Alliance launches $40 million equity raise with 17.4% discount to TERP

Retail Entitlement Offer Launches to Complete $40 Million Equity Raise

Alliance Aviation Services (ASX:AQZ) has kicked off the retail component of its fully underwritten $40 million equity raising, aiming to shore up its balance sheet and fund working capital as it pushes through a strategic turnaround. The retail entitlement offer opened on 2 September and will close at 5pm Sydney time on 11 September, targeting approximately $7 million in new funds at an issue price of $0.70 per share.

This retail offer follows a successful institutional placement and entitlement offer that closed on 27 August, raising about $33 million at the same price and ratio of one new share for every 5.6 existing shares held at the record date of 28 August. The offer price represents a 17.4% discount to the theoretical ex-rights price of $0.85 and a 22.2% discount to the last closing price of $0.90 on 21 August.

Equity Raising to Support Deleveraging and Operational Reset

The capital raising is part of Alliance's broader strategy to strengthen its financial position following a turbulent FY26. The company reported an underlying profit before tax of $38.2 million, in line with guidance, but statutory results showed a $90.9 million loss due to significant non-cash impairments primarily related to the Fokker fleet. This impairment reflects the company's ongoing fleet renewal and optimisation efforts, including a revised wet lease agreement with Qantas that reduces fleet commitments and improves contract economics.

Alliance's chairman, James Jackson, highlighted the equity raise as a key step in the company’s transformation: "The net proceeds will improve balance sheet flexibility and support our deleveraging program, targeting a reduction in net debt to EBITDA from 2.7x in FY26 to around 2.1x by June 2027." The company is also pursuing asset sales estimated to generate $60 to $75 million in FY27, including surplus aircraft and non-core assets.

Shareholder Participation and Offer Mechanics

Eligible retail shareholders in Australia and New Zealand can subscribe for new shares on a pro-rata basis, with the option to apply for additional shares up to 100% of their entitlement through a top-up facility. However, allocations under this top-up are not guaranteed and may be scaled back on a pro-rata basis if demand exceeds supply.

Entitlements are non-renounceable, meaning shareholders cannot trade or transfer their rights. Shareholders who do not participate will see their holdings diluted as new shares are issued.

Leadership Transition and FY27 Outlook

Looking ahead, Alliance has appointed Steven Greenway as CEO effective 1 October 2026, succeeding Stewart Tully after more than 11 years at the helm. Greenway brings extensive global airline leadership experience, including turnaround success at Flyadeal.

Management forecasts FY27 underlying EBITDA between $175 million and $190 million, with profit before tax guidance of $55 million to $60 million. The company also anticipates underlying free cash flow of $10 million to $20 million, with full benefits of cost reductions expected in FY28.

Alliance has suspended dividends for FY26, prioritising cash flow and balance sheet repair, with a resumption contingent on improved free cash flow.

What Investors Should Watch Next

The retail entitlement offer subscription rate will be a key indicator of shareholder confidence in Alliance’s turnaround plans. Progress on asset sales and the execution of cost reduction initiatives will also be critical to achieving the targeted leverage reduction. Meanwhile, the leadership transition to Greenway marks a pivotal moment as the company seeks to convert strategic resets into sustainable profitability.