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Alliance Airlines has faced a setback in its Embraer E190 fleet expansion program, with five fewer E-Jets expected this year than previously anticipated.
In a statement to the ASX, Alliance said it had expected to settle purchases of 17 more E190s from Dublin-based AerCap Ireland Limited over this year, at a cost of between $182 million and $204 million, as part of its plan to acquire 30 more E-Jets between 2023 and 2026.
AerCap had been leasing the jets to a US-based airline when Alliance signed a deal last year to purchase them from the company, which is the largest owner of commercial aircraft in the world.
“The aircraft were to be purchased one at a time over a three-year period in accordance with the timetable set out in the AerCap sale and purchase agreement. However, there is currently a delay in the delivery of each aircraft. As a result, to date, seven aircraft have been settled and delivered to Alliance,” the airline told the ASX.
“Given the anticipated delays to the delivery of the aircraft (and therefore the payment of each aircraft), and the conservative nature of Alliance’s estimates of the remaining commitments, Alliance now believes only 12 aircraft are expected to settle during 1 January 2024 to 31 December 2024 at an estimated cost of between $128 million and $144 million.”
In more positive news for the charter and FIFO operator, its existing $67 million ANZ loan has been extended by three years from its original end date in January next year and has been upsized by $50 million to fund the airline’s capital expenditure program.
Alliance managing director Scott McMillan said fleet ownership is “fundamental to the [airline’s] business model”.
“It underpins our operational performance with Alliance having ultimate control of our fleet units, thus providing flexibility, particularly around maintenance,” he said.
“The 2023 Aircraft Acquisition Programme is a significant growth initiative we are currently successfully implementing.
“Securing funding against this initiative highlights our strong financial status, particularly our long dated contracted revenue streams from a predominately investment grade customer base.”
Alliance last month announced that four planes acquired in the AerCap deal, which were slated to be parted out, will instead be put into operation, reducing the number of AerCap E190s parted out from 11 to seven.
“We have a long record of opportunistically purchasing aircraft and realising exceptional value by deployment, sale (aircraft or parts) or lease,” said McMillan in March.
“At the time of this notice, Alliance has taken delivery of 10 of 34 of the E190 fleet committed to in February and July 2023, with three already parted out.”
