Alliance Aviation Raises EBITDA Guidance to $210M, Targets $315M Debt by 2026

Financial Guidance and Operational Challenges

Alliance Aviation Services Limited has provided an updated outlook for the fiscal year 2025, signaling a modest increase in EBITDA guidance to a range of $205 million to $210 million. However, profit before tax has been revised downward to between $80 million and $85 million, reflecting a series of operational disruptions. These include aircraft damage, protected industrial action, severe weather events such as North Queensland floods and Tropical Cyclone Alfred, as well as a four-day closure of Brisbane Airport that led to the cancellation of 272 flights and fleet relocations.

Debt Reduction Strategy and Cash Flow Focus

Alliance is forecasting net debt of $425 million to $430 million by the end of June 2025, with a clear target to reduce this to between $315 million and $360 million by June 2026. The company plans to achieve this through maximising operating cash flow, monetising engines, aircraft, and parts inventory, and consolidating or potentially selling infrastructure assets. Cost and capital expenditure efficiencies are also a priority. This financial discipline is expected to enable the board to consider recommencing dividends, a positive signal for investors.

Fleet Expansion and Competitive Advantages

Alliance continues to leverage its unique competitive advantage of owning an aircraft-only fleet, which provides flexibility in trading and strong relationships across Europe, the USA, and Asia. The company has focused on the 100-seat market, trading mature and reliable engines and airframes, and capitalising on a low Australian dollar. The deployment of Embraer E190 aircraft remains central to fleet optimisation, supporting increased wet lease activity and charter income growth. The company’s technical expertise and reputation as a reliable supplier underpin its strong pipeline of deals.

Addressing Operational and Technological Challenges

Operational challenges such as complex industrial relations and reliance on legacy systems have been acknowledged. Alliance is investing in new technology, including the implementation of Lufthansa systems, and has made leadership changes to strengthen its senior management team. These initiatives aim to improve on-time performance, operational productivity, and inventory management. The company is also expanding its maintenance facilities and capabilities to support fleet growth and redeployment.

Commitment to ESG and Governance

Alliance reaffirmed its commitment to environmental, social, and governance (ESG) principles. Environmentally, it is focused on fuel efficiency, emissions reduction, and recycling aircraft parts. Social initiatives include safety prioritisation, community partnerships for aviation education, and support for charitable organisations such as Breast Cancer Network Australia and Foodbank. Governance efforts highlight compliance with ASX principles, independent board oversight, and robust policies on ethics and cybersecurity.