Alliance reaffirms fleet growth plans

written by australianaviation.com.au | November 2, 2018
A file image of an Alliance Airlines Fokker 100. (Martin Eadie)
A file image of an Alliance Airlines Fokker 100. (Martin Eadie)

Alliance Aviation Services has reaffirmed plans to add nine aircraft to its operating fleet during the 2018/19 financial year.

Speaking at the company’s annual general meeting in Brisbane on October 30, Alliance managing director Scott McMillan said the airline had taken three aircraft so far in the current financial year, with two more due to arrive by December 31 2018.

“The remaining four aircraft are scheduled to complete their entry into service maintenance checks towards the end of this financial year,” McMillan told shareholders in prepared remarks.

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“These additions will bring the operating fleet size to 42 aircraft which we consider will meet current and future demand.”

The company ended 2017/18 with 33 aircraft, comprising five Fokker 50s, nine Fokker 70s and 19 Fokker 100s, up from 29 aircraft a year earlier.

At its 2017/18 full year results presentation in August, Alliance outlined plans to bring an additional nine aircraft into the fleet amid increased activity in the resources sector and an expansion of its charter operations for tourism companies.

The nine aircraft comprised four Fokker 70s and five Fokker 100s and were being sourced from Alliance’s pool of 21 Fokker aircraft it purchased from Austrian Airlines in 2015.

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McMillan said Alliance recently signed long-term maintenance and support agreements with KLM UK, Austrian Airlines Technik Bratislava and Rolls Royce that included “guaranteed slots for its aircraft heavy maintenance programme over the coming years” to support the fleet expansion.

Further, the company had also acquired a substantial volume of Fokker and Rolls Royce spare parts and engines from a variety of operators.

“These spares will be used in Alliance’s operating fleet as well as being made available for sale to other operators,” McMillan said.

Alliance is the largest operator of Fokker aircraft in the world. (Dave Parer)
Alliance is the largest operator of Fokker aircraft in the world. (Dave Parer)

In recent years, Alliance has made significant strides in broadening its operations from fly-in/fly-out (FIFO) work for mining and resources clients to areas such as tourism, aircraft sales, wet and dry leasing and spare parts sales to help boost revenue.

This initiative has included starting regular public transport (RPT) flights out of Brisbane which are sold as Virgin Australia codeshare services. It also began operating Newcastle-Adelaide flights on behalf of FlyPelican.

Further, Alliance also has contracts with tour companies including United States tour operator Tauck and Japan travel company JTB.

And Alliance also has a partnership with Virgin Australia to work together in the FIFO market that received Australian Competition and Consumer Commission (ACCC) approval in May 2017.

Total flight hours rose 34 per cent in 2017/18 to 34,612, from 25,689 in the prior corresponding period.

Alliance chief executive Lee Schofield described 2018 as a big year for the company and told shareholders to expect an “even bigger” 2019.

“The Directors are of the opinion that with the diversification of our business into sectors which are profitable and the recovery in the resources sector which is driving growth in our traditional FIFO business, Alliance’s outlook is positive,” Schofield said.

A file image of an Alliance Fokker 50 in Hobart. (Rob Finlayson)
A file image of an Alliance Fokker 50 in Hobart. (Rob Finlayson)

Alliance chairman Steve Padgett said the board had decided to amend the dividend policy to increase the amount available to be distributed via normal dividends following a review of the company’s capital management structure.

“The Directors believe that this measure allows for the flexibility to better align the returns to shareholders with the operational and strategic objectives of the Company,” Padgett said.

“To achieve this, the Directors have agreed to amend the dividend policy so that the maximum amount that can be made available in the form of dividends changes from 60 per cent of net profit after tax to 60 per cent of profit before tax.

“The effect of this amendment will increase the potential dividends of the Company by up to 43 per cent based on a 30 per cent tax rate.”

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6 Comments

  • John grier

    says:

    looks like Alliance might take over more of Qantas & Virgins thin routes.

  • David

    says:

    you’d think that Brisbane/Albury nonstop a few days a week, would have to work. The flight could continue onto Adelaide.

    Jetgo, used to operate it daily with 36 seaters. I think it was one of Jetgos better routes.

  • Geoff H

    says:

    Brisbane Albury then Avalon to connect with Air Asia to KL and the world.

  • Mike

    says:

    @Geoff H, starting from Brisbane, I doubt many (if any) travellers would actually fly Brisbane-Albury-Avalon to connect with Air Asia to KL. It would be a pointless exercise in both time and money when you can already fly Air Asia from Coolangatta to KL…and the world!

    • David

      says:

      yes any flight from Albury has to be to a city such as Adelaide or Gold Coast. Jetgo did fly Albury to Gold Coast. Not sure if it was daily.

  • reeves35

    says:

    The finances for airlines concentrating on regional flying such as Alliance and REx can be tenuous so they fly older aircraft with very low acquisition cost and this keeps their operating costs down. Fortunately, both airlines maintain their aircraft very well so it is possible that they can run them until they near 40 years old.

    In some respects, they have no choice. There is no other aircraft as perfectly suited to the rough and tumble flying they undertake or sized so well for these routes. At some point, this will have to change and the airlines face a dilemma in finding replacements that fir their requirements so well. At a guess, you’d think REx would go for secondhand ATR42s which are the only logical replacement for the SAAB and, even then, they comprise a significant capacity increase. Alliance would probably look at secondhand E190s which are sized well but whether they are as resilient in the AU outback is an open question.

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