Feb Lf's - Ws-86.1%; Porter-54%

[Lakelad]

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Canada's WestJet flies fuller planes in February, Porter sees drop

TORONTO, March 5 (Reuters) - WestJet Airlines Ltd, Canada's No. 2 carrier, reported record monthly passenger levels on Tuesday, sending its shares higher, while smaller regional carrier Porter Airlines flew emptier planes in February.

WestJet said its load factor, or the percentage of seats filled with paying customers, jumped to 86.1 percent. That compares with 82.7 percent a year earlier and marks the Calgary-based airline's eighth consecutive record monthly load factor.

WestJet shares jumped C$1.19, or 5.2 percent, to C$24.26 on the Toronto Stock Exchange in early trade on Tuesday.

WestJet, which will launch a regional carrier called Encore in June, said that capacity, which is measured by available seat miles, rose just 3.1 percent. Traffic, or revenue per passenger mile, increased by 7.3 percent.

Toll Cross Securities analyst Jacques Kavafian said traffic gains matched his estimates, while capacity growth was less than he expected.

"This translates into a huge increase in load factor and therefore, margins," he said in a note. Based on traffic data released to date, he expects WestJet will report first-quarter earnings of 61 Canadian cents per share, over 49 Canadian cents a share last year.

National Bank Financial analyst Cameron Doerksen said WestJet's traffic is a "clear indication of healthy air travel demand" and suggests that the airline is benefiting from a charter deal with Thomas Cook Group.

WestJet struck an agreement with Thomas Cook last April to be the exclusive airline for the UK travel group's tour operator business in Canada. WestJet is the only airline providing seat capacity for Thomas Cook's tour operator arm, Sunquest, in the Canadian market.

Air Canada, the country's biggest airline, is expected to report is monthly statistics later on Tuesday.

Porter Airline said its load factor slipped 2 percentage points to 54 percent, as capacity dropped 5 percent and traffic fell 8.6 percent.

Despite the declines, Porter chief executive Robert Deluce said that yield, or revenue per available seat mile, "is holding up nicely compared to last year despite significant capacity increases by other carriers on certain routes."

Porter competes with Air Canada and WestJet on certain short-haul flights in Canada and a handful of routes to the United States.

Air Canada Reports Record February Load Factor

MONTREAL, March 7, 2013 /CNW Telbec/ - For the month of February, Air Canada reported a record system load factor of 79.8 per cent, versus 76.8 per cent in February 2012, an increase of 3.0 percentage points. System traffic decreased 0.7 per cent on a system-wide capacity decrease of 4.4 per cent. Air Canada reports traffic results on a system-wide basis, including regional airlines from which Air Canada purchases capacity.

"I am pleased to report a record load factor of 79.8 per cent for the month of February," said Calin Rovinescu, President and Chief Executive Officer. "The difference in capacity and traffic from the previous year is attributed almost entirely to the additional day of operations reported for the February 2012 leap year, making those year-over-year comparisons less meaningful. I would like to thank our employees for their hard work taking care of customers while transporting them safely to their destinations despite the challenges of severe winter weather during the month."

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[rudder]

54%?

tic...tic...tic...tic...

[Guest rozar s'macco]

Pilots are so stupid. We cheer the death of good companies at the hands of bad ones. Isn't that what is really happening here?

Evolution:

2005 Jazz is the only large regional airline in the country, and pays world-beating wages. Ok, it is at the expense of AC but...

2006 porter comes on the scene, at a lower scale. By most accounts is a great company. Is poo pooed.

20011 AC, moving quickly (ha) puts wheels in motion for a competitive response with Sky Regional. At still lower pay than porter.

2012 WJ announces Encore. At 80% of the median pay for the category. In other words, 20% below the middle. Is cheered.

2012 AC expands SR mandate to jets. Captain base pay is $57K.

2013 Jazz (the well-paying regional) begins to shrink. AC pilots laugh.

2013 porter LF is dropping due to capacity expansion by competitors. This is cheered.

Huh?

They all fly the same jets (or props), to the same airports, with the same gas, and the....everything. But the pay keeps going down. The model is broken, guys. Stop cheering for good companies failure.

[rudder]

Huh?

They all fly the same jets (or props), to the same airports, with the same gas, and the....everything. But the pay keeps going down. The model is broken, guys. Stop cheering for good companies failure.

Nobody is cheering.

But unsustainable capacity under the guise of competition is exactly what is driving the race to the bottom in pilot compensation. Removal of some or all of that capacity and a return to rational pricing competition will only help in the medium to long term.

[Thebean]

Porter's loads continue to slide, yields have undoubtedly dropped on their YTZ-EWR service, which was the jewel in the crown until July last year, growth has stopped, and there's no evidence whatsoever of any sort of profitability as defined by traditional metrics.

Porter's YTZ-EWR tomorrow range from $333 to $595. Their YTZ-BOS fares tomorrow range from $750-$1,233, Ya think Encore / WJA won't be all over that as aircraft are delivered?

Porter claims that their yoy capacity reduction was purely a function of last years leap year.

Even a 12 year old can figure out that last years 110.4m asm's in Feb equates to 3.806m asm's a day. Muliply that by this years 28 day month and that equals 106.6m asms, yet Porter produced 104.9m asms. That's negative growth.

Porter's asm capacity is about 1/18, or 6% of WJ's capacity and dropping.

It is not a compelling story.

Meanwhile, WJA is hitting record highs. That $10 share bought in 1999 was worth $82.65 earlier today.

If, and it's a big if, Porter's investors had sold out to WJ in a stock deal a few years ago when it was trading at about $14, their investment today might be close to whole. Instead, it's in a deep hole and only getting worse. Meanwhile the DOW is hitting record highs as the dead money just gets deader

Pushing water uphill is never fun.....

[rudder]

If, and it's a big if, Porter's investors had sold out to WJ in a stock deal a few years ago when it was trading at about $14, their investment today might be close to whole.

Was that actually a option? Unfortunately, PAH had traditionally overvalued itself by a factor of 2 or 3 and there has been no recent indication that mindset has changed.

[Thebean]

Was that actually a option? Unfortunately, PAH had traditionally overvalued itself by a factor of 2 or 3 and there has been no recent indication that mindset has changed.

Porter has been shopped around multiple times over it's history. You are correct in saying their valuations had little basis in reality, as was seen during their failed IPO attempt a few years ago.

It's 2013, there's no growth, loads are dropping, there's no evidence of profitability and competition will only cause Porter's yields to drop further as fuel rises and an increasing % of their fleet is no longer on a maintenance hoilday.

I can't say whether or not serious discussions ever occured, but, theoretically, had there been an all stock deal a few years ago at $14, for, say, $200m, those shares would be worth about $350m today, and perhaps more as the operation was rejigged to maximize profitability instead of ego.

Remember, Porter is 1/18th the size of WJA on an ASM basis and WJ's market cap today is about $3.2b with year after year of proven, near industry leading profitability. It's hard to see how Porter could be valued anything more than between $150m and $200m at the best of times....and that assumes some history of modest profitability.

On the brightside, I have it on good authority that Porter is well utilized by students at Dal and St. Mary's in Halifax. Students are taking vigorous advantage of Porter's shareholders subsidization of their drinking habits.

[rudder]

I had suggested in the past that PAH might be worth more sold in pieces (individual subsidiaries) than being put up for sale as a single entity.

Time will tell. The investors must have great patience and no expectations.

[chockalicious]

Are the fuelers still on strike? Rumor has it that an ex WS VP now involved in ground handling has set up to fuel planes on the island and break the Porter fuelers.

[CanadaEH]

MB?

[chockalicious]

Yup, the cozy relationship with a certain ex YYZ based WS'er facilitated it.

[moeman]

This should help their load factor: http://www.buytopia.ca/?skip=true&a_aid=news&chan=logo-Calgary-77858

[Thebean]

This should help their load factor: http://www.buytopia.ca/?skip=true&a_aid=news&chan=logo-Calgary-77858

.....and their yields.....

[dagger]

.....and their yields.....

They have managed to back themselves into a nice rut at YTZ. If you look at pricing on the transcon and the transoceanic routes into the summer, fares are remarkably high (and as Bean says, like to induce a new ULCC into the market before too long). I'm checking fares to Europe in mid-June for a business trip, and they are as high as I have seen them since 2007. Every major hub is the same: FRA, LHR, CDG, AMS. Fortunately, a customer is paying for this trip and big enough globally to eat a pricey ticket. But Porter manages to have half-empty planes and half-price tickets.

[Guest rozar s'macco]

Good thing their magic beans allow them to break even at 45%lf. :wow:

[airt]

“If I were WestJet, I’d also be a little bit concerned that one of these days Porter may move into Western Canada.”

Them's fightin' words...

http://business.financialpost.com/2013/03/08/porter-plots-path-forward-as-rivals-fill-planes/

[mrlupin]

How are the AC flights to YTZ doing? Surely they must be running at 85% ? Why is Porter picked on while AC isn't even mentionned?

[Thebean]

Memo to Porter's Competition: Keep up the good work. You are clearly driving Bob Deluce nuts.

This story, and Deluce's comments, simply reek of desperation and frustration. He must have had a really tough day at the Board of Directors meeting.

There are so much nonsense mentioned in the story, I don't know where to start, so I'm not going to bother.

It is exceedingly obvious WestJet in particular is getting under his skin.

I'll bet his P&L on Newark since last summer has a lot to do with it. Porter can look forward to much more of the same over the next few years in all the markets they operate that are not currently WJ/Encore markets.

That should make sphincters tighten around the Porter boardroom table.

It'll be fascinating to see how long they keep with the "we break-even at 50% because we use fuel efficient Q400's" fairy tale.

Jazz and Skyregional have the latest Q400's, and Encore will take delivery of the first of their 45+ tails in a few short months and you won't hear any of them spouting off that sort of unmitigated poppycock. It's too bad the reporter doesn't have the cajones to challenge this fairy tale, but why annoy a significant advertiser?

I can't wait to see what happens if the highest cost sched operator in Canada with a few scheckels in his war chest decides to go head to head with the lowest cost operator in Canada with an extensive domestic, transborder, sun and international network, (albeit it code share) with $1.5b burning a hole in it's pocket.

We've all seen that movie before countless times and know how it ends.

This news story will go down in Canadian aviation history as the poster child for "idle threats".

Knowing the personalities of some of the other key players in the business, It's also an open invitation for others to keep one foot on Porter's jugular, and now gingerly, but with an unmistakable firmness, place the other foot on Porter's seeds.

“So in war, the way is to avoid what is strong, and strike at what is weak.”
― Sun Tzu, The Art of War