Allegiant Travel Company · NASDAQ:ALGT
Allegiant Travel — Investor Presentation (May 2011)
41 slides from Allegiant Travel's investor presentation, May 6, 2011
Slide 1: Management Presentation
Management Presentation 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 BE EBITOA® «I Free cash flow Tl PretaxProft [| Pretax Margin @ Highly resilient and profitable ($m) - - Profitable last 33 quarters (") ‘a 110% _ [sem] [sax - $133mm LTM EBITDA ?) - LTM ROE 20% @ Very strong balance sheet - Rated BB- and Ba3 (°) — $306mm cash/short
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: MD-80 — our aircraft of choice, for a long time
MD-80 — our aircraft of choice, for a long time @ Operating 51 MD-80s EBITDA/ Aircraft — Avg age - 33k cycles Simm — Avg utilization — 1k cycles/yr $36 - Certificated to 60k cycles $35 @ Purchase for ~ $3.5m — Purchase price + induction & Still operated at DAL & AMR $25 - DAL-117 AC (41k cycles) — A
Slide 6: Nationwide footprint
Nationwide footprint Projected through July 31, 2011 164 routes, 51 operating aircraft ll we 63 small cities, 12 leisure destinations @llegian
Slide 7: Minimal head to head mainline competition
Minimal head to head mainline competition Other airlines view us as an annoyance, not a threat 160 155
Slide 8: Best pre-tax margins
Best pre-tax margins 250% aust ane RYAAY RYAAY not ot aust 150% ax wy aust Auk RYAAY 100% 0 AK u 7 50% me jouw a jew 00% . : : sox jew AK RYAAY 100% 2007 2008 2009 2010 a1 ‘Normal” Runaway Recession Recovery Runaway oil Gil Avg AC in period 28 36 43 49 51 System fuel price $2.30 $2.98 $1.76 $2.30 $2
Slide 9: Revenue model
Revenue model ™@ Scheduled service Air fare from small cities to leisure destinations $446m LTM @ Ancillary air Unbundled air product $172m LTM @ Ancillary 3rd party Hotels, rental cars $26m net revenue LTM @ Fixed fee Charter flying Total revenue $600 $500 $400 $300 4 $200 $504 $95 2008 scheduled R
Slide 10: Ancillary — air related
Ancillary — air related Checked bag ($15 - $30) ™@ Convenience fee ($15) ® Call-center booking fee ($15) Assigned seat ($6 - $35) Priority boarding ($10) Trip flex ($8) On-board sales $32 $30 $22 Ancillary air rev per scheduled Passenger $31.38 $30.24 2008 2009 2010 ait
Slide 11: Ancillary — third party
Ancillary — third party Third party rev per scheduled @ Bundled vacation package $5.00 passenger offers (opaque pricing) $4.84 - Hotels, car rentals, show 9475 tickets @ Very high margins 9450 — 28% of LTM pre-tax $434 income — $93m gross revenue LTM $425 @ Wholesale price for hotel & g400 4.01 car,
Slide 12: Our website is our store front
Our website is our store front Travel ls our deal: rears 20mm unique visitors (last . 42 months) Paina iacstent 33% new visits 6.5 average page views Over 5.5 min on site Completed usability testing Ficsbook Sma [REARS EV ALLEGAN MED] CRM strategy 89% of 2010 sales were through the site allegiant ad
Slide 13: Excellent cost discipline - CASM
Excellent cost discipline - CASM Total cost/ASM (CASM) Total cost ex fue/ASM (CASM ex) vs stage length Z vs stage length 12 1 ts * Ako 1.5 Sie 75 * uve u 1 ft 7, 2 g 88 2105 103 5 BLU g 3 oe <5 = 10 z 3 36 3 95 o4 . 2 3 * aLeT bss . 5.2 as 5 * alot . 45 800 900 1,000 1,100 1,200 800 900 © 1,000 4,10
Slide 14: Structural cost advantage
Structural cost advantage @ Low aircraft acquisition costs @ Simple product @ Cost-based scheduling — aircraft bases — Out and back — No crew overnights @ Labor efficiencies — 32 FTEs per aircraft @ Closed distribution @ Small cities — Lower airport costs — Lower marketing costs
Slide 15: Low cost drivers
Low cost drivers LTM Q111 cost per passenger Total Allegiant = $98 Southwest = $129 JetBlue = $145 28 | $02 other —$75 $18 —$68 eg | 7 — sit $9 | $14 Aircraft ae —$70 a ~$61 M4 ‘$61 | ALGT Luv JBLU mFuel “Ownership “Maintenance mLabor © Other Seman faltensandonetine cages we allegiant "Travel is our
Slide 16: Fuel hedging
Fuel hedging @ We are 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 @ No liquidity or balance s
Slide 17: Aggressive capacity management
Aggressive capacity management ‘Avg. daily scheduled fights by month‘ 16000 2010 140,00, can fuel price 100,00, 8000 6000 4000 Jan Feb Mar Ape May un Jul Alg=Sep Oct, Nov. Dee an 7 a a ot ane (1) Projected schedules through October 2011 allegiant "Travel is our deal
Slide 18: High fuel prices — we have been here before
High fuel prices — we have been here before Q1 08 Qi % change System ASMs (billions) 1.27 1.62 28% Average AC 34.5, $1.0 48% Avg fare — scheduled service $87.00 $89.00 2% Avg fare - total $112.74 $125.22 11% Pre-tax margin 11.0% 14.1% om $250 40) $38 $300 $2862.87 30 $27 $2.50 2B $2.00 $19 2 315 $1.
Slide 19: MD-80 network growth
MD-80 network growth ® Currently analyzing/negotiating — 50 new routes, 30 new small cities @ International cities as origins — Small cities in Mexico and Canada to Las Vegas, Orlando @ International vacation destinations — Caribbean, Mexico m@ 166 seat —- Adding 16 seats by eliminating monuments —
Slide 20: Fleet
757 fleet @ Contracted to purchase 6 757 aircraft — Have completed purchase on 4 aircraft — Financed $21mm on 3 aircraft — Expect to purchase remaining 2 in Q4 2011 @ Leased 3 aircraft to European operators — Expected return from lease in Q3 2012 — Should receive between $15 - $18m over life of 3 le
Slide 21: Fleet and Hawaii
757 fleet and Hawaii @ Anticipating Hawaii service in 2H 2012 @ Initial request to FAA — simultaneous approval — 757 on certificate — Flag status (needed for Hawaii) — ETOPS 180 (needed for Hawaii) @ ETOPS application — Operate 757 in domestic mainland, non-ETOPS flying — After several months of ope
Slide 22: Projected growth — scheduled ASMs
Projected growth — scheduled ASMs m@ FY 2011 ~Oto +4% — 51 operating aircraft through the year - 166 seat and 757 aircraft begin to operate 2H 11 m FY 2012 ~ +18 to 20% — 166 seat upgrade completed Q4 12 - 4 additional MD-80s Q4 12 (in storage today) — 6757 operating to Hawaii 2H 12 m FY 2013 ~ +17
Slide 23: Guidance
Guidance @ Q2 11 PRASM +22 to 24% ™@ 51 MD-80s operating in Q2 11 B® Schedule currently selling through November 2011 @ 4 aircraft in 166 induction lines B 4 aircraft in storage - can react to opportunities quickly 2"4 Quarter 2011 3°4 Quarter 2011 System departures (4) to 0% (7) to (3)% System ASMs
Slide 24: Appendix
Appendix allegiant.
Slide 25: GAAP reconciliation
GAAP reconciliation EBITDA calculations mm Liat — 2010 = 200820082007 Netincome 603657 730 3540 315 +Provision for Income Taxes 346878 442 198 19.2 +Other Expenses 15 13 16 7 36 +Depreciation and Amortization 362 350 226 35 160 =EBITDA 1926 1996 «= 1518 «79.43. Total debt 1438 (28.4 458 9 64T 72.4 7
Slide 26: GAAP reconciliation
GAAP reconciliation Return on equity Smm uma 2010 © 2009 2008 2007 Net Income (mn) 60.3 657 763 4 315 Total shareholders equity ($m) 294.9 2977 292.0 233.9 2103 Return on equity 20% 22% 29% 16% 1% alle
Slide 27: GAAP reconciliation
GAAP reconciliation Free cash flow calculations mm. um att 2010 2008 2008 Net income 603 657 763 364 + Provision for income tax 346 376 442 198 + Other expenses 15 13 18 7 +Depreciation & Amortization 362 36.0 296 235 EBITDA 1826 139.6 1518 79.4 -Capital Expenditures 950 98.5 an 530 FCF 375 att 1202
Slide 28: GAAP reconciliation
GAAP reconciliation Return on capital employed calculatio! smm. Lm ait 2010 2009 2008 + Net income 003 657 763 36.4 + Income tax 346 378 442 198 + Interest expense 26 25 47 54 + Interest income. (1.0) (1.2) (2.5) (47) eT 96.4 10.68 1227 559 + Interest income 190 12 25 47 Tax rate 36.7% 36.4% 36.2% 3
Slide 29: History
History @ Current management took control June 2001 m@ MD-80s @ Hotel packages since 2002 @ Pioneered US unbundled airline product starting in 2003 @ Profitable 2 quarters of 2002, every quarter since 2003 ® Disciplined, consistent growth 2002-2003, oC 20S 2200702 ONS ONTE (20128 wAdditions YE Arcra
Slide 30: Small cities, leisure
Small cities, leisure @ Low prices stimulate leisure travel @ Small, underserved (and sometimes un-served) markets @ Value proposition — Non-stop — Local airport (avoid long drives, long lines, hassles) — Big, comfortable airplane vs. small, cramped airplane — Low, low fares — Bundled vacation packa
Slide 31: Our customers
Our customers How favorable do you view Allegiant(2) @ Demographics) 100% — Mean income > $104k 80% — 75% married 80% 7 — Mean age = 49 me - 86% own home we - 75% employed ~ - 54% professional ony 30% 4 ™ Our customers consider us we — Reliable 10% — Trustworthy 0% - Agood value Satisfaction Very fa
Slide 32: Pricing
Pricing m@ We manage our network for a target load factor @ Lock down one variable — load factor — Will run +/- 90%; have done so for 11 consecutive quarters ™@ Manage capacity to solve for price @ High load factor enables — Ancillary revenue — Lower cost per pax
Slide 33: Unit revenue gains with growth
Unit revenue gains with growth 320% 25% 23.8% 20% | 18.5% 15% | 138% 13.9% 15% 10% | 1% 5% 5% or 0% : : | H 7 21% neiaa| so 40% 40% 10% Dec-10 Janet Feb-11 Mare 11 Aprett 22011 03.2011 mScheduled ASM growth = PRASM growth 02-2011 & 03-2011 scheduled ASM growth is midpoint of guided rang ‘Api 2011 PR
Slide 34: 3rd party initiatives
3" 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 — Improve car module we
Slide 35: Growth and pre-tax margin vs fuel
Growth and pre-tax margin vs fuel 01-2008 02-2008 03.2008 04-2008 01-2008 02.2009 03-2008 04-2008 1.2010 2.2010 63.2010 04.2010 1-201 Scheduled ASMe growth —=P-RASM growth = = System fuel price growth _— allegiant_,
Slide 36: Capacity growth
Capacity growth on Year over year change in scheduled ASMs 5% 2% 24% 17% 15% 14% 14% 10% 9% 6% 3% i 3% 3% ox 5% 4% 7 10% 8% 0% 15% 13% Tet@tr2010 2nd OW 2010 3rd OA ZID-—Mh OAIOID-— tet WONT. 2nd W211. aed GH DIT Total scheduled ASM growth mSame store ASM growth ‘ASMs - available seat mils Scheduled
Slide 37: 166 seat project economics
166 seat project economics Revenue (actuals LTM Q111) Average scheduled fare Average ancillary fare Total scheduled fare Assumptions 75% load factor (16 x .75) $ per pax fuel ($3.11 gal x 40 gal/dept) $ per pax non fuel (inflight, D&A, marketing, etc.) Total marginal cost per pax Departures/AC/year
Slide 38: Managed fuel efficiency
Managed fuel efficiency LTM Q111 fuel gallons per passenger Py JBLU 20 388 ALK B19 195 i ALGT @t60 seats i "79 ate ° 617 ALGT @166 seats ‘es ° "uu 16 ie 15 800 900 1,000 1,100 1,200 ‘Source: Company flngs Average stage length (miles) ALK ie mainline statisies, LUVis average length of passenger haul
Slide 39: Labor costs vs peers
Labor costs vs peers Labor cost per passenger ~ LTM Q111 45 0 35 20 25 20 1 10 $42 $37 $19 Allegiant Jetblue Southwest Source: company flings Employees are fulltime equivalents 10 Employees per aircraft - Q111 70 64 32 Allegiant ‘Southwest sie’ allegiant "Travel is our deal
Slide 40: Credit metrics
Credit metrics Return on capital employed 25.0% 20% | 185% 17.6% "I [ Is 7 2009 2010 LTMartt LUVLT™ ant Interest coverage 60 554K sey 50 | “ 37.2% aT ae 20082010 LIMatiT LUVLTM ant LUV= Souttovest ines, based on published information Return on equity 40% 23.0% ao 223% 204% 20% 10% 0% 2009 © 2010 LTM
Slide 41: 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 @ Kurt Carpenter — VP