Allegiant Travel Company · NASDAQ:ALGT
Allegiant Travel — Investor Presentation (September 2007)
23 slides from Allegiant Travel's investor presentation, Sep 26, 2007
Slide 1: Management Presentation September 2007
Management Presentation September 2007
Slide 2: Notice on Forward Looking Statements
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 and
Slide 3: ALGT Highlights
ALGT Highlights Unwanted customers, cities & assets Leisure customers Small cities MD-80s Unique product approach – ancillary revenues Minimal competition Pricing power At YE2007: At least 32 MD-80 aircraft in operation Five destinations (Vegas, Orlando, St. Pete, Phoenix, Ft. Lauderdale) 55 small c
Slide 4: Revenue & Profitability History
Revenue & Profitability History Revenues Operating Profit (and Fuel Prices) Fuel Price (right scale) $mm $mm 2002 to YE2Q07 CAGR: 78% $22 $50 $90 $133 $119 $243 $173 0 50 100 150 200 250 300 2002 2003 2004 2005 1H06 2006 1H07 ($1) $3 $6 $9 $12 $23 $28 -5 0 5 10 15 20 25 30 2002 2003 2004 2005 1H06 2
Slide 5: Three Years After Restart
Three Years After Restart YE 2004 One destination, 13 small cities 13 routes Nine MD-80 aircraft in operation
Slide 6: National Footprint
National Footprint YE 2007 Five destinations, 55 small cities 109 routes (including seasonal) At least 32 MD-80 aircraft in operation Potential: At least 100 small cities = 100M+ people
Slide 7: Economic Turbulence
Economic Turbulence Traffic originates in small cities: Nevada, Arizona, Florida problems not an issue To date, no sign of distress in the most affected states Performance up strongly year/year in, for instance, Stockton Where performance worse year/year, other clear explanations (Detroit competitio
Slide 8: Economic Turbulence: Slowdown Prospects
Economic Turbulence In a recession: Hotels reduce prices Reduce capacity Spread capacity over more markets (new markets already undersupplied) If necessary, ground aircraft Fuel prices may drop If fuel prices stay high/increase: Reduce/eliminate long-haul flying, add more short-haul flights Reduce c
Slide 9: Growth Potential
Growth Potential Believe five existing destinations will support doubling of scheduled fleet YE2007: 26.5 scheduled aircraft - 14.5 Vegas - 6 Orlando - 2 St. Pete - 2 Phoenix (new) - 2 Ft Lauderdale (new) 2.5 in Charter, 3 Spares One more big US destination (at least), Caribbean, Mexico At least 45
Slide 10: Unique, Defensible Business Model
Unique, Defensible Business Model Traditional Airline Approach High frequency Business Multiple intermediaries Hub, regional aircraft Frills Bundled product Low frequency Leisure Sell direct Nonstop, full-size aircraft No frills Unbundled product Air travel Vacation
Slide 11: Minimal Direct Competition
Minimal Direct Competition Delta: Knoxville Greenville/ Spartanburg Tri-Cities, TN Greensboro Huntsville US Airways: Colorado Springs Medford Eugene US Airways/United: Fresno Head-to-Head Competition on Only Nine of 109 Routes by YE07 Competition pre-existed on all nine routes To date, it is rare fo
Slide 12: Ancillary Revenue
Ancillary Revenue Product innovation driving high margin revenue Voluntary extra passenger spend > $20 net per passenger segment Traditional airline product unbundling Third party product sales Key advantage: custom reservation system Legacy majors limited by multiple systems Even low-cost carriers
Slide 13: Ancillary Products
Ancillary Products Third Party Products Hotel accommodations Car rentals Shuttle bus transfers Show tickets Theme park tickets VIP night club access Unbundling the traditional airline product Convenience fee ($8.50pp, use of website) Assigned seat ($11pp, includes priority boarding) Checked bag ($3+
Slide 14: Growing Ancillary Revenue
Growing Ancillary Revenue Ancillary Revenue as a % of Scheduled Service Revenue YE2Q07 Ancillary Revenue as % of Scheduled Service Revenue (1) Source: public filings of the respective companies. Includes AAI, FRNT, JBLU, LCC, and LUV Other Revenues as a percentage of Air Revenue. 1.5% 3.9% 6.8% 12.3
Slide 15: Control the Customer
Control the Customer www.allegiantair.com Leverage direct relationship with customers Maximize e-commerce opportunities August 07 unique visitors 940K+, up 81% year/year Instantly relevant to leisure customers in our small cities Accounts for ~90% of sales Generates email lists for future low-cost c
Slide 16: Low Operating Cost – Simplicity Critical
Low Operating Cost – Simplicity Critical Key Drivers: Cost-driven schedule Simple product, no connections Comprehensive automation Direct distribution, 88% web bookings No CRS / GDS – Expedia, etc. Fee to book with agent No 800 number Highly productive work force Low cost aircraft (3) YE2Q07 CASM Ex
Slide 17: YE2Q07 CASM Breakdown
YE2Q07 CASM Breakdown (¢) (2) (1) 7.9 8.1 9.5 9.5 11.1 11.1 Source: public filings of the respective companies. Totals may not foot to components due to rounding. (1) Includes ALK, AMR, CAL and UAUA. (2) Excludes the effects of fuel hedging. (3) Ownership includes Depreciation and Amortization plus
Slide 18: Lowest Costs Despite Low Aircraft Utilization
Lowest Costs Despite Low Aircraft Utilization Daily Utilization (hrs) CASM (¢) Daily Utilization (hrs) Source: public filings of the respective companies, US DOT via www.APGDAT.com, Southwest for YE1Q07 Low Aircraft Utilization YE2Q07 Aircraft Utilization (Block Hrs/Day) (1) 12.7 12.0 11.2 11.0 10.9
Slide 19: Very Productive Labor
Very Productive Labor (¢) Employees/Aircraft Source: public filings of the respective companies. (1) Includes ALK, AMR, CAL and UAUA. (2) Airtran as of December 31, 2006. (1) (1) (2) YE2Q07 Labor CASM June 30, 2007 Employees/Aircraft 3.2 3.2 2.8 2.0 1.3 2.0 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 Allegiant
Slide 20: Expanding Operating Margins
Expanding Operating Margins (2) Allegiant Operating Margins YE2Q07 Operating Margins (1) (1) Source: public filings of the respective companies. (2) Includes ALK, AMR, CAL and UAUA. YE2Q07 YE2Q06 Southwest Hedge (6.1pp) 13.0% 9.0% 6.7% 4.3% 3.9% 2.9% (1.6%) (5%) 0% 5% 10% 15% 20% Allegiant Southwest
Slide 21: Exceptionally Strong Balance Sheet
Exceptionally Strong Balance Sheet Source: public filings of Southwest (1) Includes $39.5mm in Redeemable Convertible Preferred Shares (2) Adjusted for 7x LTM Rent Expense of $157mm (LUV), $3.2mm (ALGT June 30, 2007) and $5.9mm (ALGT Sep 30, 2006) ($ in millions) Comparable to Southwest in Strength
Slide 22: Proven Management Team
Proven Management Team Name Title Years in Industry Prior Experience Maury Gallagher President & CEO 2 8 Ponder Harrison Managing Director – Marketing & Sales 2 2 Andrew Levy Managing Director – Planning 10 Mike Baxter Senior Vice President of Operations 43
Slide 23: Appendix: The Best Defense
ALGT passengers essentially 100% leisure Competitors generally ignore us, our fares and our customers – roughly speaking, we take leisure customers, they take business traffic Appendix: The Best Defense We believe potential competitors find our customers unattractive 24 Las Vegas Allegiant markets w
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