Porter Airlines sues Billy Bishop terminal owner owner over $45.3-million in fees for unused slots


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Porter Airlines sues Billy Bishop terminal owner owner over $45.3-million in fees for unused slots

https://www.theglobeandmail.com/business/article-porter-airlines-sues-billy-bishop-airport-owner-over-453-million-in/

 

Porter is attempting to avoid paying 45.3 million in fees for terminal slots it’s not currently using and alleges its landlord is not doing enough to keep the facility safe for travellers. For its part, Nieuport is trying to seize three Porter planes pledged as collateral by the airline.

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1 hour ago, CanadaEH said:

I'm not so sure Porter can survive this pandemic. 

They may be one of many who do not survive but I hope they can outlast this crisis as they have managed to do in the past when a very few thought they would make it past their first year.

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Priceless.

PAH sells Terminal Corp to a consortium for hundreds of million$ (rumour is $750MM) and uses cash proceeds to retire all debt associated with Q400 fleet. It is that retirement of debt that has allowed Porter Airlines to remain closed and still avoid CCAA.

The buyers of Terminal Corp justified the massive acquisition expense against a guaranteed revenue stream via long term lease with PAH/Porter Airlines. 

Now Porter has ceased making lease payments (no surprise since Porter has zero revenues). And Nieuport is looking to put liens on Porter assets.

You cannot make this stuff up. 

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Porter, the scourge of Toronto’s waterfront, is having trouble paying its bills.

That’s not a surprise, since it hasn’t operated since March, and has no plans to restart until next February, at the earliest.

We’ve all savoured the peace and quiet we’ve had on our waterfront as a result.

The story tells us that Porter is trying to stop the terminal owner from seizing three of its planes for non-payment of $45.3M in fees owed to the terminal.

The irony is that Porter built the terminal for $50M, and sold it to the current owners for a reported $700M, a massive sum that depends on the income stream from rent payments promised by Porter.

To be sure, not all of that $700M was paid – we understand a good portion of it was to be paid when – or if – the current lease from the City for a significant portion of the Island Airport lands is extended from its expiry in June, 2033.

And another significant portion of the purchase price was required to be paid to retire the low-interest loans Porter was given to purchase its planes by the federal government’s Export Development Corporation. Required, as the purchaser wanted some assurance that Porter would stay in business, rather than cashing out.

That’s the reason Porter can talk about it being debt-free – it has replaced low-cost debt with high-cost rent to the new terminal owner.

One must also wonder what the purchaser of the Island Airport terminal was thinking. Porter’s business had “matured” some time earlier. Its sales growth has been essentially stagnant since 2010, and by the date of the sale in 2014, the writing was on the wall that it had just seen its growth plans scuppered by the determined – and successful ‑ community opposition to its proposed use of jets at the Island Airport.

Said one commentator, back when the terminal sale was first announced:

“I can't think of a more core strategic asset than ownership of the sole passenger terminal in an airport where you control, basically in perpetuity, 90% of all commercial landings.

“Successful businesses don't do sale/leasebacks on core strategic assets.”

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Breaking News:

Details are emerging that Porter Airlines is in negotiations to relaunch their previously scuttled Airbus A220 order, previously Bombardier C-Series.

Reports are that the Trudeau Liberals, as a condition of the yet to be announced Regional Airline Bailout package, will impose the amendments on the tripartite agreement to permit the Mirabel built jet's operation at the downtown airport, ensure the continued viability of air service to smaller communities, and promote jobs in Quebec.

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LOL.

The numbers worked when they ordered them the first time apparently. Or maybe they'll fill in some of the lake and extend the runway.

Either way, I'm sure they will really throttle up those engines for static start max power takeoffs... just for the nimbys like Mr.Iler here.

 

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Pipe dream.

Porter has bigger and more immediate issues to deal with, like staying in business.

You cannot just ignore bills, or contractual obligations.

Porter will take Fed money and pay the rent. And there will be no jets at YTZ.

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10 minutes ago, rudder said:

Pipe dream.

Porter has bigger and more immediate issues to deal with, like staying in business.

You cannot just ignore bills, or contractual obligations.

Porter will take Fed money and pay the rent. And there will be no jets at YTZ.

No you can't but you can also work out a deferred payment plan. Like it or not without Porter the terminal owner is toast. Are they willing to play chicken with the golden Deluce? AC gradually phased out service there pre-Porter and only came back because of them. If they play it smarter and maintain just enough service no one would ever go back and there again.

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23 hours ago, Briler said:

Porter, the scourge of Toronto’s waterfront, is having trouble paying its bills.

I thought the scourge of the waterfront was all those people living on the island paying next to nothing for rent while the city has to look at building parks on platforms over the rail lands.  

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2 hours ago, Bobcaygeon said:

No you can't but you can also work out a deferred payment plan. Like it or not without Porter the terminal owner is toast. Are they willing to play chicken with the golden Deluce? AC gradually phased out service there pre-Porter and only came back because of them. If they play it smarter and maintain just enough service no one would ever go back and there again.

If that negotiation was going well, the matter would not be in court.

No different than what is going on with HBC.

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9 minutes ago, rudder said:

If that negotiation was going well, the matter would not be in court.

No different than what is going on with HBC.

Court is just another tool in the tool box. It's not a quick process so no money will change hands anytime soon. Porter just needs to stall until the cash starts flowing again, lol. Deluce has used the courts for YTZ himself... Is the bridge built yet? That family is legendary after starting as a mom & pop float operator in Northern Ontario.

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8 minutes ago, Bobcaygeon said:

Court is just another tool in the tool box. It's not a quick process so no money will change hands anytime soon. Porter just needs to stall until the cash starts flowing again, lol. Deluce has used the courts for YTZ himself... Is the bridge built yet? That family is legendary after starting as a mom & pop float operator in Northern Ontario.

The legend was Stan. He started it all. Class act.

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4 hours ago, st27 said:

Really??? I didn’t think 4000’ would be enough runway for the a220, even if it was empty.

There is going to be lake fill at YTZ with or without a runway extension and with or without the C Series to accommodate the amended RESA requirement. The runway might as well be extended at that time.

It is also nice to see that the Liberals have also reached the "f--k these guys" stage with the City of Toronto as did Harper before them.

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16 hours ago, j.k. said:

Breaking News:

Details are emerging that Porter Airlines is in negotiations to relaunch their previously scuttled Airbus A220 order, previously Bombardier C-Series.

Reports are that the Trudeau Liberals, as a condition of the yet to be announced Regional Airline Bailout package, will impose the amendments on the tripartite agreement to permit the Mirabel built jet's operation at the downtown airport, ensure the continued viability of air service to smaller communities, and promote jobs in Quebec.

Please excuse my ignorance but I can’t figure out if your post is meant to be real or sarcasm.

Is there actually truth to this?

 

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2 hours ago, Turbofan said:

Please excuse my ignorance but I can’t figure out if your post is meant to be real or sarcasm.

Is there actually truth to this?

 

LOL... Throwing saving Quebec Bombardier jobs sure makes it sound plausible...

I don't have a stake in the success of Porter, the opposite really, but I don't like nimbys who would have airlines shuttered and runways bulldozed beaking off on an aviation forum... I would like to see max power run ups off of Mr. Iler's deck.

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4 hours ago, Fido said:

The biggest condition for any Liberal government

Is saving jobs a bad thing?  I don't remember hearing complaints from Albertans when the Liberal party forced Air Canada to save jobs at Canadian Airlines.

Edited by FA@AC
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12 hours ago, FA@AC said:

Is saving jobs a bad thing?  I don't remember hearing complaints from Albertans when the Liberal party forced Air Canada to save jobs at Canadian Airlines.

Of course you are forgetting that the majority of employees of Canadian Airlines were not working / employed in Alberta so the so called bailout of Canadian was something that was positive for a lot of workers etc. 

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47 minutes ago, Malcolm said:

Of course you are forgetting that the majority of employees of Canadian Airlines were not working / employed in Alberta so the so called bailout of Canadian was something that was positive for a lot of workers etc. 

The bailout of any company is a good thing for its workers.  That’s a separate matter from the hypocrisy of those who take potshots at a political party for its support of a Quebec business but had no criticism when the same party forced the bailout of an Alberta one.

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16 minutes ago, FA@AC said:

The bailout of any company is a good thing for its workers.  That’s a separate matter from the hypocrisy of those who take potshots at a political party for its support of a Quebec business but had no criticism when the same party forced the bailout of an Alberta one.

Was AirCanada forced to purchase Canadian Airlines, ......  depends upon how you review what happened.  Anyway enough of ancient history.  

CBC Archives

Quote

The Story


 

It's 1999 and Air Canada and Canadian Airlines are one step closer to a merger. The idea to join forces comes after a streak of bad luck for Air Canada: a mid-1970s recession and rising costs due to a global fuel crisis. By 1979 the federal government had lifted all protection rules for Air Canada, paving the way for new airlines like CP Air. Before the government lifted protection laws, Air Canada took Canadians on 78 per cent of their flights within the country. In this 1999 CBC Television clip, business magnate Gerald Schwartz revels in news of a court ruling in his favour. Ontario justice Robert Blair gives Schwartz the go-ahead to ask for a merger vote between Air Canada's shareholders and Canadian Airlines. But Air Canada's top brass is generally not in favour of what they view as a hostile merger attempt by shareholders of Schwartz's company Onex Corp. 

INTERNATIONAL BUSINESS; Air Canada Grapples With Its Takeover of Canadian Airlines

By Timothy Pritchard

  • Feb. 16, 2000
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See the article in its original context from February 16, 2000, Section C, Page 4Buy Reprints
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*Does not include Crossword-only or Cooking-only subscribers.

It took a distracting three-month takeover brawl for Air Canada to emerge as the winning buyer of Canadian Airlines, shrinking the nation's major air carriers from two to one. That may have been the easy part.

In the three months since Air Canada won control of the nation's air space, it has grappled with making good on a promise to improve air service, generate higher returns for shareholders, eliminate thousands of overlapping jobs and reduce billions of dollars in debt -- much of it owed by the financially ailing airline it had struggled to buy in the first place.

Earlier this month Air Canada raised the possibility of putting its erstwhile rival into bankruptcy protection if creditors were not willing to negotiate more flexible payment terms.

The good news for Air Canada is that it has emerged as Canada's only major airline just as it has completed a profitable year.

 
 

Last year, it earned 213 million Canadian dollars, or $146 million, after losing 16 million dollars, or $11 million, in 1998. The airline's operating profit margin of 7.7 percent, said Robert Milton, its president and chief executive, ''is the best in 27 years and in line with the world's best-performing carriers.'' His objective, he said, is a margin of 10 percent.

One of the first steps Mr. Milton has taken to achieve that is to start eliminating some of the overlapping cross-country flights of the two airlines -- mainly those that link the big eastern cities of Toronto, Ottawa and Montreal, and the big western cities of Vancouver, Calgary and Edmonton. Almost one-fifth of current domestic flights provide matching service.

This does not necessarily mean air travelers in Canada will have fewer choices, however. The reduction in service is expected to open niches for an ambitious regional carrier, WestJet Airlines of Calgary.

Officials at Air Canada estimate that streamlined routes and other efficiencies will yield savings between 650 million and 800 million dollars a year. At least 2,500 jobs will be cut, but all departures are expected to be voluntary. Air Canada, based in Montreal, has 24,000 employees, compared with 15,000 at Canadian Airlines, which is based in Calgary.

Air Canada won control of Canada's airspace in November after a three-month fight with the Onex Corporation, a Toronto holding company that had tried to buy the two airlines and merge them. Onex withdrew because a court upheld a law that prevented anyone from owning more than 10 percent of Air Canada's shares. That opened the way for Air Canada to buy Canadian Airlines for about 92 million dollars.

 

The most difficult challenge facing Air Canada may be renegotiating Canadian Airlines' debt of 3.5 billion dollars. Its creditors were warned in October, when Air Canada was in the midst of trying to buy Canadian Airlines, that concessions would be sought. Earlier this month, Canadian Airlines suspended payments of 135 million dollars to lenders and lessors of aircraft to conserve cash during the weak winter season.

Air Canada, which has annual revenue of 6.5 billion dollars, has 6.7 billion dollars of debt on its books. But Canadian Airlines, with less than half as much revenue, is even more heavily mortgaged.

''Canadian is paying far above what Air Canada is paying for identical assets,'' Mr. Milton said when Canadian Airlines suspended its debt payments. He said Canadian Airlines would be put under bankruptcy protection ''if the creditors don't want to play ball.''

Canadian Airlines' fleet of 79 aircraft is older than Air Canada's fleet of 155, and industry analysts said lessors of older or unwanted planes would have to accept payments as low as half the current rate or take back their assets. They think some unsecured creditors may get only 60 cents on the dollar.

 
 
A version of this article appears in print on Feb. 16, 2000, Section C, Page 4 of 

 

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