Alliance Airlines ups Qantas E190 wet lease cost, cuts numbers

By Andrew Curran.

Alliance Airlines will reduce the number of E190-100s it wet-leases to Qantas while also charging more for the aircraft as part of a sweeping restructuring of the long-running arrangement.

In an August 5, 2026, Australian Securities Exchange filing, Alliance Aviation Services Limited, the trading as Alliance Airlines, said it had "materially revised" the terms of its existing wet-lease arrangements with Qantas. The changes include a price increase that took effect on July 1, a revised annual price escalation mechanism to "better reflect future cost increases", and a reduction in the number of Embraers wet-leased to Qantas from 30 to 23. The fleet reduction will take place over the next 12 months.

Alliance Airlines, which has endured a financially punishing year, said the new arrangement better positions the business for sustainable long-term performance. Earlier this year, the carrier said good-faith negotiations were underway with a then unnamed, but major, wet-lease customer to resolve a commercially unviable and cash flow-negative arrangement that was materially impacting the airline's financial performance.

Original contractual terms bite Alliance Airlines

The company, which did not disclose specific details of the price increase, posted a statutory loss of AUD105.8 million (USD74.7 million) for the six months to December 31, 2025. In recent analyst briefings, Alliance executives have cited the insufficient repricing mechanisms and margin erosion embedded in the original contracts.

Alliance Airlines began wet-leasing E190-100s to Qantas in 2021, gradually increasing the number over several years. The regional jets, now painted in QantasLink colours, have become a core part of the Qantas fleet and are widely used on routes too thin to support frequent B737-800 services, such as Brisbane (BNE) – Adelaide (ADL) and Darwin (DRW) – Adelaide (ADL).

However, Qantas has also acquired more modern A220-300s and now has 13 in service, reducing the airline's reliance on the Embraers.

"This agreement improves the expected returns and cash flow for Alliance and demonstrates the strength of our partnership with Qantas," said Alliance Managing Director Stuart Tully.

Deliveries reduce need for wet-leased aircraft

The Qantas Group has a 19.9% shareholding in Alliance Airlines. In 2022, the Australian Competition and Consumer Commission rejected a bid by Qantas to buy the remainder of Alliance, which derives the bulk of its business from operating fly-in fly-out services for mining and resources companies and wet-leasing aircraft to other carriers.

The Alliance Airlines fleet comprises 85 aircraft, although not all are in service and several are being sold or broken down for parts. The fleet includes twelve F70s, twenty-two F100s and fifty-one E190-100s.

The Fokkers are primarily used on fly-in fly-out contracts and some Virgin Australia regular passenger transport routes. However, Virgin Australia recently ended its use of Alliance Fokkers on its Brisbane – Newcastle (NTL) and Brisbane – Rockhampton (ROK) routes. Like Qantas, Virgin Australia is benefiting from additional in-house capacity as more B737-8s are delivered.

In the six months to December 31, 2025, Alliance Airlines derived 41.4% of its revenue from closed charter (FIFO) flying and 46.1% from wet-lease operations.

Alliance flags job losses

The filing also flagged job losses at Alliance Airlines through a "phased consultation process" with its workforce as it seeks to right-size the business and better align its workforce and operating model with future operational requirements.

As of December 31, 2025, Alliance Airlines employed 1,429 people.

Alliance says it will reveal more details of its new wet-lease arrangement with Qantas, including the financial impact, when it releases its annual results later this month. Yesterday, Alliance also reaffirmed its underlying profit before tax guidance for the 12 months to June 30, 2026. The company expects underlying profit before tax to be between AUD35 million and AUD40 million (USD24.7 million–USD28.3 million).

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