Australia’s flag carrier Qantas Airways announced today plans to buy the remaining 80% stake in Alliance Aviation Services.
Alliance Aviation operates a fly-in-fly-out air charter service for the Australian mining industry, as well as offering private aircraft charters across Australia, New Zealand, the Pacific Islands, and Southeast Asia.
Details behind the buy
Qantas Airways bought Alliance Aviation for $443.14 million. The deal will allow Qantas to merge with Alliance’s charter fleet to the point where they can essentially serve customers in the Australian mining industry.
This benefits Qantas as the recent full reopening of Australia and New Zealand’s borders are expected to generate increased activity – and increased profitability – in the sector.
Alan Joyce, Chief Executive Officer of Qantas, explained the reasoning behind the Aussie carrier’s expensive purchase:
“The resources sector continues to grow and any new tender for airline services will be very competitive. It makes a lot of sense for us to combine with Alliance to improve the services we can offer.”
As Alliance Aviation Services Chairman Steve Padgett remarked, the transaction represented itself as a “compelling” opportunity for its shareholders to “exit the Alliance business following a period of significant industry upheaval” and “make a strong return on Alliance’s fleet assets.”
Alliance shares rose as a consequence, but Qantas’ reduced slightly.
Qantas offered reassurance that agreements already in place with Alliance wouldn’t be affected by the deal regardless of the time it would take to secure approvals. Australia’s relevant watchdog has been made aware of the purchase.
Qantas is Australia’s largest airline by fleet size, international flights and international destinations. Already a profitable and successful carrier, there’s still no reason to resist expansion through new business purchases. However, The Australian Competition & Consumer Commission will be scrutinising the proposed acquisition “very closely,” according to details given to Reuters.
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