed by end of Q3, average in-service cost $4mm 757 NOT a replacement for MD-80 Average in-service cost of $14mm each 757 asset values at trough in the cycle Limited downside Anticipated future plans
Slide 20: Q2 2010 Guidance
Investor Update Revenue Guidance Q2 2010 vs Q2 2009 RASM(1) Up 7.5 – 8.5% TRASM(2) Up 6.0 – 7.0% Average total fare Up 9.0 – 10.0% Cost Guidance Q2 2010 Cost per passenger – excluding fuel $52 - $53 Capacity Guidance Q2 2010 vs Q2 2009 System departures Up 2.9 – 3.3% System ASMs Up 8.6 – 9.0% Schedu
Slide 21: Summary
Summary Superior results Sustained profitability Highly adaptable High growth Strong balance sheet Experienced management team Creating shareholder value
Slide 22: Appendix
Appendix é allegiang
Slide 23: GAAP Reconciliation
GAAP Reconciliation LTM Free Cash Flow $82mm = Operating Income of $114mm + Depreciation & Amortization of $31.4mm - Capital expenditures of $63.6mm $mm LTM 1Q10 2009 2008 2007 Net Income 71 76 35 32 +Provision for Income Taxes 41 44 20 19 +Other Expenses 2 2 1 -7 +Depreciation and Amortization 32 3