Alliance partners with Virgin

Listed companies Alliance Aviation Services and Virgin Australia have teamed up to help grow their respective charter businesses in the national fly-in, fly-out market.

Under the proposed agreement, which is subject to approval by the competition watchdog, Alliance and Virgin Australia Regional Airlines will form a partnership whereby new contracts received will be operated under the partnership, while existing contracts will remain with their current operator.

Alliance, which primarily operates Fifo charter flights, and Virgin will also enter into agreements to provide and procure services for each other on a preferential basis.

“This includes, but is not limited to, aircraft procurement, spare parts pooling, maintenance and ground handling services,” Alliance said in a statement.

“This (partnership) will allow Alliance and Virgin to develop a compelling customer proposition and to more effectively compete in the Australian Fifo market.”

Alliance managing director Scott McMillan said the company looked forward to partnering with Virgin and leveraging the operational and commercial expertise of the two businesses.

“With our combined services and expertise we see a great deal of logic in working together,” he said.

Virgin Australia chief executive John Borghetti said the collaboration with Alliance would further build a more competitive, efficient and sustainable charter business.

“This partnership will enable Virgin and Alliance to develop and grow their competitive position in the charter market,” he said.

The announcement comes as Alliance posted a net profit of $4.9 million for the half-year to December; a significant improvement on the $25.8 million loss it made in the previous corresponding period.

Revenue was down by about $11 million to $92.9 million for the half-year, but the company was bullish on the next six months, saying it expects to exceed its results in the second-half of FY16 as a result of recent contract wins, the restructuring of its engineering business and the current operational performance.

Alliance shares were unchanged at 50 cents each at the close of trade.