Porter going public via IPO

[MD2]

What Canadian company is now going to buy out a losing proposition, especially after this most recent money-grab? Maybe Mike The White will make an offer they can't refuse. Very similar business practices (in upper management) by the sounds of the last 11 pages of this thread. I have never, nor will ever wish ill on any Canadian airline. They all have something to offer. Their employees almost always devote huge personal loyalty to their employers, many times to the detriment of their own personal potential. But how many times do we have to witness these pathetic "build a house out of cards, then sell it for a million bucks" operations?

It's not the employees who do this, but they sure take it up the butt at the end of the day.

Come on now, Air Canada may still be able to turn it around.

[Thebean]

Porter needs the other airlines far more than the other airlines need Porter. For that reason, the phone calls from will be originating from Porter HQ.

If WJ was interested in producing the worst operating metrics in North America, they could quite easily take a very small portion of their $1.1b in cash and do precisely what Porter has done and gone and bought some marketshare.

However, WestJet is quite different than Porter in that the airline is profit focussed and doesn't tolerate losses. Porter has just completed a very embarrasing exercise to determine what investors think about airlines that chase market share without any thought of, or future hope of generating operating profits. They are told in no uncertain terms to pound sand.

WJ has dropped capacity from Hamilton to Moncton. WJ only ever operated Hamilton-Sudbury and Hamilton- Sault. It might be a tad different operating the same from YYZ. You will notice WJ has been in tiny YQU for years with double dailies to YEG with 737's.

With limited aircraft WJ will likely defer service to those sorts of markets in favor of the lower hanging fruit elsewhere.

Moncton was chosen way back when as a central catch-all for the maritime marketplace. Everything is a 2 hour drive from Moncton.

With service available from YYZ to YYG, YQM and a ton to YHZ, the necessity of flowing over YHM is greatly reduced.

Besides, the high yield boys on Bay Street aren't exactly clamoring for high frequency to Moncton these days.

Nonetheless, I'm sure Porter will be up to 5x daily in no time with those $99 fares on 742 mile sectors with 18 cent fully allocated costs, and continue their tradition of buying marketshare and hemmoraging cash.

I hate to tell you this, but the only thing of on-going value that has been created by Porter is, perhaps, the terminal facility on the Island.

The rest of it is quite easily replicated, without any having to deal with legacy costs, expectations or culture issues.

Everyone saw the mistake Rhys made buying Wardair when it was obviously no longer a going concern.

Never say never, but I'd be surprised if the same mistake was made twice.

[chockalicious]

You may indeed be right about Porter and how they will eventually go under, but I remain curious as to why you care so much and spend so much time writing about Porter. Lots of idle time on your hands or ????

I find it curous that a guy who started almost half the topics on the main page would wonder if someone else had too much idle time

[MD2]

...Nonetheless, I'm sure Porter will be up to 5x daily in no time with those $99 fares on 742 mile sectors with 18 cent fully allocated costs, and continue their tradition of buying marketshare and hemmoraging cash.

It's interesting how you keep contradicting yourself. From the one hand you complain about "monopolistic" prices and poor simpletons at community air quote you too! And then you remonstrate Porter's low prices in capturing market share! Reality is somewhere in between and easy to discover for oneself as I did a search and posted before to find Porter's prices in line with other airlines serving the route. Ironically the not so bright continue to believe they are actually witnessing "corporate negotiation" taking place here!! Oh those lovers of conspiracy theories!! Enjoy the ride.

[Thebean]

It's interesting how you keep contradicting yourself. From the one hand you complain about "monopolistic" prices and poor simpletons at community air quote you too! And then you remonstrate Porter's low prices in capturing market share! Reality is somewhere in between and easy to discover for oneself as I did a search and posted before to find Porter's prices in line with other airlines serving the route. Ironically the not so bright continue to believe they are actually witnessing "corporate negotiation" taking place here!! Oh those lovers of conspiracy theories!! Enjoy the ride.

It's too bad Porter's costs are far too high to support their latest "what ever it is, we'll call it a strategy" strategy.

I'd bet Porter paid for more full page ads in 1Q 2010 than WJ did in its first decade of flying, the same decade that produced 37 net profitable quarters of flying out of 40, with margins in the top 3 on the continent.

With all that marketing expense, Porter managed to draw the lowest l/f's on the continent with operations based in the largest aviation market in Canada, Toronto, and high frequency flights to 2 of the top 3 largest domestic O & D aviation markets and as well from the largest city in Canada the tiny villages of New York City, Chicago and Boston.

The biggest city WJ operated into after 4 years was Vancouver. The smallest was Grande Prairie. All were profitable. You know. Profit? When revenues exceed expenses? That could be a difficult concept for you to understand....

Is any of this sinking in yet?

BTW: How many independent, low fare turbo prop operators can you think of on planet earth?

Monopolistic pricing refers to walkup $700 fare from YTZ to EWR & MDW. That fare will never be achieved with direct, airport to airport competition in the marketplace.

In the meantime, please keep pointing out the branches on the trees as the business hemmorages 3.5 cents a seat mile loss over every single asm flown.

Some of us are far more interested in observing the forest. From FL41.

[blues deville]

I can't believe I am jumping into this discussion but like others on the site, I am growing tired of hearing how WS got their start compared to Porter's initial progress. Two very different operations and time periods in Canadian aviation history. If CAIL hadn't died its slow death followed by C3 leaving the scene, I doubt very much that WS would be anything close to the success story it is today. If you want to make operational, not financial comparisons, review how little City Express managed to hang on until the big red machine rolled in and put a stop to Victor P's business plan. Both airlines started out with brand new Dash 8s....not old 737s with more patches than rivets on their fuselages. Victor had the right idea for an air service but AC decided it was not going to continue. Now Porter is facing a similar battle.

I think we should all keep in mind that Porter has been busy hiring airline staff since their startup. Putting many people to work and trying to establish themselves in a very tough market with every obstacle you can imagine working against them. I don't think they are going to take over the world, it seems that has become WestJet's latest direction. We all know what happens when you grow too big too fast.

Many of the aviation finance terms mentioned on this site are above my level, but I am still an airline employee and I know many of the Porter staff. I am not semi-retired with nothing else to do but constantly tell people "look what I did?"

Why don't we consider the positive aspects of what Porter is attempting to do rather than the alternative.

Just my opinion.....I could be wrong.

bd

[Moon The Loon]

Why don't we consider the positive aspects of what Porter is attempting to do rather than the alternative.

I used to be a big fan of Porter until they came out with this IPO which seemed to be an attempt to fleece the public. Much like C3's IPO turned out to be. This latest episode turned my stomach. That may be behind many of the negative posts here. Given a choice now, I won't fly with them as there's a good possibility they will turn to panic cost controls. Or just plane (!) shut down in the middle of some not-to-distant future night.

[rudder]

MD2 - you can crow all you like about PAH but the fact is that the market raised it's leg like a golden retriever when asked to pass judgement on the proposed PAH IPO. And although you hold AC in disdain, its IPO was fully subscribed, as was Jazz Income Trust and WJA. Simply put, the valuations on PAH do not add up and the "trust us, we have a great product" schtick doesn't sell to investors. I hope that the current principals have deep pockets because if the business plan does not change they will need them.

[Ex 9A Guy]

If CAIL hadn't died its slow death followed by C3 leaving the scene, I doubt very much that WS would be anything close to the success story it is today.

Oh I do love revisionist history.

CAIL taking their eyes off the prize, I will give you that as a positive for WestJet's startup in 1996 but by the time CAIL disappeared from the landscape in 2001 and C3 shutdown after 9/11 WestJet was into it's 5th year of operation and was extremely successful both financially and operationally. CAIL's domestic presence had dwindled to a shadow of it's former self and C3's domestic operation was sparse at best, only providing feed for their overseas longhaul flying. Air Canada generally ignored WestJet for the first few years while it was busy putting nails into CAIL's coffin and by the time that was done 9/11 arrived and AC had to put their own house in order rather than try to oust WestJet.

If you remember the late 90's were some of the worst recessionary times in memory in Western Canada until the recent meltdown and WestJet thrived in that environment.

Both airlines started out with brand new Dash 8s....not old 737s with more patches than rivets on their fuselages.

I think you will find that City Express started with Dash 7's not Dash 8's although they did operate both during their 7 year stint at Toronto Island. You can laugh all you want about new DHC8s vs. old B737-200s but they are the very reason why WestJet turned a profit in their first year of operation and Porter has not. They were acquired for between $2 and $4 million each and then had $1 to $2 million spent on them in updates and refurbishment. What does a Q400 cost these days? List price is $27 million a piece. You do the math.

Cut down to the very basics of the operation, the fleet, and barring everything else Porter's costs are 5+ times greater per aircraft than WestJet's were at startup, for an aircraft with half the seating capacity. This is the most basic example of "Low cost, low fare" vs. High cost, low fare" one is sustainable the other clearly is not.

I feel immensely for the good folks trying to make it work and make a living at Porter and believe although I have yet to experience it personally that they do have a good product. Unfortunately they will be the ones left holding the bag for the piss poor business plan and the execution thereof. I have been the unwitting bag holder twice in my 20 year career and would not wish that upon my worst enemy never mind a fellow aviation addict.

[Spinnaker]

Talking about idle time, your 1500+ posts would seem to indicate you also have some on your hands.

Or maybe when 'rattler' retired and 'malcolm' was born that post count reset...

[Super 80]

City Express had Turboprop Heron's and DHC-7's at launch, the first DHC-8 was delivered in September of 1985 a year into the mission but were already ordered prior to their launch on September 13th 1984.

[Moon The Loon]

City Express had Turboprop Heron's and DHC-7's at launch, the first DHC-8 was delivered in September of 1985 a year into the mission but were already ordered prior to their launch on September 13th 1984.

Those Herons (Saunders ST-27) were the fleet of Air Atonabee, the newer version of Air Otonabee (spelling might be a little off) that Vic bought out, brought in the Dash 7's in advance of the up and coming Dash 8, brought in pilots from overseas because there were no qualified pilots in Canada at the time ( ). The rest is City Express history. A good idea at the time, in advance of airline deregulation in Canada which spelled the end of CE. They couldn't survive being unaffiliated with CP or AC.

[blues deville]

I used to be a big fan of Porter until they came out with this IPO which seemed to be an attempt to fleece the public. Much like C3's IPO turned out to be. This latest episode turned my stomach. That may be behind many of the negative posts here. Given a choice now, I won't fly with them as there's a good possibility they will turn to panic cost controls. Or just plane (!) shut down in the middle of some not-to-distant future night.

Could be true Moon but I somehow doubt it after Deluce has now practically rebuilt the YTZ terminal facilities. It's not like they still have a collection of ATCO trailers connected which used to be the case with Jazz. However, if Jazz or US Express were to return, Deluce would be able to offer them prime space if Porter were to cease operations.

bd

[blues deville]

Ex9A Guy.....thanks for offering some constructive debate to this never-ending discussion. Unfortunately I can't agree with all of your comments and I am not sure of your sources of information.

C3's domestic operation was a signicant percentage of the Canadian traffic, somewhere in the range of 20+% by 2001. They quietly grew to serve Canadian cities from NF to BC until Air Canada saw this threat and started up a project called Tango. What's interesting is how AC shut down that low cost divison on the same day C3 died. WS was also increasing their presence in Ontario by flying to YHM which also hurt C3's bottom line in 2001.

There is really not too much you can tell me about City Express. I had a front row seat with them for several years and saw it all happen. Yes the Dash 7s were there first but the Dash 8's were delayed due to financing problems but finally went into service by September 1985.

And I wasn't laughing about WS starting up with patched 737-200s. I love 737s. I have a friend who helped build/design the first one (-100) parked in Seattle's Museum of Flight. I am just stating a fact. 1985's City Express and the more recent Porter start-ups involved expensive new turboprop aircraft. It's very easy to see how WS was able to turn a profit with a their relatively small investment in a few old 737 aircraft....no rocket science there my friend. WS and Porter's initial business plans are/were completely different....different markets, different operations, different initial costs. You are only confirming my point.

I am glad to hear you feel good about the people trying to make a go of it with Porter. I have experienced their service personally and it was great. So have many of my friends and neighbours whose work takes them to Ottawa, Montreal and NYC on a regular basis. They will only use Porter now for business travel to these places and they love it. Of course it may not be a low cost fare but as with many business travelers, someone else is paying for the ticket. What they really like is the time savings in avoiding line ups and congestion at YYZ as well as the extra little services provided by Porter.

And as with most airline employees in this country, there are not too many who have not collected a few different uniforms and airports passes. It sounds like you have some yourself but I am sure the day both airlines hired you are still happy memories until it all ended for one reason or another. It sounds like the experience gained with them have gotten you to where you are now.

I personnaly would like to see Porter continue its growth and hopefully become a profitable airline. Its now being refered to as Canada's third largest scheduled airline. Can we not all see this as a good thing?

Again....just my opinion. I could be wrong.

bd

[Thebean]

Ex9A Guy.....thanks for offering some constructive debate to this never-ending discussion. Unfortunately I can't agree with all of your comments and I am not sure of your sources of information.

C3's domestic operation was a signicant percentage of the Canadian traffic, somewhere in the range of 20+% by 2001. They quietly grew to serve Canadian cities from NF to BC until Air Canada saw this threat and started up a project called Tango. What's interesting is how AC shut down that low cost divison on the same day C3 died. WS was also increasing their presence in Ontario by flying to YHM which also hurt C3's bottom line in 2001.

There is really not too much you can tell me about City Express. I had a front row seat with them for several years and saw it all happen. Yes the Dash 7s were there first but the Dash 8's were delayed due to financing problems but finally went into service by September 1985.

And I wasn't laughing about WS starting up with patched 737-200s. I love 737s. I have a friend who helped build/design the first one (-100) parked in Seattle's Museum of Flight. I am just stating a fact. 1985's City Express and the more recent Porter start-ups involved expensive new turboprop aircraft. It's very easy to see how WS was able to turn a profit with a their relatively small investment in a few old 737 aircraft....no rocket science there my friend. WS and Porter's initial business plans are/were completely different....different markets, different operations, different initial costs. You are only confirming my point.

I am glad to hear you feel good about the people trying to make a go of it with Porter. I have experienced their service personally and it was great. So have many of my friends and neighbours whose work takes them to Ottawa, Montreal and NYC on a regular basis. They will only use Porter now for business travel to these places and they love it. Of course it may not be a low cost fare but as with many business travelers, someone else is paying for the ticket. What they really like is the time savings in avoiding line ups and congestion at YYZ as well as the extra little services provided by Porter.

And as with most airline employees in this country, there are not too many who have not collected a few different uniforms and airports passes. It sounds like you have some yourself but I am sure the day both airlines hired you are still happy memories until it all ended for one reason or another. It sounds like the experience gained with them have gotten you to where you are now.

I personnaly would like to see Porter continue its growth and hopefully become a profitable airline. Its now being refered to as Canada's third largest scheduled airline. Can we not all see this as a good thing?

Again....just my opinion. I could be wrong.

bd

C3000, even during it's 5 month lifespan as a conglomeration of Royal and CJ 1.0, was never even remotely close to 20% share. At best, about 10%, and was DOA long before 9/11 and everyone knew it.

Revisionist history suggests it was easy for WJ to get going.

I suppose it was just as easy for every other start up in Canada and the USA over the last 20 years to be successful as well. I can think of about 20 that failed miserably, many using 737-200's. Astoria, CanJet, 1.0 and 2.0, VistaJet, Greyhound, Royal, Canada 3000, Roots Air, the Convair operator out of YYC, Vanguard, Air South, Western Pacific, ProAir....the list goes on and on. Then there's the current crop, namely Porter and Virgin America who are losing money hand over fist.....

Ah yes. Easy as pie. Especially when knocking down YYC-YVR walk up fares from $294 to $59.......and printing cash in doing so....a piece of cake.

[blues deville]

C3000, even during it's 5 month lifespan as a conglomeration of Royal and CJ 1.0, was never even remotely close to 20% share. At best, about 10%, and was DOA long before 9/11 and everyone knew it.

Revisionist history suggests it was easy for WJ to get going.

I suppose it was just as easy for every other start up in Canada and the USA over the last 20 years to be successful as well. I can think of about 20 that failed miserably, many using 737-200's. Astoria, CanJet, 1.0 and 2.0, VistaJet, Greyhound, Royal, Canada 3000, Roots Air, the Convair operator out of YYC, Vanguard, Air South, Western Pacific, ProAir....the list goes on and on. Then there's the current crop, namely Porter and Virgin America who are losing money hand over fist.....

Ah yes. Easy as pie. Especially when knocking down YYC-YVR walk up fares from $294 to $59.......and printing cash in doing so....a piece of cake.

Interesting rant.

I firmly believe the planets were aligned when WS got going in 1996. Simple as that. I sincerely doubt anyone involved from the original WS startup group will ever be able to repeat that same success anywhere else. It was all just good timimg and its not going to happen again in this country.

bd

[Guest]

C3's domestic operation was a signicant percentage of the Canadian traffic, somewhere in the range of 20+% by 2001. They quietly grew to serve Canadian cities from NF to BC until Air Canada saw this threat and started up a project called Tango. What's interesting is how AC shut down that low cost divison on the same day C3 died.

This would be interesting if indeed it were true.

C3 ceased operations on November 9, 2001.

Tango took to the skies on Nov 1, 2001 and gradually pulled back operations in 2004.

The 2 only crossed paths for a total of 9 days

[Moon The Loon]

C3 wasn't in trouble because of its core operation, nor even that of its CanJet acquisition. It started bleeding red ink with its assumption of Royal Aviation. In October of 2001, both the C3 pilot contract and the Air Transat pilot contracts were up for renewal. C3 pilots stood the most to gain as we had the lowest wages of the two. Angus knew this was going to happen. He knew both our existing contracts expired on the same date. He knew all he had to show us was enough red ink because of the Royal fiasco (not his fault - he was dead set against getting involved with Mike) which he used to his advantage - not only were the C3 pilots not going to get raises, he would have ammunition to cut existing wages. There were all kinds of opportunities to fix things. Unbelievable as it might seem, within months of the triple merger, we had a merged seniority list. And it was going to stick.

And here's the kicker. After 911 when Leckie cried "we'll be out of cash by Christmas", Angus went ballistic and tried to negate our new seniority by dumping the Royal entity. Neither tactic worked and within a week, we were in a controlled shutdown. Much like what happened at SSV but with (I suspect) a lot harder feelings and anger.

A lot of our employees (over 90%) had been suckered into a stock purchase plan. Many lost tens of thousands of dollars just with that.

Anyway, all water under the bridge. Once I learned of a lot of the details of the shutdown, I didn't lose any sleep. C3 was a horribly run business. A great airline, but a HORRIBLE business with horrendous economic and business practices.

[blues deville]

This would be interesting if indeed it were true.

C3 ceased operations on November 9, 2001.

Tango took to the skies on Nov 1, 2001 and gradually pulled back operations in 2004.

The 2 only crossed paths for a total of 9 days

Thanks for the C3 review. I recall that day quite clearly. The following day not so much. What I meant to say is that Canada's competition bureau was going to shut down Tango on Friday, Novemeber 10th, 2001 because of the predatory nature of this AC operation. However, since C3 had already closed its doors, there was no need.

Also, Angus Kinnear briefly considered a re-start of C3 with financial backing in place, but would not go ahead with the plan unless Tango was removed from the scene.

bd

[Thebean]

Interesting rant.

I firmly believe the planets were aligned when WS got going in 1996. Simple as that. I sincerely doubt anyone involved from the original WS startup group will ever be able to repeat that same success anywhere else. It was all just good timimg and its not going to happen again in this country.

bd

The problem with your theory is that at least one of the WJ start up group has been successful with 2 other LCC's. Their current collective fleets stand at over 140 jets.

[Ex 9A Guy]

It started bleeding red ink with its assumption of Royal Aviation.

How come no-one except AK could see the goings on at Royal. Everyone from student pilots to astronauts in this country knew Mike the White was as crooked as a corkscrew. The failure of the C3 BoD to due a proper due diligence was bordering on criminal negligence. :angry:

[blues deville]

The problem with your theory is that at least one of the WJ start up group has been successful with 2 other LCC's. Their current collective fleets stand at over 140 jets.

Yes one guy, an American named David Neelemam who helped with WestJet's startup. He took his cash and left Canada.

I'll say it again. It was all just good timing and its not going to happen again in this country.

bd

[E-HANDLE]

Yes one guy, an American named David Neelemam who helped with WestJet's startup. He took his cash and left Canada.

I'll say it again. It was all just good timing and its not going to happen again in this country.

bd

Say it as often as you like. Does not make it so.

I was there from the start. AC and Canadian pulled out all the stops; they failed.

[Thebean]

Yes one guy, an American named David Neelemam who helped with WestJet's startup. He took his cash and left Canada.

I'll say it again. It was all just good timing and its not going to happen again in this country.

bd

Really? I was unaware Dave was invoved with Volaris. I'll ask him next time we chat so he can refresh my memory.....

Perhaps you should get a copy of Blue Streak or dig out some of the orginal prospectus materials and learn a little more about the story.

There were at least 3 LCC start ups planned in Calgary alone in the mid 90's.

Huisman's Greyhound was miles ahead of WestJet in October 1994. So was Newair, with Glenn Picard.

If it was so easy, why didn't anyone succeed basing an operation in central Canada and use 737-200's out of YYZ, easily the largest market in Canada?

VistaJet supposedly had the same model as WestJet...a couple of 737-200's based out of Toronto. Why did they fail? There was another one as well. Same basic plan, either slightly before or after VistaJet. Same outcome. How could that be?

How about CanJet who had basically the entire Toronto - Maritime LCC market locked up with old 737-200's. They failed. How about Royal's shortlived foray into sched? That didn't work out so well even though WJ had barely touched central Canada. Roots Air? The 36 day wonder? C3000? Jetsgo who waltzed into the void at YYZ when WJ was in YHM with $60,000 a month MD80's? That should have been a cinch, but it failed.

According to you, it's a simple business that anyone could have succeeded at. Round up a few turnips that fell off the truck, grab a couple of old 737-200's and wait for the cash to come rolling in. It's just that easy folks!

Countless people have tried it. Only one group succeeded. It's no coincidence none of them had any "airline" experience.

I can't decide if your version of events is pure naivite or just bad revisionist history....

[blues deville]

Really? I was unaware Dave was invoved with Volaris. I'll ask him next time we chat so he can refresh my memory.....

Perhaps you should get a copy of Blue Streak or dig out some of the orginal prospectus materials and learn a little more about the story.

There were at least 3 LCC start ups planned in Calgary alone in the mid 90's.

Huisman's Greyhound was miles ahead of WestJet in October 1994. So was Newair, with Glenn Picard.

If it was so easy, why didn't anyone succeed basing an operation in central Canada and use 737-200's out of YYZ, easily the largest market in Canada?

VistaJet supposedly had the same model as WestJet...a couple of 737-200's based out of Toronto. Why did they fail? There was another one as well. Same basic plan, either slightly before or after VistaJet. Same outcome. How could that be?

How about CanJet who had basically the entire Toronto - Maritime LCC market locked up with old 737-200's. They failed. How about Royal's shortlived foray into sched? That didn't work out so well even though WJ had barely touched central Canada. Roots Air? The 36 day wonder? C3000? Jetsgo who waltzed into the void at YYZ when WJ was in YHM with $60,000 a month MD80's? That should have been a cinch, but it failed.

According to you, it's a simple business that anyone could have succeeded at. Round up a few turnips that fell off the truck, grab a couple of old 737-200's and wait for the cash to come rolling in. It's just that easy folks!

Countless people have tried it. Only one group succeeded. It's no coincidence none of them had any "airline" experience.

I can't decide if your version of events is pure naivite or just bad revisionist history....

You seem to be reading much more into this. I do not recall saying what WS has accomplished was easy or that anyone could do it. I believe I said the timing for WestJets startup and the failure of other established Canadian airlines was a factor in their success. You have mentioned others who have tried and failed. That is my point. WS was unique in that it survived to become a success.

Relax.

bd