Alliance suffers $100m loss as Fokkers written down

“Despite increased revenues and record flight hours in the first half, Alliance’s performance was challenged by margin pressure from a commercially unviable arrangement with one of our major wet-leasing customers that we are currently negotiating,” said Alliance managing director Stewart Tully.

“As a result of our subdued financial performance, we recently announced a $164.8m impairment and write-down of the value of our Fokker fleet and inventory, resulting in a significant statutory loss for the half.”

According to Alliance, its profitability was impacted by “a major wet-lease customer arrangement which is currently in the process of being negotiated, higher than expected maintenance costs, and costs associated with the AVIAN program implementation”.

The carrier had previously signalled a downgrade in its forecast EBITDA for the year to around $190-$210 million. It is now implementing a turnaround program, with Tully citing an “imperative to improve performance and strengthen the financial position of the Group”.

“Our immediate priority is the disciplined execution of the operational turnaround plan to improve capital allocation, profitability and cash flow generation, and strengthen the balance sheet,” he said.

“This includes an organisation-wide review of our cost base and expense management to align with the current operating context.

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“Our core contract FIFO operation remains resilient, underpinned by our strong safety and operational performance and benefiting from a positive outlook for the resources sector.

“We remain committed to maintaining the high standard of service, safety and reliability expected by our customers.”

At Alliance’s AGM in November, chair James Jackson said the carrier had been looking “to review and seek to renegotiate a major ACMI [aircraft, crew, maintenance and insurance] contract” due to unexpected high costs.

While Alliance could not confirm the name of the client, Jackson said the contract “was originally entered into in 2021 for 14 aircraft, before being expanded to include a total of 30 Embraer E190 aircraft”.

Coupled with his note that the last of these aircraft was delivered in February 2025, his comments seemed to indicate that Qantas’ regional arm, QantasLink, was the client in question.

“The repricing mechanisms in this contract are not sufficient to reflect industry-wide cost inflation and have resulted in Alliance absorbing the impacts of significant increases in wages, operating expenses and maintenance capital expenditure that would typically be passed on to the customer,” he said.

Alliance in 2024–25 saw a statutory net profit after tax of $82.1 million, down 4.9 per cent on its record profit in 2023–24, though revenue from operations was $760.9 million, up 19.4 per cent.