Alliance Aviation, an Australian regional airline backed by Qantas, has suspended trading in its shares following a 30 percent surge after the company announced plans to "right size" its operations. The announcement, made after market close Wednesday, outlined a phased workforce consultation process but did not specify the number of potential job cuts.

The company disclosed it had finalized a new wet-leasing agreement with Qantas, its major shareholder, which involves a reduction in fleet size and flying requirements. Under the revised contract, Alliance will gradually decrease its aircraft from 30 to 23 by the 2027 fiscal year, reflecting a planned cut in flying hours. This reduction aims to lower Alliance’s committed capital and create opportunities for redeploying aircraft.

Stewart Tully, managing director of Alliance, said the updated agreement is expected to significantly boost the company's profitability and cash flow. He described the deal as "an important early step" toward improving Alliance’s operational and financial resilience and positioning the airline for sustainable long-term performance. The revised contract also allows for meaningful price increases and introduces a new annual price escalation mechanism designed to better reflect anticipated future cost pressures.

Alliance flagged that its underlying profit before tax for the 2026 fiscal year is expected to fall at the midpoint of its earlier guidance range of A$35 million to A$40 million. The company currently employs approximately 1,452 full-time staff, a figure recorded at the end of June 2023.

This development follows the collapse in October 2023 of a proposed A$614 million buyout of Alliance by Qantas. The deal was abandoned after concerns were raised by the Australian Competition & Consumer Commission. The new wet-lease arrangement represents a strategic shift for Alliance as it seeks to adjust its business model amid changing market conditions and cost pressures.