LONDON – It has been announced that Australia’s flag carrier airline, Qantas, is set to fully acquire Alliance Airlines.
The acquisition…
Qantas is due to acquire the remaining 80% stake of Alliance Aviation Services, which is the parent company of Alliance Airlines, meaning that once the acquisition has been fully completed, Qantas Group will wholly own Alliance.
Qantas has already released in a statement, that they have reached an agreement with the Alliance Aviation Service group, however, the agreement is subject to approval from a vote between the operator’s shareholders including approval from the ACCC (Australian Competition and Consumer Commission).
Back in February 2019, Qantas had bought a 20% stake in the group but highlighted at the time that it had a full intention to acquire the entire group.
This acquisition was subsequently delayed for three years because the ACCC needed to investigate the minority holding before the full acquisition could be completed.
Since then, the ACCC has come up with no findings to back up the fact that the move would lessen competition, so then subsequently agreed for the acquisition to continue, with the ACCC advising in April that, “no enforcement actions will be taken in relation to Qantas’ stake in Alliance.”
The acquisition of Alliance would significantly help the QantasLink division on charter services where they primarily focus on connecting smaller regional and domestic destinations throughout Australia, using small regional jet and turboprop aircraft.
To acquire the remaining 80%, Qantas will rely on a scheme of arrangement where Alliance’s shareholders will receive Qantas shares worth A$4.75 for each Alliance share that they hold.
This would represent a 32% premium to Alliance’s volume-weighted average price for the past three months.
On top of this, Qantas will also issue new shares valued at approximately A$614 million, where the expected EPS (earning per share) is accretive for Qantas shareholders.
The group also plans to extend its guaranteed lower fares program for its customers in a few communities where Alliance operates its own passenger service. They will also provide those customers with access to Qantas’ frequent flyer program, Qantas Frequent Flyer.
The Senior Comments
Qantas Group’s Chief Executive Officer, Alan Joyce has commented on the move to acquire Alliance Aviation Services fully, saying:
“Acquiring the remaining shares in Alliance would mean QantasLink can better compete in the highly competitive charter segment, given the shared fleet type of Fokker aircraft.”
“Alliance’s fleet of Fokker aircraft is perfect for efficiently serving resource customers in Western Australia and Queensland.”
“They also have a big inventory of spare parts that would significantly extend the practical life of a combined fleet of around 70 Fokkers.”
At present, Alliance Airlines currently operates a total of 63 aircraft, broken down as 20 Embraer E190s, 25 Fokker F100s, 14 Fokker F70s, and four Fokker F50s that are used exclusively on their Adelaide to Olympic Dam service.
The carrier is also penciled to still receive a further 12 Embraer E190s and one Fokker F70.
In addition to Alliance’s fleet, QantasLink operates a fleet of 103 aircraft, broken down as 11 Airbus A320s, 20 Boeing 717-200’s, three Dash 8 Q200s, 16 Dash 8 Q300s, 31 Dash 8 Q400s, 17 Fokker F100’s and five Embraer E190’s on lease from Alliance.
Continuing his thoughts, Joyce said, “Keeping these aircraft operating reliably for longer will help keep the costs down, which is ultimately good news for charter customers, as well as bringing together the operations planning and training facilities.”
“The resources sector continues to grow and any new tender for airline services will be very competitive. It makes a lot of sense for us to combine with Alliance to improve the services we can offer, which is a positive for both airlines as well as the traveling public.”
“We have opened up several new passenger routes using up to 18 of Alliance’s E190s, so bringing all 33 of these aircraft plus their crews in Qantas Group would really expand what we could achieve.”
Overall…
All in all, Qantas’ acquisition of Alliance will significantly help future proof the services that they offer throughout Australia, not only this but their recent announcement of their Project Sunrise program and large Airbus order of A220s, A321XLRs, and A350s will massively improve Qantas Group’s market position, not just domestically and regionally within Australia but on the world stage internationally as well.
