Small-cap Alliance Aviation surges on Qantas deal

Small-cap aviation group Alliance Aviation Services surged on Thursday after announcing a major contract with Qantas Airways.

The $688 million market cap company announced it has executed a Wet Lease Agreement with Qantas Airways for the provision of E190 capacity. The agreement initially provides for three E190 aircraft to commence operations in mid-2021 with options for Qantas to call on an additional eleven aircraft based on market conditions.

The transaction is material for Alliance in that it is expected that it will account for in excess of 5% of total revenue once the first three aircraft have been fully deployed. Alliance acquired thirty E190 aircraft with a strategy of deploying a significant number of those aircraft in wet lease operations

The initial three-year agreement will see the aircraft based in Adelaide and Darwin servicing the Adelaide–Alice Springs, Darwin–Alice Springs and Darwin–Adelaide routes.

Scott McMillan, Alliance’s Managing Director, said, “This is an exciting transaction for Alliance and further extends on previous wet-leasing arrangements that Alliance has had with Qantas since 2012. This further cements Alliance as the pre-eminent wet-lease operator in Australia and the Pacific and confirms Alliance’s view that the circa 100 seat regional jet will be the sweet spot in the global aviation market’s post-COVID-19 recovery. We look forward to providing Qantas with our renowned high-quality service and operational reliability. It is also pleasing to be able to provide new job opportunities in the Australian aviation landscape, as well as for our existing staff and potentially some Qantas Group staff who would normally be flying internationally.”