Alliance pounces on planes deal, buying 14 Embraer jets

When most airlines are parking aircraft, Alliance Aviation has just bought another 14 jets for its regional routes.

An Embraer E190 aircraft, like those being bought by Brisbane-based airline Alliance Aviation.

A $111m deal done entirely over the internet will see Brisbane-based airline Alliance take delivery of 14 Embraer E190 jets from September.

The seemingly COVID-resistant carrier raised the funds in an institutional placement and share purchase plan in June after seeing the opportunity to expand its fleet at a good price in the current pandemic.

Alliance managing director Scott McMillan said the second-hand jets from Azorra Aviation in the US were previously operated by Panama’s Copa Airlines, and had an average age of 10 years.

Each aircraft was costing Alliance about $6m.

“When we looked at them a year ago, they were about twice that, so it’s a good opportunity for us,” Mr McMillan said.

He added that there was no “kicking of the tyres” to seal the deal, with negotiations undertaken via Microsoft Teams.

Alliance will also acquire six spare General Electric CF34 engines under the deal, with the option to buy a further five jets and a full flight simulator and related training equipment.

Deliveries will be made over eight months from September, with all aircraft to be painted in the Alliance livery before arriving.

Mr McMillan said the Embraers would join Alliance’s fleet of 47 Fokkers, which had served the airline well.

“Our Fokker fleet remains the core of our fleet and we believe will remain in service for many years to come, especially given our significant spare parts and inventory stores,” he said. “With limited Fokker aircraft acquisition opportunities, it was also the time to acquire a newer aircraft in order to position us for our next growth phase.”

Scott McMillan at Alliance’s Brisbane base Picture: Lyndon Mechielsen

Mr McMillan said the E190 would most likely fly regional routes for Alliance, with the jets “perfect” for reduced demand, seating between 98 and 114 passengers.

“We are being conservative and are not forecasting any material impact on 2021 financial year results as a result of this acquisition, with the first revenue from an E190 expected to be realised in February 2021,” he said.  Alliance had a track record of buying aircraft opportunistically, at significantly reduced prices, Mr McMillan said.

“Our purchase of 21 (Fokker) aircraft from Austrian Airlines in 2015 resulted in significant growth opportunities as well as providing a long-term supply of spare parts at minimal cost for our ongoing operations,” he said.

“Alliance is confident this purchase of 14 Embraer E190 aircraft will result in similar opportunities presenting themselves.”

Embraer is the third-largest commercial jet manufacturer in the world, after Boeing and Airbus, and has delivered more than 8000 aircraft.

The E190 remains in production and was designed for regional routes.

Alliance has increased fly-in, fly-out services for resource sector clients throughout the crisis and picked up two new routes subsidised by the Queensland government — Sunshine Coast to Cairns and Brisbane to Whitsundays.

It shares closed up 6.7 per cent at $3.33.