Alliance eyes bigger fleet with $121.9m raising

Qantas takeover target Alliance has announced plans to raise $120m in order to buy up to 20 new jets.

Alliance Aviation managing director Scott McMillan at the airline’s Brisbane headquarters. Picture: Lyndon Mechielsen

Brisbane-based airline Alliance Aviation will add up to 20 more aircraft to its fleet funded by a $121.9m capital raising plan, to meet growing demand for fly-in, fly-out services.

The airline currently operates an all-Fokker fleet of 50 aircraft, but managing director Scott McMillan said with no good F100s left in the market, the company was looking at buying second-hand Embraer E190s and Bombardier CRJ900s.

With the foreign exchange rate improving, and other airlines and leasing companies seeking to offload aeroplanes, Mr McMillan was confident of getting a good deal. “The grounding of airline fleets globally, due to COVID-19, presents significant opportunities for Alliance to expand its fleet,” he said.

Alliance shares were placed in a trading halt on the ASX ahead of Thursday’s announcement, of the intention to raise $91.9m by way of an institutional placement, and up to $30m through a share purchase plan for existing shareholders.

“Alliance’s recent performance has been outstanding and allows us to be uniquely positioned to look to expand through a number of growth initiatives,” Mr McMillan said. “Importantly this capital raising will give us the ability to invest in these initiatives while maintaining our strong balance sheet.”

The small carrier has weathered the COVID-19 crisis better than most due to its fly-in, fly-out contract work for the resources sector. recent trading update saw Alliance forecast a full year profit before tax in excess of $40m, and a commitment to reward all eligible staff with $1000 worth of shares.

Alliance was recently chosen ahead of larger airlines to operate flights subsidised by the Queensland government, between Brisbane and the Whitsundays.

The four-times a week service scheduled to start on June 22, offered fares from $99 one-way including 20kg of luggage.

The airline has also been the subject of Australian Competition & Consumer Commission attention, due to Qantas’s purchase of a 19.9 per cent stake in February last year.

Despite slumping to $1.03 a share at the height of the COVID-19 crisis in mid-March, Alliance shares have been on a steady upward trajectory since then, closing at a near record high of $3.10 in Wednesday’s trade on the ASX.

The trading halt was expected to be lifted on Friday.