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Jazz Air Buying Porter?

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Any truth to this rumour?

You aren't following the rules.

It has to be noon EVERYWHERE in Canada before you start a rumor about Cdn based aviation.

:Clever:

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Any truth to this rumour?

Depends. Has PAH come up with a more reasonable valuation than the one suggested in its failed IPO attempt? And if there is any truth to the rumour (which I suspect is not the case) it would make little sense for Jazz to acquire any assets beyond the airline (infratructure/employees), aircraft, and O/C for Porter Airlines. Leave the holding company and the other PAH subsidiaries behind. They are just dead weight and non-core.

Also, given that Jazz/CHR is now satisfied existing as a 99.4% AC CPA revenue dependant corporation, I highly doubt that they are interested in acquiring an operation that would continue as an independent at-risk venture in competition with AC. There are more moving pieces involving third parties that would have to be adressed prior to CHR writing a cheque for Porter.

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You aren't following the rules.

It has to be noon EVERYWHERE in Canada before you start a rumor about Cdn based aviation.

:Clever:

Mr. Bean,

I believe you have that backwards.

In the Canadian Aviation Industry, if you don't hear a rumour by noon, you have to start one :wink_smile:

:P

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Depends. Has PAH come up with a more reasonable valuation than the one suggested in its failed IPO attempt? And if there is any truth to the rumour (which I suspect is not the case) it would make little sense for Jazz to acquire any assets beyond the airline (infratructure/employees), aircraft, and O/C for Porter Airlines. Leave the holding company and the other PAH subsidiaries behind. They are just dead weight and non-core.

Also, given that Jazz/CHR is now satisfied existing as a 99.4% AC CPA revenue dependant corporation, I highly doubt that they are interested in acquiring an operation that would continue as an independent at-risk venture in competition with AC. There are more moving pieces involving third parties that would have to be adressed prior to CHR writing a cheque for Porter.

Who says it would be run as a competitor to AC? Jazz could absorb it and negotiate it into the CPA. I imagine Rovinescu would be happy to have at least one competitor bought out (buy a company that could afford it).

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The CPA specifies number of aircraft and block hours. So "Absorbing" the fleet is not an option.

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If Jazz was looking at buying airlines, they'd do better to invest in Georgian, CMA and Hawkair. I'd see more of at threat from them than Porter.

Can't say I'm a fan of airlines buying airlines to eliminate competition.

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The biggest threat to Jazz is Sky Regional. They currently fly the EXACT same type of aircraft as Jazz(DH8-400) for the EXACT same contractor(AC) for a lot less money(including Porter)

How much less money?

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Who says it would be run as a competitor to AC? Jazz could absorb it and negotiate it into the CPA. I imagine Rovinescu would be happy to have at least one competitor bought out (buy a company that could afford it).

The CPA specifies number of aircraft and block hours. So "Absorbing" the fleet is not an option.

If I was Chorus and interested in acquiring an airline for less than cost of 26 DH8-400, here is what I would do.

1. Buy Porter.

2. Keep the profitable eastern triangle flying and the routes that are profitable. Keep Porter name and operation.

3. Drop the unprofitable stuff.

4. Transfer 5-10 Q400s to AC Express operation and take out a few more CRJs and DH3s.

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The JAZZ Fleet renewal plan is already laid out under the CPA negotiation process. AC still controls what metal and what routes.

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Well you know the public will not stand for scheduled jet service from the island. So, Yup Porter to Pearson, at least for the 175s

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There are no commercial jets permitted at YTZ. The point is moot. The bigger question is why is AC wasting its time and money there?

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Guest rozar s'macco

Yeah the strategy of ignoring the island and letting your long-standing monopoly there die a slow death over the course of 15 years was solid. Shoulda stuck with that.

Having said that, if those routes are not profitable on a "fully allocated" basis, in keeping with good business practices, they must be cut.

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I doubt the competition bureau would look too kindly on the dominant carrier in Canada having 100% of the market at YTZ.

Any behind the scenes discussions between the parties would definitely include a visit to Place du Portage in Hull for a preliminary meeting to get a read on the Bureau's thoughts on such a transaction before continuing further discussions. I know this from experience.....

It's pretty likely they'd force them to divest significant slots to another carrier to ensure adequate competitive forces in play.

It's just another angle that makes a satisfactory exit for Porter investors a very difficult proposition. The value is in the defacto monopoly, but that monopoly has not resulted in any discernable profit since launch. In the event of a sale, the monopoly would be materially watered down thus negating much of any of the perceived value of the potential acquisition in the first place.

Porter's Sept press release illustrates their dilemma. High loads, low yields in the summer as they sop up all the spill traffic available to them. As traffic declines, lower loads but higher yields. Does either scenario result in an annualized profit?

That remains to be seen.

B)

Edited by Thebean

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Not sure that the Public (same group that hates all operations from the island) would have any say in a jet operation but would it even be doable?

The runway is about 200m too short.

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