• Core FIFO business remains resilient, but impacted by unviable wet-lease arrangement
• $164.8m impairment and write-down of Fokker fleet and inventory, resulting in significant statutory loss
• Turnaround plan focused on capital allocation, free cash flow, and cost management underway

Alliance Aviation Services Limited (ASX: AQZ) has reported a challenging first half of the 2026 financial year, with its core FIFO business remaining resilient but impacted by a commercially unviable arrangement with a major wet-lease customer. The company's statutory NPAT of ($105.8m) reflects a $164.8m impairment of its Fokker fleet and write-down of inventory. The Board and management have aligned on the imperative to improve performance and strengthen the financial position of the Group. The company has commenced an operational turnaround plan focused on improving capital allocation, strengthening free cash flow (including through asset sales), and enhancing sales and customer management. This includes optimising the fleet, improving utilisation, and divesting non-core or underperforming assets. The company is also implementing disciplined maintenance capital expenditure, tighter cost control, and a review of its organisational structure.Despite the challenges, Alliance's core contract FIFO operation remains resilient, underpinned by its strong safety and operational performance and benefiting from a positive outlook for the resources sector. The company remains committed to maintaining the high standard of service, safety, and reliability expected by its customers.

Reflecting ongoing margin pressure from wet-lease arrangements and the impact of the cessation of Aircraft Trading activity, Alliance provides updated FY26 guidance for profit before tax of $35-40m.