Alliance Aviation Soars with Record EBITDA and Fleet Expansion in 1H25
Alliance Aviation Services Limited reported robust half-year results for December 2024, highlighted by record EBITDA and strategic fleet growth, underpinning a confident outlook for 2025.
- Total revenue rose 11% to $338.9 million in 1H25
- Record EBITDA of $101.2 million, up 25% year-on-year
- Fleet expanded to 76 aircraft with ongoing E190 acquisitions
- Wet lease revenue surged 25%, offsetting slight contract revenue decline
- Industrial relations negotiations ongoing with expected 7.5-8% labor cost impact
Strong Financial Performance Amid Strategic Growth
Alliance Aviation Services Limited delivered a compelling financial performance for the half year ended 31 December 2024, with total revenue climbing 11% to $338.9 million and EBITDA reaching a record $101.2 million, a 25% increase from the prior corresponding period. Profit before tax rose 10% to $41.3 million, reflecting the company’s successful execution of its growth strategy despite some operational headwinds.
The company’s revenue mix remains dominated by long-term contracts, which accounted for 98% of flights operated in the period. Wet lease operations were a standout, with revenue increasing by $32 million to $160.1 million, driven by a 21% rise in flying hours. This growth was supported by the deployment of 29 Embraer E190 aircraft under contract with Qantas, with the final option aircraft scheduled for delivery in February 2025.
Fleet Expansion and Operational Metrics
Alliance’s fleet expanded to 76 aircraft, up from 70 a year earlier, reflecting the ongoing E190 acquisition program. The company has settled on 17 of 30 E190 aircraft under contract with AerCap, with six more expected to settle in the second half of FY25 and the remaining seven in FY26. This fleet growth underpins the company’s capacity to meet increasing demand in wet lease and contract charter services.
Flight hours increased significantly to 58,362, up from 50,793 in 1H24, driven primarily by wet lease operations. Contract revenue hours remained stable, while charter flying hours declined slightly. The company’s national footprint, including bases in major Australian cities and regional ports, continues to provide a competitive advantage in responsiveness and flexibility.
Industrial Relations and Cost Management
Alliance is actively managing industrial relations, with recent Enterprise Agreements reached for Brisbane engineers and QLD/SA pilots and Perth cabin crew, pending Fair Work Commission approval. The anticipated financial impact of these agreements is estimated at 7.5-8% of total labor and staff costs, in addition to previously agreed CPI increases. The company acknowledges the challenges posed by new industrial relations legislation and is focused on mitigating further impacts.
Capital Expenditure and Debt Position
Capital expenditure remains elevated as Alliance invests in fleet expansion and infrastructure, including the acquisition of three aircraft and two additional hangars in Brisbane. Total capital expenditure for 1H25 was $145.7 million, with growth capex focused on the E190 program. The company’s net debt increased to $425.5 million, supported by expanded debt facilities totaling $483.3 million, with leverage at 2.44 times EBITDA. Management expects leverage to reduce as aircraft acquisitions complete and operating cash flow strengthens.
Outlook and Strategic Focus
Looking ahead, Alliance maintains a positive outlook for 2025, anticipating further aircraft deployments on wet lease services and stable contract charter operations. The company plans to drive additional ad-hoc charter revenue and continue investing in technology and maintenance facilities to support growth. Dividend payments are on hold as capital is retained to fund expansion and debt reduction. Consensus forecasts for FY25 remain at $92.9 million profit before tax and $202.1 million EBITDA.
Bottom Line?
Alliance’s robust half-year results and fleet expansion set the stage for sustained growth, though industrial relations and capital commitments warrant close monitoring.
Questions in the middle?
- How will ongoing industrial relations negotiations affect operational costs and margins?
- What is the timeline and impact of the remaining E190 aircraft deliveries on capacity and profitability?
- How will Alliance balance capital expenditure with debt reduction and potential dividend resumption?
