The Alliance Aviation Services Ltd (ASX: AQZ) share price is up almost 6% after announcing further aircraft purchases.
Alliance is Australia’s leading provider of contract, charter and allied aviation services, employing nearly 600 full time staff throughout Australasia and Europe. The company currently operates a fleet of 38 aircraft which is set to increase to 44 by the end of 2019.
Alliance specialises in tailored aircraft charters for the resource industry along with inbound and domestic group travel across Australia, New Zealand, the Pacific Islands and South East Asia.
What Did Alliance Aviation Announce?
Alliance Aviation Services announced that it has entered into a binding agreement with Swiss airline Helvetic Airways for the purchase of five Fokker 100 aircraft and all of Helvetic’s spare engines, parts and tooling.
The company said this acquisition builds on Alliance’s purchase of 21 Fokker aircraft from Austrian Airlines in December 2015.
Alliance Aviation revealed several reasons for this additional purchase.
One is the ability to expand the fleet is to take advantage of opportunities as they in arise in Australia and the South Pacific.
Another reason is the improving the economic life of Alliance’s fleet and reduces future capital expenditure requirements by securing low cost major components.
It also would improve Alliance’s position as the largest supplier of engines and spare parts outside of Fokker and the further diversification of its revenue streams.
Alliance Aviation Services Managing Director Scott McMillian said: “Since the 2015 fleet purchase, we have increased our operational fleet by 11 aircraft to meet the needs of a resurgent resources sector, satisfy the demand for wet-lease services and service the growing opportunities within the tourism sector.
“We have also successfully on-sold several of the Austrian fleet as well as establishing ongoing engine leases and we continue to sell increasing amounts of spare parts to all the major Fokker operators in the southern hemisphere. As with the Austrian transaction we have purchased aircraft from Helvetic in excellent condition,”
This seems like a smart move by Alliance Aviation, but I’m not sure about how much potential growth there is in this industry. That’s why I would rather invest in the rapidly growing businesses in the free report below instead.
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