Alliance Aviation Services has posted a big lift in full year profit and says the outlook for the year ahead is positive amid high commodities prices and increased mining production.
The company said net profit for the 12 months to June 30 2019 rose 25.5 per cent to $22.7 million, from $18.1 million in the prior corresponding period.
Revenue rose 11.9 per cent to $277.12 million, Alliance said in a regulatory filing to the Australian Securities Exchange (ASX) on Wednesday.
Alliance chief executive Lee Schofield said it was the best financial results in the company’s history.
“This financial result is underpinned by the continued focus of all Alliance employees on ensuring the safe, on time and cost effective provision of services to all of our clients,” Schofield said in a statement.
“This is what makes Alliance the pre-eminent aviation services company in Australia.”
Looking ahead, Schofield said financial and operational growth would continue to be part of Alliance’s strategy.
In recent years, Alliance has made significant strides in broadening 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.
That has led to a significant increase in flying hours and fleet growth, as the company commenced regular public transport (RPT) flights in regional Queensland which are sold as Virgin Australia codeshare services, signed contracts with United States tour operator Tauck and Japanese travel company JTB.
Alliance has also strengthened its position in the FIFO market through a partnership with Virgin Australia that received Australian Competition and Consumer Commission (ACCC) approval in May 2017.
Total flight hours rose 9.9 per cent to a record 38,326 hours in 2018/19, compared with 34,612 hours in the prior corresponding period, Alliance said in its financial results. The bulk of the increase was in wet lease flying.
Contracted flight hours
Wet lease flight hours
Regular Public Transport
Charter flight hours
Other flight hours
Total flight hours
Source: Alliance Aviation Services
Alliance grew its fleet to 38 aircraft in 2018/19, an increase of five from a year earlier. While this was less than the nine aircraft expected to be added in the year, Alliance said in its financial results statement this was due to additional maintenance requirements on the existing fleet and the availability of maintenance slots for the additional aircraft.
At June 30 2019, the fleet comprised five Fokker 50s, 10 Fokker 70s and 23 Fokker 100s.
The company said it expected to add two Fokker 100s and five Fokker 70s in the current financial year. These were the last of the 21 aircraft purchased from Austrian Airlines in 2015.
In July 2019, Alliance purchased five Fokker 100s from Switzerland-based Helvetic Airways, as well as all tooling, spare engines and parts.
Alliance said the outlook for 2019/20 was positive as high commodity prices and increasing mine production levels led to more flights for resources clients.
There would also be growth in the tourism sector, such as the upcoming flights between Melbourne and Kunnanurra it will operated on behalf of Virgin Australia, as well as more wet lease flying.
The Alliance annual report listed Qantas as the company’s largest shareholder at 19.8 per cent.
Qantas announced the investment in February 2019 and stated its intention was to eventually move to a majority stake. In the meantime, it has not sought a seat on the board and has expressed confidence in current management.
In early August, the ACCC released a statement of issues following its review of the transition, which expressed concerns about the shareholding.
“The ACCC is concerned that the acquisition has, or is likely to have, the effect of substantially lessening competition in markets for the supply of fly-in fly-out (FIFO) charter airline services, and regular passenger transport (RPT) services on routes serviced by Alliance Airlines aircraft,” the ACCC said.
In response to the statement of issues, Qantas said its current shareholding was “not contingent on reaching a majority position”, indicating it remained committed to holding on to the 19.8 per cent stake.