Qantas announces acquisition of major fly-in, fly-out charter operator

Qantas has reached an agreement to buy Australia's biggest fly-in, fly-out charter operator in a deal that will see the airline take a huge role in the nation's resources sector.

Today the airline announced it will fully acquire Alliance Aviation Services, which currently boasts a fleet of 70 aircraft that predominantly serve routes to mine sites alongside with some small passenger routes.

Qantas is Alliance's biggest single customer, with a long-term agreement that sees Alliance operate up to 18 newly acquired E190 jets for QantasLink.

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Qantas bought just under 20 per cent of Alliance in February 2019 and at the time flagged its intentions to acquire the whole airline.

The new takeover agreement is still subject to a vote from Alliance shareholders and regulators such as the ACCC.

Qantas CEO Alan Joyce said the acquisition would help QantasLink better compete in the charter flight segment.

"Alliance's fleet of Fokker aircraft are perfect for efficiently serving resources customers in WA and Queensland. 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," Mr Joyce said.

"Keeping these aircraft operating reliably for longer than either carrier could achieve by themselves will help keep costs down, which is ultimately good news for charter customers.

"There are also benefits from bringing together our operations planning and training facilities."

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Mr Joyce said there are positives for locals who live near or around rural mine sites, with guaranteed lower fares to continue for residents.

"The resources sector continues to grow and any new tender for airline services will be very competitive," Mr Joyce said.

"It makes a lot of 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.

"We've opened up several new passenger routes using up to 18 of Alliance's E190s, so bringing all 33 of these aircraft, plus their crews, into the Qantas Group would really expand what we could achieve.

"We plan to extend our program of guaranteed lower fares for residents in those few communities where Alliance operates its own passenger services, as well as access to our Frequent Flyer program."

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Under the agreement announced today, the remaining 80 per cent would be acquired through a scheme of arrangement where Alliance shareholders receive Qantas shares worth $4.75 for each Alliance share they hold, representing a 32 per cent premium to Alliance's volume-weighted average price for the past three months.

Qantas would issue new shares valued at approximately $614 million in a transaction that is expected to be EPS accretive for Qantas shareholders, before synergies.