• Core contracted (FIFO) business remains resilient
• Commercially unviable wet-lease customer arrangement materially impacted financial performance
• $164.8 million fleet impairment and inventory write-down announced

Alliance Aviation Services Ltd reported its 1HFY26 results, with the core contracted (FIFO) business remaining resilient, underpinned by strong safety and operational performance and a positive outlook for the resources sector. However, a commercially unviable and cash flow negative arrangement with a major wet-lease customer materially impacted the Group's financial performance. The company has initiated good faith negotiations with the customer to address this issue. Alliance also announced a $164.8 million fleet impairment and inventory write-down, comprising a $144.6 million impairment on Fokker F70 and F100 aircraft and engines, a $7.2 million impairment on right of use assets, a $0.1 million impairment of intangible assets, and a $12.9 million write-down on Fokker spare parts and inventory. These are non-cash accounting adjustments that do not impact the company's cash position, operations or debt covenants. A turnaround is underway, with a focus on capital allocation, free cash flow generation including asset sales, and expense management. Aircraft trading activity has ceased as of 31 December 2025, and the company's net tangible assets stood at $2.22 per share as of that date.

FY26 underlying PBT guidance of $35-40 million, reflecting the cessation of aircraft trading activities (which contributed $18 million in PBT) offset by a reduction in depreciation expense following the fleet impairment (approximately $9-10 million).

The company is focused on a turnaround, with priorities including optimizing the fleet, improving utilization and divesting non-core or underperforming assets, implementing disciplined capital expenditure and cost control, and reviewing customer contracts to identify arrangements that do not meet required return thresholds.