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Alliance Aviation sees big rise in profit

Derek Rose
Alliance Aviation runs regular flights for the mining sector, including BHP's Olympic Dam mine

Alliance Aviation shares have soared to a four-month high after announcing it expects to make a $40 million profit before tax this fiscal year, making it a rare aviation company to benefit from the coronavirus crisis.

"The board is of the view that this is an exceptional result and demonstrates the underlying robustness and diversity of the Alliance business model," the company said on Wednesday.

At 1114 AEDT, its shares were up 26.5 per cent to $2.62.

The company made $32.8 million in profit before tax in fiscal 2019 and expects to use the increased cash to pay down debt, which stood at $50.4 million as of June 30.

Alliance said that while its inbound tourism flights were suspended it had seen increased demand by the resources sector for both regularly scheduled and charter flights.

Alliance said its flights for the resource sector had been the first to adopt pioneering measures in response to the coronavirus, including seating plans to accommodate social distancing, specific cleaning regimes, aircraft filtration systems and passenger temperature tests.

"This swift and flexible response has seen Alliance capitalise on additional demand for flights in the resource sector and, particularly, increases in flight schedules of contracted clients," Alliance said.

Alliance, which has a fleet of 40 jet and turboprop Fokker aircraft, has also attracted a number of new resource sector clients, it said.

As well as increasing flight schedules for contracted clients, Alliance has experienced a substantial increase in demand for charter flights as other operators cancel flights.

The company said a number of new resource sector clients had taken up charter services and Alliance expected to deliver its stronger charter revenue in many years.

The company does not expect a resumption of its inbound tourism flights until at least fiscal 2022.

Alliance said it was awarding most of its employees, other than senior management, $1,000 in free shares to thank them for their exceptional performance.