Alliance looks to expand its fleet

ALLIANCE FOKKER F28 MK100 VH-FKJ (CN 11372)

Regional air operator Alliance Aviation will buy 20 to 25 new planes - expanding its fleet by about half - as it aims to grow its share of the charter flight market and fill a void left by Virgin Australia.

Australia’s Alliance Aviation is looking to raise around A$122 million ($85 million) in equity capital, for acquiring aircraft to take advantage of growth opportunities. This comprises $A91.9 million via a fully underwritten institutional share placement and a A$30 million target from a non-underwritten share purchase plan extended to existing shareholders. The grounding of airline fleets globally “presents significant opportunities for Alliance to expand its fleet”, the company said today in a disclosure to the Australian Securities Exchange (ASX). “Alliance has continued to operate profitably due to its focus on contract flying, a diverse business model and its ability to react quickly to the changing aviation environment. Alliance believes it is now in an enviable position and is looking to invest for future growth.” Alliance Airlines operates an all-Fokker fleet, comprising 30 F100s, 16 F70s, and five F50s, between 24 and 31 years old. “The capacity, range, aerodrome accessibility and other features of Alliance’s aircraft continue to be of importance to Alliance’s existing customers, as they provide an optimum combination of features for regional services,” it says. “Alliance also considers that these features are likely to be valuable to prospective customers, particularly because 100- and 80-seat jet aircraft are the ideal aircraft size for prospective customers wishing to launch new regional services.” The company is offering 31.1 million shares to eligible institutional investors at A$2.95 each, fully underwritten by Ord Minnett as lead manager. The placement price represents a 5% discount to the previous close of A$3.10 on the 10th June, prior to a trading halt ahead of the announcement.

The 31.1 million new shares represent approximately 24.4% of the company’s existing issued share capital, which means it does not have to seek shareholder approval under the ASX’s class waiver decision on temporary extra placement capacity, dated 23 April. “The Australia domestic aviation sector is currently undergoing significant change, and Alliance believes this will require existing operators and any potential new sector participants to adapt to a new operating and competitive environment,” it says. It adds: “While it is not possible to determine how long these changes will last, Alliance believes they will be prolonged as Australia continues to navigate the pandemic and critical industries reassess their risk profiles.”