Qantas has announced it intends to purchase Alliance Aviation, three years after acquiring a 19.9 per cent stake in the carrier.
The airline said on Thursday that the move, which would see Alliance become a wholly-owned subsidiary of Qantas, would allow it to “better serve the growing resources sector”.
It comes just one month after the
ACCC finally cleared Qantas’ stake in the airline, after a three year investigation into its impact on competition.
Alliance currently holds wet-lease agreements with both Qantas and Virgin, for the use of its fleet for regional, charter, and fly-in fly-out operations.
It also comes after Qantas exercised more options under its wet-lease with Alliance in March, for the use of 14 QantasLink-branded Embraer E190s, crewed by Alliance personnel. The agreement offers Qantas options to use up to 18 Alliance E190s under the QantasLink brand.Qantas said its existing agreement with Alliance will continue to operate as normal until any deal is finalised.
Qantas said the remaining 80 per cent share of Alliance would be acquired through a scheme of arrangement, where Alliance shareholders receive Qantas shares worth $4.75 for each share held in Alliance.
This represents a 32 per cent premium to Alliance’s volume weighted average price over the last three months, according to the airline Alliance’s directors have unanimously recommended the scheme, with Chairman Steve Padgett stating the transaction “represents a compelling opportunity for our shareholder to exit the Alliance business following a period of significant industry upheaval, and to realise a strong return on Alliance’s fleet assets”.
Qantas has informed the ACCC of its intentions, and the final deal will require formal approval from the competition watchdog. The deal is also subject to approval by Alliance shareholders.
Qantas purchased a 19.9 per cent stake in Alliance in 2019, and has long-flagged its desire to acquire 100 per cent of carrier.
Qantas Group CEO Alan Joyce said acquiring Alliance under the QantasLink brand allows the airline to be more competitive in the fierce regional aviation market.
“Alliance’s fleet of Fokker aircraft are perfect for efficiently serving resources customers in WA and Queensland,” Joyce said.
“They also have a big inventory of spare parts that would significantly extend the practical life of a combined fleet of around almost 70 Fokkers.
“Keeping these aircraft operating reliably for longer than either carrier could achieve themselves will help keep costs down, which is ultimately good news for charter customers,” he said.
“The resources sector continues to grow and any new tender for airline services will be very competitive. It makes 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 travelling public.”