Avantair, Inc. (AAIR)
21st Annual
Roth Capital Partners
OC Growth Stock Conference
February 17, 2009
SAFE HARBOR
This document contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended. All statements, other
than statements of historical fact, including, without limitation, statements
regarding Avantair’s financial position, business strategy, plans, and
Avantair’s management’s objectives and its future operations, and industry
conditions, are forward-looking statements. Although Avantair believes
that the expectations reflected in such forward-looking statements are
reasonable, Avantair can give no assurance that such expectations will
prove to be correct. Important factors that could cause actual results to
differ materially from Avantair’s expectations (“Cautionary Statements”)
include, without limitation, the effect of existing and future laws and
governmental regulations, the results of future financing efforts, and the
political and economic climate of the United States. All subsequent written
and oral forward-looking statements attributable to Avantair, or persons
acting on Avantair’s behalf, are expressly qualified in their entirety by the
Cautionary Statements.
2
INVESTMENT HIGHLIGHTS
Sole fractional provider of the Piaggio Avanti in North America -
the roomiest, quietest, safest and most fuel efficient aircraft with
the lowest operating cost in the light jet category
Compelling secular and economic drivers spurring demand for
lower-cost alternatives within the private aviation market
New innovative Axis program bridges the gap between the
financial commitment of a fractional share and charter cards
Business model offers clear path to sustainable profitability
3
EXPERIENCED MANAGEMENT TEAM
Steven F. Santo
Chief Executive Officer
Avantair Founder
Former Assistant District Attorney in NY
Former Managing Partner, Fields, Silver & Santo
Former CEO of Skyline Aviation, aircraft leasing company
Pilot for 20 years
Over 1,000 flight hours in the Piaggio Avanti
Richard Pytak
Chief Financial Officer
Former Treasurer at Gibraltar Industries
Former Senior Manager at PricewaterhouseCoopers
Kevin Beitzel
Chief Operating Officer
Former Executive VP of Maintenance and Operations
20 years experience in aviation industry
16 years with US Airways
Kevin V. McKamey
Executive Vice President
Avantair charter employee
20 years experience in aviation industry specifically in operations,
maintenance and servicing
Former manager of flight operations and sales support for Piaggio
America
Over 3,000 flight hours in the Piaggio Avanti
4
OUR BUSINESS
Fractional shares in Avanti aircraft offer an affordable private travel
option
Buy aircraft wholesale
Break them into 16 shares (50 hours of flying time)
Sell the shares retail
Aircraft available when customers need to travel
Provide flight operations and fleet maintenance for our customers
Generates recurring monthly maintenance and management fees with
each share sold
5-year agreement with annual CPI increases
Flight operations include scheduling, pilots and pilot training,
maintenance, flight tracking and repositioning
5
AVANTAIR PROGRAM SUMMARY
6
Avantair Fractional Ownership
Hourly Operating Cost:*
$2,633
(1/16th share)
Program Highlights:
One time acquisition cost; no
hourly cost
Customizable fractional share sizes
5 year term
No restricted travel days
Expanded Primary Service Area
42% lower operating cost per hour
than other fractional programs
AXIS Club Membership
By Avantair
Hourly Operating Cost:*
$3,725 - $4,440
Program Highlights:
One time membership fee
Tiered membership options to fit
customer travel needs
3 year term
No restricted travel days
Expanded Primary Service Area
Fractional conversion and
upgrade options available
Edge Time Card
Hourly Operating Cost:*
$4,945
(25 hour card)
Program Highlights:
All inclusive, one time cost
15 or 25 hour cards available
12 month term
Only 10 restricted travel days per
year
Expanded Primary Service Area
Conversion options available
* Includes FET and fuel
NEW AXIS CLUB MEMBERSHIP PROGRAM
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Hybrid program, designed to bridge the gap between the financial commitment of a fractional share and charter cards
Offers access to blocks of flight hours at a locked-in rate, subject to annual CPI increase
One time membership fee starting as low as $75,000
3 year membership allows customers the opportunity to purchase blocks of 25 hours for $80,000 or less
Fractional conversion and upgrade options available
1 Source: Federal Reserve Board
(www.federalreserve.gov/pubs/oss/oss2/2004/scf2004home.html)
2 Source: Business Jet Monthly Report by UBS Investment
Research
3 Source: AMSTAT, Boston Aviation estimates 2/17/09
2 million households with
net worth between $5-$30
million1 and growing
Unfavorable conditions for
travelers in commercial
aviation market
Fractionally owned aircraft
fleet has grown from 8
aircraft in 1986 to 937 as of
June 18, 20082
3 fractional shareholders in
1986 to 6,5903 today
Card fractional programs
represent a new growth
segment for industry
Fractional Aircraft Ownership Growing in Popularity
LARGE ADDRESSABLE MARKET
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LIGHT JET MARKET GROWTH
With 7.1 basis point year-over-year market share growth, Avantair is the fastest growing fractional in
the light jet market
Source: UBS Estimates, Amstat, Boston Aviation
9
TOTAL MARKET GROWTH
With 1.3 basis point increase in market share from 2007 to 2008, Avantair has the highest
percentage of growth in the fractional industry
Source: UBS Estimates, Amstat, Boston Aviation
10
COMPETITIVE ADVANTAGES
Sole fractional fleet operator of
the Piaggio Avanti
Lowest fuel burn and fuel
surcharge
30%-50% more fuel
efficient than
comparable jets
Approximately 25%
more efficient than twin
turboprops*
Largest cabin in category
Short runway capability
Substantial leverage in business
model
Increase in fleet size
reduces operating costs
Opportunity for significant
margin growth
Single type aircraft fleet
Lower maintenance and
training costs
Fewer parts in inventory
Company-owned FBOs
* Source: Business and Commercial Aviation, ARG/US (http://aviationresearch.com/Free/facprgms.asp) and company pricing sheets as of September 2006
11
BUSINESS MODEL
Maintain aggressive delivery schedule
Goal of approximately 3/4 aircraft sold (12 Shares) per month
52 aircraft in fleet currently
9 deliveries expected in FY 2009
Total of 57 additional Piaggio Avanti aircraft on order through 2013
Realize economies of scale due to larger fleet size
Reduces non-revenue repositioning flights and charter costs
Leverages existing infrastructure
Fixed Base Operators in three key hubs provide operating and maintenance
efficiencies and lower fuel costs
Drives maintenance and management fees
Disciplined fiscal controls
13
THE PIAGGIO AVANTI
As the best value in the fractional industry, the Piaggio Avanti offers
the perfect combination of comfort, speed, performance and efficiency.
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LEAD GENERATION + CUSTOMER LOYALTY = SALES
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Substantial marketing leverage generated as growing customer base results in more customer referrals
70% of new leads are current owners in competing fractional programs
45% of leads are from advertising (direct mail, online and print)
70% of sales are from existing customer referrals
12% of owners purchase additional shares within one year of ownership
AIRPLANES IN FLEET
*As of end of calendar year
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$17.7 million for fiscal second quarter, up 25.1% year-over-year
Monthly fee of $9,650 during the fiscal second quarter versus $9,400
in the prior year quarter
Leverage opportunities
Fewer repositioning flights
Fewer charters
Decrease in overall costs of flight operations
Fleet expansion drives recurring maintenance and management fees
REALIZING ECONOMIES OF SCALE
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ANNUAL REVENUE AND OPERATING RESULTS
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PROFITABILITY PROGRESS
22
Management currently estimates that income from operations before depreciation and
amortization sufficient to cover interest charges can be achieved on a sustainable basis
through either fully fractionalizing 48 aircraft, increasing the sale of charter cards to 150
on an annual basis (either individually or through the Company’s Axis Membership Program),
or a combination thereof.
SECOND QUARTER and YTD FISCAL 2009
REVENUE AND OPERATING RESULTS
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FISCAL SECOND QUARTER 2009 HIGHLIGHTS
Total record revenues of $35.4 million, up 23.7% year-over-year
Reported delivery of 50th Piaggio Avanti
Charter card sales up 96% quarter-over-quarter, to 53 from 27
Announced new hybrid flight program – ‘Axis Club’ – designed to bridge the gap
between the financial commitment of a fractional share and charter cards
EBITDA (profitable results from operations before depreciation and amortization) of
$690,360, up 118.1% year-over-year
Loss from operations of $0.6 million, down 86.9% year-over-year
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INDUSTRY SALES
60; Data Source: Boston Aviation
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As of September 30, 2008, Avantair was the only fractional provider in the light jet category that has
sustained a positive net change for three consecutive quarters – taking into account shares sold and
subtracting ‘buy back’ hours.
Aircraft Sold
(New & Pre-Owned)
Aircraft Bought
Back
Net Change
CitationShares
2,375
2,500
-125
Bravo
825
1,475
-650
CJ3
675
450
225
Excel / XLS
875
575
300
Flexjet
550
1,175
-625
Lear 40 / 40XR
300
150
150
Lear 45 / 45XR
250
1,025
-775
NetJets
6,275
6,700
-425
Ultra
150
2,425
-2,275
Hawker 400XP
150
400
-250
Encore / +
3,025
400
2,625
Excel / XLS
2,950
3,475
-525
Flight Options
3,500
5,151
-1,651
400A / 400XP
3,500
5,151
-1,651
Avantair
1,925
800
1,125
Piaggio Avanti
1,925
800
1,125
FINANCIAL MODEL
Fractional share sales are paid in cash up front with revenue
amortized over 60 months
Approximately $1 million gross profit per fractionalized aircraft
Maintenance and management fees provide recurring monthly
revenues
Growth in fractional shares add incremental monthly fees on
growing base
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AVANTAIR KEY TAKEAWAYS
Superior growth rate relative to private aviation market;
Avantair continues to gain market share at competitors’
expense
Defensible competitive advantages - the Piaggio Avanti is
technologically superior to other light jets and is exclusive to
Avantair
Recurring revenue stream via fractional share sales
Substantial operating leverage inherent to business model,
leading to sustainable profitability
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Avantair, Inc. (AAIR)
Headquartered in
Clearwater, FL
727.538.7910
www.avantair.com
