Coronavirus: Charter airline soars above the COVID-19 cloud

In the midst of the worst aviation crisis in history, one small Australian airline is on track to post a $40m-plus annual profit.

Alliance Airlines managing director Scott McMillan at Brisbane Airport with aircraft engineers who are due to receive a juicy bonus. Picture: Lyndon Mechielsen

In the midst of the worst crisis ever to hit the aviation industry, one small Australian airline is on track to post a $40m-plus annual profit and deliver generous bonuses to its employees.

Alliance Airlines, which was marked as a takeover target by Qantas chief executive Alan Joyce last year, has seen the charter side of its business boom in the current pandemic, more than making up for losses in other areas.

An update to the ASX on Wednesday revealed the surprising strength of the listed airline’s ­financial position, to the point where 85 per cent of its staff are due to be rewarded with $1000 worth of shares in the company.

Managing director Scott McMillan said the airline’s success in the worst of times came down to its ability to respond to the needs of resource sector customers. “When COVID-19 hit, we sat down with our customer base and came up with protocols to continue flying for them,” he said.

“That included seating plans to accommodate social distancing, specific cleaning regimes, aircraft filtration systems and the health screening of all passengers prior to check-in.”

As a result, Alliance not only ­increased its services for existing customers, but the airline added new resource sector clients who were in need of more frequent flights to get workers to mines.

“Every one of those companies is now finding the charter operations are so much more flexible, and that really helps in terms of matching flight times with shift changes,” Mr McMillan said.

“We think that’s a permanent shift. A lot of these charters will be permanent replacements to regular public transport services.”

Not that it has all been smooth flying for Alliance, which has ­suspended all its inbound tourism charters until at least 2022.

It is owed up to $24m by Virgin Australia, and it has suspended one of its three regular public transport routes — between Brisbane and Port Macquarie — due to border restrictions.

The airline was also flying NRL players to games before the competition was put on hold, but is hopeful of resuming that role when games begin again.

Alliance operates an all-Fokker fleet of F70s and F100s, for which it has a significant inventory of spare parts, making it self-reliant.

Mr McMillan said he expected there to be even more demand for aircraft with 80 to 100 seats in the post-pandemic world.

“I think there will be a permanent change as to how large groups travel,” he said.

It is all likely to make Alliance an even more attractive target for Qantas, whose 19.9 per cent stake in the airline remains the subject of an Australian Competition & Consumer Commission investigation.

“Alliance’s business model has withstood the greatest crisis that has ever impacted the global aviation industry,” Mr McMillan said.

“We’re coming through this in an extremely strong position.”