Alliance aquire 21 additional Fokkers 70/100

[Cool banana]

Austrian Airlines to sell Fokker fleet to Alliance Aviation of Australia

Austrian Airlines to sell Fokker fleet to Alliance Aviation of Australia Austrian Airlines has concluded an agreement with the Australian leading provider of fly-in, fly-out transportation, Alliance Aviation Services, to sell its entire fleet of Fokker aircraft. The Austrian Airlines Fokker fleet consists of 15 Fokker 100 and six Fokker 70 planes, a total of 21 aircraft.

The sale of the Fokker aircraft will rejuvenate the medium haul fleet of Austrian Airlines. The Fokker aircraft will be replaced step by step as of January 2016 by nearly-new Embraer 195 jets. The purchase price for the Fokker aircraft is US$15m and will comprise an issue of new shares in Alliance and a cash component. Austrian Airlines will gradually terminate its use of the Fokker jets and deliver them to Alliance Aviation in the period December 2015 to December 2017. Deployment of the Embraer aircraft will take place simultaneously. The Embraer jets currently have an average age of four years (built 2009-2012), compared to the average age of about 21 years of the Fokker fleet. “The replacement of the Fokker fleet with Embraer aircraft will serve to significantly rejuvenate our fleet and offer Austrian Airlines better unit costs”, explains Austrian Airlines CEO Kay Kratky. Alliance Aviation has a fleet of 15 Fokker 100 and eight Fokker 70 jet planes, and says it is the largest global operator of these types of aircraft. The company operates bases in Brisbane, Townsville, Cairns, Melbourne, Adelaide, Perth and Auckland. Source http://www.aerotime.aero


Interesting times ahead for Alliance, where are these aircraft going to operate?

[The Baron]

It doesn't say anything about operating them. Alliance have made good money out of flogging off old aeroplanes to others.

[TT738]

surely some of the current Alliance fleet are heading towards expensive D checks fast, so some surely will be scraped for parts.

[Berealgetreal]

Alliance have made good money out of flogging off old aeroplanes to others.

They certainly have. I heard they flogged two of their worst F100's for around 6 mil to VARA shortly after Virgin closed the Ejet base in PER.

They've picked these machines up for around 750k each. Unreal. They'd be worth at least that (more likely more!) in parts.

[PLovett]

My understanding from reading another article on the purchase is that they are to be parked up and used for spares (perhaps in the whole aircraft sense of the word) and/or leased to other operators. There was no indication that they were going to increase the fleet in operations in Australia.

[juzanuthapilot]

The other half of the story......

Alliance Airlines is to acquire the entire Austrian Airlines fleet of 21 Fokker 100 and Fokker 70 aircraft under a deal that will see Alliance diversify its operations into Europe, and the Lufthansa-owned Austrian become a shareholder in Alliance.

The US$15 million deal, announced on Wednesday, will see Alliance acquire Austrian’s 15 Fokker 100s and six Fokker 70s over a 26-month period from December, and comprises a US$9.5 million cash payment and the issuing of new shares to Austrian Airlines worth US$5.5 million (giving it a 12 per cent stake in the company).

“This purchase now provides Alliance with the opportunity to expand Alliance’s revenue stream into new areas and geographies and also provides a cost-effective long-term supply of parts to our existing Fokker fleet,” Alliance managing director Scott McMillan said in a statement.

“These opportunities both in Australia and through the establishment of an office in Europe will allow Alliance to generate new income streams that are not directly related to the Australian fly-in/fly-out resources sector.”

Alliance says the ex-Austrian aircraft will be acquired by wholly-owned subsidiary Alliance Aviation Services Slovakia, and will be available for wet and dry leasing, for future onward sale, or for breaking up for spare parts for reconditioning and resale, where the aircraft’s engines could also be sold or leased.

Aircraft to be broken up for spares will be parted out by Austrian Technik Bratislava, which Alliance this year contracted to perform heaving maintenance on its own Fokker fleet after announcing the closure of its Brisbane heavy maintenance facility.

Alliance currently operates 15 Fokker 100s, eight Fokker 70s and five Fokker 50s, and says it plans to continue operating the types in Australia for the next eight to 10 years. All three types have been out of production since Fokker’s bankruptcy in 1997.

“For Austrian Airlines, selling the entire fleet to one of their existing customers and the world’s largest operator of Fokker aircraft in one transaction was a clean and attractive proposition,” McMillan said.

In August Alliance said its focus for the current financial year was on securing more non-mining work and reducing costs amid a “sustained downturn in the resources industry” after posting a full year $36.6 million statutory net loss in 2014/15 due to fleet writedowns and other one-off charges.

The full year result was impacted by a first half charge taken on the carrying value of the fleet, as well as restructuring costs for sending its Fokker fleet to Bratislava for heavy maintenance, one-off costs from the sale of two Fokker 100s and staff redundancies.

[Mr.Buzzy]

Mining game must be ramping up again?

Bzbzbzbzbzbzbzbbzbzbz

[onehitwonder]

All in good time

[Supermouse3]

bit off topic but it appears to show the cost of doing business in Australia- operating everything from clapped out Navajo's/ 402's to the clapped out pigs and f100/70/50's/ metro's ... no such thing as upgrading to more efficient/ reliable machines when the cost of clapped out machines is so low... surely the cost of maintaining/ fuel cant outweigh the cost of leasing a more modern aircraft?
apparently the E190 uses 2/3 the fuel of the RJ100? not to mention being significantly faster....?

[Snakecharma]

21 F70/100's for 15 million USD is about half what you would pay for a single new E190 (little bit less than half really).

Takes a lot of fuel to make up the difference. Bit of tarting up on the cabin side, slap in a new coat of paint and you have a cat 3 capable jet with about the same seat capacity as a 190.

Makes a compelling argument from a business perspective, particularly for low utilisation work where you might do a morning and evening service on a contract. No need to flog the machine all day, everyday just to make ends meet. With low utilisation the difference in fuel costs becomes less relevant, and the maintenance burden becomes less of an issue as there is more downtime for the engineers to do their thing to keep it going.

[Buttscratcher]

Mmmmmmm. Smart!

[Engineer_aus]

Didn't Vara buy 2 F100's off Alliance for 5 mil each or something? Looks like management got the wool pulled over their eyes.

[lederhosen]

Could make for some interesting backpack charter opportunities filling seats between Oz and Europe....wonder how many fuel stops the little Fokker needs between Brisbane and Bratislava? Around 15 years ago they were passing hands for about $1m. Friends who flew them were overall positive, but they were pretty heavy on maintenance. I suspect a lot of these ones will be used for spares. Not ideal in winter weather either which is another reason Oz is a good place for them.

[DHC4]

Any more news on the closure of the Brisbane maintenance facility.

[airdualbleedfault]

Humour me here with some really rough figures re how long it would take for something like an E195 to pay for itself :
20 aircraft at 10 hrs a day utilisation = 200hrs a day x 365 = 73,000 hrs a year. 73,000 x 300 litres/hour (leaving out the fact the 190 around 5% quicker), a shade under 22 million litres of fuel a year. This is obviously not factoring in things like maintenance (an F100 would require significantly more engineers/hours per flying hour) and things like loss of customers/pax due breakdowns and rescue flights (something at least one F100 operator in Oz has a shed load of). I'm not so sure running old pieces of crap is as smart as the bean counters would have us believe.
Note : most large successful LCCs run new/or low time aircraft.

[Supermouse3]

all operators have to upgrade at some point

[Supermouse3]

Also I hear the E190 is leased at $250k~ a month...

[neville_nobody]

DualBleed no charter operates aircraft 10 hours on a day on average, hence the old airframes. You couldnt justify a new anything for the amount of time these aircraft spend parked.

[Snakecharma]

About two to three months worth of lease payments on a 190 would cover the purchase price of a F100 at the prices Alliance paid.

Over the course of a year you could buy outright 4 F100's and own them vs renting an E190.

There are good reasons to buy a new airframe when you are operating high frequency RPT but for charter/FIFO where you do a morning and an evening push with the machine sitting around the rest of the time a depreciated airframe is hard to beat.

Given that contracts typically don't last as long as leases I.e. You don't see many fifo contracts last the 10-12 years that a typical new airframe would be leased for, so you take on a lot of risk buying/leasing a new airframe for FIFO work. Obviously Cobham got the guarantees they needed to take on the 190 they have, but it is no surprise that most FIFO work is done with older airframes.

[Snakecharma]

ps! Most successful LCC's use new airframes because they treat them like a consumable.

Ryanair buys airframes at such volumes that it gets them for very good prices, so much so that they flog the crap out of them, do as little maintenance as possible over the course of their life (I.e. If you were going to keep an airframe 15-20 years you would do a lot more preventative maintenance) and roll them over at 8-10 years before the big checks come due. When they do flog them they sell them for as much or more than they bought them for I.e. They break even or make a profit on a cash basis for each airframe.

Not sure about Easyjet. southwest are different as far as I am aware, they buy a mix of new and used airframes so their fleet profile is different.

[airdualbleedfault]

Whilst alliance is charter only the other 2 outfits that operate them are not. I also omitted the cost of buying fuel at outports, and not being able to carry full loads out of hot/high strips. I believe that Networks F100s were around 4.5 million landed in Oz with an Airworthy and D check, a bit more than a few months of E jet lease payments.

[Snakecharma]

You are right, 4.5 million is a bit more than a few months worth of lease payments, but given the thread is about alliance's purchase of a bunch of jets for 15 million the comparison is a bit of a sideways one.

Nevertheless, 4.5 million ready to go is still about a 10th of what you would pay for a new jet so not a hugely different argument.

A new CF34-10 would come close to 4.5 mill I suspect..

[Supermouse3]

the 717's only do 2-3 returns a day... same utilization as the f100, E190, 146...

why buy a CF34-10? when an engine is up for repair it is swapped for an overhauled engine, most are operated on a lease with a maintenance package which covers items like engines which are only replaced after a certain time, as the failure rate is so low there is no point buying one...

I don't know about the F100, but I am assuming it has the same issue as 717's, as soon as it gets a bit hot out, they struggle above about FL280, reducing efficiency and speed,
the 717 also has to have a software mod which increases thrust by about 3000lb per side to enable it to operate in the Pilbara when it gets hot..

I understand the attraction of buying a heap of cheap aircraft and replacing the current fleet before they hit D checks- but surely the F100's operated by Austrian air would have a truckload more cycles than the f100's operating in Australia... after all it is cycles that kills machines, not hours..
fleet upgrades often mean a more attractive operator... as an employer you wouldn't be happy if your employees were late to work because the bus you sent them wouldn't start... pretty soon you will start looking to the neighbor's and see their shiny new machine that starts first time every time, with no delays, higher capacity, shorter trip times, better comfort..

I understand how cut throat the aviation industry is, but everyone has to upgrade....