Is Alliance Aviation Set for a Turnaround After a 14.50% Share Price Drop?

Source: Kapitales Research

Highlights:

• Shares Slide Sharply: Alliance Aviation’s (ASX: AQZ) stock fell nearly 14.50% to a CMP of AU$0.770 at the time of writing following a weak half-year result and large asset impairments.
• Heavy Non-Cash Hit: The company reported a statutory loss of AU$105.8 million at the time of writing, impacted by AU$164.8 million in fleet impairments and inventory write-downs.
• Turnaround in Focus: Management has launched a restructuring plan and guided FY26 PBT of AU$35–40 million at the time of writing, aiming to restore profitability and strengthen cash flow.

Alliance Aviation Services Limited (ASX: AQZ) has come under market pressure, with its shares trading at a CMP of AU$0.770, reflecting a decline of nearly 14.50% at the time of writing. The sharp move follows the release of its half-year results, which revealed a significant statutory loss driven by large asset impairments and margin challenges.

Statutory Loss Deepens Amid Major Impairments

For the half year ended 31 December 2025, Alliance reported revenue from continuing operations of AU$359.3 million at the time of writing. Alliance recorded a statutory loss after tax of AU$105.8 million at the time of writing.

The result was heavily impacted by total impairments and write-downs of AU$164.8 million at the time of writing, primarily linked to the Fokker fleet and related inventory. Management clarified that these are non-cash accounting adjustments and do not affect day-to-day operations.

Net tangible assets stood at AU$2.22 per share at the time of writing, suggesting a notable gap between the company’s asset backing and its current market price.

Wet-Lease Challenges Weigh on Margins

While core contract FIFO operations remained steady, profitability was pressured by a commercially unviable wet-lease arrangement with a major customer. The company confirmed that negotiations are ongoing to improve terms.

Operating cash flow recorded a net outflow of AU$5.8 million at the time of writing, reflecting aircraft purchases and higher interest costs. Net debt stood at AU$433.4 million at the time of writing, with the company remaining compliant with banking covenants.

Turnaround Strategy and FY26 Outlook

Alliance has initiated an operational turnaround focused on capital allocation, asset sales, and cost control. The company has also updated FY26 profit before tax guidance to AU$35–40 million at the time of writing.

With fleet renewal plans underway and negotiations continuing, investors will be watching closely to see whether this aviation operator can regain altitude in the months ahead.

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