Alliance Aviation Services Ltd share price flies to 52-week high

What: Shares in regional airline operator Alliance Aviation Services Ltd (ASX: AQZ) have touched a fresh 52-week high on Thursday morning of 77 cents after the group released a full year result which enthused the market.

Pleasing progress: The group’s performance over the 12 months to June 30 showed pleasing progress and improvement. Here are the key numbers investors need to know…

  • Flying revenue increased by 3.7% (reported revenues were down due to reduced fuel prices)
  • Earnings before interest, tax, depreciation and amortisation (EBITDA) increased from $41.7 million to $43.6 million
  • Profit before tax (PBT) swung from a loss in the prior year to a profit of $13.5 million
  • Earnings per share of 11.8 cents were reported
  • Gearing fell from 44.7% to 38.5% year on year

Now What: The market has in the past been concerned about Alliance Aviation’s (AA) exposure to the resource sector given the majority of the group’s business is providing transport to ‘fly in-fly out” (FIFO) workers. While the market’s concern is understandable, as it turns out the revenues from AA’s blue chip customer base have held up much better than many expected.

Importantly, management has stated that the financial outlook is “one of opportunity” with contracted flying revenues to remain stable, further opportunities in tourism and further debt reduction forecast.

With AA’s share price having soared 50% in the past year, it’s an important reminder to investors that opportunities can be found in all corners of the market – even the airline sector which Warren Buffett has warned investors to stay away from!

For those prepared to consider investments in the sector (despite Buffett’s repeated warnings), as I noted here, Virgin Australia Holdings Ltd (ASX: VAH) is another airline stock which could be worth taking a closer look at.

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Motley Fool contributor Tim McArthur has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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