TIDMDNA
RNS Number : 3517B
Doric Nimrod Air One Limited
02 April 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THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS NOT
FOR PUBLICATION, RELEASE, OR DISTRIBUTION, DIRECTLY OR INDIRECTLY,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
2 April 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 January 2013 to 31 March
2013.
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 February 2013, a total
of 2,141 flight cycles were registered. Total flight hours were
17,570. This is equal to an average flight duration of
approximately eight hours.
Amongst its 199 aircraft in operation as of March 2013, Emirates
has a fleet of 31 A380s which currently serve 21 destinations
worldwide: Amsterdam, Auckland, Bangkok, Beijing, Hong Kong,
Jeddah, 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. By the end of January 2013 its A380
fleet had carried 14 million passengers and flown more than 200
million kilometres on 35,000 flights since the double decker was
introduced to its fleet in August 2008. Emirates has an additional
59 aircraft of this type on firm order for delivery through
2017.
The A380 (MSN 016) owned by the Company recently visited
Auckland, London Heathrow, Melbourne, New York JFK, Paris CDG,
Toronto and Sydney during the first quarter of 2013.
Company Facts (31(st) March 2013)
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Listing LSE and CISX
----------------------------- ---------------------------------
Ticker DNA
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Share Price 125.5 pence
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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
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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 programme according to which minor maintenance checks
are performed every 1,500 flight hours, and more significant
maintenance checks (C checks) every 24 months or 12,000 flight
hours, whichever comes first. The second C check of the aircraft
took place in the Emirates engineering facility at Dubai
International Airport in November 2012. The next heavy maintenance
check will be the 6-year check (which will include the third C
check) 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 programme and
replaced by spares. On 11(th) November 2012 the engine with the
serial number P550121 owned by the Company and installed on another
Emirates A380 aircraft at that moment, experienced an in-flight
shutdown during climb out of Sydney on its way to Dubai. Fuel was
dumped, the aircraft returned to the departure airport and landed
safely about 90 minutes after take-off. The engine was removed from
the aircraft. Intermediate inspection results indicate a
malfunction within the high pressure turbine (HPT) which caused
damage inside the HPT and secondary damage further downstream in
the engine. Emirates and the manufacturer, Engine Alliance (EA),
agreed to replace the damaged propulsor with a brand new one. As
the Company's asset manager, Doric has been overseeing the process,
including transfer of title.
Emirates bears all costs (including maintenance, repair and
insurance) relating to the aircraft during the lifetime of the
lease.
Inspections
Doric 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 detected 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 remains fully airworthy and the hairline cracks pose no
risk to flight safety as affirmed by the European Aviation Safety
Agency (EASA) and Airbus.
In late June 2012 EASA issued the then latest airworthiness
directive (AD) pertaining to wing rib feet cracks on the Airbus
A380 aircraft, which specified initial and repeat inspections of
A380 aircraft at defined intervals. The Company's aircraft has been
inspected based on a preceding AD published earlier in 2012 and the
necessary corrective action was undertaken. Afterwards the aircraft
returned to commercial service.
Based on inspection results, Airbus has developed a permanent
fix to wing rib feet cracking during the second half of 2012. A
comprehensive test programme included computer simulations of
stress levels and practical tests with a dedicated A380 test
aircraft (MSN 004). To enable the measurement of the different
stress levels during test flights, Airbus modified the left-hand
wing, leaving the right-hand wing unmodified. In March 2013 EASA
certified the retrofit modification programme and confirmed that
modified in-service A380 will preserve their full design service
life without further repeat inspections of the wing rib feet. The
programme consists of nine Service Bulletins covering different rib
modifications in different areas of the wings. These modifications
must be incorporated in all in-service A380s during downtime
periods of the aircraft. In any case all modifications must be
completed before the aircraft reaches six years of age. In April
2013 a further AD is anticipated in connection with the wing rib
feet issues, which will instruct A380 operators to implement the
retrofit. In addition to the retrofit solution Airbus has developed
a modified wing for new aircraft. Full design life certification by
EASA is expected by mid-2013. Delivery of the first aircraft with
the reworked wing design is expected in early 2014.
Airbus has confirmed that it may take up to eight weeks to
incorporate the permanent fix in the A380. Subject to changes in
Emirates' timeline, it is currently envisaged to implement the
final fix for MSN 016 in January and February 2014. Emirates
decided to implement the final fix in one step.
All the repair work will be covered by the applicable
manufacturer's warranties.
2. Market Overview
Between January and December 2012 passenger demand, measured in
revenue passenger kilometres (RPKs), expanded by 5.3% compared to
the previous calendar year. In its latest Global Market Forecast,
published in September 2012, Airbus predicts a compound average
annual growth rate of 4.7% for worldwide passenger traffic (in
RPKs) until 2031. After a weak performance during the third quarter
of 2012 passenger markets have improved significantly since last
October. During the four months from October 2012 until the end of
January 2013 RPKs grew by an annualized rate of 9%. Increased
business confidence, supported by a growing economy in China and a
stabilization of the Eurozone crisis had a positive impact on air
transport demand. The regional growth patterns continue to be
uneven. During 2012 the Middle East was by far the fastest growing
region (+15.2%). Slowest growth was observed in North America with
an increase in RPKs of 1.3% compared to the previous year. For the
current year the International Air Transport Association (IATA)
forecasts a worldwide RPK growth of 5.4%.
An overall solid growth of RPKs coupled with a tight airline
capacity management has kept the passenger load factor on a high
level. Between January and December 2012 average seat utilization
was 79.1%, reaching an all-time high.
Air freight has slightly weakened during 2012. The number of
freight-tonne-kilometres (FTKs) from January to December was 1.5%
lower than in 2011. During the last quarter of 2012 improving
consumer and business confidence in some major economies had pushed
air freight demand, mainly from Asia. Based on the latest available
figures, FTKs in January 2013 were 5.0% higher compared to the same
month of the previous year.
IATA released its latest industry outlook in March 2013
according to which global industry profits are expected to reach
USD 10.6 billion this year. This is higher than IATA's December
2012 estimate of USD 8.4 billion and is based on improved economic
prospects, higher air travel volumes and a return to growth in
freight markets since the beginning of the year. Expenses for jet
fuel are expected to remain on a high level, totalling 33% of the
airlines' operating costs.
Source: 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.
According to the latest available key financial indicators
Emirates increased its revenues by 17% to USD 9.7 billion during
the first six months (until September 2012) of the current
financial year ending on 31(st) March 2013. Compared to the same
period of the previous year, net profit doubled to USD 464
million.
Notwithstanding the challenging operating environment, Emirates
has continued to invest in its infrastructure and significantly
increased the number of aircraft. In 2012 the lessee added 33
wide-body aircraft to its fleet, including four freighters. As of
31(st) March 2013 Emirates has 199 aircraft in operation, with firm
orders for another 198 aircraft, including 59 A380s. The airline
operates the world's largest fleet of Airbus A380s and Boeing
777-300ER.
With its increased fleet, Emirates has launched 15 destinations
in 2012. The first new destinations in 2013 were Warsaw and the
Algerian capital Algiers, which were added to the network on 6(th)
February and on 1(st) March. Further network expansion is planned
during the course of the year: In June 2013 Emirates will commence
flights to Tokyo International Airport (Haneda Airport), currently
ranked the second busiest airport in Asia. In March 2013 Emirates
operated flights to 130 destinations in 76 countries on six
continents. Depending on the demand of the respective routes, the
carrier is constantly adjusting its capacities to meet customer
expectations and utilization targets. On the Dubai-Moscow route
Emirates increased the number of seats by nearly 50% within three
months. After the airline had launched scheduled A380 flights to
Domodedovo Airport, it recently upgraded its second daily flight to
a Boeing 777-300ER aircraft. Furthermore, Emirates will upgrade a
daily flight on the Dubai-Sydney route to an Airbus A380, becoming
the second daily A380 service flying into the state capital of New
South Wales, Australia.
The rapidly expanding fleet allowed a 17.3% increase of
available seat kilometres between April and September 2012, as
compared to the prior-year period. Measured in RPKs passenger
traffic grew by 17.8%. This 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 only 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 the previous 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 freight sales (USD 2.58 billion). As of 30(th)
September 2012 the carrier held a cash position of USD 3.6
billion.
At the beginning of this year, Emirates started the phased
launch of Concourse A, the world's first A380-dedicated terminal
building at Dubai International Airport. It became fully
operational in mid-February 2013. More than 500,000 m(2) of space
accommodates facilities to service up to 20 Airbus A380s at a time,
increasing the airport's capacity by 15 million passengers a year.
The eleven-story glass construction also hosts the largest first
class and business class lounges in the world and a dedicated hotel
floor. Concourse A is part of a USD 7.8 billion strategic plan by
Dubai Airports to increase airport capacity to 90 million
passengers by 2018. According to Paul Griffiths, CEO of Dubai
Airports, Dubai International aims to become the world's busiest
airport for international passenger traffic by the end of 2015.
Since Australia's competition authority granted its formal approval
to the global aviation partnership between the lessee and Qantas in
March 2013, Emirates and the Australian flag carrier make exclusive
use of Concourse A.
Source: Emirates
4. Aircraft - A380
On 14(th) March 2013 the A380 programme reached a further
milestone: The 100(th) aircraft was delivered to Malaysia Airlines.
At the end of March 2013, the global A380 fleet consisted of 101
planes that were in service with nine operators: Emirates (31 A380
aircraft), Singapore Airlines (19), Qantas (12), Deutsche Lufthansa
(10), Air France (8), Korean Airways (6), China Southern Airlines
(5), Malaysia Airlines (6) and Thai Airways (4).
Since its inaugural flight in October 2007 the worldwide A380
fleet has carried 36 million passengers on 100,000 flights. Every
day the fleet performs more than 140 flights carrying 1.5 million
passengers a month. An A380 is taking off or landing every six
minutes at one of the 32 international airports. A further 50
airports are preparing to accommodate the A380.
The first A380 order of the year 2013 came from Lufthansa, who
ordered another two aircraft. It is the third order from Germany's
flag carrier who already operates ten A380s. After the latest
purchase Lufthansa's current order backlog stands at nine aircraft.
Accordingly Nico Buchholz, Executive Vice President, Lufthansa
Group Fleet Management, said, "the A380 fulfils all our
expectations, it's a very reliable aircraft and our passengers'
feedback is excellent".
Source: 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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