To obtain income returns and a capital return for its Shareholders by acquiring, leasing and then selling aircraft.
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Https://www.londonstockexchange.com/news-article/AA4/factsheet/16329371
"First, the directors were very pleased to be able to show their confidence in the Company's finances by increasing the dividend last month. Whilst there are issues surrounding values (good and bad) our cash flow is strong, we are not exposed to rising interest rates and our lessees are performing well."
"Asia Pacific traffic continues its strong recovery which helps Thai Airways. They are rumoured to be about to order new Boeing 787 aircraft. The airline is clearly confident that it will have the balance sheet and cashflow to finance them."
Interesting snippet from the fact sheet:
"Emirates has selected and the Company has formally consented for MSNs 187, 201, 206, 208, & 42334 to undergo the premium economy retrofit."
"Emirates has selected and the Company has formally consented for MSNs 187, 201, 206, 208, & 42334 to undergo the premium economy retrofit."
What's the lifespan of a retrofit? If it is beyond the lease terms, could this be an indication that Emirates/AA4 are working towards a lease extension?
Emirate`s will not be looking at lease extensions, in my view.
Should the A380 planes be returned back to AA4 then Emirate`s face either a half life payment of $17m + extras, or a Minimum life payment of $25m + extra`s.
The planes if returned and then leased to a new party, could cost emirates a full life refurbishment to the new lease parties configuration on top of the minimum life payment = max pain ;p
AA4 have very different terms to those which DNA have, and so that is the key to seeing the future value in the share price and possible returns.
At this stage we have $35m being paid for planes via DNA with $12m half life terms. And so basically stick either $5m or $13m on the $35m paid example, and we have a bench mark of $40-$53m.
Two of the A380`s had modifications undertaken, and are not to standard with modified lease terms from AA4.
Simonm...how do you know all of this information you have shared. I don't think it is in the public domain is it?
Also is your post supportive of a buy , advice to hold , or suggestion to sell , and what is your conviction for either ?
Afternoon Candid,
All information is in the public domain, you just need to read through the historic Company news releases for a start ;p
We know Emirates are refitting and aiming to fly the A380`s into the late 2030`s-early 2040`s, general press information from emirates (aviation news).
They have 119 A380`s with 67 slated for full cabin refurbishment, of which MSNs 187,201,206,208 are to undergo premium refit.
Five of the Companyβs A380s are in service, and it is expected that the remaining aircraft (MSN 201) is anticipated to return during Q1β2024.
Full life and half life terms are stated back in the previous prospectus news releases. The funny thing here is AA4 did make a point of saying we had different terms after the DNA plane sold for $30m, and then changed the comments to limited market options to sell on the A380`s.
My conviction is 200k shares +, small to some and large to others with continued accumulating :)
Simonm, why do you say you don't think the Emirates leases will be extended (your post 17 Feb)?
You (correctly) mention below that Emirates wants to keep operating the A380 into the 2030s and beyond. They are paying to retrofit half their A380 fleet, including 5 of AA4's planes with the leases on those planes terminating in 2026-28. How long does a retrofit last? Another one is coming back into service very soon. Emirates would prefer to operate a plane they "know".
Are you saying that the lease provisions make it cheaper for Emirates to return the planes and pay the contractual dues? If that could be $40m+ per plane, that would be over $320m (treating 777s as similar to A380s for now) or about $1 a share.
I haven't been in an aircraft leasing company as it goes through the process to return an aircraft, so I am interested to see how it plays out.
Guitarsolo
Evening GS,
The previous history against the DNA,DNA2, shares points to the planes being purchased.
With the next real dump of planes being DNA2, with 5 more A380 planes off hiring by the end of November 2024, which will set the tone for AA4.
I do hold DNA2,3, which i wouldn't chase these now as AA4 looks nicer. Worth a check out against DNA2 to see the process of funds returned and such.
The retrofit is really the Cabin layouts to help gain more capacity and reduced operating costs, which is why they are swapping out the boeings on routes previously like Frankfurt and BHX and such as they have limited landing slots.
The lease provisions require notice to return the planes, to open up bidding and settlement of purchase.
If they extend, the half life and minimum life payments + other costs are still payable = No benefit in extending the lease.
At this stage i can only base on the A380`s against the DNA share planes purchase prices and $12m Minimum life payment and such, and so suspect $40m per plane is achievable .
In relation to the 777-300ER planes, these off hire in the July/ Aug time 2028 after the A380`s. I see these as a bonus along with the A350 planes.
Im just a general Joe investor, with limited knowledge :D
Regards.
Thanks simonm,
OK, I see your point. If Emirates have certain half-life costs to pay anyway, why not return the aircraft and get your hands on some newer ones.
I did look at DNA a while back, but opted for AA4 in the end as I thought it had more possibilities to boost shareholder payouts. It's my first foray into this type of company so still a learning experience. Out of interest, are there "younger" versions of DNA and AA4 out there with longer-term leases.......But to airlines that actually pay, so not to Thai Airways!
"Im just a general Joe investor, with limited knowledge :D".....I suspect you're not, but grateful for your input either way!
Guitarsolo
Hi GS,
I dont believe it is about newer planes as such , more landing slots and supply of new plane constants to market. And with the current state of affairs with Boeing's safety and production delays, there is nothing on the horizon to replace the A380`s.
The next best thing would be a more economical engine upgrade, to really push the life out on the A380`s.
The first off hire confirmation comes in 2025 for AA4, this will hopefully lead to a sale of the first pair of A380`s in 2026 to Emirates. There should then be some form of capital return back to shareholders, maybe they only pay partial and withhold some funds.
Alternatives to AA4,DNA2,DNA3, nothing that i have found of interest... The Uk stock market has taken a back seat for me, I see more rewards on the US and BDC, Reit companies and like.
I will keep an eye out :)
Regards