Alliance Airlines (QQ, Brisbane International) has announced it has successfully raised AUD91.9 million Australian dollars (USD63 million) in fresh capital which will be channelled almost entirely towards the acquisition of new aircraft.
The Australian carrier said in a stock market filing that its institutional placement of new fully paid-up ordinary shares was fully subscribed by existing and new investors. The new placement amounts to 24.4% of Alliance's existing issued share capital.
The airline is in the process of raising another AUD30 million (USD20.6 million) through a non-underwritten share purchase plan aimed at existing shareholders. The purchase will start on June 19 and is expected to end by July 9, 2020.
In an earlier investor update, the carrier said that the pandemic provided a growth opportunity for Alliance Airlines given its reliance on the booming charter market.
"Alliance's recent performance has been outstanding and allows us to be uniquely positioned to look to expand through a number of growth initiatives. Importantly, this capital raising will give us the ability to invest in these initiatives whilst maintaining our strong balance sheet," Managing Director Scott McMillan said.
Alliance Airlines said that as the domestic market undergoes a transition in the wake of the pandemic and the associated travel restrictions, it was "well-positioned to adapt and respond to the challenges arising from the changes" which were likely to increase the demand from existing and new charter customers.
The carrier underlined that as scheduled flights were limited and even suspended, the demand for charter flights boomed. It added that it was impossible to predict how long-lasting these changes will be. However, Alliance sees potential for more charter work in short- and long-term. Some of its short-term charter customers are already in talks about more long-term contracts.
Alliance said it would like to purchase second-hand Fokker Aircraft jets but given their limited availability, it might be forced to diversify its fleet make-up and add other types. It underlined, however, that 80-100-seat jets "were the ideal size" in the current market environment.
"The grounding of airline fleets globally, due to COVID-19, presents significant opportunities for Alliance to expand its fleet. A fleet expansion would assist with satisfying the demand described above and enhancing Alliance's capability to continue to support its customers in the long term in accordance with its business model," it said.
Alliance Airlines operates twenty-four Fokker 100s, thirteen Fokker 70s, and five Fokker 50s. It has a further two Fokker 100s and one 70 in storage but available for reactivation when needed. All of the aircraft, except for one Fokker 70, are owned by the airline. Until late March, it wet-leased five Fokker 100s and five 70s to Virgin Australia International (VA, Brisbane International). The contract was terminated due to the COVID-19 pandemic and Alliance Airlines said in an investor briefing that its wet-lease operations would resume at a minimal level in mid-2021. Until then, it intends to focus on its charter and scheduled services, operated mainly on behalf of the Australian resources sector. It said that it was also well-positioned to operate regional flights on behalf of other Australian airlines.
The airline expects to post a AUD40 million (USD27.4 million) profit in the financial year ending at the end of June 2020.
