Company Profile: Alliance Aviation Services (ASX: AQZ)
Alliance Aviation ServicesAQZ
GICS Sub-IndustryTransportation
Current Price$1.13
Market Capitalisation ($M)$131.46

As of 11/08/2017 11:00AEST

Alliance Aviation is Australia’s leading fly in, fly out (FIFO) air charter services operator, offering specialised services to the resources industry, inbound travel and domestic group travel. The business has a fleet of 28 Fokker aircrafts, employs over 400 staff and provides ad hoc charter services in Australia and New Zealand.


The business has three main segments: Contract Income, Wet Lease & Charter Income and Aviation Services. The Contract Income segment is by far the company’s most important segment, accounting for over 76% of group revenue. This segment involves Alliance Aviation providing flights to its clients as part of long-term contracts and is measured by flying hours. The segment experienced significant growth in flying hours in FY17 despite lower mine maintenance flights as part of the wider slowdown in the resources sector.

 

Alliance Aviation’s recent announcement of increased services by replacing Virgin Australia on four regional Queensland routes is a clear positive in terms of a material increase in flight hours (and hence earnings) as well as further vindication of the previous fleet expansion strategy (Austrian Airlines transaction).

 

The Wet Lease and Charter Income segment accounts for 10.9% of Group revenues, which involves operating Alliance aircraft for other carriers as well as income from ad-hoc requests.  Alliance recently announced the operation of flights for Virgin on three routes (Brisbane) on a wet-lease basis for 12 months.

 

The Aviation Services segment offers complementary services including leases, parts and aircraft sales. The segment represents 10.7% of Group revenues and is expected to develop as the business leverages its significant inventory holding.

 

Alliance Aviation’s Board is highly experienced, with each having extensive track records of working in the aviation industry as well as directorships in key industry bodies. Alliance Aviation is led by Scott McMillan, who has been Managing Director since the company’s establishment in 2002.

Glennon Capital does own AQZ in the portfolio.

Written by Glennon Capital
Article posted 11/08/17