Allegiant Travel Company · NASDAQ:ALGT
Allegiant Travel — Merrill Lynch Presentation June 2008
20 slides from Allegiant Travel's conference presentation, Jun 18, 2008
Slide 1: Merrill Lynch Presentation June 2008
Merrill Lynch Presentation June 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 21 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 at June 12, 2008
3 Nationwide At June 12, 2008: 61 cities, 103 routes, 37 Aircraft
Slide 5: Minimal Direct Competition
4 Minimal Direct Competition Delta: – Knoxville(2) US Airways: – Colorado Springs(2) – Eugene(2) – Medford(2) – Santa Barbara US Airways/United: – Fresno (1) Two as of September 2008 (2) Service ends by September 2008 Head-to-head competition on only six(1) of 103 routes • Competition pre-existed on
Slide 6: Competition Diminishing
5 Competition Diminishing Elimination of head-to-head competition – seven routes so far – Orlando to Tri-Cities, Greenville, Greensboro (already) – Orlando to Knoxville (Sep 08) – Las Vegas to Medford, Eugene, Colorado Springs (Sep 08) Reduction in head-to-head capacity (Vegas to Fresno, Santa Barba
Slide 7: Competition Diminishing: Orlando, Las Vegas & Tampa Bay
6 Competition Diminishing Orlando, Las Vegas & Tampa Bay 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 3rd part
Slide 8: Increasing Ancillary Revenues & Pax/Departure
7 Increasing Ancillary Revenues & Pax/Departure Scheduled service Q1 comparison: 1Q07 1Q08 Q1YOY Revenue/Passenger $87 $87 - Ancillary/Passenger $19 $26 37% Total Revenue/Passenger $106 $113 7% Passengers/Departure 119 127 7% Average Stage Length 926 907 (2%) Fuel/Passenger $41 $56 37% Ancillary rev
Slide 9: Industry-Leading Ancillary Revenue/Passenger
8 $1.06 $3.40 $5.87 $11.55 $16.11 $18.98 $21.53 $25.75 $0 $5 $10 $15 $20 $25 2002 2003 2004 2005 2006 1Q07 2007 1Q08 Industry-Leading Ancillary Revenue/Passenger Since 2002, ancillary/passenger has grown at over 80% CAGR
Slide 10: Ancillary Revenue
9 Ancillary Revenue Voluntary extra spend > $25 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 Other Carriers – tough to duplicate/replicate – Legacies limited b
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 ($5-$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 – 1Q08 unique visitors 3.5mm, up 59% 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 (3) 2007 CASM Ex-fuel (1) 2007 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 7.5 $102 $100 $103 $101 $97 $103 $78 $70 $60 $55 $50 $48 $0 $20 $40 $60 $80 $100 $120 $140 0 1 2 3 4 5 6 7 8 2003 2004 2005 2006 2007 1Q08 Daily Utilization (BHs) Cost/pax Declining Non-Fuel Cost/Pax Utilization Cost/Pax Cost/Pax ex-
Slide 15: Best Operating Margins - 2007
14 Best Operating Margins - 2007 2007 Operating Margins 2007 Pre-Tax Margins Source: public filings of the respective companies. Southwest Hedge (7.4pp) Southwest Hedge (7.0pp)
Slide 16: 1Q08 – Best Margins vs. Deteriorating Industry
15 11.0% 1.5% -1.6% -6.7% -8.3% -9.2% N/A* (10%) (8%) (6%) (4%) (2%) 0% 2% 4% 6% 8% 10% 12% 1Q08 – Best Margins vs. Deteriorating Industry 1Q08 Operating Margins 1Q08 Pre-Tax Margins * Frontier in bankruptcy has not reported 1Q08 earnings Source: public filings of the respective companies. Southwest
Slide 17: Capitalization
16 Capitalization (1) Adjusted for 7x LTM Rent Expense of $5.1M in 2006 and $3.4M in YE1Q08 As of As of 3/31/08 12/31/06 Cash, Cash Equivalents and Short-term Investments $188.2 $144.7 Total Assets 424.4 305.7 Total Debt Retained Earnings 71.0 60.1 72.8 19.1 Total Shareholders' Equity $205.3 $153.5
Slide 18: Protected from Credit Card Holdbacks
17 Protected from Credit Card Holdbacks Cash(1) net ATL(2) as percent of LTM revenues at March 31, 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 (3) December
Slide 19: Goal: Maintain Double Digit Operating Margins
18 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 20: Merrill Lynch Presentation June 2008
Merrill Lynch Presentation June 2008
Allegiant Travel — Merrill Lynch Presentation June 2008 on 6ix