Doric Aircraft Fund 3 - Fully Syndicated

Highlights
In addition to the long-term lease to Singapore Airlines Limited (“Singapore Airlines”), a particular highlight of this investment opportunity is the purchase price of approximately
USD 200.7 million. This is 38% less than the list price of USD 325 million.

Asset
An Airbus A380-800 – the world’s largest state-of-the-art passenger aircraft – equipped with four Rolls-Royce jet engines.

The Airbus A380-800 is the first aircraft ever to have two full passenger decks, enabling it to carry up to 853 passengers. At the same time fuel consumption lies at less than three litres per 100 passenger kilometres (assuming a capacity of 525 passengers) which puts the aircraft firmly at the low end of the fuel consumption scale. From both an environmental and business perspective the A380-800 is currently the world’s most efficient widebody aircraft. The plane, with the manufacturer's serial number (MSN) 006, was delivered to Singapore Airlines on 11th March 2008. It entered service mid-March and now also serves London Heathrow from the Singapore hub.

Market
Driven by globalisation and the liberalisation of international airspace, world air traffic is expected to double in volume over the next 20 years. The growing economic importance of the emerging markets, especially of Asia, is increasing the need for faster transportation of goods and people between continents. The wealth of the middle-classes in many emerging nations is growing and creating new markets for the whole aviation industry. In addition, stricter environmental and noise regulations, as well as higher fuel prices, have exacerbated the need for efficient and quiet aircraft.

Accordingly, both Boeing and Airbus have received a large number of new orders, creating substantial production backlogs.  Today waiting lists for most types of aircraft extend as far as 2010. Demand is also expected to exceed production capacity in the future. For these reasons, an investment in a modern widebody aircraft offers a great opportunity for attractive profits in both the short and long term.

Employment
The aircraft has been long-term leased to Singapore Airlines. The initial lease tenor is ten years with an option to extend for a further two years. All operating costs, including insurance and maintenance costs, will be borne by Singapore Airlines.

Lessee
Singapore Airlines is one of Asia’s leading air carriers. Founded in 1972 and specialising in international long-haul flights, Singapore Airlines is one of the world’s largest airlines by profits. The airline currently offers 764 flights per week to 65 destinations in 35 countries.

Temasek Holdings Ltd. („Temasek“), which holds 54% in Singapore Airlines, is a holding/investment company of the city state Singapore. Both Standard and Poor’s and Moody’s give Temasek the highest possible rating – a triple A.

Debt Financing
Around 54% of the purchase price of the aircraft and transaction cost have been financed by a long-term USD loan from Norddeutsche Landesbank. Interest has been fixed for ten years with full amortisation of the loan to take place within 14 years.

Economics
Total distributions of 233% (including repayment of capital) have been projected until the end of the investment period in 2026. If the aircraft were to be under lease after this time, total distributions would exceed projections due to the additional lease income. 

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