Alaska Air Group, Inc. · NYSE:ALK
Alaska Air — Merger or Acquisition (December 2023)
27 slides from Alaska Air's merger presentation, Dec 4, 2023
Slide 1: Investor Presentation
INVESTOR PRESENTATION DECEMBER 3, 2023 =)%a)
Slide 2: Safe Harbor for Forward-Looking Statements
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS Thi \icati i i ject to the safe ion provided by relating to the expected timing ofthe closing ofthe pending acquisition (the “Transaction’) of Hawaiian cn Inc. CHawtin lan) by Alaska Air eur Inc. ("Alaska Air Group” , considerations taken s of closing of th
Slide 3: Additional Disclaimers
ADDITIONAL DISCLAIMERS Important Additional Information and Where to Find It e i y it itati Transaction. Daniel W. Akins, Wendy A. Beck, Earl E. Fry, Lawrence S. Hersht i Il of the Transaction Please i i i Aki caption “Security ip ery hs i 2 4 & acne eG oe a evallable ot a. y Mi pr eckfolder i Inthe
Slide 4: Today's Presenters
TODAY'S PRESENTERS oF Miss, Ye PETER INGRAM President & Chief Executive Officer Hawaiian Airlines BEN MINICUCCI SHANE TACKETT President & Chief Executive Officer Executive Vice President, Alaska Airlines Finance & Chief Financial Officer Alaska Airlines
Slide 5: Agenda
AGENDA TRANSACTION STRATEGIC VALUE COMMITMENT SUMMARY RATIONALE CREATION TO HAWAI'I
Slide 6: Combining Two Carriers with Strong Histories, Cultures and Values
90+ year legacies of service, including to air travel dependent communities a)Vay COMBINING TWO CARRIERS WITH STRONG HISTORIES, CULTURES AND VALUES customer service, hospitality, and best-in-class operations Rooted in local communities and local cultures |: send ECS Aligned values of care, excellenc
Slide 7: Transaction Summary
TRANSACTION SUMMARY TRANSACTION OVERVIEW | FINANCIAL TERMS | CLOSING CONSIDERATIONS = $18 per share all-cash paid to Hawaiian m Customary closing conditions, including regulatory 7 ion equity clearance and Hawaiian shareholder approval value of $1.0B m Hawaiian shareholder vote expected in 1Q 2024 =
Slide 8: Compelling Transaction Rationale Accelerates Existing Strategy and Drives Value Creation
TRANSACTION SUMMARY COMPELLING TRANSACTION RATIONALE ACCELERATES EXISTING STRATEGY AND DRIVES VALUE CREATION BETTER, BROADER | LEADERSHIP IN ENHANCED ROBUST FINANCIAL | IMPROVED SHARED NETWORK PREMIUM MARKET | MARGIN PROFILE | RETURNS CONSUMER CHOICE | VALUES Adds Becomes leader in padi ition of Del
Slide 9: Strategic Rationale
NEED DESIGN FILES TO CHANGE COLOR
Slide 10: Enhances Our West Coast Network with Another Hub
STRATEGIC RATIONALE ENHANCES OU ANOTHER HUB SA Oe Seat Share ): 58% R WEST COAST NETWORK WITH IN A TOP-25 U.S. MARKET al Market Rank®: #8 Market Size ®: $7B+
Slide 11: Adds a Leading Position in the Highly Attractive Hawai'i Market
ADDS A LEADING POSITION IN THE STRATEGIC RATIONALE HIGHLY ATTRACTIVE HAWAI'I MARKET TOP GLOBAL LEISURE DESTINATION with $8B+ annual passenger revenue “) > §0+% HAWAI'I MARKET SHARE enables attractive hub economics STRONG MIX OF INTERNATIONAL TRAVELERS 9M+ annual visitors by air and most popular outb
Slide 12: Alaska + Hawaiian
Alaska + Hawaiian UA WN AA DL AS+HA UA WN DL AA
Slide 13: Creates Stronger Competitor to Network Carriers with Award-Winning Service
STRATEGIC RATIONALE CREATES STRONGER COMPETITOR TO NETWORK CARRIERS WITH AWARD-WINNING SERVICE HIGH-VALUE, LOW-FARE BRAND HAWAIIAN 9 TRAVEL+ i LONG-HAUL PREMIUM PRODUCT LEISURE SU trip: ONEWORLD© mT. ARLES BEST WAY TO TRAVEL THE BEST DOMESTIC EDITOR'S CHOICE AWARD — CONNECTING THE HAWAIIAN ISLANDS “
Slide 14: Alaska + Hawaiian by the Numbers
STRATEGIC RATIONALE ALASKA + HAWAIIAN BY THE NUMBERS Maska. HAWAIIAN AIRLINES. } REVENUE $10.4B $2.88 $13.1B (+27%) 2019 ADJ. EBITDAR'” $1.98 $0.68 §2DGss) ASMS 65.8B 20.0B 85.8B (+30%) DAILY DEPARTURES ~1,100 + ~240 = ~1,340 (+22%) PASSENGERS 2) 43.8M 10.9M 54.7M (+25%) ACTIVE LOYALTY MEMBERS 9.0M
Slide 15: Acquiring a Carrier with a Historical Track Record of Profitability at an Attractive Valuation
ACQUIRING A CARRIER WITH A HISTORICAL TRACK VALUE CREATION RECORD OF PROFITABILITY AT AN ATTRACTIVE VALUATION me STRONG REVENUE BASE WITH PROFIT UPSIDE... AT ATTRACTIVE TRANSACTION uals Adjusted action Enterprise Value / Last Twelve Months Reve $2.8 LTM 9/30/2023 Industry Average ® @€ 1M 9/30/2023 1
Slide 16: Generating Robust Financial Returns While Maintaining Balance Sheet Strength
GENERATING ROBUST FINANCIAL RETURNS WHILE “ MAINTAINING BALANCE SHEET STRENGTH EXPECTED TO BE ACCRETIVE NEAR-TERM... Adjusted Earnings Per Share (EPS) “ Accretion (%) +High-Teens % +High Single Digit % Within 2 Years 3+ Years mm Adjusted EPS wit Phasein® Return on Invested Capital (ROIC) % High-Teen
Slide 17: Combination Creates Substantial Value Creation
COMBINATION CREATES SUBSTANTIAL VALUE CREATION SYNERGY OPPORTUNITY HIGH CONFIDENCE IN ABILITY TO REALIZE SYNERGIES UPSIDE FROM OTHER OPPORTUNITIES BITDA Annual E Contribution = Accelerated Asia-Pacific travel recovery = New domestic pathways = International connection growth $110M A a = Co-brand car
Slide 18: Mostly Owned Fleet Provides Value Creation Flexibility and Net Equity Value
MOSTLY OWNED FLEET PROVIDES VALUE CREATION FLEXIBILITY AND NET EQUITY VALUE 40 OF 61” OPERATING AIRCRAFT ARE OWNED -WITH ABILITY TO TAILOR FUTURE GROWTH Current Hawaiian Fleet ® = A32Ineo fleet is young (4.8 years) and majority 2 14 10 owned 24 = Leased A330s are up for renewal in near term, providi
Slide 19: Commitment to Hawai'i: Committed to the Future of Hawai'i
COMMITMENT TO HAWAI'I COMMITTED TO THE FUTURE OF HAWAI'I = Retain and grow union = Combine and expand our = Carbon emissions reduction represented jobs in Hawai'i two airlines’ commitments, & path to net zero and work with local leaders =P ilot, flight er eed peo ea to build a vibrant future for att
Slide 20: Commitment to Hawai'i: Creating Value for All Stakeholders
COMMITMENT TO HAWAI'I CREATING VALUE FOR ALL STAKEHOLDERS 4s OUR PEOPLE Respect retained role as top local 1 7 As OUR GUESTS Sustains two highly-respected brands with represented jobs in Hawai 7 fi ‘to workforce development programs Competitive pay and benefits Stronger platform to compete and grow
Slide 21: Thank You
THANK YOU ff
Slide 22: Appendix
APPENDIX
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Slide 25: Valuation Is Very Attractive Relative to Recent Airline Transactions
VALUATION IS VERY ATTRACTIVE RELATIVE TO RECENT AIRLINE TRANSACTIONS ATTRACTIVE VALUATION ON REVENUE BASIS... ~-AND EBITDAR BASIS Transaction Enterprise Value / Last Twelve Months Revenue ” Transaction Enterprise Value / Last Twelve Months Adjusted EBITDAR ee Te Vs Sasi Fm Ya PTS Vin om Ya LTM 9/30/
Slide 26: Non-GAAP Reconciliations - Alaska
Non-GAAP Reconciliations - Alaska (in m GAAP Operating Income Adjusted for: Mark-to-market fuel hedge adjustments Depreciation & amortization Aircraft rent Twelve months ended December 31, 2019 $1,063 EBITDAR $1,855 Source: Company filings.
Slide 27: Non-GAAP Reconciliations - Hawaiian
Non-GAAP Reconciliations - Hawaiian Twelve months ended December 31, 2022 (in thousan 2023 2022 2019 Net Income (Loss) before Taxes ($200,812) ($230,931) ($293,849) $304,996 Depreciation & amortization 100,775 102,435, 136,169 158,906 Aircraft rent 80,827 77,987 103,846 118,904 Interest and amortiza
Alaska Air Group — Merger or Acquisition (December 2023) on 6ix