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Alliance shows Qantas, Virgin how to run an airline with record profit

Business

Queensland-based Alliance Aviation has shown the major airlines how to run a business after posting a record profit, with an increased workforce.

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The airline recorded a net profit of $23.4 million for the half year, an increase of 120 per cent. However, it has held back from providing a dividend because of major expansion plans.

The result runs counter to the major airlines like Virgin Australia, which went into administration last year owing more than $10 billion and was eventually bought out by Bain. Qantas has also announced an expectation of an $11 billion revenue loss this year. Both airlines are now facing increased competition from Rex, which has started flying the major domestic routes.

Managing director Scott McMillan said the company had achieved significant milestones in the first six months of the financial year.

“The robustness of our business model, the commitment of our staff and the relationship we have with clients ensures Alliance will continue to grow the business in future years,” McMillan said

Charter revenue for the company grew 176 per cent, but its wet lease revenue fell by 96 per cent.

While the major airlines have struggled with the impacts of border restrictions Alliance has been benefitting from the continued strength in the mining sector and earlier this year it also struck a “wet lease” deal with Qantas and bought new aircraft to underpin its expansion. A wet lease relates to the supply of aircraft and crew.

The airline has a major role in servicing the mining sector in Queensland and Western Australia where business is booming.

In its report, Alliance said it was seeing an increase to operational activity across all revenue types and those that had been impacted by the pandemic were starting to show signs of growth.

The profit also adds to the company’s reputation of being the only airline in the world to record an operating profit in every year of operation.

“Contract revenue is expected to increase in 2021 as the annualised impact of the increased schedule is realised. Mine maintenance programs are also expected to have a positive effect in the second half of the year.

“The charter sector is forecast to remain strong.”

Alliance is embarking on a significant growth project with its new aircraft, which cost $85 million after raising $92 million from investors.

Chief executive Scott McMillan said at the time the additional capacity would be deployed to capture several growth opportunities across Australia, including contract flying and wet and dry lease operations.

Alliance has also struck a deal to sponsor the Queensland Reds rugby team this season.

Read more here – Wing and a prayer: Rags to riches tale of how a bold new Qld company took flight

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