This ASX aviation stock climbed 80pc in 12 months and is up, up and away on a new Qantas deal
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ASX listed airline Alliance Aviation (ASX:AQZ) has done well out of COVID-19 and its shareholders received further good news this morning.
The company operates wet lease aircraft and charter flights which have actually been in heavier demand during COVID-19.
This has been because of the shunning of commercial flights by its clientele as well as the resources boom which has driven demand for FIFO workers.
Alliance did that better than its peers out of COVID, so much so that it actually bought more aircraft last June – snapping up 14 Embraer E190s for just over US$79 million which are worth $104 million at today’s exchange rates.
Today Alliance Aviation announced to the ASX it had found a use for some of them – to wet lease to Qantas (ASX:QAN).
From the middle of this year, Alliance will provide the aircraft in the NT for Qantas services, initially three with E190s and up to another 11 subject to market conditions. The aircraft will serve flights between Adelaide, Alice Springs and Darwin.
Alliance already was a wet lessor to Qantas and formerly to Virgin Australia (ASX: VAH) as well managing director Scott McMillan.
But this is the first deal for these aircraft and the company says it will account for over 5 per cent of its total revenues – just for the first three planes.
“This further cements Alliance as the pre-eminent wet lease operator in Australia and the Pacific and confirms Alliance’s view that the circa 100 seat regional jet will be the sweet spot in the global aviation market’s post COVID-19 recovery,” said managing director Scott McMillan.
“It is also pleasing to be able to provide new job opportunities in the Australian aviation landscape as well as for our existing staff and potentially some Qantas Group staff who would normally be flying internationally.”
Alliance shares are up over 80 per cent in 12 months off the back of its solid performance. They gained another 14 per cent today.
However, Alliance is not the only solid performer in the ASX aviation sector.
Regional Express (ASX:REX) has rallied ever since it announced plans to launch capital city flights and have edged closer to their starting date – currently pencilled in at March 1. Rex’s shares are up over 70 per cent in 12 months.
Meanwhile, Virgin Australia went into administration and ended up going private while Qantas remains 35 per cent off pre-COVID highs in December 2019.