Qantas (QF, Sydney Kingsford Smith) will exercise the final four E190 options it holds with Alliance Airlines (QQ, Brisbane International) by the end of the year, according to Alliance managing director Scott McMillan, who says the closed charter and wet lease specialist carrier is increasingly well-positioned to capitalise on the demand for capacity with its growing fleet of E190s.
"The aviation market worldwide is looking very bullish in terms of capacity," McMillan told an August 29 analysts' briefing following the release of its FY2024 results. "We committed last year to purchase thirty E190s from AerCap. It's a decision that, with the benefit of hindsight, is looking better and better every month."
Qantas, which holds a 19.73% stake in Alliance, already has twenty-six E190s in its fleet, all operated on a wet lease basis by Alliance. Another two will go to Qantas in September, a third towards the end of October, and the fourth in December.
Alliance had settled on ten of those thirty ex-AerCap E190s as of June 30, 2024. The airline has since settled on three more, including two this week. "The goal is to have all 30 AerCap aircraft delivered by June 2026," McMillan said. Seven of those aircraft will be parted out, providing Alliance with a stock of spare parts to use on its fleet, but also to sell to other Embraer operators.
Alliance had also secured four E190s from Azorra, now all delivered and in operation for the carrier, as well as an initial tranche of thirty-three E190s from Jetran and Azorra, also now all delivered.
As of June 30, Alliance had possession of forty-seven E190s. Another four are due for delivery this quarter, and three more are expected in the fourth quarter. In calendar 2025, the airline expects ten E190 deliveries - three in the first quarter, two each in the second and third quarters, and three in the final three months of the year. Two more E190s are due in the first quarter of 2026 and the final one in the second quarter of that year - taking the E190 delivery total to 67 airframes. However, the number of operational E190s will be fewer as some will be sold and others are already or will be parted out.
"We have people knocking on our door all the time wanting to buy either engines or airframes or both from us, and a number of these E190s are lower serial numbers," said McMillan. "It does make sense for us to sell some of the airframes and retain the engines."
At the close of the 2024 financial year, Alliance Airlines had 72 aircraft in revenue service. In addition to the E190s, the airline had thirteen Fokker 70s and twenty-four Fokker 100s in service. During the 2024 financial year, it acquired three additional F100s, with two being parted out and one due to enter service this month on a wet-lease basis with Virgin Australia (VA, Brisbane International).
"We've got significant growth and are turning away business," McMillan said. "We'll be building our Embraer operations in Queensland and strengthening our Fokker operations in Western Australia. In addition to finalising the four aircraft going to Qantas, we have people talking to us about buying Embraers, and we are finalising the dry leases for two additional E190s. We don't see any future changes to what we're doing - growing our fleet, growing our earnings, growing our cash flow, and ultimately reducing our debt as quickly as possible. That's the strategy."
Alliance generated an after-tax profit of AUD60.5 million Australian dollars (USD41.2 million) in the 12 months to June 30, 2024, on revenue of AUD646.8 million (USD441.2 million). Closed charter contract revenue, primarily flying for mining and resource companies, generated 48% of the total revenues; wet lease ops for customers such as Qantas and Virgin Australia accounted for 41%. Ad hoc charters accounted for 2.6%, regular passenger transport services accounted for 2%, and other services such as MRO, the sale of parts, ground handling, and aerodrome management accounted for the remainder.
