Alliance Airlines seeks $40 million to fund strategic reset

By Andrew Curran.

Alliance Aviation Services Limited, trading as Alliance Airlines, will go to the market to raise AUD40.1 million (USD28.8 million) via an institutional placement and a 1:5.6 pro rata entitlement offer targeting existing institutional and retail shareholders.

The announcement of the fully underwritten equity raising follows a trading halt on the Australian Securities Exchange and the release of the company’s financial results for the 12 months to June 30, 2026.

The company will issue 28,760,866 ordinary shares at AUD0.70 (USD0.50) per share in the entitlement offer, each with the same rights as existing shares. The lead manager and underwriter is Barrenjoey Markets Pty Limited. Around half the capital raised will come from the entitlement offer and half from the institutional placement.

“The proceeds of the capital raising will be used primarily to support working capital and to reduce debt,” said Alliance Aviation Services Limited Chairman James Jackson during an August 26, 2026, analyst briefing.

“The board carefully considered the size and structure of this raising,” Jackson added. “It is designed to provide an immediate and meaningful reduction in leverage while preserving the company’s capacity to deliver its strategic turnaround.”

Alliance’s directors and largest (19.7%) shareholder, Qantas, will fully exercise their share entitlements.

Jackson said the capital raising is the first step in the airline’s de-leverage programme, which includes the sale of surplus and non-core assets, including aircraft, hangars, engine cores, and parts.

“We are targeting proceeds from the sale of these assets of approximately AUD60 – 75 million (USD46.7 -  53.9 million) through this financial year,” said Jackson.

Alliance Airlines posts an underlying before tax profit but a statutory before tax loss for FY2026

Meanwhile, Alliance Aviation Services Limited announced an underlying profit before tax of AUD38.2 million (USD27.4 million) for the year ending June 30, 2026, and a statutory before tax loss of AUD129.9 million (USD93.3 million).

Alliance’s preferred underlying profit before tax figure excludes an AUD0.6 million (USD0.43 million) adjustment from the previous year’s revenue; a payroll tax adjustment of AUD1.2 million (USD0.86 million); an AUD144.6 million (USD103.9 million) impairment of Fokker aircraft; an asset right of use impairment of AUD7.2 million (USD5.2 million); an intangibles impairment of AUD0.1 million (USD0.72 million); an inventory write down of AUD12.9 million (USD9.3 million); redundancy costs of AUD1.6 million (USD1.2 million); and associated tax impacts of AUD50.4 million (USD36.2 million).

The full year results announcement caps a torrid year for Alliance Airlines, which posted both an underlying and statutory before tax loss in the first half.  However, the company’s board says the business is now performing better, helped in part by the successful renegotiation of large scale wet-lease agreement with Qantas and a business turnaround programme.

Renegotiated Qantas agreement helps Alliance's financial reset

Outgoing Managing Director Stewart Tully calls the new wet lease agreement with Qantas an essential part of the airline’s strategic reset, saying the previous arrangement had become commercially unsustainable.

“Cost inflation across labour, maintenance, logistics, and compliance reduced profitability  under the previous arrangement,” Tully said. “The revised agreement addresses that directly.”

Among other changes, the renegotiated agreement will see the number of Alliance E190-100s flying for Qantas reduce from 30 to 23 by June 30, 2027. Already, one aircraft has been returned.

“The staged reduction of committed aircraft doesn’t simply mean less flying,” said Tully. “It means better utilisation of that fleet, lower capital intensity, and the flexibility to reallocate aircraft to other customers and the opportunity to generate the best returns.”

Calling the deal a commercial reset, Tully said Qantas would remain a valuable customer but Alliance’s future focus would be on fly-in-fly-out (FIFO) flying, the “foundation of the business.”

A renewed focus on FIFO flying for Alliance Airlines

The report accompanying the results announcement shows that FIFO contract flying accounted for 27,328 flying hours in the 12-month period, or 24.9% of the airline’s total flying hours. But FIFO flying generated AUD319.2 million (USD229.3 million) in revenue in FY2026, or 44.8% of the airline’s total revenue of AUD712.6 million (USD511.8 million).

The company’s wet-lease flying, which is Qantas-focused but includes other customers, accounted for 79,560 flying hours in the 12 months to June 30, 2026, but AUD313.1 million (USD224.9 million) in revenue – or 43.9% of the airline’s overall revenue.

“We continue to value of relationship with Qantas but this revised arrangement puts that relationship on a more sustainable footing for both parties,” Tully said.

Alliance’s trading halt will lift when the ASX re-opens for business on August 27. The new shares are expected to be issued within the first half of September, with trading in those shares scheduled to begin on September 21.

Photo: Aero South Pacific.
Contact the writer: andrew@aerosouthpacific.com