Allegiant Travel Company · NASDAQ:ALGT
Allegiant Travel — Investor Presentation (February 2011)
30 slides from Allegiant Travel's investor presentation, Feb 3, 2011
Slide 1: Management Presentation February 2011
Management Presentation February 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: Unique business model and results
Unique business model and results MEceTDA® I Freecash flow 1) Pre-tax Profit [~] Pre-tax Margin @ Highly resilient and profitable (mm) — 15.6% LTM pre-tax margin eu 15.6% - Profitable last 32 quarters () ie Ents ai — $140mm LTM EBITDA ?) 190 $121 120 120 ™@ Very strong balance sheet $103 100 — $150m
Slide 4: Built to be different — highly profitable
Built to be different — highly profitable Air transportation Travel Business, VFR, leisure Leisure = vacation Large cities Small cities High frequency Low frequency Fixed capacity Variable capacity High cost assets Low cost assets Competition Little competition Unprofitable / Marginally profitable H
Slide 5: Nationwide footprint
Nationwide footprint ene Falls ia Bitings McAllei Yellow dots — leisure destinations Blue dots — small cities Projected through March 31, 2011 ee 162 routes, 51 operating aircraft we a 62 small cities, 11 leisure destinations allegiant_
Slide 6: Best pre-tax margins
Best pre-tax margins 25.0% ALGT 20.0% RYAAYO) 16.0% co) ALGT ills 10.0% 5.0% 0.0% + JBLU® 5.0% “10.0% 2008 2009 2010 Runaway Recession Recovery Oil (1) RYAAY = Ryanair ; LUV = Southwest Airlines; JBLU = JetBlue Airways @) RYAAYLTM 0310 allegiant ‘Travel is our deal.
Slide 7: Credit metrics
Credit metrics Return on capital employed 25% 2008 2009 2010 = =2010LUV Interest coverage 60 55.4% Return on equity 29% 2008 2009 2010 Debt/ EBITDA 2010 LUV 50 4 i 37.2x 3 29% 30 2 204 147% 14x 10 | as ' al 04x 03x 0 |_| 0 = = 2008 ©=—- 2008S 2010 2010LUV 2008 = 2009S 2010 -2010LUV LUV= Southwest Ai
Slide 8: Profitable growth
Profitable growth 2007 2010 % change System ASMs (billions) 3.87 6.25 62% Average AC 28 49 76% Total cities 58 73 26% Pre-tax margin 14% 16% $3.50 $3.34 $mm 160. $140 140 $3.00 0 $103 $250 $2.31 $2.30 10) 0 $63 $2.00 60 $51 $1.50 $1.48) 40 20 $1.00 + 0+ EPS System fuel price Prectax income EBA” (1).
Slide 9: Balance sheet management
Balance sheet management $mm. $350 $08.0 $300 $25.0 $2507 $2315 $200 $98.5 149 150.3 $160 $307 $53.8 | i) $100 $177 $60 $0 Unrestricted Operating Pre-payment — Capital Cash Stock Net Debt Other Unrestricted Cash & CashFlow toHarrahs Expenditures Dividend Repurchase Retired Cash & Equivalents Equival
Slide 10: Fuel hedging
Fuel hedging @ Weare 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 to manage fuel risk B No liquidity or balance sh
Slide 11: Aggressive capacity management
Aggressive capacity management Avg. daily scheduled flights by month" 160.00 140.00 July 2008 120.00 high fuel price 100.00 80.00 60.00 40.00 Jan Feb = Mar Apr = May = Jun Jul,» Aug Sep Oct = Nov = Dec. Jan allegiant ‘Travel is our deal. 2007 2008 2009 2010 201 (1) Projected schedules through July 2
Slide 12: Capacity growth
Capacity growth 30% 25% 20% 18% 10% 5% 0% B% “10% 18% Year over year change in scheduled ASMs 24% 17% 4%, 14% 9% 6% 4% 3% 6% 4% ay oe 2% 1st Qtr 2010 2nd Qtr 2010 3rd Qtr 2010 th Qtr 2010 OPrevious guidance mTotal scheduled ASM growth ASMs — available seat miles Schedule ASM growth is the midpoint o
Slide 13: Structural cost advantage
Structural cost advantage @ Low aircraft acquisition costs @ Simple product —@ Cost-based scheduling — aircraft bases — Outand back — Nocrew overnights @ Labor efficiencies — 32 FTEs per aircraft — Closed distribution @ Small cities — Lower airport costs — Lower marketing costs we llegi —_— allegian
Slide 14: Excellent cost discipline - CASM
Excellent cost discipline - CASM Total cost/ASM (CASM) Total cost ex fuel/ASM (CASM ex) vs stage length 85 vs stage length 115 ita - LUV 75- * Luv 4 z a 74 2 105 S . a7 g 2 ae JBLU z 10 6 99 5° = JBLU 3 % 95 5 6) 3 z 2 9 8.9 355 * ALGT e « 85 55 ALGT 84 45 r r 1 500 750 1000 1250 500 750 1000 1250 A
Slide 15: Labor costs vs peers
Labor costs vs peers Labor cost per passenger — 2010 Employees per aircraft —- Q410 45 $42 80 40 $37 70 70 s 64 60 30 50 25 2 $18 0 32 15 30 10 20 5 10 o it) Allegiant Jetblue Southwest Allegiant Southwest JetBlue Source: company filings we Employees are full time equivalents alle la tt
Slide 16: Our website is our store front
Our website is our store front scour Fgh and Vacation Fahages | Tavs Ou Dea | Afar Hoel Pakage rom Aegan allegiant Travel i 25 “gi wwe ™: ~—- ne = @ 19mm unique visitors (last 12 months) Finda better hotel deal and : your next flight’s free*! 32% new visits That's our new low-price pledge, F M@ 6.5
Slide 17: 3rd party business
34 party business (mm) 34 party ancillary revenue 3rd party revenue per $100 growth siso scheduled passenger $89.3 $4.34 ws | $73.2 $4.25 $60 $4.01 $4.00 24.4 525 19.7 $0 $3.75 2009 2010 2008 2010 = Gross revenue (Non GAAP) = Net revenue
Slide 18: 3rd party products
34 party products @ “Expedia with wings” @ Very high margins — largely pre-tax income @ Corporate focus on growing this area of business — No direct fuel risk — No capex, all automation — Leverages consumer relationships Wholesale price for hotel and car, we manage margin No inventory risk Receive c
Slide 19: 3rd party initiatives
3'4 party initiatives @ Continued focus on supplier costs @ Pricing @ Adding inventory @ New programs — Branson, Missouri (service to SGF from 5 destinations) — Ski packages — Small cities @ Automation — Improve pricing tools — Land only products 4 a — Improve car module allegiant
Slide 20: MD-80 network growth
MD-80 network growth @ Currently analyzing/negotiating — 50 new routes — 30 new small cities @ 166 seat — Adding 16 seats — Start seeing larger aircraft in 2H 2011 — Completion mid 2012 @ 8 aircraft in storage — Willuse 4 to supplement fleet for 166 project we a allegiant_,
Slide 21: 166 seat project economics
166 seat project economics Revenue (actuals 2010) Average scheduled fare Average ancillary fare Total scheduled fare Assumptions 75% load factor (16 x .75) $ per pax fuel ($2.81 gal x 40 gal/dept) $ per pax non fuel (inflight, D&A, marketing, etc.) Total marginal cost per pax Departures/AC/year (201
Slide 22: 757 fleet and Hawaii
757 fleet and Hawaii @ Hawaii is now a 2012 goal @ Initial request to FAA — simultaneous approval — 757 on certificate — Flag status (needed for Hawaii) — ETOPS 180 (needed for Hawaii) @ Plan to amend application — Operate 757 in domestic mainland, non-ETOPS flying — After several months of operatio
Slide 23: 757 fleet
757 fleet @ Aircraft 1&2 — Purchased and subsequently financed ($14mm) — Target early Summer 2011 for 1 aircraft domestic flying — Lease second aircraft to a European operator + Expected return from lease Summer 2012 @ Aircraft3 & 4 — Expected purchase Feb 2011 — Lease through Summer 2012 — Can call
Slide 24: Management changes
Management changes @ Kris Bauer - SVP Operations (May 2010) — SVP of Technical Operations at Northwest/Delta @ Greg Rehwaldt — VP of Stations (Dec 2010) — Director of Stations at Northwest ™@ Greg Baden — VP of Flight Operations (Jan 2011) — Managing Director of Flying at Delta @ Scott Allard — Chie
Slide 25: 1st half 2011 capacity guidance
1% half 2011 capacity guidance @ Q111PRASM+5% @ Not growing aircraft in 1H 2011 @ Schedule currently selling through August 16th 2011 @ 8 aircraft in storage — can react to opportunities quickly 4st Quarter 2011 2nd Quarter 2011 System departures +3 - 6% +1-5% System ASMs +3 - 6% +1-5% Scheduled dep
Slide 26: Appendix
Appendix we _—— allegiant
Slide 27: GAAP reconciliation
GAAP reconciliation EBITDA calculations $mm 2010 2009 2008 2007 Net Income 657 76.3 354 315 +Provision for Income Taxes 376 44.2 19.8 19:2 +Other Expenses 13 16 7 3.6 +Depreciation and Amortization 35.0 29.6 235 16.0 =EBITDA 139.6 1518 79.4 63.1 Total debt 28.1 45.8 647 72.1 7x annual rent 12.0 13.5
Slide 28: GAAP reconciliation
GAAP reconciliation Returt $mm 2010 2009 2008 2007 LTM Net Income ($rm) 65.7 76.3 354 a15 Total shareholders equity ($m) 2977 292.0 223-5: 210.3 Return on equity 22% 29% 16% 17%
Slide 29: GAAP reconciliation
GAAP reconciliation Free cash flow calculations $mm Operating Income +Depreciation & Amortization -Capital Expenditures =FCF Diluted Shares (mm) FCF Diluted Share 2009 122.3 29.6 317 120.2 20.3 $5.93 2008 2007 55.8 444 235 16.0 53.0 424 263 179 205 205 $1.28 $0.87 allegia nt ‘Travel is our deal.
Slide 30: GAAP reconciliation
GAAP reconciliation Return on capital employed calculatio $mm 2010 2009 2008 +Net income 65.7 763 364 + Income tax 376 442 198 + Interest expense 25 AT 54 + Interest income: (1.2) (2.5) (47) EBIT 104.6 122.7 55.9 + Interest income 12 25 AT Tax rate 36.7% 36.2% 35.9% Numerator 67.0 799 38.9 Total ass
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