Alliance Aviation Reports 11.3% Revenue Rise and 9.9% Profit Growth in H1 FY2025

Financial Performance Highlights

Alliance Aviation Services Limited (ASX: AQZ) has delivered a robust financial performance for the half year ended 31 December 2024, with revenue climbing 11.3% to $333 million and net profit after tax increasing by 9.9% to $28.9 million. This growth reflects the company’s strategic focus on expanding its wet lease operations and maintaining strong contract renewals, despite a challenging operating environment.

The company’s earnings before interest, tax, depreciation, and amortisation (EBITDA) rose 25.9% to $101.2 million, underscoring improved operational leverage. Profit before tax increased 9.5% to $41.3 million, supported by disciplined cost management and fleet expansion.

Fleet Expansion and Operational Developments

Alliance’s fleet grew with the addition of three Embraer E190 aircraft, bringing the total E190 fleet to 38, alongside an increase in the Fokker 100 fleet to 38 aircraft. This expansion supports the company’s wet lease segment, which saw a 25.5% revenue surge to $160.1 million, driven by higher aircraft deployment in the first quarter of 2025.

However, operational challenges emerged in the latter part of the half, including two aircraft sidelined due to structural damage and industrial action by Brisbane engineers. These disruptions affected on-time performance, reliability, and revenue, particularly in contract and charter services.

Contract Revenue and Market Pressures

Contract revenue remained relatively stable, dipping slightly by 0.7% to $153.6 million, impacted by the transition of BHP Nickel West’s operations from full production to care and maintenance. This shift reduced service frequency from 24 to seven flights per week, weighing on the contract revenue stream.

Charter revenue declined 11.1% to $7.2 million, reflecting aircraft prioritisation toward wet lease and contract operations. Regular public transport (RPT) revenue also fell 6.3% to $5.9 million, consistent with the company’s strategy to focus capacity on higher-utilisation wet lease and contract charter clients.

Capital Investment and Cash Flow Dynamics

Capital expenditure surged to $145.7 million, driven by growth investments including the acquisition of three E190 aircraft and additional hangars at Brisbane Airport. The company completed the purchase of adjacent hangar facilities for $20.9 million, enhancing maintenance and operational capacity.

Operating cash flow turned negative at -$15.1 million, reflecting increased inventory purchases and higher interest payments due to elevated debt levels. Financing activities saw a net inflow of $106.9 million, supported by refinancing and increased debt facilities with ANZ and Pricoa Private Capital, enabling the funding of fleet and infrastructure expansion.

Strategic Outlook and Governance

Alliance’s board, led by Chairman Stephen Padgett OAM and Managing Director Scott McMillan, continues to prioritise safety, punctuality, and financial sustainability. The company has not declared an interim dividend, opting to reinvest earnings to support growth and navigate market uncertainties.

Despite operational headwinds, Alliance’s strong contract renewals and fleet growth position it well to capitalise on demand in resource and airline sectors. The company remains vigilant on industrial relations and market pricing pressures, particularly in the nickel sector, which could influence future revenue streams.