Avantair, Inc - FORM 8-K - EX-99.1

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8-K - Avantair, Inc	v187445_8k.htm

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”) as
described in Avantair’s public filings 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.

INVESTMENT HIGHLIGHTS

Sole North American fleet provider of flight hour time cards and
fractional shares in the Piaggio Avanti aircraft - 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 Club Membership bridges the gap between the
financial commitment of a fractional share and flight hour time cards

Business model offers path to sustainable profitability

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

Over 20 years experience in aviation industry

16 years with US Airways

OUR BUSINESS

AVANTAIR PROGRAM SUMMARY

Avantair Fractional Ownership

Hourly Operating Cost*:
$2,610
(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

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*:

$4,515

(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

TOTAL LIGHT-CABIN FLEET SOLD INTO FRACTIONALLY

Avantair’s fleet has the highest sold-to-in-service ratio of 80% among the
top five fractional players in the light-cabin fleet category

Source: AvData Fractional Aircraft Report, November 2009

PIAGGIO AVANTI
AIRCRAFT

FLEET SUMMARY

Fleet Statistics

55 aircraft in fleet

4 new Piaggio Avanti II aircraft added to Avantair’s operating
certificate in February 2010

52 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 Operations in three key hubs provide operating and
maintenance efficiencies and lower fuel costs

THE PIAGGIO AVANTI

As the best value in the private aircraft industry, the Piaggio Avanti
offers an unparalleled combination of comfort, speed, performance,
safety and efficiency.

REALIZING EFFICIENCIES

Fleet expansion drives recurring maintenance and management fees

$18.3 million for fiscal 2010 third quarter, up 1.7% year-over-year

Leverage opportunities

Fewer repositioning flights

Fewer charters

Decrease in overall costs of flight operations

Superior flight optimization technology

Fully integrated in March 2010

Increasing utilization, 3% utility gain within third quarter of fiscal 2010

Automated flight tracking, scheduling and adding new legs to the trips
provide increasing efficiencies

FINANCIAL
SECTION

NON-GAAP MEASURES

The following table reflects the reconciliation of income from operations prepared in conformity with generally accepted accounting principles
(GAAP) to the non-GAAP financial measure of adjusted non-GAAP income from operations.

Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures

Three Months Ended March 31,

Three Months
Ended
December 31,
2009

2010

2009

GAAP income from operations

$ 500,888

$ 3,248,183

$ 1,394,863

Subtract:

Vendor service reimbursement

(2,951,867)

Gain on sale of assets

(849,584)

Adjusted non-GAAP income from
operations

$ 500,888

$ 296,316

$ 545,279

NON-GAAP MEASURES

Reconciliation of GAAP Net Income (Loss) to EBITDA and Adjusted EBITDA

Three Months Ended

March 31,

Twelve Months Ended

June 30,

2010

2009

2008

Net Loss:

$ (773,504)

$ 1,822,233

$ (4,460,921)

$ (18,882,065)

Add:

Depreciation and amortization

1,314,870

1,240,262

5,233,250

3,624,710

Interest expense

1,281,626

1,439,661

5,942,221

3,661,227

Subtract:

Interest and other income

(7,234)

(13,711)

(48,921)

(482, 918)

EBITDA

1,815,758

4,488,445

$ 6,665,629

$ (12,079,046

Subtract:

Vendor service reimbursement

(2,951,867)

Adjusted EBITDA

$ 1,815,758

$ 1,536,578

The following table reflects the reconciliation of GAAP net income (loss) to the non-GAAP financial measures of EBITDA and to adjusted
EBITDA:

The Company believes that the use of the non-GAAP financial measure of adjusted non-GAAP income from operations is useful to investors as it
eliminates a non-recurring vendor service reimbursement recognized in the third quarter of fiscal 2009 and a non-recurring gain from the sale of an
asset recognized in the second quarter of fiscal 2010 in order to provide information that is directly comparable to our current year financial
statements.

The Company believes that EBITDA is useful to investors as it excludes certain non-cash expenses that do not directly relate to the operation of
aircraft and that adjusted EBITDA is useful as it eliminates a nonrecurring vendor service reimbursement recognized in 2009 in order to provide
information that is directly comparable to our current year EBITDA.

These measures are supplements to generally accepted accounting principles used to prepare the Company’s financial statements and should not
be viewed as a substitute for GAAP measures. In addition, the Company’s non-GAAP measures may not be comparable to non-GAAP measures
of other companies.

FISCAL THIRD QUARTER 2010 HIGHLIGHTS

Total revenues increased YOY and on a sequential quarter basis to $36.0 million.

Revenue generating flight hours flown reached a new third quarter record, increasing
11.5% to 9,623 hours, from 8,627 for the third quarter of fiscal 2009. This compares with
9,770 revenue generating flight hours flown in the fiscal 2010 second quarter.

During the Company’s seasonally slowest sales quarter, flight hour cards sold increased
183% to 82 for the third quarter of fiscal 2010, from 29 flight hour cards sold during the
third quarter of fiscal 2009.

EBITDA (results from operations before interest, taxes, depreciation and amortization) of
$1.8 million, compared with adjusted EBITDA of $1.5 million, which excludes a one-time,
non-recurring $3.0 million vendor service reimbursement in the third quarter of fiscal
2009.

Operating income increased to $501,000, compared with adjusted non-GAAP operating
income of $296,000, which excludes a one-time, non-recurring $3.0 million vendor service
reimbursement in the third quarter of fiscal 2009. The cost per revenue hour was reduced
significantly following the addition of four new aircraft to Avantair’s operating certificate in
mid-February.

As of March 31, 2010, Avantair had cash and cash equivalents of $7.3 million, compared
with cash and cash equivalents of $3.8 million as of June 30, 2009.

FINANCIAL MODEL

Fractional shares:

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

AXIS Club Membership:

Membership fee is paid in cash up front with revenue amortized over 36 months

Membership fee may be applied towards the purchase of a fractional share

Edge and AXIS Time Cards:

Edge and Axis flight hour time card sales are paid in cash up front with revenue
recognized when hours are used

AVANTAIR KEY TAKEAWAYS

Superior growth rate relative to private aviation market; Avantair continues
to gain market share

Taking market share from competitors

Gaining new customers

Defensible competitive advantages - Piaggio Avanti is technologically
superior to other light jets and is exclusive to Avantair

Recurring revenue stream via fractional share and Axis membership sales

Substantial operating leverage inherent to business model, expected to
lead to sustainable profitability

Avantair, Inc.

(OTCBB: AAIR)

Headquartered in
Clearwater, FL

727.538.7910

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