Qantas buys the rest of Alliance Aviation

Qantas has announced that it has reached an agreement to take full control of Alliance Aviation Services by acquiring the remaining 80% of the airline. The Australian flag carrier had initially acquired 20% in 2019, but has always been open about its intentions to gain full control. 

A full acquisition

In the three years since Qantas acquired a 20% minority stake in Alliance Airlines, it has worked closely with the Brisbane-headquartered regional carrier. Indeed, the Australian flag carrier explained in a statement published regarding its announcement that Alliance already operates 18 Embraer E190s for QantasLink.

Alliance is a fairly small player in the Australian domestic market, with its flights accounting for approximately 2% of this sector. Away from scheduled services, it particularly specializes in charter flights that serve mining communities on a 'fly-in, fly-out' (FIFO) basis. Qantas CEO Alan Joyce welcomed the announcement, stating:

"The resources sector continues to grow and any new tender for airline services will be very competitive. It makes a lot of sense for us to combine with Alliance to improve the services we can offer, which is a positive for both airlines as well as the traveling public."

The cost of the deal

According to the American Journal of Transportation, the deal values Alliance Airlines as a whole at A$763 million ($553 million). Reuters notes that the 80% stake that Qantas is acquiring to gain full control equates to A$610.8 million ($443.14 million). Shareholders in Alliance Airlines will receive Qantas shares worth A$4.75 apiece, "representing a 32% premium to Alliance’s volume-weighted average."

With Qantas being a heavyweight of Australian commercial aviation, it would be understandable if other carriers were to object to the deal on competition grounds. However, Qantas explained in its statement today that an ACCC investigation into its minority stake in Alliance "made no findings that it lessened competition." In any case, the ACCC will also scrutinize the full acquisition, with the airline stating:

"Qantas has advised the ACCC of today’s announcement and provided detail of the anticipated benefits to customers. Qantas will continue to update the market on expected completion timing as the competition clearance and Alliance shareholder vote processes progress."

Strong support all round

In terms of shareholder approval, Alliance is strongly in favor of the deal. Indeed, the carrier's own statement on the matter confirmed that "directors unanimously recommend the scheme." But what exactly will Qantas get for its money?

In terms of its current fleet, Alliance Airlines presently flies 18 Embraer 190s, 5 Fokker 50s, 14 Fokker 70s, and 25 Fokker 100s. QantasLink also flies Fokker aircraft, and Joyce explains that the acquisition would also benefit these planes. He states that Alliance has "a big inventory of spare parts that would significantly extend the practical life of a combined fleet of around almost 70 Fokkers."

ALLIANCE FOKKER 50 VH-FKZ (MSN 20286)

FRONT: ALLIANCE FOKKER 70 VH-NKQ (MSN 11572)
BACK: ALLIANCE FOKKER 100 VH-UQW (MSN 11367)

ALLIANCE FOKKER 70 VH-NUU (MSN 11532)
SPORTING THE BREAST CANCER LIVERY

ALLIANCE FOKKER 70 VH-QQW (MSN 11569)
SPORTING 100YRS OF FLIGHT LIVERY

ALLIANCE EMBRAER E190AR VH-UYB (MSN 19000012)
SPORTING THE 100YRS OF THE RAAF LIVERY

ALLIANCE EMBRAER E190AR VH-UYW (MSN 190000174)

ALLIANCE AIRLINES
Alliance Airlines Pty Limited, founded on the 5th April 2002, is based in Brisbane, with operational bases in Adelaide, Cairns, Melbourne, Perth, Townsville, Darwin and Rockhampton. 

Alliance Airlines owns and operates a fleet of Fokker and Embraer aircraft, including Fokker 50 turboprops and Fokker 70, Fokker 100 and Embraer 190 jet aircraft. Alliance operates fly-in fly-out (FIFO) air charter services for the Australian mining and resources industry, as well as private aircraft charters throughout Australia, New Zealand, the Pacific Islands and South East Asia. Alliance also provides aircraft component sales and leasing worldwide.