Allegiant Travel Company · NASDAQ:ALGT
Allegiant Travel — Investor Presentation (August 2012)
31 slides from Allegiant Travel's investor presentation, Aug 7, 2012
Slide 1: Management Presentation
Management Presentation August 2012 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 @ Highly resilient and profitable Built to be different — Profitable last 38 quarters (”) — $162mm EBITDA®LTM 2Q12 — LTM Return on Capital 14.4% @) Leisure customer Small cities Little competition @ Strong balance sheet — Rated BB- and Ba3 ©) — $390mm unrestricted c
Slide 4: Leisure customer in small cities
Leisure customer in small cities Taking people where they want to vacation Stimulation of demand - non-stop flights, low prices Prior to ALGT, small cities had few good options Leisure - more resilient than business, proven repeatedly Packages — air + hotels, cars, etc. Variable capacity to match se
Slide 5: Nationwide footprint
Nationwide footprint .) Tam, ‘ort Lauderdale Yellow dots — leisure destinations Blue dots — small cities Large dots - bases Based on current published schedule through December 31, 201 186 routes, 62 operating aircraft 67 small cities, 13 leisure destinations allegiant_
Slide 6: Little competition
Little competition Uniquely built to profitably serve small city markets = 171 15 allegiant”
Slide 7: Low cost aircraft
Low cost aircraft @ MD-80 — 59 owned, 54 operating, 58 operating EOY 2012 — $3mm total for purchase + induction — $2.9mm EBITDA‘ aircraft LTM 2Q12() — 51 MD-80s will have166 seats * 31 166 seat AC Aug 3, completion EOY 2012 @ 757 — 6 owned - 4 operating, 2 leased out, 6 operating 1Q13 — $15mm total
Slide 8: Capacity management
Capacity management Leisure = seasonality Small cities = low frequency") Avg. block hours/AC/day Weekly market frequency =Peak = Off peak 2 z 270 3 7 Fes = 50.0% Feo F 100% A = 30.0% 55 2 é © 20.0% 8 2 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec x 2x 4x Beorgrester —2010 2011 —2012E Weekly frequ
Slide 9: Ancillary revenue — third party products
Ancillary revenue — third party products Ancillary revenue - third party @ Bundled vacation packages er products $120.0 $106.4 $116.1 @ Very high margins = $100.0 $89.3 - 31% of LTM pre-tax income $80.0 $60.0 m@ Wholesale price for hotel & car, — sso eg $29.9 $335 we manage margin, no inventory s200
Slide 10: Our website is our only store
Our website is our only store allegiant Travel is our deal” nts ee 25m unique visitors LTM 2Q12 - ~140k visitors per day More everyday low fares. No gimmicks. High conversion — >4% in 2Q12 Low distribution costs — $0.83 adv/pax LTM 2Q12 Low transaction costs - High debit card usage 91% of YTD 2012 s
Slide 11: Excellent cost structure
Excellent cost structure Total cost ex fuel per ASM (cents) © nN a ~ food a ov a Operating cost ex fuel/ASM (CASM ex) vs stage length 17 * Luv 76 * ALK 68 * sBLU 60 SAVE + 5.4 ater 600 700 800 900 1,000 1,100 1,200 Average stage length (miles) (1) ALK is mainline statistics ime period — LTM 2012, AS
Slide 12: Best pre-tax margins
Best pre-tax margins 25.0% ALGT 20.0% 15.0% ‘SAVE 10.0% 5.0% JBLUO 0.0% + 2009 2010 2011 4412 Recession Recovery Runaway 222 Oil Ava ACin period 43 49 52 58 cacti $1.90 $2.43 $3.30 $3.39 service fuel cost (1) LUV = Southwest Airlines; JBLU = JetBlue Airways: SAVE = Spirit Airlines 1 ALK = Consolidat
Slide 13: Airbus update
Airbus update Long term replacement strategy — +5 to 10 year process @ Superior economics to MD-80 — Better fuel and maintenance costs, higher ownership * Ownership costs —same scenario when we began to acquire the MD-80 @ Leased vs. buy — Opportunistic in the market — Values are distressed today, r
Slide 14: No change in business plan
No change in business plan Better performance, opens up +20 cities MD-80 can not fly into. Some marginal SUMEU GIES MD-80 markets could be profitable A319 markets Distressed asset type. New engine Low cost aircraft technology will continue to drive asset values down Still low ownership costs allow u
Slide 15: Hawaii update
Hawaii update @ Began flying Las Vegas and Fresno, CA to Honolulu — 1 flights June 29/30 # Additional growth into Honolulu — Bellingham, WA, Eugene, OR, Santa Maria, Stockton, and Monterey CA * Begin 11/15/12, 11/17/12, 11/17/12, 11/18/12, and 11/16/12 @ Hawaii (Maui) — Bellingham, WA - Begins 11/14
Slide 16: Carry on bag fee
Carry on bag fee @ Began charging for bags to be placed in overhead — Bags that fit under the seat are free @ Changed boarding process in late June — Went from open seating to a zone boarding process Avg fare — ancillary air related $33.90 $33 $32.39 S82) g31.38 $31.46 $31.51 | 38 $30 $29 $28 jan 2a
Slide 17: Guidance
Guidance 3Q 12 PRASM (9) to (7)% Schedule currently selling through end of 2012 | | @ 3Q 12 CASM ex fuel (2)% to 0% H@ 3Q 12 Fixed fee + other revenue $10m to $12m | 2012 CAPEX $105m to $115m 34 Quarter 2012 4h Quarter 2012 System departures 2 to 6% 5 to 9% System ASMs 14 to 18% 19 to 23% Scheduled
Slide 18: Appendix
Appendix — allegiant”
Slide 19: GAAP reconciliation
GAAP reconciliation EBITDA calculations $mm LT 2Q12 2011 2010 ©2009 2008 2007 Net Income 672 49.4 657 763 35.4 315 +Provision for Income Taxes 405 30.4 376 442 198 192 +Other Expenses 73 59 13 16 T 36 +Depreciation and Amortization 474 42.0 35.0 29.6 235 160 =EBITDA 162.1 127.4 1396 © 151.8 79.4 63.
Slide 20: GAAP reconciliation
GAAP reconciliation Return on equity $mm LTM 2Q12 2011 2010 2009 Net Income ($mm) 672 494 657 76.3 Jun 2012 Jun 2011 Dec 2011 Dec 2010 Dec 2009 Total shareholders equity ($mm) 403.0 328.3 351.5 2977 292.0 Return on equity 18% 15% 22% ROE = Net income / Avg shareholders equity we
Slide 21: GAAP reconciliation
GAAP reconciliation ti capital employed calculatio $mm LTM 2Q12 2011 2010 2009 + Net income 672 494 657 76.3 + Income tax 40.5 30.1 376 442 + Interest expense 84 ed 25 47 = Interest income 11 12 12 25 EBIT 115.0 85.5 104.6 1227 + Interest income 11 12 12 25 Tax rate 37.6% 37.9% 36.4% 36.2% Numerator
Slide 22: Revenue momentum
Revenue momentum ‘Average fare - total ‘Average fare - ancillary third party $135 products $131 $6.00 $130 $126 $127 $5.56 $125 $5.50 g5.1g $5.26 $120 ew SUEY gas 1 $4.50 $105 + $4.00 + 20100 «2011 HT tH. 20100201111 1H12 Average fare - scheduled service Average fare - ancillary air-related charges
Slide 23: Growth and pre-tax margin vs fuel
Growth and pre-tax margin vs fuel 60% 5 40% ~ 20% + 0% -20% + 40% ~ Bina Be" s we ie we sw woe es 2 £ # 2S 2 # # 2 2 PB > 8 8 86 8 8 8 6 6 8 8 6 6 8 8 86 8 8 —Scheduled ASMs growth ——PRASM growth — — System fuel price growth allegiant ‘Travel is our deal.
Slide 24: Fuel efficiency improvements
Fuel efficiency improvements System ASMs per gallon 63.0 620 614 61.0 60.1 59.2 59.4 59.0 59.0 l 586 | 587 587 587 57.0 [| l 1010 210 3Q10 4Q10 1011 211 3Q11 411 1Q12 2Q12 YoY chg — Sys ASMs/gal (0.5)% 0.2% (0.2)% 2.4% 4.6% 5.6% # of 757 acin svc (end of qtr) 1 4 3 # of 166 seat ac in sve (end of qt
Slide 25: Capacity changes
Capacity changes Year over year change in scheduled ASMs 30% a 24% 24% 22% 20% 20% 7 4705 17% 15% 14% 14% 14% 11% 10% 9% 8% 6% 5% a 3% 3% 1% 0% 3% 5% : 3 3 2% 10% 8% -9% 15% -13% 192010 202010 32010 42010 102011 202011 302011 402011 102012 202012 30 2012E 4Q 2012E mTotal scheduled ASM growth = Same
Slide 26: Market management over time
Market management over time 25 20 B15 g 5 & 310 0 J nas At I - © & & OP s s - re - ec eS mu Markets added = Markets deleted Does not include shifting of 10 markets from Sanford to Orlando International in 1Q 10 wie and shifted back to Sanford in 1Q 11 ll nt
Slide 27: Revenue model
Revenue model , Revenue growth ($mm) @ Scheduled service $000 — Air fare from small cities to Total revenue leisure destinations $800 $779 @ Ancillary —Air related charges $700 — Unbundled air product $201 ® Ancillary 3rd party products $600 $180 — Hotels, rental cars $500 @ Fixed fee & Other - Char
Slide 28: Unit revenue changes vs capacity changes
Unit revenue changes vs capacity changes 40% 38% 35% 33% 30% 24% 20h 22% 22% 20% 14% 15% i 10% 11% 11% — spagtong 10% 5% 0% -5% 10% 8% 8% -15% seo oo YF EPS SSS we y Scheduled ASM growth = PRASM growth 4Q-12E scheduled service ASM growth is midpoint of guided range 30-12E is midpoint of guided range
Slide 29: Seat project economics
166 seat project economics Revenue (actual LTM 2Q12) Average scheduled fare $90.36 Average ancillary fare $37.48 Total scheduled fare $127.84 Assumptions 75% load factor (16 x .75) 12 pax $ per pax fuel ($3.04* gal x 40 gal/dept) $10.13 $ per pax non fuel (inflight, D&A, marketing, etc.) $30.00 Tota
Slide 30: Low cost drivers
Low cost drivers LTM 2Q12 cost per passenger Ex fuel cost = $56 Ex fuel cost = $65 Ex fuel cost = $90 Ex fuel cost = $96 Fuel cost = $54 Fuel cost = $56 Total Allegiant = $110 Total Southwest = $146 Other -— $72 cs og $12 | $13 | Aircraft — ircrai i” |. $65 $87 ALGT SAVE LUV JBLU @ Fuel ™@ Ownership
Slide 31: Credit metrics
Credit metrics Return on capital employed 20% 18.5% 15.3% 44.4% 10% 3.1% 0% ml 30% 20% Return on equity 18.0% 15.0% U I = 10% 0% + 2010 2011 LTM2Q12 LUV LTM 2010 2011 LTM2Q12 LUV LTM 2Q12 2Q12 Interest coverage Debt / EBITDA 60 55.4x 5 50 4 39x 40 5 30 19:3: 20 LEX : 2 jae s6y [PEE fe 0 a oe Hs 2010
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