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Alliance Aviation (ASX:AQZ) share price soars to new all-time high

The Alliance Aviation Services Ltd (ASX: AQZ) share price is reaching a new all-time high today following an announcement it is expanding its current fleet.
The post Alliance Aviation (ASX:AQZ) share price soars to new all-time high appeared first on The Motley Fool Australia. –

asx share price rise represented by red paper plane flying away from other white paper planes

The Alliance Aviation Services Ltd (ASX: AQZ) share price is breaking new ground today  after the company announced it is expanding its current fleet.

During mid afternoon trade, the company’s shares reached an all-time high of $4.05 but have since slightly retreated. At the time of writing, the Alliance share price is up 5.24% to $4.02.

What’s moving the Alliance share price

In today’s release, Alliance advised it has entered a contract with United States-based company Jetran LLC. The agreement will see Alliance acquire 16 Embraer E190 aircraft and one spare General Electric CF34 engine.

The aircraft, previously operated by American Airlines, are of a 99 seat, two-class cabin configuration.

The total purchase price of the assets is valued at $85 million. Alliance will fund the expansion through a mix of existing cash reserves, operating cash flows, and debt facilities.

Transfer of the aircraft will take place over an 11-month period, commencing with 5 Embraer E190s to be delivered this month. Thereafter, one airline jet will be handed over each month until November 2021.

The company said it will use the planes to capture several growth opportunities across Australia. This includes contract flying as well as wet and dry lease operations.

In addition to the news, Alliance stated that the E190 simulator that was bought as part of its Azzora E190 transaction is currently in transit. Expected to arrive in Brisbane in the near future, the aircraft simulator will be employed for pilot training.

The company anticipates that its E190 aircraft will be accredited to its CASA Air Operator’s Certificate in March next year.

Alliance believes the acquisition will not see a full positive material impact until sometime in FY23. In the meantime, the company is due to release its FY21 half-year results on 10 February 2021.

What did the managing director say?

Mr Scott McMillan, managing director of Alliance Aviation, commented on the procurement:

Alliance has again taken advantage of its strong financial position and current market conditions to acquire these quality aircraft at compelling value. The 100 seat jet aircraft market globally will rebound quickly as carriers look to focus on total trip costs rather than traditional metrics.

The acquisition of these 16 aircraft is in addition to the previously disclosed acquisition of 14 E190 aircraft from Azzora Aviation. This transaction completes Alliance’s short-term fleet expansion strategy and while the Azzora transaction included options for five additional aircraft, these options will now not be exercised.

Alliance share price summary

The Alliance share price has strongly rebounded since COVID-19 hit the airline industry earlier this year.

Breaking new ground today, the airline’s shares have outperformed while its peers are still well below their 52-week highs.

Alliance has a market capitalisation of $645 million and a price-to-earnings (P/E) ratio of 23.66.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Alliance Aviation (ASX:AQZ) share price soars to new all-time high appeared first on The Motley Fool Australia.

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