Alliance Airlines (QQ, Brisbane International) is experiencing delays in the delivery of thirty E190s purchased from AerCap in 2023, causing the closed charter specialist to revise down its spending commitments this year.
In an April 26 Australian Stock Exchange (ASX) filing, Alliance said it had expected to spend AUD182-204 million Australian dollars (USD119-133 million) this calendar year settling the purchase of 17 of the 30 aircraft.
The aircraft were to be purchased one at a time over a three-year period, per the terms of the sale and purchase agreement with AerCap. However, Alliance Airlines says only seven of the planes have been delivered to date, and instead of the 17 aircraft planned for delivery this year, only 12 are likely. Accordingly, it now expects to spend AUD128-144 million (USD84-94 million) on finalising aircraft acquisitions this year.
The filing notes that Alliance has also entered into a standby vendor financing letter with AerCap regarding the purchase of the remaining aircraft. Subject to finalisation and satisfaction of the customary closing conditions, it may choose to defer payment for an aircraft by obtaining a loan from AerCap equal to 65% of the aircraft's net purchase price, with equal monthly repayments spreading over three years.
ANZ Bank has also agreed to extend an existing AUD67 million (USD44 million) loan facility due to expire in January 2025 for another three years. The bank will also upsize the facility by AUD50 million (USD33 million) to fund Alliance's capital expenditure programme.
Alliance's existing fleet includes thirty-four E190s, twenty-four Fokker 100s, and thirteen Fokker 70s. It operates some scheduled passenger transport services and ad hoc charters but its core business is wet-leasing aircraft to part-owner Qantas (QF, Sydney Kingsford Smith) and running fly-in-fly-out (FIFO) flights for the mining and resources sector.
"Fleet ownership is fundamental to the Alliance business model," said Managing Director Scott McMillan. "It underpins our operational performance with Alliance having ultimate control of our fleet units. The 2023 aircraft acquisition programme is a significant growth initiative we are implementing. Securing funding against this initiative highlights our strong financial status, particularly our long-dated contracted revenue streams from a predominantly investment-grade customer base."
