Porter hunts for cash

[teacher]

Porter hunts for cash

BRENT JANG , Globe and Mail Update

Porter Airlines Inc. plans to raise $150-million to finance expansion as it mulls adding flights to five major U.S. cities.

“We're in the marketplace and we're raising some new financing for new aircraft,” Porter president Robert Deluce said in an interview Wednesday.

Nine-month-old Porter, which runs four aircraft from its base at Toronto City Centre Airport, expects to take delivery of another six Bombardier Q400 turboprops from early 2008 through early 2009.

“There's a good appetite for primarily debt financing,” Mr. Deluce said, noting that Porter already has a cast of private equity partners. “A small equity portion will come from existing cash flow.”

Porter is slated to begin service to Newark Liberty International Airport in New Jersey by early 2008, and intends to add Chicago, Boston, Philadelphia and Washington by 2010.

A 14-page report titled Blue Sky Opportunity, which Porter says was drafted by MBA students for an academic course but not endorsed by the airline, suggests that Florida would also be an attractive destination.

Porter's original plans called for flights within a 925-kilometre radius of Toronto, and while Florida is well beyond that distance, Mr. Deluce said he's studying Florida as a charter option, not part of the scheduled network.

Florida is within the range of the Bombardier Q400 turboprop aircraft, which could fly 2,500 kilometres. However, there are weight restrictions on planes taking off from Porter's base at Toronto City Centre Airport.

Mr. Deluce said the MBA students' report is accurate in producing a chart showing that the airline's breakeven level is based roughly on attracting 25 customers on the 70-seat turboprops. That's a load factor – the proportion of seats filled – of 35.7 per cent.

Winnipeg is another destination possibility. Sources say Mr. Deluce held talks last week with the Winnipeg Airports Authority, but no decision has been made yet on launching flights to the Manitoba capital. If Winnipeg doesn't make the cut, other possibilities include Thunder Bay, Quebec City and Windsor, Ont.

Porter's shareholders from the first round of $126-million in equity financing last year are: Regco Capital Corp., headed by Mr. Deluce; the Ontario Municipal Employees Retirement System's Borealis Infrastructure Management Inc.; equity fund EdgeStone Capital Partners; GEAM International Private Equity Fund, part of the General Electric Co. empire; and Dancap Private Equity Inc.

As part of its growth strategy, Porter plans to introduce a frequent-flier program this fall, Mr. Deluce said. He noted that the airline posted its first monthly profit in May, and it has the strength to comfortably borrow money.

The upstart carrier isn't going unnoticed by WestJet Airlines Ltd. and Air Canada.

Both of the larger carriers, which use Toronto's Pearson International Airport as their eastern base, have tangled with Porter in frequent fare wars. Porter was launched last October with flights to Ottawa. Montreal was added in December and then seasonal service to Halifax began last month.

WestJet's Boeing 737s are too large for Toronto's downtown island airport, while Air Canada Jazz was forced to halt its service from the island site in February, 2006, after being ousted by a Porter affiliate that runs the air terminal.

WestJet chairman Clive Beddoe, who announced Tuesday that he's stepping down as chief executive officer in September, said he's skeptical about whether Porter has what it takes to be a serious threat.

“The public at large has historically not liked getting on turboprops. You're going to get banged around by turbulence a lot more. And looking out the window, seeing those propellers spinning is not very comforting to the flying public,” Mr. Beddoe said. “We operate at 40,000 feet with a modern jet, so it's a much more comfortable and faster ride.”

Mr. Deluce countered that Porter's planes are up to the task at 25,000 feet, providing a smooth ride and travelling speeds comparable to most jets on short-haul flights.

Mr. Beddoe said Porter will have a difficult task keeping costs down, given its small fleet, but such criticisms don't faze Mr. Deluce.

“I'm flattered by the attention,” he said.

http://ctv2.theglobeandmail.com/servlet ... v-business

[Nightflight]

WestJet chairman Clive Beddoe, who announced Tuesday that he's stepping down as chief executive officer in September, said he's skeptical about whether Porter has what it takes to be a serious threat.

“The public at large has historically not liked getting on turboprops. You're going to get banged around by turbulence a lot more. And looking out the window, seeing those propellers spinning is not very comforting to the flying public,” Mr. Beddoe said. “We operate at 40,000 feet with a modern jet, so it's a much more comfortable and faster ride.”

Perhaps Mr. Beddoe should try a flight in the awesome Q 400 before issuing such statements. I would have expected something substantially more intelligent from the likes of him. Disappointing!
Didn't realize that spinning propellers can be such a scary sight.

[tofo]

Has Bombardier issued any ad's on the nose gear.

I Know the Japan thing was big but there have been other incedents too.

Correct me if I'm wrong, or don't

[invertedattitude]

Dash-8 = safest mode of commercial air travel in the world.

Considering a Dash-8 has considerably more cycles in it's lifetime when compared to an A320 or 737, that's pretty impressive, and considering the conditions they often have to fly through.... more approaches to non-precision approach airports etc.

[skyhigh]

Put a brand new Q400 and a older 737-200 together on a ramp...now give the average travelling public the choice to seat on either for their flight....19 out of 20 will choose the older jet. The public's perception of a prop driven aircraft is for the most part rather backwards.....relating props to old technology......Beddoe may be right but I guess he could have phrased himself better.

[abc xyz]

Nightflight,

Clives job is to sell Westjet nothing more. By being politically correct hes defeating his mandate. we all know the q400 is a great airplane but joe public doesnt see anything more than a prop job. your naive to think he'll come out and say Porter is "da shit" and everybody should flock there.

[invertedattitude]

Nightflight,

Clives job is to sell Westjet nothing more. By being politically correct hes defeating his mandate. we all know the q400 is a great airplane but joe public doesnt see anything more than a prop job. your naive to think he'll come out and say Porter is "da shit" and everybody should flock there.

I think the point is, to say nothing would have been the proper thing to do. A company as big and as respected as WestJet shouldn't need to even mention a company like Porter.

With their current business model they will never compete with WestJet on the same level.

Last time I checked flying a Q400 from CYYT-CYYC takes a while.

It sounds like some CEO from Sobeys going on about Pedra Shakaras corner meat market and deli, on 21st and Main.

[abc xyz]

but this is business invertedattitude. ethics and business often dont mix. if Clive can put the fear of god in just a handful of Porters clients he's slowly going to squeeze out their revenue. the triangle market is AC's market - WJ is trying to gain a foothold and by having Porter there to pick up the scraps maybe some of WJ's flights are not paying the bills. his approach may not be the most ethical but it is par for the course for Clive.

[DA900]

Dash-8 = safest mode of commercial air travel in the world.

Considering a Dash-8 has considerably more cycles in it's lifetime when compared to an A320 or 737, that's pretty impressive, and considering the conditions they often have to fly through.... more approaches to non-precision approach airports etc.

That has me wondering, has there been any fatal crash of a DHC-8. I can't think of any off hand other than Bangkok Airways in the 90's and Ansett in New Zealand. Pretty impressive considering the number of aircraft, areas operating into, and experience levels.

[teacher]

Ever notice how the Japanese nose gear issues all of a sudden stopped being mentioned? No more calls for a public apology?

From what I heard from some sources is that it was the Air Careers either doing incorrect maintenance or overhaul. If someone knows more please feel free to correct me. I don't think there's been any other gear issues other than in Japan.

[bmc]

The public perception that propeller airplanes are slow and old tech is not unique to Canada. I boarded an Austrian Airlines Q400 last fall and the folks ahead of me were whining about getting on an old airplane. I piped in and told them just how modern and fast the plane was. They really had no idea and it took nothing to convince them that the block times were the same as a jet on Vienna-Geneva.

[Four1oh]

Hello people! How long have you guys been in the aviation gig, and still haven't figured out how incredibly ignorant the general public is???

[invertedattitude]

Goes right back to 9/11 before the second hit:


"It appears a small plane must have gotten lost and hit the world trade center"

Then when the second plane hit:

"It would seem there is some sort of navigational problem going on in the New York area"

[tofo]

sorry slept in that morning saw the highlights could you elaborate inverted

[Four1oh]

My wife phoned me and woke me up that morning saying the news was reporting one of the towers was on fire after a 'small' plane hit it. I turned on the TV and 3 seconds later an airliner hit the second tower.

It was a freakin horror show that wouldn't stop.

[invertedattitude]

Yep, I was supposed to go flying that day actually, and was sitting at my computer desk and turned the TV on, happened to be on CNN, saw it all live as the second airplane hit...

It was a feeling you get watching those big movies "Oh man can you imagine if that ever happened?"

But it actually did...

The day after at the airport (CYYG) meeting a Cessna 404 pilot who had been instructed by ATC to land in Charlottetown, he was ferrying the airplane from South Africa to Toronto area, complete overcast, GPS on the fritz. Him telling his story of being vectored to a place he never even heard of was quite amusing.

[Main Gear]

Giving Props to the New Turbos

Road warriors grown accustomed to regional jets on commuter hops flinch at the idea of a turboprop. Perhaps it's that sensation of being crammed into a flying matchbox while a man inside your head uses a jackhammer to tunnel his way out.
Related Articles

But airlines' changing dynamics mean that you are going to be seeing more propellers from your window seat. Relax, the ride is getting a lot better. A new breed of six-bladed turboprops like Bombardier's Q400--jet fast but even quieter--is leading a revival. Carriers are taking advantage of the new turbos' more efficient fuel burn, reduced cabin noise, increased capacity and comfort and greater speed compared with previous models.

From Europe's largest regional airline, Flybe, to the commuter partner of Continental, airlines have ordered 131 so far this year, more than .

doubling last year's orders. Bombardier's deliveries of its Q Series turboprop (Q stands for quiet) were up 71% last year. And Europe's ATR was in a death spiral when the market gave it lift; ATR's sales jumped 100% for its 42-seater (ATR 42-500) and 157% for its 72-seater (ATR 72-500).

The rocketing price of jet fuel has prompted the industry to rethink its jets- first strategy on short-haul routes (less than 500 miles, or about 800 km). Seattle-based regional carrier Horizon Air, owned by Alaska Air, was a hard sell on the Q400 until it couldn't get deliveries of the CRJ-700, a 70-seater regional jet, from the Canadian company. So Horizon grudgingly ordered 12 turboprops, and the airline hasn't looked back. "We found out very quickly that the Q400 was a completely different animal," says Pat Zachweija, until recently a top executive at Alaska Air Group. Horizon, with 33, has the most Q400s of any fleet in North America and expects to have 48--70% of its fleet--by 2009. "The economics were there," he says. "And as fuel goes up, we just look smarter and smarter." The Q400 might allow the regional to go up against low-cost, short-haul king Southwest and its fleet of Boeing 737s.

Bombardier and ATR figured out how to quiet the beast, although the Q400's 15-second drone on takeoff caused a recent flyer to initially doubt the improved 76-seater. Once the plane is cruising, though, Bombardier's noise-and-vibration-reduction system (cousin to technology used in submarines) monitors sound levels through microphones inside the plane walls. A computer initiates vibrations through special absorbers to counter those from the propellers, reducing the resonance of the airframe and hushing the cabin about 4 db quieter than many jets. ATR upgraded its four-blade propeller to a six-blade fiber-composite one with a smaller diameter that generates less vibration and cabin noise when coupled with other noise-dampening features.

Then there's the green card: the $24 million Q400 burns from 30% to 40% less fuel than--and emits half the CO2 of--a 70-seater regional jet and offers up to eight more seats. ATR says its light, $18 million 72-seater goes further, consuming 30% less fuel than the Q400 and 50% less than a regional jet.

Airlines and manufacturers are optimistic that today's turboprop runs will make the never-before-seen 500 production mark--ATR thinks it can crack $1 billion in sales next year. Bombardier is working on the Q400X, a 90-seater, which would be the largest turboprop in the world, to compete quietly with even bigger jets. As turbos continue to make noise in aviation, at least it's no longer the kind we've always expected. PROP-U-LAR Worldwide orders for turboprop aircraft with 20 to 90 seats.


http://www.time.com/time/magazine/artic ... 07,00.html

[Stoptheworld]

Maybe a dumb question, but has deHavilland ever looked at re-engining the 300 or 200? I can't help but think that a 37 or 50 seat prop with the performance of the -400 would go over quite well.

[invertedattitude]

I thought they did have the Q100/200/300 ?

[invertedattitude]

[Stoptheworld]

If I'm not mistaken, the 100 originally came with the PW120A, the 300 with the PW120C. The 100 was re-engined with the 120C and became the 200. The Q designation came along later with the advent of some sound mitigation equipment. At Time Air, all our copies were prior to the Q variant arrival.

The props were all 4 blade Hamilton Standards.

The Q400 has the PW150 (I think) with a 6 blade. The question was, why deHavilland doesn't look at putting a 6 blade PW150 (or some variant) on the 200 or 300 to get the same type of performance for a 37 or 50 seat aircraft (Which I think would kick ass on some of the short thin routes)

[QBalls]

The question was, why deHavilland doesn't look at putting a 6 blade PW150 (or some variant) on the 200 or 300 to get the same type of performance for a 37 or 50 seat aircraft (Which I think would kick ass on some of the short thin routes)

I'm no expert, but I would think that the PW150 with 5071 SHP a side would be too powerful to put on the wings of 200/300s. The 400 has a wing that was designed for such an engine. Just my jab at it and please feel free to correct me.

BTW there has been some talk of building a 50 seat version of the 400.

[Valhalla]

Bombardier has recently decided to stop taking orders for the Q200/Q300 series Dash-8. Kinda sad for the little Dashes, but the Q400 order book is appearently too hot to allocate space on the production line for anything else.

[Stoptheworld]

I'm no expert, but I would think that the PW150 with 5071 SHP a side would be too powerful to put on the wings of 200/300s. The 400 has a wing that was designed for such an engine. Just my jab at it and please feel free to correct me. Smile

I have no doubt you're right. I think the wing would probably need some re-engineering to support the power-plant. Still think its worth it though.

Otherwise, a 300 would like kinda stupid with just the fuselage sitting there and the wings heading off to orbit !

[jayjact]

Yah, that, and the nacelles on the 400 are 1/2 the size of a 300's fuselage.