Alliance forecasts $40m profit thanks to miners, footballers needing charter flights
Link copied to
Few airlines will be making profits this year but Alliance Aviation (ASX:AQZ) thinks it will be an exception.
With commercial flight options across Australia non-existent and Virgin Australia (ASX:VAH) in administration, Alliance is seeing hot demand for its charter flights, particularly from its FIFO clients.
The return of football leagues is also seeing the money roll in for the airline. Alliance helped bring the New Zealand Warriors across the ditch so the season could resume next week.
It also flew Australian NRL clubs during Round Two and this will continue for the foreseeable future, with teams discouraged from taking commercial flights and the lack of commercial options.
Alliance told shareholders it expects to book a $40m profit before tax (PBT). This is 22 per cent higher than the $32.8m PBT it made last financial year.
“The company has experienced a substantial increase in demand for these services subsequent to the outbreak of COVID-19 and expects to deliver its strongest charter revenue result in many years,” the company said.
Alliance also expects high revenues to continue into the next financial year, noting a substantial portion came from new clients.
But it is not all good news for Alliance. Prior to the pandemic, the company operated wet lease flights for Virgin Australia.
Virgin’s administration has suspended the agreement for the time being. Even if Virgin gets itself out of the difficulties it’s in, Alliance expects limited demand from the commercial airline next financial year.
Alliance also operates tourist charter flights, but currently all tours are suspended and the company does not expect them to resume until the 2022 financial year.
Nevertheless, with its FIFO and football charter flights evidently making up for this shortfall, shares rose by 26 per cent. The stock has now completely recovered from the plunge it saw in March.