TIDMDNA
RNS Number : 8269G
Doric Nimrod Air One Limited
03 July 2012
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS NOT
FOR PUBLICATION, RELEASE, OR DISTRIBUTION, DIRECTLY OR INDIRECTLY,
IN, OR INTO, THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR ANY
JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL. THE INFORMATION
CONTAINED HEREIN DOES NOT CONSTITUTE AN OFFER OF SECURITIES FOR
SALE IN THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR ANY
JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION IS
UNLAWFUL.
DORIC NIMROD AIR ONE LIMITED
Announcement of Asset Manager's Report
3 July 2012
Doric Nimrod Air One Limited (the "Company"), a
Guernsey-domiciled company, is pleased to present the quarterly
Fact Sheet in respect of the period from 1 April 2012 to 30 June
2012.
Doric Asset Finance & Verwaltungs GmbH, the Company's Asset
Manager, has provided the Company with this commentary on the
Company's airplane and a copy of their report is appended below for
the benefit of shareholders.
*****
On the invitation of the directors of the Company, the following
commentary has been provided by Doric Asset Finance &
Verwaltungs GmbHas Asset Manager of the Company and is provided
without any warranty as to its accuracy and without any liability
incurred on the part of the Company, its directors and officers and
service providers. The commentary is not intended to constitute,
and should not be construed as, investment advice. Potential
investors in the Company should seek their own independent
financial advice and may not rely on this communication in
evaluating the merits of an investment in the Company. The
commentary is provided as a source of information for shareholders
of the Company but is not attributable to the Company.
QUARTERLY FACT SHEET
DORIC NIMROD AIR ONE LIMITED
LSE: DNA
CISX: DNA
The Company
Doric Nimrod Air One Limited ("the Company") is a Guernsey
domiciled company which listed on the Specialist Fund Market of the
London Stock Exchange and the Channel Islands Stock Exchange on
13(th) December 2010. The Company has purchased one Airbus A380-861
aircraft, manufacturer's serial number (MSN) 016, which it has
leased to Emirates Airlines, the national carrier owned by the
Investment Corporation of Dubai, based in Dubai, United Arab
Emirates.
Investment Strategy
The Company's investment objective is to obtain income returns
and a capital return for its Shareholders by acquiring, leasing and
then selling a single aircraft. The Company will receive income
from the lease and its directors intend to target a gross
distribution to shareholders of 2.25 pence per share per quarter
(9p per annum).
1. The Doric Nimrod Air One Airbus A380
The Airbus A380 with manufacturer's serial number (MSN) 016 is
registered in the United Arab Emirates under the registration mark
A6-EDC. For the period from original delivery of the aircraft to
Emirates in November 2008 until the end of May 2012, a total of
1,891 flight cycles were registered. Total flight hours were
15,513. This is equal to an average flight duration of
approximately eight hours.
Amongst its 169 aircraft in operation as of March 2012, Emirates
has a fleet of 21 A380s which currently serve 16 destinations
worldwide: Auckland, Bangkok, Beijing, Hong Kong, Jeddah, Kuala
Lumpur, London Heathrow, Manchester, Munich, New York JFK, Paris,
Rome, Seoul, Shanghai, Sydney and Toronto. In the second half of
2012 Emirates is planning to launch A380 flights to Melbourne,
Tokyo and Amsterdam. Emirates has an additional 69 of this model on
firm order for delivery through 2017.
Recent visits of the A380 owned by the Company (MSN 016)
included London, Munich, New York and Sydney during the second
quarter of 2012.
Company Facts (30(th) June 2012)
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Listing LSE and CISX
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Ticker DNA
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Share Price 124.5p
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Market Capitalisation GBP53 million
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Anticipated Dividend 2.25p per quarter (9p per annum)
------------------------------ ---------------------------------------
Anticipated Dividend Payment April, July, October, January
Dates
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Currency GBP
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Launch Date/Price 13(th) December 2010 / 100p
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Incorporation Guernsey
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Asset Manager Doric Asset Finance & Verwaltungs GmbH
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Corp & Shareholder Advisor Nimrod Capital LLP
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Administrator Anson Fund Managers Ltd
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Auditor Ernst and Young LLP
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Market Makers Shore Capital Ltd
Winterflood Securities Ltd
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SEDOL, ISIN B4MF389 , GG00B4MF3899
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Year End 31(st) March
------------------------------ ---------------------------------------
Stocks & Shares ISA Eligible
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Website www.dnairone.com
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Maintenance status
Emirates maintains its A380 aircraft fleet based on a
maintenance program according to which minor maintenance checks are
performed every 1,500 flight hours and more significant maintenance
checks (so called C checks) every 24 months or 12,000 flight hours,
whichever comes first. The next C check is expected to fall due in
the last quarter of 2012.
Emirates bears all costs (including maintenance, repair and
insurance) relating to the aircraft during the lifetime of the
lease.
Inspections
The next inspection of the aircraft by the asset manager is
scheduled during the aforementioned C check later in 2012.
Hairline Cracks
Since late 2011, hairline cracks have been discovered in a small
number of L-shaped metal brackets within the wing structure of some
A380s. There are about 2,000 brackets (known as rib-skin
attachments or wing rib feet) in each wing, which attach the wing's
upper and lower skins to ribs running throughout the wing. The
aircraft remain fully airworthy and pose no risk to flight safety
as affirmed by European Aviation Safety Agency ("EASA") and
Airbus.
In recent months Airbus has traced the source of the cracking in
A380 wing structures to the choice of a less flexible aluminum
alloy used to make the wing brackets, stresses involved during
assembly when fitting portions of the wing together plus thermal
fatigue during flight at very low temperatures.
In February 2012, EASA issued an updated airworthiness directive
("AD") in relation to the wing rib feet cracks, which called for
all A380s in operation to be checked for cracks in the brackets
that attach to the wing's ribs before reaching 1,300 flights.
Aircraft already approaching or beyond the threshold were ordered
to perform the checks and repairs almost immediately. The aircraft
owned by the Company (MSN 016) was inspected in March 2012. The
cracks detected on this occasion were repaired. The aircraft has
since returned to normal commercial service.
In late June EASA issued a new AD pertaining to wing rib feet
cracks on the Airbus A380 aircraft, which now also specifies repeat
inspections of A380 aircraft at defined intervals. This will allow
A380 aircraft to continue flying until a permanent fix for wing rib
feet cracking has been incorporated in the aircraft. The length of
the applicable inspection interval is determined by the location
within the wing where previous wing rib feet repairs have been made
and the type of repair that has been previously made. Depending on
this, an inspection interval of between 560 and 1200 flight cycles
is required. After performing this repeat inspection, the follow-on
repeat inspections shall have an inspection interval of 560 flight
cycles.
Airbus has developed a permanent fix to wing rib feet cracking,
which is currently being certified by EASA. A retrofit modification
will be installed on in-service aircraft, while a production
modification will be applied for new aircraft. The retrofit is
expected to become available in late 2012/early 2013. A further AD
is anticipated which will instruct A380 operators to implement the
retrofit. At that time, the retrofit will be installed in existing
A380s. New aircraft with the production modification are expected
to be delivered beginning in early 2014. The permanent fix
developed by Airbus will preserve the full design service life of
the A380 aircraft.
Airbus has confirmed that it may take up to 8 weeks to
incorporate the permanent fix in the A380. Another option is for
the fix to be gradually accomplished during regularly scheduled
"heavy checks" when the aircraft is two, four, and six years of
age. To implement the repair gradually, some extra days would be
added to each two to three week "heavy check". Aircraft operators
are expected to choose between the various repair solutions
depending on their fleet planning and flight schedules.
All the repair works will be covered by the applicable
manufacturer's warranties. In the meantime airlines with A380s on
lease will continue to operate the aircraft and their lease rental
obligations will remain absolute and unconditional on these
events.
2. Market Overview
The International Air Transport Association (IATA) released its
revised industry outlook in June 2012 according to which global
industry profits are still expected to reach USD 3.0 billion this
year, unchanged from the last update in March. A fall in oil
prices, stronger than expected growth in passenger traffic and a
bottoming out of the freight market are driving some improvements
in the profitability outlook. However, this is offset by the
continued European sovereign debt crisis, which has led markets to
expect a further deterioration and damage to economic growth.
IATA expects that 2012 will mark a second successive year of
declining airline profits. In 2010 the industry's profits peaked at
USD 15.8 billion, before dipping in 2011 to USD 7.9 billion net
profit. Although airlines face the common challenges of high fuel
prices and economic uncertainty, the regional picture is diverse.
Compared with the previous forecast in March 2012, North American
and Latin American carriers are expected to see improved prospects.
But the outlook for European, Asian-Pacific and Middle Eastern
carriers has been downgraded, with European losses now expected to
be USD 1.1 billion (nearly double the previously forecast USD 600
million loss).
World GDP growth, a key driver of airline profitability, is
expected to be 2.1% in 2012. That is slightly better than the
anticipated 2.0% growth forecast in March. But this is still a
slower growth environment than last year, and one in which airlines
will struggle to recover cost increases. Historically, the airline
industry has fallen into losses (at a global level) when world GDP
growth drops below 2.0%.
Given the actual slower economic growth environment it has been
notable that up to April passenger demand, measured in revenue
passenger kilometers, continued to expand at an above-trend rate of
6.0%. The strongest markets have been those linked with Asia, Latin
America, and the Middle East, where economies have been more
robust. However, a weaker second half of the year is expected as
deepening problems in Europe damage confidence. Even so, the
strength of travel demand in the first part of this year has caused
an upward revision to the forecast for air travel growth to 4.8%
from 4.2% in the previous forecast.
Source: IATA
3. Lessee - Emirates Key Financials and Outlook
The aircraft is leased to Emirates for an initial term of 12
years, with fixed lease rentals for the duration.
Emirates revenue reached a record high of USD16.9 billion in the
12 months ended 31 March 2012, an increase of 16% from the previous
financial year. Passenger revenue climbed 18% year-on-year, to
USD13.3 billion due to the overall expansion of passenger numbers
as well as higher fares.
Geographically, East Asia and Australasia remains Emirates' most
important region in terms of revenue, accounting for almost 30%,
just ahead of Europe. The carrier's revenue base is increasingly
diffused globally, particularly with the introduction of several
new routes into North and South America and the development of
African destinations.
Despite this strong revenue growth, the stifling cost of jet
fuel impacted Emirates' bottom line with the airline's profit
dropping to USD 409 million, representing a decrease of 72% over
last year's record results. Fuel costs increased by 44.4% compared
to the preceding year to USD 6.6 billion, representing about 40% of
Emirates' total operating costs. Emirates Chairman and CEO, Sheikh
Ahmed bin Saeed Al Maktoum, stated that if fuel prices remained
where they were in the previous financial year, the net profit
"would have again soared to a new record high".
These solid financial results not only represent Emirates 24(th)
consecutive year of profit, but the carrier was also able to
strengthen its cash position with an increase of 11.6% to USD 4.2
billion.
Emirates received 22 new aircraft during the course of the past
financial year including 14 Boeing 777-300ERs, two Boeing 777Fs
(freighters) and six A380s from Airbus, the highest number of
aircraft received in a single year of operation. With an increased
fleet, Emirates launched 11 new destinations in 2011/2012 including
a strong focus on North America and South America in the final
quarter with Rio de Janeiro, Buenos Aires, Seattle and Dallas-Fort
Worth all launching between January and March 2012. The Emirates
fleet, one of the youngest in the industry, carried a record number
of almost 34 million passengers at an 80% passenger load factor to
a network of 122 destinations in 72 countries. As of 31 March 2012
Emirates has 169 aircraft in operation, with firm orders for
another 223 passenger aircraft, including 69 A380.
Most recently the carrier added a new route to Ho Chi Minh City
in June. This will be followed by new services to Barcelona and
Lisbon in July and Washington DC in September.
Employee numbers at the airline stand at around 42,500 and
Emirates plans to recruit more than 4,000 workers this year.
Source: Emirates
4. Aircraft - A380
At the end of May 2012, the global A380 fleet consisted of 75
planes that were in service with eight operators: Emirates (21 A380
aircraft), Singapore Airlines (17), Qantas (12), Deutsche Lufthansa
(9), Air France (7), Korean Airways (5), China Southern Airlines
(3) and Malaysia Airlines (1).
Malaysia Airlines was the latest operator to take delivery of
the 75(th) aircraft of the type at the end of May 2012. Thai
Airways is scheduled to receive its first Airbus A380 in the second
half of 2012. This will bring the total number to nine worldwide
operators. The in-service fleet is expected to approach 100
aircraft by the end of 2012.
Sources: IATA, Boeing, Airbus
Contact Details
Company
Doric Nimrod Air One Limited
Anson Place, Mill Court,
La Charroterie, St Peter Port,
Guernsey GY1 1EJ
Tel: +44 (0) 1481 722260
Website: www.dnairone.com
Corporate & Shareholder Advisor
Nimrod Capital LLP
4 The London Fruit and Wool Exchange
Brushfield Street
London E1 6HB
Tel: +44 (0) 20 3355 6855
END OF ANNOUNCEMENT
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