Doric Nimrod 3 Discussion Threads

[jurgenklopp] 15/6/2023 14:27

At 50p this is yielding 16% with quarterly payments.

Pretty good risk / reward play.

[extrader] 24/5/2023 13:14

carcosa comment on AA4 board...

That Global airline link.

It's effectively a scam. It's been pedalling this guff for two years or so. A simple check with Iata, any serious commercial aircraft publication, Airbus themselves, Aircraft registry, their whole concept, no finance etc etc etc. A child like webpage, only one registered company officer who paid his GBP10 or whatever to register the name and operates out of his mum's bedroom in a retirement village here

Make believe airline from the crypto industry...

Utter tripe!

[nat7] 24/5/2023 10:59

hxxps://www.cityam.com/london-set-to-be-home-of-new-transatlantic-carrier-global-as-soon-as-next-year/

[langland] 24/5/2023 10:50

Can you provide a link please?

[nat7] 24/5/2023 10:38

City AM this morning quoting that a new airline being set up. went on to quote that a good A380 is worth GBP90M
Which must be good news

[bandit99] 03/2/2023 16:43

Sorry Nat I have been away. I would be more positive about the ST article than Smidge, I interpereted as flagging the potential for upsides in the DNA funds

[smidge21] 16/1/2023 15:21

More a heads-up to structure, background etc than any recommendation.

[nat7] 16/1/2023 15:16

good or bad ?

[bandit99] 16/1/2023 13:32

Major article in today's Times on DNA funds

[rambutan2] 15/1/2023 21:05

Quarterly to 31/12/22:

[yieldsearch] 05/1/2023 08:16

https://www.wsj.com/articles/boeings-delays-could-give-airbuss-a380-an-active-retirement-11672690947?st=aqarmsjqfyv7ogi

[rambutan2] 20/12/2022 23:00

Last week's interim report, with some interesting commentary:

[grahamg8] 17/12/2022 11:39

Riff to answer your question in a slightly roundabout way. Try abcdlist.nl for a fount of information on all the A380's ever built. Given below are the Airbus production sequence numbers, they are not exactly in the same order as the lease start dates, although similar.

Put yourself in Emirates position: You have two planes, one has been in service for up to 14 years and is to say the least pretty clapped out, the other one is the last off the production line and you have only had it for 12 months. Which would you refurbish?

For the 12 DNA1/2/3 planes serial numbers 16,77,90,105,109,110 are in storage. 106,107,132,133,134,136 are all in service. Only one plane number 7? is shown as having been refurbished. Plane 9? is also stored. These are both A380-861, two others number 11, and 13 have been broken up. Which makes our (ex) plane 16 the third oldest still in Emirates possession. The oldest flying is plane 80.

So quite simply Emirates have chosen, not surprisingly, to fly their newest planes and store their oldest ones. Logically the oldest planes will be refurbished.

The half year report seems pretty encouraging. Subject to a shortage of crew, Emirates want to get as many A380's in the air as possible and keep them going till the mid 2030's. They could last out even longer as there is no new large replacement on the horizon.

The big question is how much will Emirates pay to keep them (or re-lease) once the leases end? First to finish is plane 16 which has been snapped up for a trifling £25.90m, announced 15 July for a lease ending on 16 December ie yesterday. Next up plane number 77 whose lease ends 14 October 2023. So we should find out sometime in Summer.

[riff1954] 04/12/2022 16:54

Does anyone know if any of ‘our’ A380s are included in the 67 being refurbished: www.emirates.com/media-centre/emirates-undertakes-largest-known-fleet-retrofit-project-as-part-of-multi-billion-dollar-investment-to-elevate-customer-experience/

[rik shaw] 28/11/2022 10:05

Positive report in the Sunday Times yesterday on the resurgence of the A380 worldwide

[bandit99] 25/11/2022 10:53

gradually inching up...

[nicholasblake] 18/8/2022 20:06

That appraisal stuff is misleading. Would be minus 75/85/95.
IMO range is probably $15m to $30m. But Emirates likely to renew leases of modern ‘good configuration’ planes.

[sf5] 18/8/2022 19:43

Thanks rik shaw. There is no market for used A380s. So these figures are entirely speculative. That said, the DNA3 30.6.22 report postulates a 'soft' market value of $168m for their 4 aircraft and then considers 25, 50, 75% reductions from this appraisal value. The single DNA1 aircraft has been sold back to Emirates for £25m.

[rik shaw] 18/8/2022 14:22

The article from the link in sf5 post states their six Airbus A380s 'are estimated to be worth some $240 million'
By contrast the linked article for June states' There were estimates the Malaysia Airlines A380s could be sold for a rock bottom US$100 million each, but still no takers'
And July article
states 'the four oldest aircraft each have a current market value of $44.89 million, while the remaining two are worth $46.89 million. This would give the entire fleet a current market value of $273.34 million.'

[nicholasblake] 18/8/2022 13:57

@sf5 what is the source for the $40m price tag?

[sf5] 18/8/2022 08:51

Interesting comment here that Malaysian has been trying to offload its 6 A380s for some years. No takers at $40m each

[bandit99] 15/8/2022 09:56

David Stevenson in this week's Moneyweek:
Aircraft-leasing funds crashed during the pandemic, but things could finally be looking up

When the Doric Nimrod aircraft funds launched a few years ago, they offered some tempting asset-backed income from a portfolio of A380 superjumbos that were leased to Emirates. A later fund, Amedeo Air Four Plus (LSE: AA4) broadened out the concept with a portfolio of Airbus and Boeing planes that were let to both Emirates and Thai Airways.

But the security that these assets offer looked fragile when the pandemic hit. No A380s were flying. Many airlines were in trouble. And Airbus had already cancelled A380 manufacturing the previous year. All this made it difficult to work out what the aircraft would be worth once the leases expired. So the price of the funds crashed way below stated net asset value, even though all three Doric Nimrod funds kept paying regular dividends.

Analysts have tried to put a value on how much these stranded A380s might be worth, but this has been a largely fruitless exercise as second-hand values are not advertised – there is no Rightmove for planes. It also hasn’t helped that Thai Airways has fallen into bankruptcy, although Emirates looks in much better shape.

But last month we finally got some concrete data. Doric Nimrod Air One (LSE: DNA), the very first fund, owns a single A380 that it let to Emirates back in 2008. It’s now agreed to sell the plane to Emirates for £25.3m ($30m) at the lease-end date in December.

We can sensibly use this as a marker for the other Doric Nimrod funds, although with lots of caveats. For Doric Nimrod Air Two (LSE: DNA2), which owns seven A380s with leases ending in 2023 and 2024, Emirates has already given notice that it is exercising the option that allows it to redeliver the aircraft in half-life condition, or between two major overhauls in its maintenance cycle. If this happens, a return condition payment of $12m per aircraft will be made by Emirates.

At that stage Emirates could still buy the planes, although most analysts think that it probably wouldn’t offer exactly the same price given to DNA. Meanwhile, the third fund, Doric Nimrod Air Three (LSE: DNA3) has four A380s, whose leases expire in 2025. Analysts at Jefferies reckon a prudent valuation for DNA2 and DNA3 could be $25m per aircraft. If that materialises, investors could expect a return of 1.47 times the current share price for both funds, including future dividends. Nothing is guaranteed, but that’s potentially very good news.
A more complicated case

AA4’s situation is more complicated. It owns six A380s (leased to Emirates), two B777s (leased to Emirates) and four A350s (leased to Thai Airways). It had to suspend dividends for much of 2020 and 2021 while Thai Airways was restructuring and renegotiating its leasing deal. Dividends have now resumed at a lower level, although these are covered by Emirates’ leases only. But Thai Airways’ financial situation has improved and it is set to restart fixed payments next year (currently AA4 gets paid only for the time it uses the planes). The A380s are of uncertain value, though DNA’s deal is positive. Analysts at Liberum believe AA4 is building up its cash reserves to meet its debt obligations (the aircraft funds use a lot of debt to buy the planes, then pay it down over the course of the lease).

The wider story is that demand for aviation has picked up. Many airlines are struggling to get planes in the air. Emirates is experiencing capacity issues, partly due to problems with the delivery of Boeing’s 777X programme, says Liberium. If all goes to plan, its analysts think AA4 could deliver an internal rate of return (before fund costs) of 14% from the current share price. Whether or not those exact numbers work out, the outlook for these funds might finally be improving.

[carcosa] 19/7/2022 06:46

No very wrong.

Airline does all the upgrades themselves.

It is usual for the airframe to be delivered to the lessor minus interior. No seats or entertainment systems. They are customer decisions and will be incorporated during airframe build as a separate contract with the seating/entertainment supplier using Airbus labour.

Cabin interior changes are then done during service life by Emirates themselves.

When the lease expires return conditions also include cabin interior condition.
Most of those 'upgrades' can be removed in 2-3 days during hangar visit. For one thing Emirates or any other airline would not want a second lessor to be flying around with 'their' seating/interior design and a new airline would want to brand the interior in their own style.

'Upgrading' an interior has nil effect on the value of an aircraft. It's irrelevant.

"But logic says you fly your best planes and rework the older ones." For practical purposes they are all the same. The driving force as to which are best/worse depends on your engine shop visit schedule.

As for the accounting changes see hxxps://www.pwc.com/gx/en/audit-services/ifrs/publications/ifrs-16/ifrs-16-implications-for-the-airlines-industry.pdf You can see that IFRS 16 accounting for leases has a detrimental effect for the accounts from 2019 due to the financial liabilities during the early part of the lease.