Alliance Aviation shares soar despite pandemic and lockdowns

At a time when most airlines are struggling to survive the COVID crisis, one carrier has seen its share price climb 150 per cent in a year.

Scott McMillan, Managing Director of Alliance Airlines, with some of his aircraft engineers at their base in Brisbane Airport. Picture: Lyndon Mechielsen

A series of contract renewals with major mining companies has pushed shares in Brisbane-based airline Alliance Aviation to record levels.

The predominantly charter operator, which is in the process of expanding its fleet with 30 Embraer jets, saw its share price climb to a record high of $4.68 this week, up almost 150 per cent on a year ago.

The increase is good news for major shareholder Qantas, which bought a 19.9 per cent stake in Alliance for $60m in early 2019, with the share parcel now worth an estimated $140m.

Alliance employees were also benefiting from the gain after each eligible worker was “gifted” $1000 worth of shares at the end of 2020 in recognition of their contribution to the company.

The dramatic lift in the share price followed a number of significant developments in the past week, including renewed contracts with mining giants Santos and BHP.

Alliance managing director Scott McMillan said it was pleasing to see the additional FIFO work undertaken for the mining companies during the COVID crisis last year, now locked into five-year and two-year contracts.

“For Santos we previously had a three-year contract, that’s now been renewed for the next five years and includes the extra flying we started doing for them,” Mr McMillan said.

In a further boost, Alliance’s partnership with Virgin Australia was given final Australian Competition & Consumer Association approval on Friday.

Under the deal, Alliance could operate up to 41 regional routes for Virgin using its Fokker 70s and 100s, allowing the larger carrier to substantially expand its network.

At the same time, the Civil Aviation Safety Authority signed off on the operation of Alliance’s Embraer 190s with the first commercial services to start on Saturday.

Initially, Alliance will operate flights for Air North out of Darwin, before commencing a three-year wet lease contract for Qantas on May 25.

Under the contract, worth an estimated $20m a year, Alliance will provide three aircraft and crew for the Qantas flights from Darwin and Adelaide to Alice Springs.

All going well, Qantas could end up wet-leasing 14 Alliance Embraers for regional routes, freeing up the airline’s Boeing 737s for other services.

Alliance expected to have all 30 Embraers delivered by November, with the 94-seat aircraft to be used for “expansionary purposes”.

Mr McMillan said travel charters were also starting to take off again for Alliance as the domestic tourism industry got back on its feet.

“It’s grown to quite a bit of business,” he told The Australian.

“One day the other week we had four (charter) aircraft on the ground at Uluru all day, all having come from different destinations.”

The day trip concept will be extended to outback Queensland later this year, with Alliance offering flights to Winton and a day of activities for an all-inclusive fare of $700.

Three services have been scheduled for May 15, July 3 and September 18, with the potential for more in response to demand.