TIDMDNA
RNS Number : 8659U
Doric Nimrod Air One Limited
04 January 2013
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS NOT
FOR PUBLICATION, RELEASE, OR DISTRIBUTION, DIRECTLY OR INDIRECTLY,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
4 January 2013
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 October 2012 to 31
December 2012.
Doric 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 GmbH as 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 November 2012, a total
of 2,141 flight cycles were registered. Total flight hours were
17,570. This is equal to a flight duration of approximately eight
hours on average.
Amongst its 193 aircraft in operation as of December 2012,
Emirates has a fleet of 31 A380s which currently serve 22
destinations worldwide: Amsterdam, Auckland, Bangkok, Beijing, Hong
Kong, Jeddah, Johannesburg, Kuala Lumpur, London Heathrow,
Manchester, Melbourne, Moscow, Munich, New York JFK, Paris, Rome,
Seoul, Shanghai, Singapore, Sydney, Toronto and Tokyo. The carrier
is the largest A380 operator in the world and has now carried more
than 11.5 million passengers and has flown 169 million kilometers
since the double decker was introduced to its fleet in August 2008.
Emirates has additional 59 aircraft of this model on firm order for
delivery through 2017.
Recent visits of the A380 owned by the Company (MSN 016)
included Auckland, Jeddah, Munich, Tokyo, Toronto and Sydney during
the fourth quarter of 2012.
Company Facts (31(st) December 2012)
-----------------------------------------------------------------
Listing LSE and CISX
------------------------------ ---------------------------------
Ticker DNA
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Share Price 125.75p
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Market Capitalisation GPB 53 million
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Aircraft Registration A6-EDC
Number
------------------------------ ---------------------------------
Anticipated Dividend 2.25p per quarter (9p per annum)
------------------------------ ---------------------------------
Anticipated Dividend Payment April, July, October, January
Dates
------------------------------ ---------------------------------
Currency GBP
------------------------------ ---------------------------------
Launch Date/Price 13(th) December 2010 / 100p
------------------------------ ---------------------------------
Incorporation Guernsey
------------------------------ ---------------------------------
Asset Manager Doric GmbH
------------------------------ ---------------------------------
Corp & Shareholder Advisor Nimrod Capital LLP
------------------------------ ---------------------------------
Administrator Anson Fund Managers Limited
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Auditor Deloitte LLP
------------------------------ ---------------------------------
Market Makers Shore Capital Ltd
Winterflood Securities Ltd
------------------------------ ---------------------------------
SEDOL, ISIN B4MF389 , GG00B4MF3899
------------------------------ ---------------------------------
Year End 31(st) March
------------------------------ ---------------------------------
Stocks & Shares ISA Eligible
------------------------------ ---------------------------------
Website www.dnairone.com
------------------------------ ---------------------------------
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 second C check for the aircraft took
place in the Emirates Engineering facility at Dubai International
Airport in November 2012. In addition to routine C check tasks,
some modification packages and improvements from Airbus and
associated vendors have also been performed. As an example, the
windows in the first class cabin have been fitted with electronic
window shades. The next heavy maintenance check will be the 6-year
check (including the C check) which is scheduled for November
2014.
All four original Engine Alliance power plants are no longer
with the Airbus A380. The engines were removed between September
2010 and February 2011 as part of a modification program and
replaced by spares. On 11(th) November 2012 engine P550121 owned by
the Company, which is installed on another Emirates A380 aircraft
at the moment, experienced an in-flight shutdown during climb out
of Sydney on its way to Dubai. Fuel was dumped and the aircraft
returned to the departure airport and landed safely about 90
minutes after take-off. Preliminary inspection results indicated
damage to the High Pressure Turbine. The engine was removed and
sent to the manufacturer Engine Alliance (EA) for repair. Costs in
connection with the engine repair are handled in accordance with
the maintenance support agreement between EA and Emirates.
Emirates bears all costs (including maintenance, repair and
insurance) related to the aircraft during the lifetime of the
lease.
Inspections
Asset manager Doric has inspected the aircraft during the above
mentioned C check in November 2012. The aircraft's physical
condition is good and consistent with its age. After four years in
service, the passenger cabin has undergone a major refurbishment,
including replacement of soft furnishings and floor coverings.
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 the hairline cracks pose no
risk to flight safety as affirmed by European Aviation Safety
Agency (EASA) and Airbus.
Since the occurrence of the issue, 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. The
aircraft owned by the Company (MSN 016) was inspected in March
2012. The cracks detected on this occasion were repaired.
In late June 2012 EASA issued a new AD pertaining to wing rib
feet cracks on the Airbus A380 aircraft, which specified 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 1,200 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. Airbus announced
that both certification processes are well underway and should be
completed in early 2013. Afterwards a retrofit kit will be
available to operators. 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. According to
press reports the first set of metal ribs for the reworked wing
design have been scheduled to arrive in the UK wing facility by
mid-December 2012. New aircraft with the production modification
are expected to be delivered beginning in early 2014.
Airbus has confirmed that it may take up to 8 weeks to
incorporate the permanent fix in the A380. Subject to changes in
Emirates' timeline, it is envisaged to implement the final fix for
MSN 016 in October and November 2013. The permanent fix developed
by Airbus will preserve the full design service life of the A380
aircraft.
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
latest industry outlook in December 2012 according to which global
industry profits are expected to reach USD 6.7 billion this year.
Cost cutting measures and improved industry structures have
enhanced the financial performance of airlines during the second
and third quarters of 2012. Accordingly, IATA has increased its net
profit expectations for the second time in 2012 by another USD 2.6
billion. Compared to its previous forecast in September 2012,
expected net profits were at least stable in all regions, with
Asia-Pacific (USD 3.0 billion) and North America (USD 2.4 billion)
contributing the largest share. The strongest rebound has been
assumed for Europe, from minus USD 1.2 billion to a break-even
level.
But the business environment remains difficult and from IATA's
point of view, probability of an accelerated global economic growth
in 2013 has diminished. World GDP growth, a key driver of airline
profitability, is expected to be 2.1% in 2012, very close to the
critical threshold of 2%. During the last four decades, airline
industry profits turned into losses, when world GDP growth had
slipped below that value. Based on the better than originally
expected numbers for the current year, IATA has also increased its
2013 outlook from USD 7.5 billion to USD 8.4 billion. However,
expenses for jet fuel will remain on a high level, totalling 33% of
the airlines operating costs.
Between January and October 2012 passenger demand, measured in
Revenue Passenger Kilometers (RPK), expanded by 5.3% compared to
the same period the year before. In its latest Global Market
Forecast, published in September 2012, Airbus predicts a compound
average growth rate of 4.7% for worldwide passenger traffic until
2031. Since the beginning of the second half-year, demand for air
travel developed less dynamically, but in consistence with weak
economic indices. Slowest growth was observed in the North American
market, with only 0.8% higher RPK. The fastest growing region by
far was the Middle East with 16% higher RPK in the first ten months
of this year, compared to the previous year's period. Average
passenger load factor between January and October 2012 reached
79.4% and hence remained on a high level.
Air freight has diminished. The number of flown
Freight-Tonne-Kilometers (FTK) from January to October 2012 was
2.0% lower than the year before.
Sources: IATA, Airbus
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.
During the first six months of the current financial year until
September 2012 Emirates increased its revenues by 17% to USD 9.7
billion. Compared to the same period of the previous year, net
profit doubled to USD 464 million. His Highness Sheikh Ahmed bin
Saeed Al Maktoum, Chairman and CEO of Emirates, announced, that
"half-year performance is the result of hard work and our drive to
stay on course and continue to grow despite the precarious
marketplace".
Notwithstanding the challenging operating environment, Emirates
has continued to invest in its infrastructure and significantly
increased the number of aircraft. Between April and September 2012
13 wide-body aircraft were added to the fleet of Emirates. In the
second part of the ongoing financial year until March 2013, further
15 aircraft will be added. This would be the highest number of new
aircraft taken into service in a single year of operation. On 1(st)
October 2012 Emirates set an additional company record: Three
wide-body aircraft were handed over to the airline within a day,
which required advanced preparation and close cooperation of all
operational units to secure a smooth entry into service. During
this day, the 24(th) and 25(th) A380 were delivered at the
manufacturer's site in Hamburg, Germany. According to Adel al
Redha, Emirates Executive Vice President of Engineering and
Operations, the Airbus A380 remains "one of the pillars of
Emirates' future growth". As of 30(th) November 2012 Emirates has
193 aircraft in operation, with firm orders for another 214
aircraft, including 59 A380.
With an increased fleet, Emirates has already launched 15 new
destinations in 2012 (Rio de Janeiro, Buenos Aires, Dublin, Lusaka,
Harare, Dallas, Seattle, Ho Chi Minh City, Barcelona, Lisbon,
Erbil, Washington DC, Adelaide, Lyon, and Phuket). Warsaw and
Algiers will join the network of Emirates in February and March
next year. The Algerian capital will become the 22(nd) destination
on the African continent. Emirates is also responding to stronger
passenger and cargo demand on some existing routes, for example to
Lagos, Nigeria. To meet the surging demand from France, a second
A380 service into Paris will start in January 2013. By
mid-December, six weeks ahead of schedule and just in time for
Christmas, the lessee has upgraded all five daily flights into
London Heathrow to A380 services. The number of superjumbo flights
into and out of London and Manchester has been increased to 360 per
month, equivalent to more than 180,000 seats. In December 2012
Emirates operated flights to 128 destinations on six
continents.
The rapidly expanding fleet allowed an increase of available
seat kilometers by 17.3% between April and September 2012, compared
to the prior-year period. Passenger traffic carried, measured in
Revenue Passenger Kilometers, even grew by 17.8%. This successful
development pushed the average passenger load factor to 80%. About
18.7 million passengers flew with Emirates between April and
September 2012 - an increase of 15.4% compared to the previous
year.
As a non-listed company, Emirates discloses selected operational
and financial results semi-annually. According to the latest annual
report, balance sheet total as per 31(st) March 2012 was USD 21
billion - an increase of 18% from last year. Total equity increased
by more than 3% to USD 5.85 billion with an equity ratio of 28%.
The current ratio was 0.98; therefore the airline would be able to
meet its current liabilities by liquidating all of its current
assets. Significant items on the liabilities side of the balance
sheet were finance leases in the amount of USD 5.44 billion and
revenues received in advance from passenger and cargo sales (USD
2.58 billion). As of 30(th) September 2012 the carrier holds a cash
position of USD 3.6 billion.
After Emirates and Qantas have announced a global aviation
partnership in September 2012, Australia's competition watchdog has
recently given its preliminary consent. Final approval is scheduled
for March next year. Australia's Competition and Consumer
Commission concludes that "the alliance has the potential to result
in public benefits". From April 2012 on, the Australian carrier
plans to move its hub for European flights from Singapore to Dubai.
The 10-year codeshare agreement with Qantas is enhanced by
integrated network collaboration with coordinated pricing, sales
and scheduling as well as a benefits sharing model.
Sources: Air Transport News, Emirates
4. Aircraft - A380
At the end of November 2012, the global A380 fleet consisted of
92 planes that were in service with eight operators: Emirates (28
A380 aircraft), Singapore Airlines (19), Qantas (12), Deutsche
Lufthansa (10), Air France (8), Korean Airways (5), China Southern
Airlines (4), Malaysia Airlines (4) and Thai Airways (2).
The worldwide A380 fleet operates 120 commercial flights each
day (takes off or lands approximately every 6 minutes) carrying
1.25 million passengers each month.
Sources: Airbus, Ascend
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
3 St. Helen's Place
London EC3A 6AB
Tel: +44 (0) 20 3355 6855
Website: www.nimrodcapital.com
END OF ANNOUNCEMENT
E&OE - in transmission.
This information is provided by RNS
The company news service from the London Stock Exchange
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