TIDMDNA
RNS Number : 4104I
Doric Nimrod Air One Limited
02 July 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THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS NOT
FOR PUBLICATION, RELEASE, OR DISTRIBUTION, DIRECTLY OR INDIRECTLY,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 July 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 April 2013 to 30 June
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
December 2010. The Company has purchased one Airbus A380-861
aircraft, manufacturer's serial number (MSN) 016, which it has
leased for an initial term of 12 years, with fixed lease rentals
for the duration, 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 receives income from
the lease and its directors are targeting a gross distribution to
shareholders of 2.25 pence per share per quarter (9p per annum). It
is anticipated that income distributions will continue to be made
quarterly.
Company Facts (30(th) June 2013)
Listing LSE and CISX
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Ticker DNA
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Share Price 121.5 pence
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Market Capitalisation GPB 52 million
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Aircraft Registration A6-EDC
Number
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Anticipated Dividend 2.25p per quarter (9p per annum)
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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 GmbH
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Corp & Shareholder Advisor Nimrod Capital LLP
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Administrator Anson Fund Managers Limited
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Auditor Deloitte 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
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Stocks & Shares ISA Eligible
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Website www.dnairone.com
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1. The Doric Nimrod Air One Airbus A380
The Airbus A380 with the 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 2013, a total of
2,421 flight cycles were registered. Total flight hours were
20,090. This equates to an average flight duration of approximately
eight hours and 20 minutes.
On 11 November 2012 the engine with the serial number P550121
owned by the Company and installed on another Emirates A380
aircraft at that moment, underwent an in-flight shutdown during
climb out of Sydney on the aircraft's way to Dubai. Emirates and
the manufacturer, Engine Alliance (EA), agreed to replace the
damaged propulsor with a new one. The transfer of ownership to the
Company for the new power plant with serial number P550349 took
place on 23 May 2013.
The A380 (MSN 016) owned by the Company visited Bangkok, Jeddah,
London Heathrow, New York JFK, Tokyo and Sydney during the second
quarter of 2013.
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.
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 (known as wing rib feet) within
the wing structure of some A380s. 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.
As previously reported, Airbus has since developed a permanent
fix to wing rib feet cracking. 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. In May
2013 EASA released its latest Airworthiness Directive (AD)
outlining which modifications need to be made and the respective
compliance times. In addition to the retrofit solution Airbus has
developed a modified wing for new aircraft. Delivery of the first
aircraft with the reworked wing design is expected in early
2014.
The wing rib feet modification programme for Emirates' aircraft
is essentially managed by Airbus. All modification activities will
be covered by the applicable manufacturer's warranties. Emirates
decided to embody all modifications in one step. Airbus is
confident that the downtime required to incorporate the permanent
fix might be reduced from the originally planned eight weeks to six
weeks. Subject to changes in Emirates' timeline, it is currently
envisaged to implement the final fix for MSN 016 from mid-January
to mid-March 2014. The modification work on the A380 owned by the
Company will be completed by Ameco Beijing (Aircraft Maintenance
and Engineering Corporation). Founded in 1989 by Lufthansa and Air
China, Ameco Beijing is the largest provider of maintenance, repair
and overhaul services (MRO) in China and has the largest hangar in
Asia with space for up to four A380 at the same time.
2. Market Overview
During the first four months of the current year, passenger
demand, measured in revenue passenger kilometres (RPKs), expanded
by 4.1% compared to the same period in the previous year. Growth in
air travel has been supported by a relatively better business
environment over the past six months than what airlines experienced
during the middle parts of 2012. Although business confidence has
been broadly flat throughout 2013, levels remained above the lows
registered in the third quarter of last year.
Regional growth patterns continue to be uneven and similar to
last year when the Middle East replaced Latin America as the
world's fastest growing region. Between January and April 2013
Middle East airlines increased their RPKs by 12.1% compared to the
previous year's period. The slowest growth was observed in North
America with an increase in RPKs of 1.5% compared to the same
period in the previous year.
The International Air Transport Association (IATA) has reduced
its 2013 estimate for worldwide RPK growth by 10 basis points to
5.3%. This number is still above the long-term growth rate although
the Eurozone has fallen into the longest recession since records
began in 1995. From January to March 2013 the economic output
contracted for the sixth consecutive quarter. In its latest 20-year
forecast from June 2013 Boeing expects passenger traffic and cargo
traffic to grow by 5% annually over the next two decades until
2032. The airframe manufacturer is also projecting a more robust
outlook for worldwide aircraft demand, predicting the fleet of
in-service commercial aircraft will grow from 20,310 aircraft in
2012 to more than 41,000 by 2032.
After a slight recovery in air freight demand during the fourth
quarter of 2012, global freight-tonne-kilometres (FTKs) were
falling in February and March 2013. Between January and April 2013
FTKs decreased by 0.6% compared to the same period the year before.
Notwithstanding the encouraging figures for April 2013, some market
observers expect a decline in business confidence - which is
closely correlated to air freight demand - in the second half of
this year. Against the background of the uncertain outlook, IATA
has revised its target for FTK growth during 2013 down to 1.5%.
This would be nonetheless an improvement compared to 2012, when the
air freight market contracted.
Expenses for jet fuel are expected to remain on a high level
during 2013 with an average price of USD 127 per barrel, a slight
relief compared to the previous forecast in March 2013 of USD 130
per barrel. This would marginally reduce the share of fuel costs
from 33% to 31% of airlines' total operating costs. A decade ago,
the share was 14% and has more than doubled since then.
IATA released its latest industry outlook in June 2013 according
to which global industry profits are expected to reach USD 12.7
billion this year. This is higher than IATA's March 2013 estimate
of USD 10.6 billion and is based on the expectation that airlines'
capacity reductions will result in record passenger loads for the
full year 2013. IATA predicts airlines will carry more than three
billion passengers for the first time, at an average seat occupancy
of 80.3%.
Source: Aviation Today, Boeing, IATA, Reuters
3. Lessee - Emirates Key Financials and Outlook
Emirates has announced its 25(th) consecutive year of profit and
company-wide growth for the financial year ending 31 March 2013,
despite continuing high fuel prices and a weak global economic
environment.
Revenue reached a record high of USD 19.9 billion, up by 17%
compared to the previous financial year, and continues to be well
balanced with no region contributing more than 30%. East Asia and
Australasia remained the highest revenue contributing region with
USD 5.7 billion, up 15% from 2011/2012. Europe (up 18% to USD 5.5
billion) and the Americas (up 24% to USD 2.3 billion) saw the most
significant growth, reflecting new destinations as well as
increased frequency and capacity to these regions.
The airline posted a net profit of USD 622 million, representing
an increase of 52% over last year's results. Although Emirates'
fuel bill increased by 15% to reach USD 7.6 billion, total
operating costs showed a smaller increase (+16%) than revenue
(+17%) in the financial year 2012/2013.
As of 31 March 2013 the balance sheet total amounted to USD 25.8
billion, an increase of 23% from the previous year. Total equity
increased by 7.3% to USD 6.3 billion with an equity ratio of 24.3%.
The current ratio was 1.12; 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 included finance leases in the amount of USD 7.4 billion and
revenues received in advance from passenger and freight sales (USD
2.9 billion). As of 31 March 2013 the carrier's cash balance
reached USD 6.7 billion.
Emirates continued with its growth plan and during the financial
year 2012/2013 saw the largest increase in capacity in the
airline's history, receiving 34 wide-body aircraft, including ten
Airbus A380s and four freighters. As of 31 May 2013 Emirates has
200 aircraft in operation, with firm orders for another 195
aircraft, including 57 A380s, 63 Boeing 777-300ER and 50 Airbus
A350-900 XWB. The airline operates the world's largest fleets of
Airbus A380s and Boeing 777-300ER. Emirates raised USD 7.8 billion
in new funding mainly to secure its on-going fleet expansion, a
record amount for the airline. This included USD 587.5 million
financing for additional A380s with a form of debt security
(enhanced equipment trust certificates) that used the debt capital
market in the US, a first for a non-US airline in years.
With its increased fleet and resources, Emirates launched 10
destinations during the last financial year. In June 2013 Emirates
operated flights to 134 destinations in 77 countries on six
continents. New routes launched so far this year include Warsaw,
Algiers and Tokyo Haneda. Services to Stockholm begin on 4
September 2013, followed by Clark International Airport in the
Philippines as of 1 October 2013. Depending on the demand of the
respective routes, the carrier is constantly adjusting its
capacities to meet customer expectations and utilization targets.
Bangkok, one of Emirates' earliest destinations in the Far East,
will receive a second daily non-stop A380 service starting in
October 2013. Also at the beginning of the fourth quarter 2013,
Emirates will commence its first transatlantic flights from Europe.
One out of three current daily flights from Dubai to Milan (Italy)
will continue to New York's John F. Kennedy Airport (JFK).
According to Tim Clark, Emirates' President, the airline has
identified strong demand, which is currently underserved on this
route. The service will be operated by a Boeing 777-300ER.
The rapidly expanding fleet allowed an almost 18% increase of
available seat kilometres between April 2012 and March 2013, as
compared to the prior financial year. Measured in RPKs passenger
traffic grew by 17.6%, resulting in an average passenger load
factor of nearly 80%. A record 39.4 million passengers flew with
Emirates between April 2012 and March 2013 - an increase of 15.9%
compared to the previous period.
On 1 April 2013 Emirates and Qantas started their global
aviation partnership with two Qantas flights operated from
Melbourne and Sydney to London Heathrow via Dubai, Emirates' home.
Passengers from these two destinations save more than two hours on
average to the top ten destinations in Europe, according to Alan
Joyce, CEO of Qantas. In addition to the Australian Competition and
Consumer Commission (ACCC), which already granted approval in March
2013, the New Zealand Minister of Transport gave his consent on
trans-Tasman routes for passenger and cargo transport operations
and related services. First results of the new partnership look
encouraging for both airlines: Qantas has seen a sixfold increase
in bookings to Europe during the first nine weeks of sales,
compared to the same period last year. Emirates is benefiting from
this feed for its European, African and Middle Eastern
destinations. During the same period, the number of Emirates
customers who booked flights on Qantas' domestic network, was
almost seven times higher.
Source: Bloomberg, Emirates
4. Aircraft - A380
Emirates has a fleet of 33 A380s which currently serve 20
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 and Toronto. Emirates announced an upgrade of
service from Dubai to Los Angeles with the introduction of the A380
starting in December 2013. Brisbane and Zurich are scheduled to
complement the list of A380 destinations in October 2013 and
January 2014 respectively. As of May 2013 Emirates operated 46
different routes, more than any other A380 operator worldwide. The
carrier is also the largest A380 operator in terms of aircraft
number. Emirates has an additional 57 aircraft of this type on firm
order for delivery through 2017; receiving one A380 delivery per
month, on average. Together with its partner Qantas, the two
airlines operate a combined fleet of 45 A380s, which is more than
40% of the world's current A380 capacity.
At the end of May 2013, the global A380 fleet consisted of 103
planes that were in service with nine operators: Emirates (33 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). British Airways is
set to receive its first A380 in July 2013.
As of May 2013, 1,048 weekly A380 flights were scheduled
worldwide, with lessee Emirates holding a share of nearly 40%.
There are currently nine operators who employ the A380 fleet on 128
routes. With a distance of 1,202 km the shortest A380 route is
operated by China Southern Airlines between Guangzhou and Shanghai.
Qantas operates the longest route, from Los Angeles to Melbourne
(12,751 km). On average an A380 flight is 7,517 km. Dubai and
Singapore, home of the two largest A380 operators Emirates and
Singapore Airlines, are the most frequented destinations.
Source: Ascend, Centre for Aviation
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
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