Brisbane-based Alliance Airlines has posted a record profit for the twelve months to June 30, 2021. The airline recorded a US$35.5 million statutory profit before tax. Alliance Airlines is one of the few airlines anywhere to make money in the period.
Alliance Airlines boss thanks his employees
In a filing to the Australian Stock Exchange (ASX), the specialist fly-in-fly-out (FIFO) and charter operator posted a sunny set of financial metrics. Underlying operating cash flow in the 2021 financial year was US$55.7 million, up 73% on the previous year. Underlying profit before tax was up 25% and statutory profit before tax increased by 19%.
Alliance’s Managing Director, Scott McMillan, thanked his 820 employees for making this happen.
“They are key to Alliance’s success in delivering our three key performance indicators of safety, on-time performance, and financial sustainability. Their collective response to the operational challenges presented by COVID19 has been exceptional.”
Embraers proving their worth for Alliance Airlines
Alliance Airlines is probably best known to Simple Flyer readers for recently wet leasing Embraer E190s to Qantas. Better known as a Fokker specialist, Alliance Airlines bought 14 former Copa Airlines E190s and 160 ex-American Airlines E190s last year.
“Due to earlier than expected capacity demand, Alliance has brought forward investment
required to deploy the E190 fleet,” Alliance’s MD said this week. “We have and continue to recruit pilots, cabin crew, engineers, and other operational and corporate staff to support the earlier deployment of the fleet. We expect to have at least 14 E190 aircraft in service by December 2021 with the balance to be deployed by mid-2022.”
Alliance Airlines advises in its filing that up to 18 E190s will service the wet lease contract with Qantas. A further five will fly specific Central Australian FIFO routes. Two E190s will get used on dry leases (one is already leased to Darwin-based Airnorth), and three aircraft will cover base maintenance checks. Alliance Airlines will use the remaining four E190s for “expansionary opportunities.”
Contract FIFO flying keeps Alliance Airlines in the black
The bulk of Alliance’s flying is contract work, typically FIFO flights. The airline has contracts with some big-name mining giants, including BHP, Santos, Newmont, and Newcrest. These are big liquid miners who pay their bills and keep digging regardless of what goes on elsewhere in the world. They need to keep flying their employees to and from sites, making Alliance’s contract flying relatively immune to the downturn in demand impacting regular passenger flights.
“The increase in total revenue, in the year, was driven by growth in contract and charter
revenues of 6% and 66% respectively. These increases more than offset wet lease and RPT
revenues decreasing by 68% and 3% when compared to the previous year,” Alliance Airlines said in its ASX filing.
Alliance Airlines bullish on 2022
Alliance Airlines expects business to remain strong over the next year. The airline says its robust and diverse business model provides a strong buffer against the financial shocks impacting most airlines.
In addition to growth in resource and energy sector FIFO flying, Alliance Airlines expects to sign up a second dry lease customer and grow its ad hoc charters.
“Alliance’s core business remains strong,” the filing notes. After working for 20 years to build up the airline, Scott McMillan told The Australian newspaper the record profit was very satisfying.
“When we started post-September 11, people said it was the worst time ever to start an aviation company.
“But we got through the GFC, the so-called mining downturn, and now COVID. Our business model is very, very resilient and very, very adaptive.”
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