Alliance Aviation Services Ltd – Fund Manager Investment Commentary & Insights

In November 2025, Perennial Partners commented that Alliance Aviation Services Ltd (ASX:AQZ) had downgraded FY26 earnings as inflationary maintenance and other cost pressures could not be immediately passed through under multi‑year contracts, though the business remained profitable, cash‑generative and compliant with covenants while pursuing aircraft sales to shore up the balance sheet. Across fund manager commentary, recent updates from Perennial, Ellerston, Seneca and earlier NGE Capital paint a consistent picture: Alliance is a niche, FIFO‑focused regional operator with structural tailwinds from resources-sector demand, a sizeable fleet (79 aircraft at 30 June) and long‑term wet‑lease exposure to Qantas (a 19.7% shareholder and past $4.75 takeover bidder), yet near‑term performance is constrained by higher maintenance and depreciation charges, supply‑chain inflation, inventory/system implementation issues and potential contract or wet‑lease disputes that have driven a sharp share selloff and a re‑rating to a steep discount to reported NTA (~$2.73–$2.90) and low valuation multiples (EV/EBITDA ~3.1–3.4x, P/E and P/TBV materially depressed); managers highlight actionable responses—accelerate non‑core asset sales or recycling of aircraft to reduce leverage, resolve contract disputes and operational integration issues, and tighten cost controls to restore free cash flow—while noting meaningful downside risks if further adverse surprises or high debt levels persist, and upside potential if execution on deleveraging and margin recovery is delivered or if private equity/strategic interest re‑emerges.