Allegiant Travel Company · NASDAQ:ALGT
Allegiant Travel — Investor Presentation (March 2011)
42 slides from Allegiant Travel's investor presentation, Mar 7, 2011
Slide 1: Management Presentation
Management Presentation March 2011 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 MEceTDA® I Freecash flow 1) Pre-tax Profit [~] Pre-tax Margin @ Highly resilient and profitable (mm) — 15.6% LTM pre-tax margin eu 15.6% - Profitable last 32 quarters () ie Ents ai — $140mm LTM EBITDA ?) 190 $121 120 120 ™@ Very strong balance sheet $103 100 — $150m
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 — Avg age —- 32k cycles — Avg utilization — 1k cycles/yr — Certificated to 60k cycles @ Purchase for ~ $3.5m — Purchase price + induction H@ Still operated at DAL & AMR — DAL-117 AC (41k cycles) — AMR - 224 AC (29k cycles) @ DC-9
Slide 6: Nationwide footprint
Nationwide footprint ene Falls ia Bitings McAllei Yellow dots — leisure destinations Blue dots — small cities Projected through March 31, 2011 wee 164 routes, 51 operating aircraft we a 62 small cities, 11 leisure destinations allegiant_
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 5 155
Slide 8: Best pre-tax margins
Best pre-tax margins 25.0% ALGT RYAAYO) 20.0%. 15.0% 10.0% 5.0% JBLUO 0.0% + 6.0% ALK RYAAY 10.0% 2007 2008 2009 2010 “Normal” Runaway Recession Recovery Oil Avg ACin period 28 36 43 49 ‘System fuel price $2.30 $2.98 $1.76 $2.30 (1) RYAAY = Ryanair ; LUV = Southwest Airlines; JBLU = JetBlue Airways;
Slide 9: Credit metrics
Credit metrics Return on capital employed 25% 2008 2009 2010 = =2010LUV Interest coverage 60 55.4% Return on equity 29% 2008 2009 2010 Debt/ EBITDA 2010 LUV 50 4 i 37.2x 3 29% 30 2 204 147% 14x 10 | as ' al 04x 03x 0 |_| 0 = = 2008 ©=—- 2008S 2010 2010LUV 2008 = 2009S 2010 -2010LUV LUV= Southwest Ai
Slide 10: Revenue model
Revenue model Revenue growth ($mm) @ Scheduled service Total venue $364 $504 $558 $664 — Air fare from small cities to aa leisure destinations — $428m in 2010 $600 @ Ancillary air $500 — Unbundled air product — $170m in 2010 4400 @ Ancillary 3rd party $300 - Hotels, rental cars — $24m net revenue in
Slide 11: Ancillary air revenue
Ancillary air revenue Ancillary air rev per scheduled ™ Checked bag ($15 - $30) $36 passenger ™@ Convenience fee ($15) $30.24 $30 $29.07 @ Call-center booking fee ($1 5) $05 $24.52 @ Assigned seat ($6 - $35) ® Priority boarding ($10) $20 Bm Trip flex ($8) os [| @ On-board sales $10 2007 2008 2009 20
Slide 12: Third party ancillary revenue
Third party ancillary revenue @ Bundled vacation package $4.50 offers (opaque pricing) — Hotels, car rentals, show tickets @ Very high margins — 24% of 2010 pre-tax income — $89m gross revenue in 2010 $4.00 @ Wholesale price for hotel & car, we manage margin Third party rev per scheduled passenger $
Slide 13: Our website is our store front
Our website is our store front scour Fgh and Vacation Fahages | Tavs Ou Dea | Afar Hoel Pakage rom Aegan allegiant Travel i 25 “gi wwe ™: ~—- ne = @ 19mm unique visitors (last 12 months) Finda better hotel deal and : your next flight’s free*! 32% new visits That's our new low-price pledge, F M@ 6.5
Slide 14: Excellent cost discipline - CASM
Excellent cost discipline - CASM Total cost/ASM (CASM) Total cost ex fuel/ASM (CASM ex) vs stage length vs stage length 11.55 8) 79 11.3 * Luv 9 78 * ALK 11.0 Luv 1 oie 75 g 2 105 B 7 2 g * elu zB 10 2 99 565 S JBLU 3 5 95- 36 : z F 94 + 89 355 ALGT £ 5.1 85 5 * ger 8 45 : : 1 500 750 1,000 1,250 50
Slide 15: Structural cost advantage
Structural cost advantage @ Low aircraft acquisition costs @ Simple product —@ Cost-based scheduling — aircraft bases — Outand back — Nocrew overnights @ Labor efficiencies — 31 FTEs per aircraft — Closed distribution @ Small cities — Lower airport costs — Lower marketing costs we llegi —_— allegian
Slide 16: Low cost drivers
Low cost drivers 2010 cost per passenger Total Allegiant= $95 Southwest = $126 JetBlue =$142 Other $7 | $14 Aircraft $67 $58 " ag ALGT JBLU mFuel © Ownership © Maintenance sLabor © Other Source: Company flings Ownership includes depreciation & amortization + aircraft rent we Other excludes special i
Slide 17: Balance sheet management
Balance sheet management $mm. $350 $08.0 $300 $25.0 $2507 $2315 $200 $98.5 149 150.3 $160 $307 $53.8 | i) $100 $177 $60 $0 Unrestricted Operating Pre-payment — Capital Cash Stock Net Debt Other Unrestricted Cash & CashFlow toHarrahs Expenditures Dividend Repurchase Retired Cash & Equivalents Equival
Slide 18: Fuel hedging
Fuel hedging @ Weare 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 B No liquidity or balance sh
Slide 19: Aggressive capacity management
Aggressive capacity management Avg. daily scheduled flights by month" 160.00 140.00 July 2008 120.00 high fuel price 100.00 80.00 60.00 40.00 Jan Feb = Mar Apr = May = Jun Jul,» Aug Sep Oct = Nov = Dec. Jan allegiant ‘Travel is our deal. 2007 2008 2009 2010 201 (1) Projected schedules through July 2
Slide 20: MD-80 network growth
MD-80 network growth @ Currently analyzing/negotiating — 50 new routes — 30 new small cities @ 166 seat — Adding 16 seats by eliminating monuments — Will have a 30 inch seat pitch (standard pitch in industry) — Start seeing larger aircraft in 2H 2011 — Completion mid 2012 @ 8 aircraft in storage — W
Slide 21: fleet
757 fleet @ Aircraft 1&2 — Purchased and subsequently financed ($14mm) — Target early Summer 2011 for 1 aircraft domestic flying — Lease second aircraft to a European operator + Expected return from lease Summer 2012 @ Aircraft3 & 4 — #8 purchased Feb 2011, #4 purchased Mar 2011 — Lease through Summ
Slide 22: fleet and Hawaii
757 fleet and Hawaii @ Hawaii is now a 2012 goal @ 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 operational expe
Slide 23: 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
Slide 24: Projected growth — scheduled ASMs
Projected growth — scheduled ASMs @ FY 2011~+1to3% — 51 operating aircraft through the year — 166 seat aircraft begin to operate 2H 11 @ FY 2012~+18to 20% — 166 seat upgrade completed Q4 12 — 4additional MD-80s Q4 12 (in storage today) — 6757 operating to Hawaii 2H 12 @ FY 2013~+17 to 19% — Fullyear
Slide 25: 1st half 2011 guidance
1% half 2011 guidance @ Q111PRASM +9to 11% @ Not growing aircraft in 1H 2011 @ Schedule currently selling through August 16th 2011 @ 8 aircraft in storage — can react to opportunities quickly 4st Quarter 2011 2nd Quarter 2011 System departures +2 to 4% (2) to +2% System ASMs +2 to 4% (2) to +2% Sche
Slide 26: Appendix
Appendix we _—— allegiant
Slide 27: GAAP reconciliation
GAAP reconciliation EBITDA calculations $mm 2010 2009 2008 2007 Net Income 657 76.3 354 315 +Provision for Income Taxes 376 44.2 19.8 19:2 +Other Expenses 13 16 7 3.6 +Depreciation and Amortization 35.0 29.6 235 16.0 =EBITDA 139.6 1518 79.4 63.1 Total debt 28.1 45.8 647 72.1 7x annual rent 12.0 13.5
Slide 28: GAAP reconciliation
GAAP reconciliation Returt $mm 2010 2009 2008 2007 Net Income ($mm) 65.7 76.3 354 a15 Total shareholders equity ($m) 2977 292.0 223-5: 210.3 Return on equity 22% 29% 16% 17%
Slide 29: GAAP reconciliation
GAAP reconciliation Free cash flow calculations $mm Operating Income +Depreciation & Amortization -Capital Expenditures =FCF Diluted Shares (mm) FCF Diluted Share 2009 122.3 29.6 317 120.2 20.3 $5.93 2008 2007 55.8 444 235 16.0 53.0 424 263 179 205 205 $1.28 $0.87 allegia nt ‘Travel is our deal.
Slide 30: GAAP reconciliation
GAAP reconciliation Return on capital employed calculatio $mm 2010 2009 2008 +Net income 65.7 763 364 + Income tax 376 442 198 + Interest expense 25 AT 54 + Interest income: (1.2) (2.5) (47) EBIT 104.6 122.7 55.9 + Interest income 12 25 AT Tax rate 36.7% 36.2% 35.9% Numerator 67.0 799 38.9 Total ass
Slide 31: History
History @ Current management took control June 2001 & 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 46 5 B 2 24 a 7 7 9 8 7 a 8 6 8 10 a3 4 2 mill 5 —— —_ 2002 20
Slide 32: 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 33: Our customers
Our customers How favorable do you view Allegiant(2) @ Demographics” 100% — Mean income > $104k 90% — 75% married ae 70% — Mean age = 49 60% — 86% own home 50% - 75% employed _ - 54% professional 30% @ Ourcustomers consider us 20% — Reliable 10% 0% + — Trustworthy — Agood value Satisfaction = Very f
Slide 34: Capacity growth
Capacity growth Year over year change in scheduled ASMs 30% 25% 24% ia 17% 416% 4% 14% 10% 9% 6% 6% 5% 4% 3% 4% 39 0% “a 2% 10% -8% 15% “13% (st Qtr 2010 2nd Qtr 2010 3rd Qtr 2010 4th Otr 2010 Ast Qtr 2011 2nd Gtr 2011 OPrevious guidance (Jan 10, 2011) @ Total scheduled ASM growth = Same store ASM g
Slide 35: Unit revenue gains with growth
Unit revenue gains with growth 16% % 13.9% 14% 13.8% 12% 11.5% 10% aa 77% 6% 55% 4% 2% 1.0% 0% || 7 [1 -2.0% -2% -A% Dec-10 Jane Feb-11 Mar-11 a2-2011 allegiant ‘Travel is our deal. Scheduled ASM growth = = PRASM growth 02-2011 scheduled ASM growth is midpoint of guided range Feb 2011 PRASM growth i
Slide 36: Profitable growth
Profitable growth 2007 2010 % change System ASMs (billions) 3.87 6.25 62% Average AC 28 49 76% Total cities 58 73 26% Pre-tax margin 14% 16% gmm 160 $3.50 $3.32 $140 140 - $3.00 $103 1 $2.50 $2.30$2.30 ia $63 60 $61 $2100 $1.53 4 $1.50 20 04 $1.00 + eBDa” Pre-tax income EPS System fuel price (1) See
Slide 37: seat project economics
166 seat project economics Revenue (actuals 2010) Average scheduled fare Average ancillary fare Total scheduled fare Assumptions 75% load factor (16 x .75) $ per pax fuel ($3.03 gal x 40 gal/dept) $ per pax non fuel (inflight, D&A, marketing, etc.) Total marginal cost per pax Departures/AC/year (201
Slide 38: Pricing
Pricing m@ VVe manage our network for a target load factor m@ Lock down one variable — load factor — Willrun+/- 90%; have done so for 11 consecutive quarters ™@ Manage capacity to solve for price @ High load factor enables — Ancillary revenue — Lower cost per pax we a allegiant_,
Slide 39: 3rd party initiatives
3'4 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 4 a — Improve car module allegiant
Slide 40: Managed fuel efficiency
Managed fuel efficiency 2010 fuel gallons per passenger 21 JBLU 20 » 200 , ALK “19.4 @ 19 3 5 H , ALGT 2 2% 18.0 £ 2 & 17 , ALGT @166 seat , Luv 16.6 1 * 163 15 600 700 800 900 41,000 41,100 41,200 Average stage length (miles) 166 seat estimate is based on company assumptions allegia t
Slide 41: Growth and pre-tax margin vs fuel
Growth and pre-tax margin vs fuel 60% 40% 20% 0% -20% -40% eo -60% Q1-2008 2-208 03-2008 04-2008 @1-2009 02-2009 03-2009 @4.2009 1-2010 22010 82010 42010 —Scheduled ASMs growth ———P-RASM growth — — System fuel price growth allegiant’
Slide 42: Labor costs vs peers
Labor costs vs peers Labor cost per passenger — 2010 Employees per aircraft —- Q410 45 $42 80 40 $37 70 70 s 64 60 30 50 25 2 $18 0 32 15 30 10 20 5 10 o it) Allegiant Jetblue Southwest Allegiant Southwest JetBlue Source: company filings we Employees are full time equivalents alle la tt
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