TIDMDPA
RNS Number : 7260P
DP Aircraft I Limited
30 May 2018
DP AIRCRAFT I LIMITED (the "Company")
INTERIM UPDATE 30 MAY 2018
The Company is issuing this report for the period from 6
November 2017 to 30 April 2018 as an investor update. It should not
be relied on by Shareholders, or any other party, as the basis for
an investment in the Company or for any other purpose.
Overview
DP Aircraft I Limited, a Guernsey based company, was launched in
October 2013. To date the Company has acquired four Boeing 787-8
aircraft, with two leased to Norwegian Air Shuttle ASA and two
leased to Thai Airways International PCL. DP Aircraft I Limited
took over the Norwegian aircraft, LN-LNA (previously EI-LNA) and
LN-LNB (previously EI-LNB), on 9 October 2013 and the Thai
aircraft, HS-TQC and HS-TQD, on 18 June 2015. Since these dates all
lease obligations have been met in full by Norwegian and Thai and
no incidents of note concerning operations of the aircraft have
occurred.
To date the Company has, paid out 18 dividends of 2.25 cents
each. The Company pays out dividends on a quarterly basis and
targets a yearly distribution of 9 per cent. The last interim
dividend payment was paid on 17 May 2018. The quarterly
distributions are targeted for February, May, August and November
in each year.
Company Information
Ticker DPA
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Company Number 56941
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ISIN Number GG00BBP6HP33
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SEDOL Number BBP6HP3
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Traded SFS
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SFS Admission Date 4th October 2013
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Share Price 1.09 [24 May 2018]
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Country of Incorporation Guernsey
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Current Shares in Issue 209,333,333 Ordinary Shares
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Administrator and Company Secretary Aztec Financial Services (Guernsey)
Limited
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Asset Manager DS Aviation GmbH & Co. KG
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Auditor and Reporting Accountant KPMG
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Corporate Broker Canaccord Genuity Limited
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Aircraft Registration (Date of LN-LNA (28 June 2013)
Delivery) LN-LNB (23 August 2013)
HS-TQC (29 October 2014)
HS-TQD (9 December 2014)
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Manufacturer Serial Number MSN 35304
MSN 35305
MSN 36110
MSN 35320
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Aircraft Type and Model B787-8
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Lessees Norwegian Air Shuttle ASA
Thai Airways International PCL
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Website www.dpaircraft.com
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The Company's investment objective is to obtain income returns
and a capital return for its Shareholders by acquiring, leasing and
then, when the Board considers it is appropriate, selling the
aircraft.
Aviation Market
The outlook for 2018 is positive. The International Air
Transport Association (IATA) expects 2018 to be the fourth year in
a row of sustainable global airline profits. IATA represents some
280 airlines worldwide, comprising 83 per cent of global traffic.
Global passenger demand is expected to increase by 6 per cent in
2018. Although this is a slower growth rate than in 2017, it is
still above the global average for the previous 10 to 20 years (5.5
per cent) and exceeds the expected increase in capacity of 5.7 per
cent. IATA is forecasting increases in load factors and yields,
with the number of total passengers amounting to 4.3 billion.
Demand in the Asia-Pacific region is anticipated to grow by 7 per
cent, assuming that the rise in cargo performance offsets the
increase in fuel prices.
Although IATA expects costs to challenge profitability in 2018,
global revenues are anticipated to increase by 9.4 per cent
compared to 2017, with global net profits reaching USD 38.4
billion, benefiting from strong demand, improved efficiency and
reduced interest payments. It is expected that on average fuel
expenses will amount to 20.5 per cent and labour costs to 30.9 per
cent of total costs.
In terms of international traffic (RPK) the biggest market share
by region is the Asia Pacific region (33.7 per cent), followed by
Europe (26.5 per cent) and North America (23.0 per cent). After
slower global demand in January 2018 compared to the same month the
previous year, there was a rebound in traffic in February, partly
because of the timing of the Lunar New Year (Chinese New Year).
Total demand in February 2018 increased by 7.6 per cent while
capacity rose by 6.3 per cent compared to the same period in 2017.
Growth has been supported by a robust economic backdrop as well as
solid business confidence. Challenges remain in the form of
increasing fuel prices and labour costs, and strong competition. In
February 2018, European carriers increased capacity by 5.0 per cent
and Asian carriers by 8.4 per cent compared to the same month in
the previous year. Traffic from European carriers increased by 6.8
per cent, while traffic from Asian-Pacific airlines rose by 9.1 per
cent. The average load factor of European carriers increased by 1.4
percentage points to 82.2 per cent, being the highest amongst the
regions. The Asia-Pacific region benefited from regional economic
growth and from an increase in the number of routes. In January
2018, a 5.3 per cent share of total international passenger traffic
(origin-destination passengers) represented premium-class cabin
travel, accounting for 29.6 per cent of total revenues. The
strongest demand was on routes between Asia and Southwest Pacific,
as well as within Europe.
As part of an IATA survey in early April 2018, 67 per cent of
the interviewed airline CFOs and Heads of Cargo indicated an
increase in profitability for the first quarter compared to the
same period in the previous year. 61 per cent shared the opinion
that profitability will continue to improve over the next twelve
months. 42 per cent of the participants reported an increase in
input costs in the first quarter 2018, mainly due to increased fuel
prices. Half of the respondents anticipated employment growth over
the coming year.
The latest Boeing Outlook (Current Market Outlook 2017-2036)
expects deliveries of 41,030 aircraft with a total market value of
USD 6.1 trillion within the next 20 years. Both Boeing and Airbus
(Global Market Forecast 2017-2036) continue to forecast that the
global passenger and freighter fleet will at least double by 2036.
According to Boeing, airlines' fleets will grow by 3.5 per cent per
annum within the next 20 years. Boeing forecasts that the current
share of the global airlines' fleet from the Asia-Pacific region
will increase from 29 per cent to 37 per cent. European airline
fleet growth is anticipated to be lower than the global average,
with an average annual growth rate of 2.7 per cent.
The Assets - Four Dreamliner Boeing 787-8s
As at 30 April 2018, Boeing had delivered 678 Boeing 787
Dreamliner aircraft, of which 350 aircraft are B787-8s, 326
aircraft are B787-9s and two are B787-10s. The first B787-10 were
delivered to Singapore Airlines in March 2018. The total order for
the B787 family amounts to 1,365 aircraft by 69 customers. Turkish
Airlines placed an order for 25 Dreamliners in March, and American
Airlines ordered an additional 25 B787-9s in April.
Norwegian has equipped its B787 fleet with a total of 291 seats,
of which 32 are premium economy and 259 economy class seats. This
type of aircraft is used to fly from Europe to destinations in Asia
and America, amongst others, Oakland, Los Angeles, New York and
Bangkok. On 14(th) January 2018, aircraft LNA was inspected in
Birmingham at the Monarch maintenance facilities during a Base
Check (every 6,000 flight hours). Our inspector considers the
aircraft and its records to be in good condition with no
significant defects or airworthiness related issues. Aircraft LNB
is scheduled to be inspected in the second quarter of 2018, subject
to airline operations. Technical records have already been
collected and are considered to be in good condition with no
airworthiness related issues.
Thai Airways' B787 fleet offers a total of 264 seats, of which
24 are business and 240 economy class seats. The carrier operates
this aircraft type to destinations such as Taipei, Nagoya, Perth,
Auckland and Vienna. Modifications of TQC and TQD, including the
installation of a Wi-Fi antenna and a crew rest compartment, have
been completed. As a result, the aircraft can be deployed more
flexibly, including long-haul destinations. TQC and TQD were
inspected on 28 February 2018 at Bangkok International Airport. TQC
was inspected during an A-check at daytime and TQD during a night
stop in the airport bay. Our inspector considers the aircraft and
their records to be in good condition with no significant defects
or airworthiness related issues.
The charts below give a short overview of the utilisation of
airframe and engines of each of the four aircraft as at 30(th)
April 2018.
AIRFRAME STATUS Norwegian Air Shuttle Norwegian Air Shuttle
(30 April 2018) LN-LNA LN-LNB
---------------------- -------------------------- --------------------------
TOTAL April 2018 TOTAL April 2018
---------------------- ------------ ------------ ------------ ------------
Flight hours 23,487 496 24,656 470
---------------------- ------------ ------------ ------------ ------------
Cycles 2,769 53 2,960 53
---------------------- ------------ ------------ ------------ ------------
Average Monthly 404 hours --- 438 hours ---
Utilisation 48 cycles 53 cycles
---------------------- ------------ ------------ ------------ ------------
Flight Hours /
Cycle Ratio 8.48:1 9.36:1 8.33:1 8.87:1
---------------------- ------------ ------------ ------------ ------------
ENGINE DATA
(30 April 2018)
---------------------- -------------------------- --------------------------
Engine Serial Number 10118 10119 10130 10135
---------------------- ------------ ------------ ------------ ------------
Engine Manufacturer Rolls-Royce Rolls-Royce Rolls-Royce Rolls-Royce
---------------------- ------------ ------------ ------------ ------------
Engine Type and Trent 1000 Trent 1000 Trent 1000 Trent 1000
Model
---------------------- ------------ ------------ ------------ ------------
Total Flight Hours 16,059 18,570 14,713 18,863
---------------------- ------------ ------------ ------------ ------------
Total Cycles 1,955 2,249 1, 645 2,211
---------------------- ------------ ------------ ------------ ------------
Location LN-LNE In shop LN-LNB LN-LNA
---------------------- ------------ ------------ ------------ ------------
AIRFRAME STATUS Thai Airways International Thai Airways International
(30 April 2018) HS-TQC HS-TQD
---------------------- ----------------------------- -----------------------------
TOTAL April 2018 TOTAL April 2018
---------------------- -------------- ------------- -------------- -------------
Flight hours 14,402 431 11,935 351
---------------------- -------------- ------------- -------------- -------------
Cycles 3,353 76 2,925 76
---------------------- -------------- ------------- -------------- -------------
Average Monthly 343 hours --- 295 hours ---
Utilisation 80 cycles 72 cycles
---------------------- -------------- ------------- -------------- -------------
Flight Hours/Cycles
Ratio 4.30:1 5.67:1 4.08:1 4.62:1
---------------------- -------------- ------------- -------------- -------------
ENGINE DATA
(30 April 2018)
---------------------- ----------------------------- -----------------------------
Engine Serial Number 10239 10240 10244 10248
---------------------- -------------- ------------- -------------- -------------
Engine Manufacturer Rolls-Royce Rolls-Royce Rolls-Royce Rolls-Royce
---------------------- -------------- ------------- -------------- -------------
Engine Type and Trent 1000 Trent 1000 Trent 1000 Trent 1000
Model
---------------------- -------------- ------------- -------------- -------------
Total Flight Hours 12,216 10,518 10,497 10,748
---------------------- -------------- ------------- -------------- -------------
Total Cycles 2,840 2,583 2,581 2,601
---------------------- -------------- ------------- -------------- -------------
Location In shop In shop TQF TQC
---------------------- -------------- ------------- -------------- -------------
The Lessees
Norwegian Air Shuttle ASA
Norwegian Air Shuttle ASA operates as a low-cost carrier on
short-, medium- and long-haul routes. As at 31 March 2018, the
airline operated a network of more than 500 routes to over 150
destinations including more than 60 intercontinental city pairs.
The fleet comprises 151 passenger aircraft, including 27 Boeing
787s. The airline will take delivery of 11 Dreamliners in 2018, of
which six B787-9s have already been delivered during the first
quarter. In 2017, the airline transported more than 33 million
passengers, an increase of 13 per cent on the previous year.
During the financial year 2017, operating revenues increased by
19 per cent to NOK 30.95 billion (USD 3.77 billion) compared to
2016. Operating loss was NOK 2.00 billion (USD 0.24 billion)
compared to an operating profit of NOK 1.82 billion (USD 0.21
billion). Net losses amounted to NOK 0.30 billion (USD 37 million)
compared to a net profit of NOK 1.14 billion (USD 0.13 billion) in
2016. Both capacity and demand increased by 25 per cent and the
load factor remained stable at 87.5 per cent. Unit costs excluding
fuel increased by 4 per cent while unit revenue decreased by 6 per
cent. Higher costs were partly compensated by a rise in ancillary
revenues per passenger which grew by 8 per cent to NOK 145 (USD
18). The equity ratio as at 31 December 2017 was 9 per cent, down 2
percentage points. Results were influenced by capacity growth, the
set-up of new bases, cockpit and cabin crew training as well as
higher fuel prices, higher expenses for wet-lease due to delayed
aircraft deliveries and the sale of 2.5 percent of Bank Norwegian
shares.
During the first quarter of 2018, passenger numbers increased by
12 per cent to 7.48 million compared to the same period in the
previous year, while operating revenues increased by 33 per cent to
NOK 6.99 billion (USD 0.89 billion). The share of passengers
outside Scandinavia increased significantly; the strongest growth
was in passengers from the U.S. While capacity was increased by 36
per cent, demand grew by 37 per cent. The passenger load factor
remained stable at 84.5 per cent. Ancillary revenues per passenger
increased by 17 per cent. Operating losses increased by 31 per cent
to NOK 2.23 billion (USD 0.28 billion) while net losses decreased
by 97 per cent to NOK 46 million (USD 6 million) compared to the
same quarter in 2017. Results were influenced by a NOK 1.94 billion
financial gain from reclassification of its investment in Norwegian
Finans Holding, in which the airline has a 16.4 per cent
shareholding. Furthermore, results were impacted by increased fuel
prices, foreign currency effects and its strong growth as outlined
above. In March 2018, Norwegian raised NOK 1.30 billion (USD 168
million) through a share issue. Cash and cash equivalents as at 31
March 2018 stood at NOK 3.20 billion (USD 0.41 billion). Aircraft
utilisation increased from 10.9 to 11.5 block hours a day compared
with the same quarter in the previous year.
In March 2018, capacity increased by 44 per cent while demand
rose by 48 per cent compared to the same month in 2017. The load
factors increased by 2.6 percentage points to 86.7 per cent and
passenger numbers grew by 15 per cent to 2.8 million. Yield and
unit revenues increased by 1 per cent and 4 per cent respectively
compared to the same month a year ago.
For 2018, Norwegian reduced gross capex commitment from USD 2.1
billion to USD 1.9 billion. The peak of growth in terms of capacity
and fleet will be in the first half of 2018; the second half will
benefit from economies of scale. The airline is scheduled to take
delivery of 25 new aircraft, including 11 B787-9s. 70 per cent of
the capacity growth in 2018 is expected to result from the growth
of the wide-body fleet, which has more than doubled since the first
quarter of 2017. The carrier anticipates a negative impact from the
introduction of a Swedish passenger tax. In 2018, Norwegian will
launch transatlantic routes from Madrid, Amsterdam and Milan and
plans to add some Canadian destinations to its network in 2019,
which were approved by the Canadian Transportation Agency in
March.
In April 2018, the International Airlines Group (IAG), parent
company of British Airways, Iberia, Aer Lingus, Vueling and LEVEL,
acquired a 4.61 per cent stake in Norwegian. A potential
acquisition could offer IAG network synergies and access to new
aircraft deliveries. According to Norwegian, they have been
approached by other interested parties and the Board of Directors
of Norwegian set up a steering committee and engaged advisors to
review the situation including potential offers and to safeguard
all shareholders' interests.
Thai Airways International PCL
Thai Airways International Public Company Limited, full service
network carrier and flag carrier of the Kingdom of Thailand, is
majority-owned by the Thai Government (Ministry of Finance) (51.03
per cent). As at 30 April 2018, the fleet of Thai Airways,
including its subsidiary Thai Smile, comprised 104 active aircraft.
In 2017, two B787-9s were delivered; there are no further B787s on
order from Thai Airways. In 2017, Thai Airways International,
excluding any subsidiaries, transported nearly 20 million
passengers, an increase of 9.9 per cent compared to 2016. The
carrier currently operates 66 destinations in 35 countries,
including 11 destinations in 13 European countries. In 2017, Thai
Airways received several awards including "Best South East Asian
Airline for 10 consecutive years" by the TTG Awards as well as
"Best Economy Class Onboard Catering" and "World's Best Economy
Class" by Skytrax.
Operating revenues in 2017 increased by 6.3 per cent to THB
191.95 billion (USD 5.89 billion) compared to 2016. THB 157.48
billion related to passenger and excess baggage revenue, THB 20.27
billion to freight and mail and 14.20 billion to other revenue and
income. Operating profits decreased by 29.8 per cent to THB 2.86
billion (USD 88 million) and net losses amounted to THB 2.07
billion (USD 64 million) compared to net profits of THB 47 million
(USD 1 million). Capacity increased by 6.4 per cent and demand by
14.7 per cent. Therefore, the load factor improved by 5.8
percentage points to 79.2 per cent. Results were impacted by
impairment loss (USD 98 million), loss on changes in ownership
regarding the stake hold in NOK (USD 13 million) and exchange
losses (USD 48 million). The airline's results were also affected
by the 24.2 per cent. rise in average jet fuel prices. Liabilities
have been continuously decreasing since 2015 and were recently
restructured to maximise the benefit of natural hedging (revenues
of foreign currencies versus expenses in foreign currencies).
During the first quarter of 2018, total operating revenues
increased by 7.4 per cent to THB 53.47 billion (USD 1,716 million)
compared to the same quarter in the previous year. Operating Profit
increased by 49.4 per cent to THB 3.84 billion (USD 123 million)
while net profit decreased by 13.6 per cent to THB 2.74 billion
(USD 88 million). Results were impacted by an impairment loss of
assets and aircraft of THB 2.47 billion as well as a gain on
foreign currency exchange of THB 583 million. Thai increased
capacity by 4.9 per cent, while demand only grew by 2.2 percent and
the load factor decreased by 2.2 percentage points to 80.6 per
cent. The passenger yield grew by 4.5 per cent compared to the
first quarter of 2017. At the end of the quarter, cash and cash
equivalents stood at THB 16.97 billion (USD 545 million) and assets
amounted to THB 286.17 billion (USD 9,182 million).
Thai considers its restructuring efforts - summarised in its
Transformation Plan - as key to a profitable future in the long
run. As part thereof, efficiency grew as a result of increasing
internet sales, and web and mobile check-in. Moreover, Thai Airways
being in the third and final stage ("sustainable growth") of its
restructuring plan puts emphasis on measurements and strategic
objectives to grow its regional network through Thai Smile and to
expand its international long-haul network, including the launch of
a four times a week Bangkok-Vienna service. The airline implemented
a revised 2017 - 2021 Plan with five key strategies to continually
drive from the third phase of its transformation plan in 2018:
aggressive profit, business portfolio, customer experiences,
digital technology and efficient human capital management. This
includes, amongst other things, focus on accelerating profit
generation through more competitive costs, the pursuit and
improvement of new business opportunities, continuous improvement
in passengers' experience and progress on the implementation of
digital technology. This business transformation plan focuses on
continuously sustainable operating results as well as improved
efficiency and excellent service quality and includes the sale of
shares in associates and subsidiaries which are not part of the
main business and of land and office premises not used by the
airline.
In 2017, the number of foreign tourists arriving in Thailand
increased by 8.9 per cent to 35 million, mainly from China, Russia,
India, Laos, Cambodia and South Korea. In the first quarter of
2018, the number of foreign tourists increased by 15.2 per cent
compared to the first quarter of last year. Additionally, the
economy of Thailand and private consumption is improving steadily.
In 2018, Thai Airways will take delivery of five A350-900s as part
of the renewal fleet plan. Further route expansion is planned, as
codeshare agreements with NOK and Shenzhen Airlines have been
signed.
Material Events since November 2017
November 2017
Interim update (23 November 2017)
The interim investor update report for the period 27 May 2017 to
6 November 2017 was published.
January 2018
Dividend Declaration (18 January 2018)
The Company declared a quarterly dividend, in respect of the
quarter ended 31 December 2018, of 2.25 cents per Share, to holders
of Shares on the register at 26 January 2018. The ex-dividend date
was 25 January 2018, and payment was made on 15 February 2018.
April 2018
Dividend Declaration (18 April 2018)
The Company declared a quarterly dividend, in respect of the
quarter ended 31 March 2018, of 2.25 cents per Share, to holders of
Shares on the register at 18 April 2018. The ex-dividend date was
26 April 2018, and payment was made on 17 May 2018.
April 2018
The Annual Report and Accounts (24 April 2018)
The Annual Report and Consolidated Accounts Financial Statements
for the year ended 31 December 2017 were published.
Investor Information
The latest available portfolio information can be accessed by
eligible Shareholders via www.dpaircraft.com
Enquiries:
Kellie Blondel / Sophie Lane
Aztec Financial Services (Guernsey) Limited
As Company Secretary to DP Aircraft I Limited
Tel: + 44 (0) 1481 748833
This information is provided by RNS, the news service of the
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END
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