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.

| More on:
asx share price rise represented by red paper plane flying away from other white paper planes

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

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.

More on Share Market News

Man jumps for joy in front of a background of a rising stocks graphic.
Broker Notes

These ASX 200 shares could rise 20% to 50%

Looking for big returns? Brokers think these shares could do the job.

Read more »

asx share price represented by cartoon letters spelling the word FOMO
Share Market News

What did Macquarie's "FOMO Meter" reveal about the stock market in May?

Is the market getting frothy or is there still room to climb?

Read more »

Market up or down
Share Gainers

Here are the top 10 ASX 200 shares today

ASX investors had a rough end to the week...

Read more »

Man in an office celebrates at he crosses a finish line before his colleagues.
Share Gainers

4 ASX 200 shares racing ahead of the benchmark this week

ASX investors sent these four stocks soaring 12% to 18% this week. But why?

Read more »

A young man sits at his desk working on his laptop with a big smile on his face.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why Dateline, DroneShield, Ora Banda, and Pilbara Minerals shares are dropping today

These shares are ending the week in the red. But why?

Read more »

Man pointing an upward line on a bar graph symbolising a rising share price.
Share Gainers

Why BHP, Coronado Global, EBR Systems, and Whitehaven Coal shares are pushing higher today

These shares are ending the week on a positive note. Let's find out why.

Read more »

man thinking about whether to invest in bitcoin
Broker Notes

Why Macquarie expects this ASX 200 dividend stock to keep outperforming

Macquarie has tipped this ASX 200 dividend stock to outperform. Let’s find out why.

Read more »