++Alliance Aviation Services (ASX: AQZ)++ has issued a sharp downgrade to its earnings outlook for the 2026 financial year, forecasting materially lower results than analyst expectations while announcing the immediate resignation of founding managing director Scott McMillan.
The company now expects EBITDA of between $190 million and $210m, down from consensus forecasts above $250m, with EBIT of $77m-$85m and pre-tax profit of $46m–$50m.
Alliance attributed the downgrade to higher aircraft purchase and maintenance costs, supply chain inflation, and an unresolved contract dispute, but said it remains profitable with strong cash flow and compliance with all banking covenants.
Co-Founder Steps Down as Leadership Realigns
Mr McMillan, who co-founded Alliance in 2002, has brought forward his previously announced resignation and stepped down from the board effective immediately.
Stewart Tully has assumed the role of managing director, while Mr McMillan will remain as a consultant for six months to support the transition.
Chair James Jackson thanked Mr McMillan for more than two decades of service, crediting him with building Alliance “into a successful aviation business with an established reputation for operational reliability, safety, and service to its clients and communities.”
Chief financial officer Andrew Evans will also depart in early 2026 after completing his short-term tenure, with an interim replacement appointed to ensure continuity during the transition period.
Alliance said it expects a permanent replacement to commence in March 2026, and has brought in additional resources to strengthen the finance team.
Earnings Impact and Remedial Actions
Alliance expects depreciation charges to rise by $15m due to higher aircraft purchase costs and shorter sector operations.
Repairs, maintenance, and logistics expenses have exceeded budget by about $1m per month, while the company also incurred $3.5m in unplanned costs from the early implementation of its AVIAN inventory management system.
A $4.2m contract dispute with a major customer is ongoing.
Alliance has launched a cost reduction program targeting purchasing and logistics processes, engaged external advisors to review its depreciation policy, and commenced the sale of non-core assets to strengthen its balance sheet.
Balance Sheet Still Solid
Despite the lower earnings forecast, Alliance said its balance sheet remains robust with net tangible assets of $466m—equivalent to $2.89 per share—and forecast net debt of $392m by June 2026.
The company said customer services remain unaffected and that operations continue at high standards of safety and on-time performance.
Alliance added that it is working with corporate advisor Barrenjoey Partners to assess business unit performance, debt structure, and capital allocation as part of its ongoing review.
The company said it remains confident in its long-term fundamentals and continues to operate profitably, but the short-term cost pressures and leadership transition are expected to define its focus through the remainder of FY26.
