Allegiant Travel Company · NASDAQ:ALGT
Allegiant Travel — Investor Day (November 2012)
65 slides from Allegiant Travel's investor day presentation, Nov 15, 2012
Slide 1: ALGT investor day
ALGT investor day Maury Gallagher — Chairman & CEO November 2012 _— 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: Current state - excellent
Current state - excellent H Helped develop new paradigm — MAKING MONEY m Past 6 years averaged 15% operating profit with 4x growth @ Returnon Invested Capital, Equity - Since 2007: — Invested capital - Earned $290m since beginning of 2008 on avg of $362m of net capital, 80% return over 5 year period
Slide 4: Very low cost structure
Very low cost structure H Have lowest ex-fuel costs in US - 5 cent plus cost/ASM - Closest is Spirit at 6 cents — 15% advantage over Spirit & Almost 50% advantage over — Southwest — 7.7 cents — Alaska —7.6 cents ® Southwest LTM 3Q12 spent $91 per passenger ex fuel - G4 $57 CCAS exfue fgures re LM 30
Slide 5: Future — focused on more of the same
Future — focused on more of the same Maintain/improve cost structure ® Continue model with low cost aircraft - market is good ™ Take advantage of strong balance sheet - cash position m@ Take advantage of automation - Increase product offerings — Unit revenues
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Slide 7: Map with no lines
Map with no lines allegiant
Slide 8: ALGT investor day
ALGT investor day Jude Bricker — SVP Planning/Treasurer November 2012 _— allegiant.
Slide 9: 2012 capacity growth
2012 capacity growth 2012 New Markets ingham Fa las Fae Steckton Bers a lana Pei >, y ingen} ie sant trl oes 22 \W ona atu ando-Sanord Lauderdale = 30 New market launches = Focus on HI, PGD, and Airtran back-fill we = allegiant_
Slide 10: Current 2013 capacity plan
Current 2013 capacity plan ® Current growth planis primarily comprised of 166 seat + Hawaii ™ 2013 scheduledASM YoY growth expected to be +15 to +20% eee Year over Year ASM Growth 3.6% " E 1.0% 10.6% 21% 15% 10% 6.0% . | | ow | Gauge Change Hawai Same Store NewCONUS Discontinued ‘tal Growth Frequenc
Slide 11: A319 capacity planning
A319 capacity planning ® A319s are not in the schedule through June (replacement only) @ Fall 2013 capacity load could include (based on A319 capabilities): - Shorter and higher airfield markets - Long range - Mexican / Caribbean - Incremental off-peak flying
Slide 12: Aircraft cost comparison (utilization of 8.9 hours/day)
Aircraft cost comparison (utilization of 8.9 hours/day) Projected costs per passenger Tota Exuel costs = $54 Ex fue cost Fuel cost = $52 Fuel cost = $41 Total MD-80= $106 Total A319 = $96 “ ES c™ aS se 50 $9 Aircraft 10 ” [" MD80 (166 seats) A319 used ™ Fuel fi Ownership i Maintenance ™ Labor = Othe
Slide 13: Other capacity initiatives
Other capacity initiatives More efficient time-of-day scheduling Optimizing peak capacity by month LAS Schedule Q1 2012 VS Q1 2013 100% 90% 86.9% y%% 11.3% 3 foe mat 2012 = = Qt 2013 = 60% 3 60% 40% 30% 20% 110% 97% 4 | a o% | Early Off Peak Hours Peak Hours Late Off Peak Hours TOI2UniReVvsAvg 72% 3
Slide 14: Pricing initiatives
Pricing initiatives @ Algorithmic approach to price @ Next step — applying the same methods to all products S180) 100% March 2012 v 2010 Trailing 100 Days Booking Curve... 20% su 190 om 1% a) € 60% $ sno r 0% B sso H 0% 2 0% 20% 10% o% $60 12722 12/29 01/05 O12 O1/19 01/26 02/02 02/09 O2M6 02/23 03/
Slide 15: Catchment area expansion
Catchment area expansion Continue to see market growth in mature markets @ Customers show willingness to travel for access to low fares ‘Stockton Catchment 2008 Stockton Catchment 2012 ae Heat map by creditcard zipcode: darkest green is more than 400 segments we
Slide 16: Revenue initiatives
Revenue initiatives @ Overhead bags + Airport bag fees @ Seat Assignment pricing @ Tripflex display and pricing @ Priority boarding revamp sa) Avg fare - ancillary air related $37.05 36 $33.90 | 832} $31.46 $31.51 i 38 $30 928 " zat a aon [ rare sae
Slide 17: Other revenue
Other revenue @ Fixed Fee flying - Caesar's contract ends in January 2013 - “Free” MD-87 available to support Ad-Hoc charters through 1H13 - DOD charter opportunities with B757 ™@ B757 leases have been terminated and aircraft returned
Slide 18: Fleet update
Fleet update ™@ Six 757s in-service by 1Q13 @ 51 MD80s modified to 166 seat configuration by 1Q13 - 1MD87 retires YE 2012; 1 MD87 retires summer 2013 - 5 150 seat MD80s retiring through YE 2013 @ 9 ex-Easyjet A319s — lease is final; 1st delivery at year end ™@ 10 ex-Cebu A319s — purchase is still be
Slide 19: A320 used market
A320 used market @ A320 opportunities for replacement and growth @ Used A320 market catalysts: - Obsolesce due to new engine models — Spread on debt financing new vs used equipment — Slow demand growth Increasing production rates by the OEMs Airline consolidation — Fleet replacements — Other: strong
Slide 20: B737 classic values
B737 classic values nuts 737.300 vest Forecast Vales 1993-2010 (Le i) 737-300 1993 Maret Vues 193-2010 bet As) #, let Fuel Price US0/Galion Bight Aes) 737NG 800 traded insane 1997 y $350 $3.00 } $250 Source: AVTAS Blue BookotsstAireat Values 1959-2010 \SOurct: BLOOMBERG -0-01-10Histrials Fu Pas, $2.
Slide 21: MD80 values keep costs down
MD80 values keep costs down @ MD80 engines trade at a discount to maintenance value @ Market conditions should continue with AA MD80 retirements STANDARD 2010 pong 2012 Esvcost/eye($) $161.82 $166.67 si7.e7 UP Cost/oye (inespollage) 7746 $2.88 $88.65, Total ost/cye(S) $239.28, $249.55, $260.35 Total
Slide 22: ALGT investor day
ALGT investor day Kris Bauer — SVP Operations November 2012 _— allegiant.
Slide 23: Getting the Airbus on our certificate
Getting the Airbus on our certificate @ Manuals submitted @ Training begun — Maintenance, pilots, flight attendants ™@ Proving runs scheduled for February — Will be performed in Phoenix H In service targeted 2Q13 @ First aircraft has undergone C-check and painted in Allegiant livery
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Slide 25: Managing 3rd aircraft type
Managing 3" aircraft type @ Dedicated fleet manager positions — Flight operations and maintenance @ Substantially improved technical management @ Substantially improved safety department @ Enhanced safety programs — ASAP, FOQA, FRMS @ Improved reliability will reduce day to day complexity
Slide 26: Labor update
Labor update @ Flight attendants @ Pilots @ Dispatchers
Slide 27: ALGT investor day
ALGT investor day Scott Sheldon - CFO November 2012 _— allegiant.
Slide 28: Aircraft fuel
Aircraft fuel @ Improving fuel efficiency even before adding A319s — Over 7% improvement 3Q12 vs 3Q11 ASMs per gallon 65.00 649 633 a 620 601 - : | 55.00 i Ww 3011 4a 1012 2012 3012 40.126 150 seat MD-80 49 a7 39 30 20 13-45 166 seat MD-80 ‘il 7 7 26 36 43.45 757 1 1 1 3 4 4 $ per gallon $3.12 $3.08
Slide 29: Salary and benefits
Salary and benefits @ Pilots — Moving from band 2 to band 3 + $3-$4m annual increase, effective Nov 1 + Increasing efficiency — 79% BH/PD ratio, up 6.7% YOY @ Flight attendants — full year 166 seat complement + $2.9M incremental costs YOY + Increasing efficiency — 84% BH/PD ratio, up 2.7% YOY @ IT -
Slide 30: Station operations
Station operations @ Major destinations — Las Vegas — same footprint, $4.5m annual increase in 2013 — Hawaii — nearly 2x average destination turn cost ™@ Secondary/smaller cities — More efficient, lower costs — Good cost control, trending towards $1k per departure — Average 40% lower cost per depart
Slide 31: Maintenance and repairs
Maintenance and repairs ™@ Heavy check line $$ flat YoY, events slightly up H Engine overhauls — 18 RB211 with minimal JT8D activity — Expect $7-$10m in 2013 vs ~$7m in 2012 Maintenance per aircraft per month S140 $1289 g sv] ES $1026 $1027 $1025 $1050 3 S100 | 5 rs, *5e° $70.4 = $625 $625 $60 s40 2
Slide 32: Ownership costs
Ownership costs @ D&A pressure due to 166 seat mods, 757s, A319s @ Accelerating MD-80 depreciation due to future retirements $100 a 09 | AC lease rental & depreciation/AC/month g S80 = sn! 2 sco 3 sso! = $40 = $304 s20 S10 | so! ‘ 2009 20126 20136 sACrenWACIMs MAC depteciaon/AC/0s «Total depreciaton
Slide 33: Continued cost improvement
Continued cost improvement @ Lowest CASM ex in the U.S. & Airbus fleet expected to lower unit costs CASM ex fuel =] ss 54 (7.0) - (5.0)% (6.0) — (1.0)% ‘a 1.6% ss Year over year change I CASM ex fuel
Slide 34: CAPEX
CAPEX @ Airbus acquisitions > 85% of aircraft spend in 2013 ™@ MX CAPEX run rate ~ $15m per year $180 Z CAPEX spend 155m $140 $130m_ $100 $86.6 wo rll 2 an 2011 2012E 2013E mOther s Aircraft
Slide 35: Strong cash generation
Strong cash generation Free cash flow Net debt sae $82 zor LTwsar $75 $0 + il = = $50 2 575 1 ° $25 * g150 | ($122) so $150 ($122) Sopot” ott UTM 3a12° $225 2 $25 | (9218) $300 | EBITDA EBITDA per AC $40 i“ $179 $175 | . $34 E sts s140 Esa0| $29 a $24 2011 LTM3a12 2010 az urmaar2 2010 ston aot alleg
Slide 36: Balance sheet strength
Balance sheet strength Return on capital employed 20% 5 15.3% 155% 0% + .s a r 2011 LTM3Q12 LUVLTM ALK LTM 3012 3012 Interest coverage 2) 213% 204 177% tog: 12x 15 10 ‘Dlii O+ + + 2) 2011 LTM3Q12 LUVLTM ALKLTM 30123012 LUV = Southwest Aifines, based on published information ALK = Alaska Aifines, bas
Slide 37: GAAP reconciliation
GAAP reconciliation EBITDA calculations smm Lim sat2 2011 2010 © 2008 2008 Net Income 746 494 657 = 763 354 +Provision for Income Taxes 454 304 376442 198 +Other Expenses 74 59 13 16 7 +Depreciation and Amortization 524 420 350-296 235 EBITDA 1792 1274 1396 161.8 79.4 Total debt 1837 146.0 28.4 458
Slide 38: GAAP reconciliation
GAAP reconciliation Return on equity smm Lim sat2 2011 2010 2009 Net Income (Smm) 746 49.4 657 763 Sept 2012 Sept 2011 Dec 2011 Dec2010 Dec 2009 Total shareholders equity (Smm) 4231 3394 3518 (2077 292.0 Return on equity 20% 15% 2% ROE = Net income /Aug shareholders equity we
Slide 39: GAAP reconciliation
GAAP reconciliation Return on capital employed calculation ‘$mm Lim sat2 2011 2010 2008 + Net income 404 657 763 + Income tax 304 376 442 + Interest expense 72 25 ar interest income 12 42 25 EBT 855 1046 1227 + Interest income 12 12 25 Tax rate 37.9% 36.4% 36.2% Numerator 53.9 673 796 Total assets p
Slide 40: GAAP reconciliation
GAAP reconciliation Free cash flow calculations mm Lim sat2 2011 2010 Cash from operations, 1883 1299 98.0 - CAPEX 1065 88.0 98.5 = Free cash flow 818 a9 (0.5)
Slide 41: GAAP reconciliation
GAAP reconciliation Net debt smm Sept 2012 Dec 2011 Dec 2010 Current maturities of long term debt 16 79 165 Long term debt, net curr maturities 1424 138.2 16 Total debt 1537 146.1 28.4 Cash and cash equivalents, 1874 1507 1133 Short term investments, 200.0 1548 367 Long term investments, 148 140 413
Slide 42: ALGT Investor Day
ALGT Investor Day Scott Allard - ClO November 2012 — allegiant”
Slide 43: Allegiant technology
Allegiant technology @ Proprietary technology platform — Integrated operations, distribution, and finance — Control over platform allows product changes and innovation @ Mission — Preserve advantages of proprietary platform — Support product expansion and growth — Modular platform for agility — End
Slide 44: New booking engine
New booking engine New Website Mobile Apps. Old Website | we Booking Engine Airline Operations
Slide 45: New platform advantages
New platform advantages @ Scalability @ Flexibility and Agility @ Marketing drives, not IT @ Content management system for efficient merchandising @ AJB testing offers continual improvement
Slide 46: Technology timeline
Technology timeline @ CRM - 2Q13 — Co-branded credit card — Travel Club @ Pricing Enhancements - 3Q13 — Additional Air fare buckets — Market directional pricing — Market-specific hotel pricing @ SuperPNR - 3Q13 — Standalone hotel, ancillary sales — Other Air sales @ International — 4Q13
Slide 47: Mobile opportunities
Mobile opportunities @ 20% of web traffic comes from mobile & Mobile extends the selling window — Ancillary upsells during mobile check-in — Onboard sales via mobile flight attendant app — In-market ancillary sales via Deals app
Slide 48: Mobile check-in
Mobile check-in ‘otal Coat: $187.00) Continue’
Slide 49: Buy on-board
Buy on-board = Bell S 23:36 ed Flight #123 Employee: 4100 ary Items Cost 1 |M&M Peanut $2.00 1 [Pringles $2.00
Slide 50: In-market ancillary sales
In-market ancillary sales CSI: The Experience (CSk: The Experience isan interactive attraction placing quests inthe rote of a ‘The Mob Museum ‘rime scene investigator as they try to ‘WEDOING 200 Stent Avenue solve one of thee trvete-Me mysteries!
Slide 51: ALGT investor day
ALGT investor day Andrew Levy - President November 2012 _— allegiant.
Slide 52: Commercial 2012
Commercial 2012 Total fare $150 58 14 sia0: $125.51 $128.78 2 | $110 8 61 $90 bia $70 2 $50 0+ 2011 Lm 3a12 ‘=Avgfare mAvgAncilpax "Avg 3rd partypax. @ Ancillary - unbundled @ Hawaii, PGD, OAK @ Debit card discount — Implemented in July 2012 — RASM up, transaction costs down — Debit card take rate ~
Slide 53: Commercial 2013
Commercial 2013 ® Booking engine and new tools B Ancillary ™@ Demand generation = Mobile @ International
Slide 54: Booking engine
Booking engine @ 100% of our originating traffic @ AJB testing — holding variables constant — Optimize user experience, conversion, revenue, profit @ Pricing tools — Air - buckets — 3rd party — directional, city specific pricing @ Early results, good
Slide 55: Example A/B testing — package upsell
Example A/B testing — package upsell Example of a silo A/B test to measure impact of pricing display on hotel upsell. Ee) ‘Book Your Hotel Now and SAVE... Guaranteed! best rete mr emtornatnmen nen eet mene travel deals. Current: Flight + Hotel pricing expressed as total price per person allegiant i
Slide 56: Example A/B testing — package upsell
Example A/B testing — package upsell Example of a silo A/B test to measure impact of pricing display on hotel upsell. [EI eet oer tcttnow and save. Guarantee rete mr emtornatnmen nen eet mene travel deals. pricing expressed as a pernighttotal price per person allegiant i ourdeat,
Slide 57: Ancillary momentum
Ancillary momentum ‘Average ancillary - total 345 $42.64 $39.97 40 is $34.58 $30 $25 $20 - 2010 yron yr. 3012 Average fare - ancillary air-related ‘Average fare - ancillary third party charges products eu $6.00 aie $657 om, $527 | sas S77 $5.00 $32.00 | S317 sg407 aa wilt BT ,, zo” 201” YTD YTD Er E
Slide 58: Air related ancillary - room to grow
Air related ancillary - room to grow @ Spirit ancillary products — Travel club — Credit card — Ticket counter charge $605 $51.70 $51.47 $49.81 se 40 532.30 133.90 $37.05 so sn = Spirit = Allegiant
Slide 59: Third party products
Third party products @ YTD hotel net revenue +13% @ YTD transportation net revenue +35% ‘% oftotal hotel % oftotal car roomnights- rental days- % of otal seats—% ofotal seats - 2012 2012 2012 2013 Las Vegas 84% 8% 36% 31% Remainder of system 16% 92% 65% 69% @ Call center — Transition to a sales forc
Slide 60: Demand generation
Demand generation @ Marketing strategy and tactics — Management — Metrics — Expect ROI justified increase in spend @ Kayak — limited experiment @ Email campaigns — Deep linking into booking flow — conversion rate increase +200% — Database of email addresses, ~3m active subscribers
Slide 61: Email campaign without deep linking
Email campaign without deep linking B The email call to action links the customer to the website, but nothing is pre-selected. Customer must perform the whole search. @ Many clicks and a large time investment are required to discover the advertised price point.
Slide 62: Email campaign featuring deep linking
Email campaign featuring deep linking @ Email with relevant price point for the customer’s market — The call to action links the customer deeper into the website. — The clicked route and travel dates are pre-selected. — The price advertised in the email is highlighted and easily discovered. °” c :.'
Slide 63: Mobile
Mobile — Deals app, only in Las Vegas now, other locations coming @ Check in @ Full product @ Buy on board @ Stations
Slide 64: International
International @ Late 2013 / early 2014 H Small cities to Las Vegas / Orlando @ Destination markets —- Cancun @ Automation - payment, taxes @ Bilingual capabilities - website, call center, inflight & stations @ Regulatory @ A319
Slide 65: Guidance recap
Guidance recap Item Guidance 2013 Scheduled ASMs - YoY 2013 CASM ex fuel - YoY 2013 CAPEX 2013 Aircraft rent 2013 AC depreciation/AC/mo 2013 Maintenance/AC/mo +15 to 20% (6%) — (1)% $150m to $160m $4m to $6m $70k to $72k $100k to $110k allegia fant” ‘Travells our dea,