Alliance to go international with Virgin wet lease deal

February 19, 2019
Alliance profit soars
Photo: Alliance

Qantas investment target Alliance Aviation Services has extended its wet-lease agreement with Virgin Australia and will operate international services as part of the deal.

Alliance has been operating services on behalf of Virgin to a number of regional ports since July 1, 2017, but the extension until the end of 2021 includes international flights between Brisbane and Papua-New Guinea’s Port Moresby from February 25.

“This extension includes increased contracted flying hours and Alliance is excited by the opportunity to commence operating international services for the Virgin Australia Group,” Alliance chief executive Lee Schofield said.

“Since the signing of our long-term strategic partnership with the Virgin Australia Group in August 2016, both parties have benefitted through the provision of a range of services including contracted wet lease services.”

The Australian Competition and Consumer Commission is investigating a move by Qantas to take a 19.9 percent stake in alliance to beef up its presence in the resources sector.

The bigger airline has also indicated it would like to take a majority stake in Alliance but has conceded there will be difficulties involved from a regulatory standpoint.

READ:  ACCC confirms Qantas-Alliance deal under scrutiny.

Virgin has said the move raises “significant concerns” and the ACCC is looking to see whether the Qantas move breaches laws relating to acquisitions that could substantially lessen competition in a market.

Alliance has been flying well and earlier this month unveiled a 39 percent rise in interim after-tax profit, to $A9.8m, on revenues that rose 18 percent to $137.8m. Pre-tax profit was up 38 percent to $A14.1m.

Total flying hours for the half-year were up 21 percent to 19,670 and the airline reduced debt by $A4.9m.

“Alliance retains a positive outlook for the 2019 financial year based on its strong half-year result and consistent with prior financial years, the second half of the financial year is expected to exceed its first half,’’ the airline said at the time.

The Queensland-based operation sees positive signs in the resources sector as commodity prices generally increase and predicted the second half would see increased demand from existing clients.

It was also tendering for a number of new niche resources sector contracts and forecast that it would win a number of them, it said.

Alliance in Australia currently operates 23 Fokker F100 aircraft, 10 Fokker 70LRs and five Fokker 50 turboprops. It is adding additional aircraft in 2019.