We are a leisure travel company focused on linking travelers in small cities
to world-class leisure destinations such as Las Vegas, Nevada, Orlando, Florida
and Tampa/St. Petersburg, Florida. We operate a low-cost passenger airline
marketed to leisure travelers in small cities, allowing us to sell air travel
both on a stand-alone basis and bundled with hotel rooms, rental cars and other
travel related services. Our route network, pricing philosophy, advertising and
diversified product offering built around relationships with premier leisure
companies are all intended to appeal to leisure travelers and make it attractive
for them to purchase air travel and related services from us.
Our business model provides for diversified revenue streams, which we
believe distinguishes us from other U.S. airlines and other travel companies.
º Scheduled service revenues currently consist of nonstop flights
between our leisure destinations and 45 small cities.
º Fixed fee contract revenues consist largely of fixed fee flying
agreements with affiliates of Harrah's Entertainment Inc. and Apple
Vacations West, Inc. that provide for a predictable revenue stream.
º Ancillary revenues are generated from the sale of hotel rooms, rental
cars, advance seat assignments, in-flight products and other items
sold in conjunction with our scheduled air service. We recognize our
ancillary revenues on a net basis, net of amounts paid to wholesale
providers, travel agent commissions and credit card processing fees.
Our business strategy has evolved as our experienced management team has
taken a different approach to the traditional way business has been conducted in
the airline industry. In contrast to the traditional airline strategy, we focus
primarily on the leisure traveler, provide low frequency nonstop service from
small cities in larger jet aircraft, sell direct to travelers, do not offer
connections, do not code-share, and provide amenities at a small charge to our
passengers. We have developed relationships with many premier leisure companies
to generate revenue beyond just air fares. We generated $11.55 of ancillary
revenue per scheduled service passenger in 2005 and $15.08 per scheduled service
passenger in the first nine months of 2006.
We provide scheduled air service to customers in 45 small cities and have
announced service from three additional small cities to commence in December
2006 and first quarter 2007. These 48 cities have an aggregate population of
over 50 million within a 50-mile radius of the airports in those cities. We have
identified at least 52 additional cities in the United States and Canada with
similar characteristics and where we do not presently have any arrangements for
service. These cities represent an estimated population of over 50 million
people we could potentially serve to our Las Vegas, Orlando and Tampa/St.
Our business model has allowed us to grow rapidly and to achieve attractive
rates of profitability, even during the present climate of high fuel costs. For
the year ended December 31, 2005, we had revenue of $132.5 million, representing
substantial growth of 46.6% over the year ended December 31, 2004, while
maintaining an operating margin of 6.4% which was higher than the U.S. legacy
carriers and U.S. low-cost carriers other than Southwest Airlines Co. We had
operating income of $6.1 million in 2004 and $8.5 million in 2005. Our net
income was $9.1 million in 2004 and $7.3 million in 2005, the decline
attributable to a substantially higher gain on fuel derivatives in 2004. In the
first nine months of 2006, we had revenue of $180.2 million, operating income of
$15.2 million and net income of $10.3 million, which was 94.9%, 134.3% and 33.7%
higher than the first nine months of 2005, respectively.
Our principal executive offices are located at 3301 N. Buffalo Drive, Suite
B-9 Las Vegas, Nevada 89129. Our telephone number is (702) 851-7300. Our
website's address is http://www.allegiantair.com.