Allegiant Travel Company · NASDAQ:ALGT
Allegiant Travel — Raymond James 29th Annual Institutional Investor Conference March 2008
20 slides from Allegiant Travel's conference presentation, Mar 5, 2008
Slide 1: Raymond James 29th Annual Institutional Investor Conference March 2008
Raymond James 29th Annual Institutional Investor Conference March 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: Andrew Levy, CFO & MD Planning
allegiant Andrew Levy CFO & MD Planning
Slide 4: Allegiant Travel Company Investment Highlights
3 Allegiant Travel Company $mm Investment highlights – Best operating margins – Excellent balance sheet – Lowest costs – Profitable last 20 quarters (1) Unique, expandable & defensible – Leisure, small cities, MD-80s – Ancillary revenue Excellent 2007 results: – Revenues up 48% – Pre-tax income up 2
Slide 5: Ponder Harrison, MD Sales and Marketing
Ponder Harrison MD Sales and Marketing
Slide 6: National Footprint YE 2007
5 National Footprint YE 2007 Five destinations, 53 small cities 106 routes (including seasonal) 32 MD-80 aircraft in operation Potential: At least 100 small cities = 100M+ people
Slide 7: Minimal Direct Competition
6 Minimal Direct Competition Delta: – Knoxville – Greenville/ Spartanburg – Greensboro – Huntsville US Airways: – Colorado Springs – Medford – Eugene US Airways/United: – Fresno Head-to-Head Competition on Only Eight of 106 Routes • Competition pre-existed on all eight routes • To date, it is rare f
Slide 8: Industry-Leading Ancillary Revenue/Passenger
7 Industry-Leading Ancillary Revenue/Passenger Since 2002, Ancillary/Passenger has Grown at over 80% CAGR $25 $20 $15 $10 $5 $0 2002 2003 2004 2005 2006 4Q06 2007 4Q07 $1.06 $3.40 $5.87 $11.55 $16.11 $18.84 $21.53 $24.30
Slide 9: Ancillary Revenue
8 Ancillary Revenue Product innovation driving high margin revenue Voluntary extra passenger spend > $24 net per pax segment – Traditional airline product unbundling – Third party product sales Key advantage: custom reservation system – Legacies limited by multiple systems – Most LCCs dependent on s
Slide 10: Ancillary Products
9 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 ($9.50/pax; use of website) – Assigned seat ($5-$20/seg; priority boarding) – Checked bag ($5-$10+
Slide 11: Control the Customer
10 Control the Customer www.allegiantair.com – Leverage direct relationship with customers – Maximize e-commerce opportunities – 4Q07 unique visitors 2.6mm, up 62% year-over-year – Instantly relevant to leisure customers in our small cities – Accounts for almost 90% of sales – Generates email lists
Slide 12: Andrew Levy, CFO & MD Planning
allegiant Andrew Levy CFO & MD Planning
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 2007 CASM Ex-fuel (1) 2007 CASM (2) Source: public fil
Slide 14: Declining Costs and Low Utilization
13 Declining Costs and Low Utilization Daily Utilization (BHs) Cost/pax Declining Non-Fuel Cost/Pax Aircraft Price Utilization Cost/Pax Cost/Pax ex-fuel 8 7 6 5 4 3 2 1 0 2003 2004 2005 2006 2007 6.4 7.1 6.1 6.7 6.7 $0 $20 $40 $60 $80 $100 $120 $140 $40 $30 $20 $10 $0 MD-80 737-700 Cost/pax
Slide 15: Best Operating Margins
14 Best Operating Margins 2007 Operating Margins 2007 Pre-Tax Margins Source: public filings of the respective companies. Southwest Hedge (7.4pp) Southwest Hedge (7.0pp) 16% 14% 12% 10% 8% 6% 4% 2% 0% (2%) (4%) Allegiant Southwest Alaska AirTran JetBlue US Airways Frontier 12.2% 8.0% 6.0% 6.0% 5.9%
Slide 16: Cash Machine
15 Cash Machine MD-80 financially out of favor, very good operational asset $1.6mm operating profit / aircraft in 2007 – 3.1 year payoff Excellent returns on invested capital “Capital Lite” in a Capital Intensive Industry 2007 2006 2005 Operating Cash Flow (1) $63 $29 $14 Increased Air Traffic Liabi
Slide 17: Capitalization
16 Capitalization (1) Adjusted for 7x LTM Rent Expense of $5.1M in 2006 and $3.0M in 2007 As of As of 12/31/07 12/31/06 Cash, Cash Equivalents and Short-term Investments $171.4 $144.7 Total Assets 405.4 305.7 Total Debt Retained Earnings 72.1 50.4 72.8 19.1 Total Shareholders’ Equity $210.3 $153.5 T
Slide 18: 2007 Operating Margins Expanded – Until 4Q
17 2007 Operating Margins Expanded – Until 4Q YoY Operating Margins vs Fuel Prices 2007 2006 +4.5pp +7.8pp +6.4pp - 5.7pp [18.9%] [+7.2pp] *Assuming 4Q06 fuel prices 20% 15% 10% 5% 0% 1Q 2Q 3Q 4Q 12.4% 16.9% 8.2% 16.0% 4.7% 11.1% 11.7% 6.0% $3.00 $2.50 $1.50 $1.00 $0.50 $0.00
Slide 19: Current Environment – Good News
18 Current Environment – Good News Traffic 1QTD very good – Jan: Pax up 59%, ASMs up 47%, Depts up 46%, LF 82.4%, +4.5 pts – Feb: Pax up 59%, ASMs up 45%, Depts up 47%, LF 86.4%, +5.5 pts 1Q & 2Q historically strongest quarters 1Q07 LAS adversely impacted by 2007 NBA All-Star Game LAS hotels facing
Slide 20: Goal: Return to Double Digit Operating Margins
19 Goal: Return to 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 – load factor up 5.0 pts 1Q08TD Increase an
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