Australian flag carrier Qantas has agreed to acquire the remaining 80% stake that it does not already own in Alliance Aviation Services in an all-scrip deal.

The latest deal will see Alliance become a wholly-owned part of Qantas.

An Australian-based operator with a fleet of 70 jet aircraft, with a seating capacity of 100 each, Alliance constitutes 2% of the domestic airline market.

Qantas will issue nearly $444m (A$614m) of new shares to buy the remaining Alliance stake.

According to the agreed terms, Alliance shareholders will receive each Qantas share at $3.44 (A$4.75) apiece, which is a 32% premium to Alliance’s ‘volume-weighted average price’ in the last three-month period.

Completion of the deal is dependent on competition clearance and the approval of Alliance shareholders.

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In 2019, Qantas acquired a 20% interest in Alliance.

According to Qantas, the Australian Competition and Consumer Commission probed that deal and did not flag competition concerns.

Qantas Group CEO Alan Joyce said: “Alliance’s fleet of Fokker aircraft are perfect for efficiently serving resources customers in Western Australia (WA) and Queensland. They also have a big inventory of spare parts that would significantly extend the practical life of a combined fleet of around almost 70 Fokkers.

“Keeping these aircraft operating reliably for longer than either carrier could achieve by themselves will help keep costs down, which is ultimately good news for charter customers. There are also benefits from bringing together our operations’ planning and training facilities.

“The resources sector continues to grow and any new tender for airline services will be very competitive. It makes a lot of sense for us to combine with Alliance to improve the services we can offer, which is a positive for both airlines as well as the travelling public.”