The Alliance Aviation Services Ltd (ASX: AQZ) share price is surging higher today following the release of an announcement.
At the time of writing, the airline operator's shares are up 13% to a record high of $4.44.
What did Alliance Aviation announce?
This morning Alliance Aviation announced that it has executed an agreement with Qantas Airways Limited (ASX: QAN) for the provision of E190 capacity to the airline giant.
According to the release, the wet lease agreement initially provides for three E190 aircraft to commence operations in mid-2021. It also includes options for Qantas to call on an additional eleven aircraft based on market conditions.
A wet lease agreement is one where the lessor provides an entire aircraft and at least one crew member.
The agreement is for an initial period of three years and the aircraft will be based in Adelaide and Darwin servicing the Adelaide–Alice Springs, Darwin–Alice Springs, and Darwin–Adelaide routes.
The company advised that this transaction is material. It is expected to account for in excess of 5% of total revenue once the first three aircraft have been fully deployed.
An exciting transaction
Alliance's Managing Director, Scott McMillan, said: "This is an exciting transaction for Alliance and further extends on previous wet leasing arrangements that Alliance has had with Qantas since 2012."
"This further cements Alliance as the pre-eminent wet lease operator in Australia and the Pacific and confirms Alliance's view that the circa 100 seat regional jet will be the sweet spot in the global aviation market's post-COVID-19 recovery."
"We look forward to providing Qantas with our renowned high-quality service and operational reliability. It is also pleasing to be able to provide new job opportunities in the Australian aviation landscape, as well as for our existing staff and potentially some Qantas Group staff who would normally be flying internationally," he concluded.
Alliance acquired thirty E190 aircraft recently with the aim of deploying a significant number of them as wet lease operations.
