Alliance Airlines posts 37 per cent profit increase in 2016/17

Revenue rose 12 per cent to $203.2 million, Alliance said in a regulatory filing to the Australian Securities Exchange (ASX) on Thursday.

“The current result is pleasing and positions the business well for the future,” Alliance managing director Scott McMillan said in a statement.

Profit before tax came in at $19.6 million, a 45 per cent increase from $13.5 million in the prior year.

Alliance has sought to broaden its operations from fly-in/fly-out (FIFO) work to boost revenue in areas such as tourism, aircraft sales, wet and dry leasing and spare parts sales.

In July, the airline commenced regular public transport services (RPT) from Brisbane to Bundaberg, Gladstone and Port Macquarie with Fokker 70 regional jets which are sold Virgin Australia codeshare services.

Meanwhile, Alliance and Virgin have received Australian Competition and Consumer Commission (ACCC) approval to work together in the charter and (FIFO) market, allowing for the joint tendering for corporate FIFO contracts, as well as cooperating on aircraft maintenance, procurement of aircraft and parts, parts pooling, airport operations, airport handling, check-in, frequent flyer programs, lounge access, scheduling, pricing, sales and marketing and service policies.

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A substantial jump in wet lease flying (which rose to 4,600 hours in 2016/76 compared with 853 hours in the prior year) led to an 11 per cent increase in total flight hours in 2016/17. Flight hours for contracted/charter flying fell three per cent to 17,872 hours.

Alliance operates some regional Queensland services on behalf of Virgin via a wet-lease arrangement, in addition to agreements with a number of other carriers.

The company had 29 aircraft in service at June 30 2017 – comprising five Fokker 50s, eight Fokker 70s and 16 Fokker 100s – up one from a year earlier. It said three additional aircraft would be introduced into service in the first half of 2017/18 to “position Alliance for further growth and fleet opportunities”.

Further, Alliance said revenue diversification was a key part of the 2017 result and would continue to be in future years.

“The resources sector continues to demonstrate signs of recovery and the Alliance strategic partnerships will provide opportunities during the next year,” Alliance said.

“Wet lease flying is forecast to continue to grow compared with the 2017 financial year and the recent introduction of regular public transport (RPT) services in regional Queensland and New South Wales will provide new opportunities.”

Alliance declared a final dividend of three cents per share, fully franked.