Alliance Aviation Services Secures Higher Pricing and Reshapes Fleet as Part of New Qantas Deal

Alliance Aviation Services (ASX: AQZ) has finalised materially revised wet lease terms with Qantas Airways (ASX: QAN), securing higher pricing while agreeing to a staged reduction in aircraft and flying requirements.

The commercial changes include a meaningful price increase from 1 July 2026, a revised annual escalation mechanism, and a reduction from 30 aircraft to 23 during FY27.

Alliance expects the agreement to materially improve profitability, returns, and cash flow while reducing committed capital and making aircraft available for alternative opportunities elsewhere in its operations under a broader transformation program.

The aviation services provider will also resize its workforce and operating model to match the lower flying requirement, with phased consultation planned over the coming months to align with future operational requirements.

The revised terms maintain the partnership between the airlines while changing its scale and commercial settings to improve Alliance’s expected returns and cash flow.

Revised Terms Reset Economics

The revised annual escalation mechanism is intended to better reflect future cost increases, addressing both the immediate pricing position and the longer-term economics of the Qantas partnership.

The seven-aircraft reduction will occur in stages through FY27, reflecting a planned decrease in flying hours rather than an immediate withdrawal of the entire capacity adjustment.

Alliance considers the released aircraft and lower capital commitment capable of supporting alternative opportunities as it works to improve the resilience and sustainability of the broader business.

“This agreement improves the expected returns and cash flow for Alliance and demonstrates the strength of our partnership with Qantas,” managing director Stewart Tully said.

“Alongside the broader actions announced today, the revised agreement represents an important early step in our transformation program, which is required to improve Alliance’s operational and financial resilience and position the business for sustainable long-term performance.”

Phased Workforce Changes

Alliance will begin a phased workforce consultation process as it aligns staffing, operations and its organisational structure with the revised wet lease commitments.

The operational review will continue seeking simpler and more efficient ways of working while retaining the carrier’s stated focus on safety, regulatory compliance and operational performance.

Alliance reaffirmed guidance for its underlying FY26 profit before tax at the midpoint of its previous range of $35 million to $40m.

Because the principal commercial changes take effect from FY27, Alliance plans to provide more detail on the anticipated group-wide financial impact when it releases its FY26 results on 25 August 2026.

Alliance operates more than 70 aircraft across contract, charter, and wet lease services for mining, energy, and government customers as well as other airlines.