Amedeo Air Four Plus Ltd (LSE:AA4) saw its share price rise around 14% after announcing plans to return capital to investors whilst also increasing its dividend.
The investment company, which acquires, leases and sells aircraft, in a statement on Wednesday said it would return £28mln to shareholders via a compulsory share redemption and is increasing its quarterly dividend to 1.75p from 1.5p per share, starting with April’s pay out.
It is driven by the firm’s returns from an aircraft rental to Thai Airways, whilst analysts at Liberum take it as a sign of confidence that payments under other leases will be honoured.
“The AA4 board has stated that it has approved the capital return to shareholders and the increased quarterly dividend while maintaining a prudent approach to liquidity,” Liberum analyst Gerald Khoo said in a note.
“We believe this implies increased confidence in the likelihood of Emirates and Thai Airways honouring their lease payments in full, and there being sufficient retained cash and aircraft residual value to cover debt repayments.”
Khoo added: “Demand for air travel has recovered rapidly from the impact of the pandemic, with the lifting of international travel restrictions typically a catalyst for the release of strong pent-up demand.”
In London, Amedeo shares rose by 5.95p or 13.76% to trade at 49.2p, valuing the aircraft investor at around £171mln.
Liberum rates the stock as a ‘buy’, albeit with a target price of 50p.