Alliance banks on expansion and FIFO as airline’s profits soar
Alliance Aviation is an airline that’s booming, thanks to business model based on servicing the mining sector and its fly-in, fly-out workforce and regional centres.
Pilots from a Qantas subsidiary have walked off the job, (Image: suppled)
The Brisbane-based regional and charter airline posted a record profit before tax of $48 million, an increase of 19 per cent, and an underlying EBITDA (earnings before interest, tax, depreciation and amortisation) of $90.5 million.
But the company has held back from paying out a dividend and will instead retain the cash to deal with its expansion plans. It made no promises about reinstating the dividend for the current financial year, but said it would revisit the issue at the end of the December half year.
It has forecast an improvement in the servicing of the mining and resources sector and more aircraft will be able to service the mining sector in Western Australia.
“Alliance retains a positive outlook for the FY2022 with organic growth opportunities geographically and across the majority of revenue streams,” the company said.
The result came as the airline increased its capex to $176 million with the purchase of E190 aircraft which the company said would dramatically increase its flying hours by the end of 2022.
The company has made the claim that it has been one of the most successful aviation companies in the world during the pandemic and that it has been largely unaffected by the restrictions that have hit Qantas, Rex and Virgin. Its share price has risen by 170 per cent since the start of the pandemic in February 2020.
The increase in demand for its services has meant Alliance brought forward investment on the aircraft. By October it will own a fleet of 75 Fokker and E190 aircraft, a flight simulator, and six spare engines.
Net debt is expected to peak at $156 million by the end of the 2021. Its bottom line profit was $33.7 million, compared with $27 million for the previous year.
“We have to continue to recruit pilots, cabin crew, engineers and other operational staff to support the earlier deployment of the fleet,” managing director Scott McMillan said.
“We expect to have at least 14 E190 aircraft in service by December 2021 with the balance deployed by mid-2022.
The company’s total flight hours were similar to that of the previous year but charter hours jumped by 83 per cent.
Wet lease (the leasing of aircraft with crew) was down 97 per cent because of the impacts of COVID-19, but there were improvements in the second half.
