Alliance flying high

WHILE COVID-19 has cruelled the bulk of the aviation industry, at least one small player is bucking the trend.
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Brisbane-based Alliance Aviation, which conducts many of the fly-in, fly-out flights for the resources sector, expects to report a before tax profit of more than $40 million.

It puts that expectation down, at least in part, to increased clientele for its resources sector business and the stronger than forecast revenue for its charter operations.

Alliance also believes the flexibility it gets from owning its own planes and the self-reliance it gets from holding a large inventory of spare parts helps too.

In the resources space the company lays claim to introducing several measures since adopted across the broader aviation industry including seating plans to accommodate social distancing, specific cleaning regimes, aircraft filtration systems, passenger temperature testing, and the health screening of all passengers prior to check-in at both home ports and mine sites.

It says those measures helped it capitalise on additional resources sector demand for flights and in increased flight schedules for contracted clients.

Alliance also managed to pick up a number of additional resources sector clients.

On the charter front the company experienced a substantial increase in demand following the COVID-19 outbreak and expects to deliver its strongest charter revenue result in many years.

The additional demand is being driven by a combination of social distancing and a lack of availability of scheduled flights by other operators.

It has picked up a number of new resources sector charter clients and expects the increased charter revenue to continue through 2020-21.

Not everything has gone so well for the aviation company though.

There are no surprises in Alliance reporting that all of the inbound tours it operated have been suspended for the foreseeable future.

Indeed, Alliance does not expect a full resumption of those flights until 2021-22.

Its wet leasing business has also taken a hit.

The wet lease agreement it has with Virgin is still in place, however, it remains suspended.

Alliance is not expecting any wet lease activity for the remainder of the 2019-20 financial year and anticipates only limited demand for those services in 2020-21.

The company has maintained uninterrupted services from Brisbane to both Gladstone and Bundaberg, although those services have been triangulated and operate six times per week.

Three of those services each week are underwritten by the federal government's Regional Airline Network Support Program.

However, Alliance's Brisbane to Port Macquarie service remains suspended due to the interstate border restrictions.

Alliance's marketing and distribution agreement with Virgin, which allows Virgin passengers to book on Alliance's RPT routes, is still operating during Virgin's voluntary administration process.

Alliance shares closed 23.7% higher at $2.66, valuing the company at $339 million.