Porter Airlines suspends planned IPO

[midwingcrisis]

Canada's Porter Airlines suspends planned IPO
Tue Jun 1, 2010 6:03pm EDT

By Nicole Mordant

VANCOUVER (Reuters) - Porter Aviation Holdings Inc, an upstart regional challenger to Canada's major airlines, said on Tuesday it was suspending plans for an initial public stock offering, the latest company to be burned by the equity market's recent volatility.

The small, 3-1/2-year-old carrier, which has been luring travelers from Air Canada (ACa.TO: Quote) and WestJet Airlines (WJA.TO: Quote) in Eastern Canada, had planned to raise C$120 million ($114 million) to potentially buy new aircraft before shaky equity markets took another tumble.

"We all know it has been a difficult May in the marketplace ... We certainly were not prepared to sell our stock at any price," said Porter Chief Executive Robert Deluce.

The Globe and Mail newspaper reported last week that Porter was chopping the price on its offering to about C$5.50 a share from between C$6 and C$7 a share.

Deluce said that once markets settle down Porter will again consider a public offering as well as "other forms of public financing". The company was in good shape, with passenger numbers and profitability up in the first quarter, and did not need the money now.

"Quite frankly, it's all moving nicely in the right direction and there is no pressure on us to do anything that we don't want to," Deluce told Reuters in an interview.

Porter Airlines, as it is known, has become a favorite with business travelers because of its "business-class-for-all" service and the close proximity to downtown Toronto of the Billy Bishop airport out of which it flies.

It started operations in 2006 with just two aircraft but now flies 20 Bombardier (BBDb.TO: Quote) 70-seat Q400 turboprops to 13 destinations in Eastern Canada and into the United States.

UNSTABLE MARKETS

Over the past several weeks, initial offerings by Canadian companies have not fared so well, raising less cash than expected in some cases and dropping below their IPO price soon after trading began in others.

Stock of Athabasca Oil Sands Corp (ATH.TO: Quote), Canada's largest IPO in a decade, has plunged 42 percent since it went public in April.

"IPOs are dangerous territory to begin with and airlines maybe add a bit," said Michael Sprung, president of Sprung & Co Investment Counsel.

"You could easily get caught in a downdraft. The last thing a new IPO wants is for there to be a lot of stock on the shelf," Sprung said.

Porter said in its offering prospectus that it plans to acquire up to nine new aircraft over the next 12 months, including two that were delivered in April.

[mcrit]

Well, that should help keep some fools and there money together a little bit longer.

[altiplano]

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[midwingcrisis]

Tough time in the markets right now for an IPO, with commodities on or about to go on fire. Expensive for the efforts that POE had to incur just getting it going (IPO). I think they were really counting on the "offering" reading their financials. Hope they get some momentum and hang in there.

[eightzeroummmseven]

Would it be a good time to launch when Jazz is on strike?

[pika]

Would it be a good time to launch when Jazz is on strike?

I suspect not as the fundamentals have not changed.

[Morav]

Don't forget Via Rail employees may strike as well.

[nottellin]

Id be curious to know what via rail employees are making and what they are looking for, drivers and non drivers. It would be nice to compare that industry to aviation.

[eightzeroummmseven]

Wow that would be a perfect storm for Porter. Or the opposite of a perfect storm I guess. A sunny day?

[tedcuthbert]

I've been following the YTZ saga closely for years, and I'm really rooting for these guys. I live a 15 min walk from airport, use it for GA and was an early adaptor to Porter, flying them whenever I can. But I never saw the business case for this airline operating more than 15-20 planes out of there. There is limited opportunity not being at a long haul hub. Getting to where there are now was the easy part, the next year or two will be the acid test. In a way, they have been marketing this IPO since before the airline was even launched, the PR & spin around this airline was very well done. But institutional investors aren't as easily sold, they want to see growth and increasing earnings (or at least the potential), and I think that will be challenging for Porter. Even if all the numbers add up, it will still be a tough sell - airlines have the rep for being bad investments. I was surprised Porter got the private equity start-up capital they did (and by the way, these investors will want to get their $$$ out sooner than later). All that said.....Go Porter.