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Share Name Share Symbol Market Type Share ISIN Share Description
Amedeo Air Four Plus Limited LSE:AA4 London Ordinary Share GG00BMZQ5R81 RED ORD NPV
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.75 1.8% 42.50 42.00 43.00 42.50 42.00 42.00 154,034 08:05:29
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Industrial Transportation 190.0 24.7 6.1 7.0 148

Amedeo Air Four Plus Share Discussion Threads

Showing 51 to 74 of 275 messages
Chat Pages: 11  10  9  8  7  6  5  4  3  2  1
DateSubjectAuthorDiscuss
19/3/2020
06:17
I will try and buy some in the 20p to 25p range. Hopefully will pay debt down with the money from the planes sold.
robizm
17/3/2020
21:00
@ROBIZM. current price is 34-39....cannot get lower unless it goes bankrupt. Either it will recover from current level or will go bankrupt and recovery will be very low. I need to speak with some experts to understand the lease clauses in this industry. I doubt they allow for interest payment holidays. If anything is agreed is due to the extraordinary events we are facing.
I personally feel it will get worse before it will get better in the world but eventually flights will go back to normal and with low oil prices to stay and delays in the production of new planes the A380 could have a serious revival.

fram7
17/3/2020
20:01
The million dollar question is will they get paid? They have some hefty loans. Maybe cancel dividend and pay down debt. I would buy at a lower price as risk has increased.
robizm
17/3/2020
10:23
This is bad new but to be expected. I am comforted by the fact that Thai is government controlled.

Key is the understanding of the lease contracts. If these allow the early return of planes, even with large penalties, this could be a big challenge for Amedeo, hopefully only short term.

fram7
17/3/2020
09:58
Liberum-

Request from Thai Airways to consider support

Mkt Cap £368m | Prem/(disc) -63.3% (FX-adjusted) | Div yield 14.4%

Event

Amedeo Air Four Plus has received a written approach from Thai Airways, to whom it leases four A350s, as to how it could support the airline given the current market backdrop. The board of AA4 is discussing the terms of any possible support. Thai Airways is currently up to date on its lease payments.

Liberum view

Amedeo's fleet comprises 12 aircraft that are leased to Emirates (6 A380s & 2 B777s) and Thai Airways (4 A350s). Thai Airways is majority-owned by the Thai Government (51%) and the second largest shareholder is the state-backed Vayupak Fund (15%). Thai Airways has a total fleet of 103 active aircraft of which 71 are leased. Thai Airways reported a Bt12.0bn ($375m) loss in 2019, wider than the Bt11.6bn loss it reported in 2018. Revenues declined 7.8% year-on-year due to a 0.9% reduction in RPKs (Revenue Passenger Kilometres) and a 6.8% fall in average passenger yield. At 31 December 2019, the airline had Bt21.7bn of cash and a total debt to equity ratio of 20.8x (12.5x interest bearing debt to equity). The debt ratios increased significantly during 2019. The CEO resigned last week following the 2019 results.

Based on the acquisition price paid and the remaining term on the leases, we estimate Thai Airways accounts for c.24% of the AA4's remaining contracted income. The approach from Thai Airways also explains why AA4 has still been considering its options for the £130m of net proceeds from the sale of two A380s to Etihad, given the potential need to retain capital to maximise balance sheet flexibility.

davebowler
13/3/2020
22:34
Thanks Daveblower,

As you have seen Amedeo is now around 60 which is worrying but normal considering current market conditions.

the underlying news are great:
-31% return of capital (or 20% over 100 of the issue price). Though income and I suppose dividend will reduce by 20%
- interest and capital repayment are projected to be 116.
- any residual value of the planed will be an extra capital gain

considering the above Amedeo seems to be an amazing deal at current prices.

Clearly there are some risk left:
- market confidence on airlines can disappear and Amedeo price could fall further
- airlines could default but I feel Emirates and Thai are some of the most solid ones
- the residual value of the A380 but now also other planes is uncertain but hopefully the economy will recover. Plus the current lack of production from from Boeing and inevitable restrictions on current production for all manufacturers could increase the value of Amedeo planes long term. We have to remember that the expiry of the leases is years away.

QUESTIONS:
1) can airlines return the planes before the lease end? This could be a large risk.
2) is it true that projected interest+capital repayment will amount to 116? If everything goes fine is a minimum return of 116 on a 60-65 investments, not bad, plus any value that can be achieved selling the planes.

fram7
13/3/2020
10:42
Liberum;

Board considering options from recent disposal

Mkt Cap £421m | Prem/(disc) -58.0% (FX-adjusted) Div yield 12.6%

Event

The board is still considering the best course of action regarding the net proceeds from the sale of the two A380 aircraft to Etihad. As a reminder, the company announced on 19 February that it had agreed the sale of the two aircraft, with £130m of proceeds due to be returned after all debt repayment and associated costs.

The board is also in active discussions with the asset manager regarding COVID-19 and the impact on the company's assets and leases. Further updates will be provided in due course.

Liberum view

In our view, the only viable option is to return the capital to shareholders given the market backdrop and the presence of a large seller on the register (Invesco is still a 9.3% shareholder). The shares have fallen by 18% since the market peak in mid-February (vs. 28% for the All Share). The sale of the aircraft was an excellent result for the company as it recouped the equity invested three years ago but it has been completely overshadowed by concerns over the extent of the impact of COVID-19 on the aviation sector.

£130m would represent a distribution of 20.2p per share (31% of the current share price). Assuming the capital is returned to shareholders and a c.20% reduction in income due to the loss of the lease payments from the sold aircraft, we estimate the current share price is covered 1.16x by the capital return and dividend payments over the remainder of the leases. This excludes any value for the aircraft at lease maturity and also does not include any capital from return condition payments or maintenance reserves. The remaining 12 aircraft are leased to Emirates (6 A380s & 2 B777s) and Thai Airways (4 A350s).

davebowler
20/2/2020
09:33
Liberum;
Amedeo Air Four Plus

£130m net proceeds from sale of two A380s

Mkt Cap £507m | Prem/(disc) -27.3% | Div yield 10.4%

Event

Amedeo Air Four Plus has agreed the sale of two of its A380-800 aircraft to Etihad Airways. Aggregate net cash proceeds from the sale are expected to be £130m after repayment of the debt and other related costs, fees and expenses. Closing of the sales is expected to occur on or around 24 February and further details will be released once completed.

Liberum view

Net cash proceeds of £130m from the sale of these two assets appears to be broadly in line with the consideration paid by the company in 2017. Amedeo Air Four raised c.£130m in January 2017 in order to fund the acquisition of these two Airbus A380s. We believe the sale represents a good opportunity for the company to return some capital to shareholders.

We believe the news of the sale will be welcomed by shareholders. There were concerns around the resale value of the A380 following Airbus' decision to end production of the aircraft. Following the news yesterday, Amedeo Air Four Plus shares gained 9.7% and the sector as a whole rallied.

davebowler
19/2/2020
17:17
hTTps://citywire.co.uk/investment-trust-insider/news/plane-funds-fly-as-amedeo-looks-to-land-130m-jet-sales/a1325543?re=72025&ea=252901&utm_source=BulkEmail_Investment%20Trust%20Insider%20Daily&utm_medium=BulkEmail_Investment%20Trust%20Insider%20Daily&utm_campaign=BulkEmail_Investment%20Trust%20Insider%20Daily
davebowler
19/2/2020
11:03
Sounds like a very positive news! first there is someone willing to buy A380, secondly there is a price for this transactions.

What I do not understand but is crucial is if they are actually getting back all the original investments. These seems to be the case which is great news. it means that the price of share should be more near to 100 than 70 as they are now. Today they are up but still potentially undervalued.

It is also important to understand why they have decided to sell. Perhaps this is not the great news....

F

fram7
19/2/2020
09:57
Today's announcement looks like a reasonable deal to me. AA4 is getting back its original capital of 130mn (it issued 125mn shares at £1.04 3 years ago to fund the purchase of the aircraft. So, it has enjoyed the income in the meantime and reduces the perceived risk of holding A380 to maturity of the lease. So, the company is left with 12 aircraft half of which are A380s. It will be interesting to see what they do with the £130mn. Capital return or invest in some other aircraft (non 380)?
langland
18/1/2020
16:34
Dividend confirmed for past quarter.I don't see any reason for a dividend cut as long as the airlines leasing the 14 aircraft continue payment - Emirates, Etihad and Thai all government/state backed so see very little chance of this not being the case. The only question mark here is what is the value of the 8 A380's and what will be done with them when the leases start to expire.
mokhan2
07/1/2020
14:19
Hi Dave and ADVFN members,

Do you have any expectation on dividends? Is there any risk it will be materially cut? I have called the administrator for Amedeo, Nimrod. they told me there is a board meeting on the 30/1 for the dividend of the 31/1.I am sure they have already decided but they are waiting for the obligation to publish the dividend to avoid speculation.
I imagine that if they can they will keep the target 2.0625p quarterly dividend otherwise the share price will fall materially from the already historical low price. I suppose a material cut will be a very bad news.
What do you think?

fram7
19/12/2019
15:58
I have been following Amedeo for some time and since yesterday I am an investor.
Looking at the yield and historical prices Amedeo looks like great value but there are a lot of uncertainties around this type of business that cannot be understood looking at the accounts.
The key matter is the used value of the planes. Even at 76 there might not be enough space to prevent a capital loss although things have to get nasty to reach this scenario and actually there could be some upside from this level.
I am surprised that the Boeing announcement has impacted prices of all these investment vehicles. Less planes might mean less used ones in future so higher values. In addition Amedeo has more Airbus planes and perhaps this is why it has been falling less than peers?

fram7
18/12/2019
10:04
Liberum;
Aircraft Leasing Funds

Potential opportunity from share price weakness

Event

Share price weakness for the London-listed aircraft leasing funds has continued with the funds down an average of 3.8% yesterday (Doric Nimrod Air Two fell by 11.2%). The sector has experienced a difficult year and has fallen by an average of 28% since Airbus' announcement to end production of the A380 aircraft following the decision by Emirates to cut its orders for the aircraft from 162 to 123.

Boeing's announcement regarding the halting of production of the 737 Max appears to have driven yesterday's decline. The issues with the 737 Max have caused operational problems for many aircraft lessors although the London-listed funds have no exposure to the narrow body aircraft. The A380 is the dominant aircraft in the fleets of the listed funds.

Summary overview of London-listed aircraft leasing funds



Doric Nimrod Air One

Doric Nimrod Air Two

Doric Nimrod Air Three

Amedeo Air Four Plus

DP Aircraft I

Ticker

DNA

DNA2

DNA3

AA4

DPA

Date of Launch

Dec-10

Jul-11

Jul-13

May-15

Oct-13

Market Cap (£m)

34

269

173

501

124













Prem / (Disc) to last published NAV

-33.5%

-25.3%

3.8%

-31.3%

-24.2%

Prem / (Disc) to live NAV (FX-adjusted)

-49.7%

-51.9%

-39.9%

-48.4%

-24.2%

Target Yield (issue price)

9.00%

9.00%

8.25%

8.25%

9.00%

Dividend Yield (current price)

11.5%

13.0%

11.0%

10.6%

11.5%

Fleet

1 Airbus A380s

7 Airbus A380s

4 Airbus A380s

8 Airbus A380s,

2 Boeing 777s,

4 Airbus A350s

4 Boeing 787s

Lessee

Emirates

Emirates

Emirates

Emirates, Etihad,

Thai Airways

Norwegian,

Thai Airways

Year of lease expiry

2022

2023-2024

2025

2026-2030

2025-2026

Return condition

Full-life

Full-life

Full-life

Varies

Full-life

LTV at acquisition

67.8%

63.1%

64.3%

73.0%

61.2%

Amortisation

Full

Full

Full

Partial

Full

FX Risk

Yes - residual value

Yes - residual value

Yes - residual value

Yes - residual value

Yes - USD listing



Source: Liberum, Company data

Our base case IRR estimates are shown below on the basis of of the current price, expected dividend payments over the remaining terms of the lease and the latest appraised values as disclosed by each of the funds. Our stressed case assumes a 50% reduction in residual values from the latest published estimates. In our worst case scenario, the income returns are unchanged and reduce the residual values of the A380s to the sum of 10% of acquisition cost and the return condition payments under the respective leases. For example, the return condition payment for Doric Nimrod Air Two is $12m per aircraft if it is returned in half-life condition. In our view, the best relative value opportunities are Doric Nimrod Air Two (due to share price weakness) and Amedeo Air Four Plus (exposure to other aircraft and longer income profile).

davebowler
07/10/2019
10:13
I don't think p and l means much in this type of vehicle due to timing differences. The only thing that really matters aside from airlines meeting payments is the residual values. I have more concerns about this vehicle than say Doric because they have multiple A380 on lease which may swamp the market when the number of 380 in use may be in decline.
pejaten
19/7/2019
09:44
I was interested to see if the A380 saga would be reflected in any way in the latest accounts. It seems not and the company is continuing to be optimistic with regard to residual valuations. They are calculating an NAV of 109.7p which the market clearly doesn't agree with.

However, the annual p/l also looks a bit worrying. Comparing the FY Mar19 to FY Mar18 there are four material differences:

1) Income is up from £219m to £254m although around half of this is due to the fall in GBP (Note 17B says 1.303 in Mar19 accounts versus 1.402 in Mar18 accounts)

2) Depreciation is up from £118m to £156m (both involve ccy adjusts of 22-£25m (note 9) so underlying depreciation is up significantly. This possibly relates to the following:

Note 9 states : Included in the depreciation charge for the period is additional depreciation in respect of certain aircraft which recognised an acceleration in the pattern of consumption of benefits expected from these aircraft based on the redelivery conditions of the aircraft and their residual values.

The FY accounts don't mention which aircraft are being depreciated at a faster rate although the latest quarterly report seems to point to the 777-300ER residual values being in decline. The A380s are actually showing a small INCREASE in residual values i.e. nothing in the accounts to reflect the possible future A380 risk at the end of the current leases.

3) Finance costs are up from £50m to £85m. Underlying interest on loans was £69m reflecting the high debt levels.

4) FX gains were £2m versus £185m last year. This item can be largely ignored since the assets and income streams are almost all in USD and matched against USD liabilities.

AA4 have not bought any more aircraft recently so going forward income is largely static; does this year's PBT of £8.48m, free of FX gains, represent the more transparent PBT going forward? With EPS at just 1.31p while the dividend was 8.25p I note the chairman's comment that 'your Board is hopeful of continuing to pay such dividends for the foreseeable future'. Note > Hopeful, rather than confident!!

pimsim
19/7/2019
06:37
AA4 has released its Annual Financial Report for 2019 following its Q2 fact sheet last week.  AA4's shares went ex-dividend today with monies payable by the end of July.  The Company continues to deliver upon its investment objectives and, at a current share of roughly 90p*, offers sterling running yield of over 9% via quarterly dividends from owning and leasing widebody aircraft to flag carrier airlines (Emirates, Etihad and Thai).  Subsequent to the share price movements following the announcement from Airbus of the cessation of the A380 programme the company's share price is implying a significant discount to the latest average appraisal values (totalling some 154.2p per share as a potential future return of capital based on the Company Q2 fact sheet – see table and its related footnotes below) with outstanding targeted dividends remaining of roughly 9 years, on average, for AA4 totalling 73.6p.  See below tables for current running yield, performance, and implied future total returns based on the average appraisal values.*18-Jul-19The Chairman's statement highlights that the key development during the period was the announcement on 14 February 2019 that Airbus will close production of the A380 in 2021. But notes: "The announcement by Airbus has no direct impact on the Company's leases nor its ability to pay targeted distributions. The Company's first lease expiry does not fall due until 2026. While the A380 forms approximately two-thirds of the Group's portfolio by appraised value, the portfolio is complemented and diversified by two additional aircraft models, namely the B777-300ER and A350-900."The Asset Managers Report contained in the Q2 2019 AA4 fact sheet published on 5 July (and outlined in our last communication on 8 July) provides commentary and updated appraisal valuation information for each of the aircraft models owned by the Company.Further, the Boards of the subsidiaries of AA4 have seen fit to re-designate their functional currency to US Dollars from 1 April 2018 and the subsequent accounting for the year ended 31 March 2019.   In the view of the Boards this is reflective of the most recent economic environment of these subsidiaries, as much of their rental income and sources of financing are primarily US Dollar based. This is the first year that the Thai planes which pay all their income in US dollars are all included.As ever, if you have any further questions or would like to request an update meeting or to schedule a meeting with the Chairman/Directors please contact Chris Holland at Nimrod Capital.Company Returns (GBP):      Fund Launch Date 13-May-15         AA4+       Dividends 35.06%  Capital Gain -10.00%  Total Return1 25.86%  Annualised Total Return1 5.65%       FTSE All-Share Annualised Total Return1 5.99%      Source: Bloomberg, 18-Jul-19 1Since inception, dividends reinvested       Current Metrics & Implied Future Total Returns (based on latest Mar-19 appraisals):        AA4+       Market Cap £578m  Yield 9.2%  Share Price 90p       Targeted Distributions 73.6p  Return of Capital* 154.2p  Total Return 227.8p      Source: Bloomberg, 18-Jul-19 & Company Q2 '19 fact sheet, adjusted for XD amount of 2.0625p on 18-Jul-19 *Please review the associated disclaimers and assumptions contained within the respective DNA/AA4 fact sheets when considering this information.      The Annual Report has been released on RNS and will also shortly be available at:http://www.aa4plus.comNimrod Capital LLP ('Nimrod') is not a broker, it does not trade with any counterparties, it does not produce investment research nor does it have any paid for research agreements with any counterparties.  This communication does not constitute "research" as defined by the Financial Conduct Authority Handbook and may be assessed as a minor non-monetary benefit.Kind RegardsMarc GordonPartnerDDI: + 44 207 382 4560 |Mob: + 44 7785 297620 |Tel: + 44 207 382 4565 |Fax: +44 207 628 7548Nimrod Capital LLP, 3 St Helen's Place, London EC3A 6ABwww.nimrodcapital.com_________________________________________________________________________________________________________Nimrod Capital LLP – a limited liability partnership registered in England and Wales.  Registration number – OC335533.  Registered office address – 69/85 Tabernacle Street, 2ndFloor, London EC2A 4RR.  This e-mail is sent in confidence.  The contents are not to be disclosed to anyone other than the addressee.  E-mail communications are not secure and therefore Nimrod Capital LLP does not accept legal responsibility for the contents of this message.  Any views or opinions presented are solely those of the author and do not necessarily represent those of Nimrod Capital LLP unless otherwise specifically stated.  This e-mail and any attachment are confidential and contain proprietary information, some of which may be legally privileged.  It is intended solely for the use of the individual or entity to which it is addressed.  If you are not the intended recipient, please notify the author immediately by telephone or by replying to this e-mail, and then delete all copies of the e-mail on your system.  If you are not the intended recipient, you must not use, disclose, distribute, copy, print or rely on this e-mail.Whilst we have taken reasonable precautions to ensure that this e-mail and any attachment has been checked for viruses, we cannot guarantee that they are virus free and we cannot accept liability for any damage sustained as a result of software viruses.  We would advise that you carry out your own virus checks, especially before opening an attachment.Nimrod Capital LLP is a data controller with respect to your personal data for the purpose of the General Data Protection Regulation.  By proceeding to use our service you consent that we may process the personal data (including sensitive personal data) that we collect from you in accordance with our Privacy Policyhttp://www.nimrodcapital.com/?page_id=1541.  This includes the recording of telephone calls made to telephone numbers registered to the Company.We hold your contact details because we have previously provided you with products or services and we believe you may wish to hear from us about similar products or services.  If you do not want to receive any further communications from us, please unsubscribe by contacting the following email address:info@nimrodcapital.com.Nimrod Capital LLP is authorised and regulated by the Financial Conduct Authority. 
davebowler
18/7/2019
17:55
Were they? I got the impression it was more to do with changing the currency used in the accounting process
riff1954
18/7/2019
15:45
Results were extremely bad. Maybe this will drift down to 80p
sbb1x
09/5/2019
10:51
Nimrod;
This morning Emirates released their 2018-19 results. Below we highlight commentary from the Annual Report relating to the A380 as well as summarising Emirates performance and milestones over the year. Links to the full announcements and reports are at the end of this email. We also provide an updated table detailing share price total return for each of the DNA/AA4 companies. As ever, if you have any questions on the results or would like to arrange a meeting or call please do get in touch. Many thanks.

Emirates comments relating to the A380 from the 2018-19 Annual Report:

We are strong believers in the A380 programme, despite Airbus’ decision to stop production in 2021. Our current and future investments in the iconic Emirates A380, including the introduction of Premium Economy in 2020, will continue to wow our customers. We have been reviewing our fleet mix options for some time now, so converting some of our A380 orders into A330neos and A350s gives us the required flexibility. In 2019-20, we plan to receive six A380s and retire eight Boeing 777s, keeping our fleet strong and young.
Our A380s continue to command awe and stir excitement.
We continue to maintain our position as the largest operator of A380 aircraft and with the addition of 7 new aircraft, we now have 109 super-jumbos in our fleet. The high seat factor on the A380 fleet continues to demonstrate the customer preference for this aircraft. This fleet carried 41% (2017-18: 41%) of our passengers in 2018-19. With A380s operating to 50 destinations, 32% (2017-18: 31%) of all cities across the Emirates network are served by an A380. This aircraft will remain the cornerstone of our fleet mix and product offering well into the 2030s.
We also include a recent article which first appeared in the April 2019 edition of Australian Aviation: “THERE’S PLENTY OF LIFE LEFT IN THE AIRBUS A380”. The article provides a detailed re-cap of recent A380 developments and also commentary on the potential future outlook for the model. The article is available here: hxxps://australianaviation.com.au/2019/05/theres-plenty-of-life-left-in-the-airbus-a380/














Emirates Group Announces 2018-19 results

Group records 31st consecutive year of profit of AED 2.3 billion (US$ 631 million)

Emirates reports a profit of AED 871 million (US$ 237 million), 69% down from the previous year

Revenue increases by 6% to AED 97.9 billion (US$ 26.7 billion), supported by steady passenger and cargo performance
Airline capacity crosses 63 billion ATKM with a net addition of 2 new aircraft to the fleet

davebowler
07/5/2019
07:44
ADVFN is hosting an investor event for Avation plc on the 21st May to find out about their future prospects.

Sign up to attend this event:

https://uk.advfn.com/stock-market/london/advfn-AFN/share-news/ADVFN-PLC-ADVFN-Investor-Event-for-Avation-plc/79847603

shiv1986
30/4/2019
12:12
Nimrod Capital;
Below we reproduce the most recent email which was sent to investors ahead of the shortened week before Easter. The only updates are the current metrics and fund return tables and investors should note that the respective companies went ex-dividend as planned. As ever, if you have any further comments or questions please do get in touch to arrange a meeting.

The DNA/AA4 investment companies have released their fact sheets for Q1 2019 and also declared their latest quarterly dividend distributions for April. The shares will go ex their respective dividend amounts on Thursday 18th April with payments made by the end of the month.

The latest fact sheets highlight news and developments not only on the A380 but also the various airlines and the global aviation market. In this email we highlight through a Q&A, which we hope investors will find useful, a re-cap of some of the most common and relevant questions investors have been asking following the announcement that Airbus will close production of the A380 in 2021 (investors might also wish to look at Emirates’ consequent statement - hxxps://www.emirates.com/media-centre/emirates-signs-deal-for-40-a330-900s-30-a350-900s). Clearly this development has impacted the DNA/AA4 company ratings with the shares marked-down pretty much universally upon the announcement, apparently with little differentiation to reflect their varying size, diversity, outstanding dividends or potential for capital outcome. Regardless, both existing and prospective shareholders should note few other investments have the transparency and granularity of the financial structure that can enable analysts and portfolio managers to model the outstanding targeted dividends and their own assumptions regarding aircraft valuations in order to assess the sensitivity of prospective returns and IRRs.

Finally, we note that during the last week of March AA4 Director, David Gelber, purchased 16,000 shares in AA4, bringing his holding to 322,518 shares in the company.

Q&A

Is it bad news that Airbus is closing production of the A380?

The announcement removes the uncertainty which has hung over the programme for more than two years now and brings clarity to investors, airlines and lessors over how many A380s will be produced. The scale of the reduction in Emirates A380 order was notable, having previously had 178 aircraft on either order/option, and was likely, in part, driven by Rolls Royce’ reluctance to deliver further Trent 900 engines. This follows engine durability problems with high-pressure compressor blades and performance issues in the hot and sandy Dubai climate leading to Rolls Royce incurring significant financial cost through compensation clauses.

Our partners Doric and Amedeo both believe that the shutdown of the A380 program should, on balance, be perceived as positive for the utilisation and potential future value of the aircraft on lease to the Emirates.

At the time of the announcement Amedeo commented:

"Amedeo considers today's Airbus announcement to have positive implications for the future values of the installed A380 fleet, particularly those aircraft operated by Emirates.

We estimate that the long-term core Emirates A380 fleet will comprise in excess of 100 A380 units, which we expect will continue to be operated by Emirates for the entirety of their useful economic lives.”

Prior to the announcement Doric commented:

The A380 has been and remains to be a niche aircraft, which constitutes a very valuable asset under the right circumstances. … A timely termination of the program would leave Emirates without access to new A380s for replacement and to keep up with its growth plans. From an aircraft owner’s point of view, a production stop can be seen as a value enhancement to existing A380s. It will limit the supply of A380s - and hence the number of competing aircraft, when it comes to a release or sale. As the number of used A380s available is very limited and the overall A380 fleet would not grow further, due to a looming production stop, Emirates should be incentivized to keep their existing A380s longer than originally planned

Emirates first 90 A380s delivered are all equipped with Engine Alliance engines (a joint-venture between GE and Pratt and Whitney) and indeed are the engine type fitted to all of the A380s owned across the DNA/AA4 investment companies (including those with Etihad). It appears Emirates A380 fleet will now only ever consist of a maximum of 123 aircraft, of which 60 are currently on operating lease with the outstanding deliveries expected to be financed either on balance sheet or via other finance structures. Rolls-Royce are reluctant to produce the improvements in the engine performance that Emirates demanded as they continue to service a back-log of grounded aircraft (Boeing 787 Dreamliners), combined with senior management changes at Airbus (incoming new CEO, CFO and COO) and, ultimately, Emirates frustration with the Trent program, seemingly pressed Emirates into a reduction of their A380 order. However, both Rolls-Royce and Airbus have still secured alternative equipment deliveries, and their on-going relationships with the Emirates, through the aforementioned A330neo and A350 deliveries (the latter not due to start until 2024) – where Rolls-Royce also happen to be the sole engine provider.

Are Emirates changing their fleet strategy? Why did they order some A330neo’s and A350s?

Neither the A330neo, nor the A350 are direct competitors to the A380 in terms of passenger capacity (seating roughly 260-330 passengers respectively, depending on layouts, versus from 489 to 615 for Emirates’ A380s in 3-class or 2-class configurations).

Emirates, alongside the announcement by Airbus, were highly complementary about the A380 in their press release. His Highness Sheikh Ahmed bin Saeed Al Maktoum, Chairman and Chief Executive, Emirates Airline and Group stated, “For us, the A380 is a wonderful aircraft loved by our customers and our crew. It is a differentiator for Emirates. ..... The A380 will remain a pillar of our fleet well into the 2030s.” Further, an Emirates spokesperson commented: “Bear in mind the A380s we receive in 2021 will be flying for another 15-20 years… We have some units on our books, some on lease or other structures, so retirement age will vary, but we intend to keep flying our A380s for as long as we can.”

Even Emirates 777X deliveries which are due to start in 2020 are, most likely, destined to refresh the early 777-300ER deliveries while the A330neo referenced above will be utilised on shorter-haul routes with less traffic. The A350 deliveries are not scheduled to start until 2024.

Will Airbus and suppliers continue to support service and maintenance of the aircraft going forward?

In short, yes. At the recent ceremony for the first A380 delivery to All Nippon Airways (ANA), CEO Shinya Katanozaka stressed that he has “no concern” over the closing of the A380 production line, pointing out that the carrier has been promised “strong support for maintenance and parts supply”. Parts suppliers to the programme, such as GKN have also made public comments about the provision of parts and Airbus themselves recently notified operators that full support will remain in place until less than five units remain in the air.

hxxps://www.arabianbusiness.com/transport/414057-global-a380-suppliers-should-see-revenue-for-20-more-years

How many A380s will there be and who will be operating them?

The total production run for the aircraft will be around 250 units. There were 17 further deliveries outlined in the announcement by Airbus (14th February 2019). 14 of these deliveries will go the Emirates, taking their total number of A380 deliveries to 123 by 2021 while three A380s will be operated by All Nippon Airways (ANA) of Japan – the first of which was delivered on 20th March 2019.

Current operator list and outstanding orders:



Operator

Total in Service

Total on Order

Emirates Airline

109

14

Singapore Airlines

19

0

Lufthansa

14

0

British Airways

12

0

Qantas

12

0

Air France

10

0

Etihad Airways

10

0

Korean Air

10

0

Qatar Airways

10

0

Asiana Airlines

6

0

Malaysia Airlines

6

0

Thai Airways International

6

0

China Southern Airlines

5

0

Hi Fly Malta

1

0

ANA - All Nippon Airways

0

3

231

17

How many potential A380 lease expiries are there over the coming years?

According to data from Ascend, which is regularly updated for new information, the current outlook for A380 lease expiries over the next four years is:

2019: None

2020: 5, none of which are Emirates

2021: 7, 2 of which are Emirates

2022: 9, 4 of which are Emirates (including DNA1 in Dec-22)

When are the next independent appraisals out?

Appraisals are undertaken annually based on 31st March valuation date (the date of each company’s financial year-end). The appraisal values will be published on the quarterly fact sheets for Q2 which are due to be released in July and are a simple average of the three independent expert appraisers which incorporate future inflation expectations from each respective appraiser. The aircraft values reported under IFRS, published in the respective audited accounts of each company, are reported without inflation (but the same in all other respects).

Current Metrics:





























DNA



DNA 2



DNA 3



AA4+



























Market Cap



£40m



£326m



£197m



£652m





Yield



9.6%



9.6%



9.2%



8.1%





Share Price



97p



188.5p



89.5p



101.5p

























Source: Bloomberg, 29-Apr-19

























Fund Returns (GBP):

























Fund Launch Date



13-Dec-10



14-Jul-11



02-Jul-13



13-May-15































DNA



DNA 2



DNA 3



AA4+



























Dividends



74.25%



64.75%



45.20%



33.00%





Capital Gain



-6.00%



-5.75%



-10.50%



1.50%



























Total Return1



81.08%



68.11%



38.61%



39.14%





Annualised Total Return1



7.33%



6.89%



5.76%



8.68%



























FTSE All-Share Annualised Total Return1



7.49%



7.53%



7.31%



6.03%

























Source: Bloomberg, 29-Apr-19



1Since respective Company inception, dividends reinvested

























Conclusion:

Over the last eight years the aircraft investment companies have consistently paid their dividends and have provided high-income to investors with little correlation to other asset classes. Following the recent share price movements all of the vehicles are offering current cash yields of between 8.8-9.5% backed by internationally recognised flag carriers, and they own an asset around which there are still many competing views but of which there will only ever be a finite supply and particularly that has no direct competitor in terms of capacity.

The fund factsheets are available at:

hxxp://www.dnairone.com

hxxp://www.dnairtwo.com

hxxp://www.dnairthree.com

hxxp://www.aa4plus.com

As ever, if you have any further questions or would like to request an update meeting please contact Chris Holland at Nimrod Capital.

Nimrod Capital LLP (‘Nimrod’;) is not a broker, it does not trade with any counterparties, it does not produce investment research nor does it have any paid for research agreements with any counterparties. This communication does not constitute “research̶1; as defined by the Financial Conduct Authority Handbook and may be assessed as a minor non-monetary benefit.

Kind Regards


Marc Gordon

davebowler
03/3/2019
13:19
http://www.citywire.co.uk/partners/redirector.aspx?contentid=1204939&deliverytargetcode=web3__sections__investment_trust_insider&re=62731&ea=252901&utm_source=BulkEmail_Investment+Trust+Insider+Weekend&utm_medium=BulkEmail_Investment+Trust+Insider+Weekend&utm_campaign=BulkEmail_Investment+Trust+Insider+Weekend
davebowler
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