Porter profitable in 2011

[ModerateChop]

Deluce is looking more brilliant by the day. How long before they are out in WestJet's back yard ? Is a WestJet - Porter - Air Transat merger in the cards soon ? Stay tuned ....

http://www.theglobea...article2267483/

After five years, Porter to post first annual profit

brent jang — TRANSPORTATION REPORTER

From Monday's Globe and Mail

Published Sunday, Dec. 11, 2011 7:20PM EST

Last updated Sunday, Dec. 11, 2011 8:05PM EST

Porter Aviation Holdings Inc. will post its first annual profit in 2011 after bolstering its passenger loads and fending off Air Canada.

Porter chief executive officer Robert Deluce said Air Canada's arrival in May at Billy Bishop Toronto City Airport worried some loyal Porter customers, but the competition has turned out to be a blessing in disguise.

Instead of wilting under the pressure from Air Canada, Porter's load factor – the proportion of seats filled by paying customers – surged during the May-to-November period. Porter's planes, which have been roughly half-full on average during most of the airline's five-year history, flew nearly two-thirds full over the past seven months.

Mr. Deluce said Porter is gaining traffic through a combination of luring connecting passengers from cities such as Thunder Bay, Sudbury and Windsor, greater brand awareness in U.S. markets, seat sales and, surprisingly, the presence of Air Canada.

"We had Billy Bishop on the map, but Air Canada has done a great job of putting it on the map with marketing campaigns. They're drawing people to the airport, many of whom had never been here before," he said.

"Even if their customers remain loyal to Air Canada on the Montreal route, they're trying us on other routes," said Mr. Deluce, whose employees have been monitoring Air Canada's 15 daily round-trips on the Toronto-Montreal service.

According to privately owned Porter's data, Air Canada's average load factor at Billy Bishop has hovered around 30 per cent.

"We count their loads as passengers are getting on and off every flight. That's fair ball. That's something that they did to us in Ottawa and Montreal during our first couple of years of operating," Mr. Deluce said. "There's somebody sitting with a clipboard. We don't hide the fact that we've got somebody there counting."

Air Canada has 30 takeoff and landing slots at Billy Bishop, compared with Porter's 172 slots, leaving the regional carrier as the dominant force at the island airport located near Toronto's downtown core. While Porter serves 17 destinations from its Toronto base, Air Canada's entire Billy Bishop schedule is on the Toronto-Montreal route. Both airlines fly 70-seat Bombardier Q400 turboprops.

Air Canada spokesman Peter Fitzpatrick said the Toronto Port Authority, which oversees Billy Bishop, has heavily favoured Porter when allocating slots.

"We're pleased with the performance so far at the island airport, particularly as the Toronto Port Authority's slot allocation policy restricts us to one destination, effectively maintaining Porter's monopoly position," he said.

Porter lost $44.5-million between its launch in October, 2006, and the first quarter of 2010. The carrier also lost money during the final nine months of 2010, though it declines to disclose how much.

The holding company owns Porter Airlines Inc. and City Centre Terminal Corp., the landlord of terminal space at Billy Bishop and collector of fees from Air Canada. "Air Canada is a competitor but they're also tenants at our terminal. Their rent is as good as anybody else's," Mr. Deluce said.

[CanadaEH]

For any fare watchers out there.. are the increased loads due to cheaper flights or have ticket prices remained stable since AC started operations?

[FA@AC]

Is it me or is the article is a bit oddly written? It opens with a statement that Porter will report a profit for 2011, but gives no source for the info. Deluce is quoted all over the article with comments on load factor, new competition, etc, but the claim that Porter will post a profit isn`t attributed to him or to anyone else.

[CanadaEH]

I wouldn't expect anything less from Jang. He's a horrible "reporter".

[rudder]

Profitable? Prove it and publish the financials.

[Kip Powick]

I'm sure if Bean has Internet he will be along, as will MD2, and they will undoubtedly clear up this mystery....

A friend of mine already sent an email to Jang asking for Data

[Kip Powick]

A friend of mine already sent an email to Jang asking for Data

Well that was fast !!!!

Forwarded to me...............

Thanks for feedback. Deluce is now on the record as saying Porter Aviation Holdings Inc. will post profit in 2011 -- that is the holding company, and not the airline per se. This is subtle but importance difference. But you're right. We won't have confirmation unless Porter goes again for initial public offering. Still, with Deluce publicly declaring profit, he will have to prove it to investors if Porter the holding company seeks IPO. Let me know if you come across any new info on Porter's new routes -- could be Philadelphia on 2012.

Regards,

Brent

[internet]

Well that was fast !!!!

Forwarded to me...............

Thanks for feedback. Deluce is now on the record as saying Porter Aviation Holdings Inc. will post profit in 2011 -- that is the holding company, and not the airline per se. This is subtle but importance difference. But you're right. We won't have confirmation unless Porter goes again for initial public offering. Still, with Deluce publicly declaring profit, he will have to prove it to investors if Porter the holding company seeks IPO. Let me know if you come across any new info on Porter's new routes -- could be Philadelphia on 2012.

Regards,

Brent

The holding company eh? Well that's almost as easy as making an Airport Authority profitable... here are the costs, plus a margin - done. Charge Porter (the airline) x in management fees (or for an AA, $30 in AIFs) See, profitability is so easy!

[jkavafian]

The holding company eh? Well that's almost as easy as making an Airport Authority profitable... here are the costs, plus a margin - done. Charge Porter (the airline) x in management fees (or for an AA, $30 in AIFs) See, profitability is so easy!

Not so easy. If the company that owns the terminal also owns the airline, the inter-company transactions are cancelled in the consolidated financial statements.

You can extend this argument to any other airline or any other company, not just Porter. If Porter (consolidated) is profitable then PORTER is profitable. No company will breakdown its profitability by individual divisions. They may disclose profitability by segment but not by division.

[Thebean]

There is a painfully simple way of resolving the debate.

When Porter issues a comprehensive P&L that substantiates their claims, then I'll buy into it.

There are countless examples of Porter claiming to have been profitable prior to their failed IPO attempt in 2010.

Their actual numbers proved the claims to be unmitigated nonsense.

I'm from Missouri. Show me.

[Guest]

I suspect Deluce is posturing in anticipation of (or in response to) a call from Greggsky in YYC.

[Thebean]

The Mountain doesn't go to Mohammed...

[FA@AC]

Why would Westjet have any interest in Porter?

[rudder]

Why would Westjet have any interest in Porter?

1. To eliminate a competitor

2. To access immediate resources and infrastructure for a Q400 operation

3. To increase domestic market share and competitive pressure on AC

Bottom line is that Porter and its private equity sponsors have a grossly inflated valuation of their enterprise and nobody, including WJ, are interested in overpaying by a factor of at least 400%.

[FA@AC]

I'm sure those would be the usual reasons, but it seems to me that:

1. Porter competes with Westjet on very few segments, and its existence probably makes little difference to Westjet's bottom line.

2. Westjet has never seen the business case for an immediate anything. They do well doing things their own way in their own time, and if they wanted a fleet of Q400s they'd acquire it other than by making the purchase of another airlines.

3. They compete very effectively with AC as it is.

The above, of course, is just my two cents and may be way out in left field. It'd certainly be an interesting move on Westjet's part if it happened.

[rudder]

I'm sure those would be the usual reasons, but it seems to me that:

1. Porter competes with Westjet on very few segments, and its existence probably makes little difference to Westjet's bottom line.

AC said the same thing about a small airline named Westjet.

2. Westjet has never seen the business case for an immediate anything. They do well doing things their own way in their own time, and if they wanted a fleet of Q400s they'd acquire it other than by making the purchase of another airlines.

SWA at one time might also have insisted that organic growth was the only option...........then they acquired airTran.

3. They compete very effectively with AC as it is.

WJ cannot enter many secondary markets where the 737 is too large and cannot offer frequency without doing so at a loss.

The above, of course, is just my two cents and may be way out in left field. It'd certainly be an interesting move on Westjet's part if it happened.

[mrlupin]

If they wait long enough, the price for Porter might make it to an acceptable level... If Bean is right and they are losing money, it's just a matter of time and WJ has all the time it wants. On the other hand, if Porter is profitable, I doubt even Westjet could make a dash8 ops any cheaper then the raccoon group. It would be harder to muscle into the market. AC's 30% load factor is a good example of that.

[DEFCON]

How about a 'linkage' agreement of some sort? Porter could deploy their fleet a bit differently, and by providing feed' to WJ, continue their expansion?