More Q400's for Porter

[Valhalla]

Porter Airlines buys four new Bombardier Q400 NextGen aircraft

Options for six additional aircraft

TORONTO/August 6, 2010 – Porter Airlines is confirming a new order for four Bombardier Aerospace Q400 NextGen aircraft, plus six options.

Based on the list price for the Q400 NextGen aircraft, Porter’s firm order is valued at approximately $120 million US, which could increase to $308 million US should all six options be converted to firm orders. Porter currently operates a fleet of 20 Q400 aircraft and the new order potentially raises this number to 30.

“The Q400 aircraft is a foundation of Porter’s operation and growth,” said Robert Deluce, president and CEO of Porter Airlines. “Its reliability, performance and efficiency have helped us grow to 20 aircraft from two over the last four years. We’re proud to be one of the world’s leading Q400 operators.”

The new aircraft are scheduled for delivery beginning in the second quarter of 2011, through the third quarter of 2012, including option aircraft.

“Porter Airlines is one of Canada’s airline success stories, and more importantly, Porter has succeeded in the face of challenging economic conditions, proving that with the right aircraft and a devotion to quality passenger care, adverse economic conditions can be overcome,” said Gary R. Scott, president of Bombardier Commercial Aircraft. ”The Q400 and Q400 NextGen airliners are also a global success story, and this additional order is a testament to their reliability and operational flexibility.”

Porter operates a 70-seat version of the Q400, one of the most fuel-efficient aircraft in its class, burning less fuel per seat than most regional and narrow-body jets. With leather seating, extended legroom and a 667 km/h cruising speed, the Q400 sets new standards for comfort, fuel efficiency and low emissions.

Porter also confirms that it raised an additional $15 million CDN in equity from existing shareholders. The proceeds will be used primarily for working capital and new aircraft purchases.

“This equity satisfies Porter’s short-term requirements for growth,” said Deluce. “At the same time, we expect to determine sources for our long-term capital requirements by the first half of 2011.”

[To The Line]

Porter is on its way to becoming a solid, substantial Canadian airline. A real force to be reckoned with....way to go Robby Raccoon!!

[tailgunner]

To the line,
I like your enthusiam, but...Robert Raccoon is about to face some serious challenges in the near future. Jazz and Continental are both moving in, and the den is about to get really crowded. Porter has established a very good niche product, but Jazz will offer the same aircraft but with the bonus of aeroplan points. Business travellers' love their points, and the 30 minute flight to yow does not really allow them the time to get unwound on Porter's freebies..., however after a few months of flying that aeroplan point may get them to HNL or CUN...Continental will fight for their share of the EWR traffic...Porter stepped on their turf and I think Continental will be aggressive in the transborder market.

[aerodude]

I just hope the folks at colgan receive the proper training going into the island. Although quite normal during cavok days, doing a steep approach with 25-30 kts from the northwest has its challenges landing on a 3900 ft strip.

[PC12flyer]

Is that steep approach published for all airlines? I was under the impression it was a restricted approach, only approved to be used if proper training had been accomplished. I could be wrong though so does anyone know for sure?

[Valhalla]

Is that steep approach published for all airlines?

To fly the steep, the crew needs special simulator training and the Dash 8 must be modded with a "steep" mode to its GPWS so the airplane doesn't scream at you on the approach!

[jjj]

Porter is on its way to becoming a solid, substantial Canadian airline. A real force to be reckoned with....way to go Robby Raccoon!!

To the line, could you please substantiate the above quote?

Porter's Q2 numbers were a disaster and the Toronto island monopoly is coming to an end with slots being awarded to Air Canada and Continental. Unless they are about to merge or something they will fail.

Love the product - the racoon - the hot flighties - the Mac check in computers - the lounges - the biscotti - and the pilots I met have been pros. Unfortunately the fundamentals required to sustain aren't even close.


Maybe the quote was sarcastic?

JJJ

[canuckjetsetter]

Good to hear! Additional capacity hopefully to add to their transborder portfolio. And by Q2 2011, I'm optimistic the U.S. economy will be on the upward swing once again and the demand will be warranted.

Question regarding the terminal:

When Jazz and Continental enter the market, will it be a completely separate terminal or a portion of the current one, minus PD's lounge access, et al?

Porter's Q2 numbers were a disaster and the Toronto island monopoly is coming to an end with slots being awarded to Air Canada and Continental. Unless they are about to merge or something they will fail.

Well, PD is the most capitalized airline project in Canadian airline history, and have investors with deep pockets. I doubt with over +$125 million investment after just 4 years they will let it fail without a fight. Furthermore, what a lot of people don't seem to mention is PD has not only been investing in routes, market share, and growth but also real assets. They own their airplanes AND a majority of property on the island. They will be leasing terminal space and selling fuel (via Porter FBO) to their competitors! And lastly, they seem to be building a route structure that doesn't solely depend on YTZ (YOW/YUL-YHZ/YYT).

Granted Jazz and Continental will most likely take a portion of traffic away from PD but on potentially 3 routes - not necessarily a deal breaker. Especially as Deluce is on record stating the YTZ-YOW/YUL routes are not their highest yielding routes but rather their YOW-YHZ/YYT routes.

[To The Line]

Honestly no sarcasm, the airline has grown by hundreds of percentage points over the past 4 years, the boss owns everything on the island, competitors will be purchasing gate assingnments, fuel and maintenance from Mr. Raccoon. And lets not forget all the free advertising once they step into the nicest terminal experience around. Also the number of slots provided to non Porter a/c is somewhere below 10% of available slots, PD with the other 90% plus. I just really believe that Porter is set for longterm success.

P.S they're hiring!!

Porter is on its way to becoming a solid, substantial Canadian airline. A real force to be reckoned with....way to go Robby Raccoon!!

To the line, could you please substantiate the above quote?

Porter's Q2 numbers were a disaster and the Toronto island monopoly is coming to an end with slots being awarded to Air Canada and Continental. Unless they are about to merge or something they will fail.

Love the product - the racoon - the hot flighties - the Mac check in computers - the lounges - the biscotti - and the pilots I met have been pros. Unfortunately the fundamentals required to sustain aren't even close.


Maybe the quote was sarcastic?

JJJ

[To The Line]

Oh and yes quaterly numbers might be deficient, but that will all be attributable to the hundreds of millions spent on infrastructure, just give it a year or two. Deep pockets to float the airline to serious profitability.

Time will tell, but my bet is on the Raccoon being around for some time to come.

Honestly no sarcasm, the airline has grown by hundreds of percentage points over the past 4 years, the boss owns everything on the island, competitors will be purchasing gate assingnments, fuel and maintenance from Mr. Raccoon. And lets not forget all the free advertising once they step into the nicest terminal experience around. Also the number of slots provided to non Porter a/c is somewhere below 10% of available slots, PD with the other 90% plus. I just really believe that Porter is set for longterm success.

P.S they're hiring!!

Porter is on its way to becoming a solid, substantial Canadian airline. A real force to be reckoned with....way to go Robby Raccoon!!

To the line, could you please substantiate the above quote?

Porter's Q2 numbers were a disaster and the Toronto island monopoly is coming to an end with slots being awarded to Air Canada and Continental. Unless they are about to merge or something they will fail.

Love the product - the racoon - the hot flighties - the Mac check in computers - the lounges - the biscotti - and the pilots I met have been pros. Unfortunately the fundamentals required to sustain aren't even close.


Maybe the quote was sarcastic?

JJJ

[Realitychex]

1Q 2010 per US DoT T100 data

YTZ-MDW: 25.7%
YTZ-BOS: 27.0%
YTZ-EWR: 49.1%
YTZ-MYR: 67.8%

Transborder system: 36.1%
Transborder ASM's as a % of total: 31.1%

Domestic L/F: 52%

With a system belf of 54.6% in the first quarter and transborder loads 18.5% pts below BELF, it's pretty clear the transborder experiment is hemmoraging cash.

Don't get too excited about MYR. It represented about .4% of Porter's total capacity in 1Q.

To put it another way, AMR was recently placed on the Titanic Watch. Even with the -10% operating margin, (including interest expense), AMR recorded in 1Q 2010, their l/f was 7.8% below their BELF. The collective industry operated 3.2% pts below BELF in the first quarter.

Porter's transborder loads were 18.5% pts below their system BELF which makes it pretty easy to understand how they managed to generate the worst operating margins on the continent, (-16.1%), and why the IPO was DOA.

There are those who will suggest that Porter's transborder BELF is far lower than their domestic BELF.

This could be the case, but if 31% of Porter's capacity has a BELF "well below" the system BELF of 54.6%, then simple algebra can pretty accurately calculate what the BELF would be for the balance, (ie domestic), portion of Porter's network. It'll be a lot higher than 54.6% and note that the domestic l/f in 1Q was 52%. It still loses money.

Sooner or later, Porter is going to have to undertake a reengineeering of their business model. It's pretty clear the current design is very seriously flawed.

Porter is on its way to becoming a solid, substantial Canadian airline. A real force to be reckoned with....way to go Robby Raccoon!!

To the line, could you please substantiate the above quote?

Porter's Q2 numbers were a disaster and the Toronto island monopoly is coming to an end with slots being awarded to Air Canada and Continental. Unless they are about to merge or something they will fail.

Love the product - the racoon - the hot flighties - the Mac check in computers - the lounges - the biscotti - and the pilots I met have been pros. Unfortunately the fundamentals required to sustain aren't even close.


Maybe the quote was sarcastic?

JJJ

[/quote][/quote]

[tailgunner]

To the line,
seriously..I am impressed by your enthusiasm for PD. If you work there, you are probably a very dedicated employee, and most likely an asset to the corp.
Pd will NOT make a lot of money on fuel and Mx. from Jazz and Continental. They will be tankering their fuel into the Island so that they will NOT have to buy it from Deluce. The Mx will be done by contract or their own employee's ....AC and Continental look after each other in differing cities so I see that continuing. The only infrastructure that PD will be making money off of will be the gates...And I am sure that there will be a regulator in place to ensure that normal fees are being charged...

[canuckjetsetter]

Realitychex

Other than the DoT stat's - are you able to provide a source for your info? I can't seem to find any numbers that resemble yours on their IPO prospectus (although to be fair, that is the only place I scouted for info). Just curious, that's all.

On a side note, when talking financials - L/F is rarely meaningful. It's all about the yields (which per their prospectus, was decent prior to the recession hitting). But, as with anything time will tell how PD will do. I just hope for the sake of all Canadian carriers that the economy both domestically and transborder will rebound quickly and ensure some solid financial results.

[airliner]

The money that Porter's terminal will make will definitely be considerable since Flybe has already set the president at London city center. Another ICAO ruled port of call.

[aileron]

The money that Porter's terminal will make will definitely be considerable since Flybe has already set the president at London city center. Another ICAO ruled port of call.

I think what you mean is "precedent", not "president".

...The only infrastructure that PD will be making money off of will be the gates...And I am sure that there will be a regulator in place to ensure that normal fees are being charged...

Yes that's true that anyone would tanker in fuel, especially from the US where it's cheaper; but they're still going to have to top off depending on where they're going, especially if it's further away.

As for the gates, unfortunately (for QK and 9L or their mother ships respectively) the system is integral with the business lounge... so what a "regulator" will deem a "normal" fee to charge, is a little challenging (which equals opportunity for PAHL ).

[aviator2010]

any chance for a ottawa dir regan national.

[sanjet]

any chance for a ottawa dir regan national.

Lots of new routes to be announced for sure next year with those new aircraft. YTZ will be nearing capacity in terms of movements / gate availability in my opinion sometime next year. New direct routes from other points will be inevitable.

[canuckjetsetter]

I can easily see them adding a few transborder flights from YOW. The route possibilities outside of YTZ are quite high. Grow YHZ more and add a maritime hub or focus city, perhaps.

It will be interesting to see what they do outside of the island flying. With up to 10 more planes on the way, there's alot of opportunity.

[Realitychex]

Realitychex

Other than the DoT stat's - are you able to provide a source for your info? I can't seem to find any numbers that resemble yours on their IPO prospectus (although to be fair, that is the only place I scouted for info). Just curious, that's all.

On a side note, when talking financials - L/F is rarely meaningful. It's all about the yields (which per their prospectus, was decent prior to the recession hitting). But, as with anything time will tell how PD will do. I just hope for the sake of all Canadian carriers that the economy both domestically and transborder will rebound quickly and ensure some solid financial results.

It's all here:

http://ostpxweb.dot.gov/aviation/usstatreport.htm#data

BELF, which is a function of yield and costs can be calculated from data provided in their prospectus. Regardless of yields achieved, they've never made anything close to a plug nickel. Competition is only going to make that worse.

Remember, the Prospectus is a marketing / selling document. They paint pretty pictures. Dig through the data and it's pretty easy to see why the IPO imploded.

Operationally, Porter has done well.

Where it counts, that is financially, by any definition, Porter has been an epic failure.

[Valhalla]

Where it counts, that is financially, by any definition, Porter has been an epic failure.

Realitychex, I will gladly call you out very soon when you are proven wrong. You have no clue as to how much money it takes to build a successful airline. You think that working at Westjet makes you a financial expert?

You clearly also fail to realize that it is very offensive to me that you (along with a few others) seem to take pride in predicting the finacial demise of the company I work for. I, along with about a thousand other employees, are working hard to make this company successful. Choose to believe it or not (I couldn't care less either way), but the success is happening.

[aileron]

...You clearly also fail to realize that it is very offensive to me that you (along with a few others) seem to take pride in predicting the finacial demise of the company I work for. I, along with about a thousand other employees, are working hard to make this company successful. Choose to believe it or not (I couldn't care less either way), but the success is happening.

+1

For all the naysayers, who's continued counterpoint is that if we can't make a monopoly work, hear this: Clearly you do not realize what we have achieved so far, and what it takes to get to that point. Do you think a switch is flicked "ON" and instantly everyone who have been "loyal" customers of our competitors come over in Mongol droves from YYZ? Give your collective heads a shake. It requires marketing and time.

We are fighting a battle on two fronts: Our Competitors and Our Economy. David vs Goliath.

If you look at the DOT data, for instance, you'll see a downward trend on the load factors collectively, over the last few years, between our competitive operators between Toronto and "X" US destinations and a rise in our own load factors. Explain that?

Our continued feedback, from our increasingly new and loyal customers is awesome. And you know what, it is really simple: We are returning service and convenience to people who are disillusioned with the continued reduction of a passenger from guest to commodity.

[Realitychex]

Where it counts, that is financially, by any definition, Porter has been an epic failure.

Realitychex, I will gladly call you out very soon when you are proven wrong. You have no clue as to how much money it takes to build a successful airline. You think that working at Westjet makes you a financial expert?

You clearly also fail to realize that it is very offensive to me that you (along with a few others) seem to take pride in predicting the finacial demise of the company I work for. I, along with about a thousand other employees, are working hard to make this company successful. Choose to believe it or not (I couldn't care less either way), but the success is happening.

I am exceedingly familiar with how to launch and build successful airlines in North America. The three I've been involved with currently operate about 260 aircraft ranging from 100 to 170 seats.

I will admit that I haven't a clue how Porter could possibly lose almost $40m in its first 39 months of operations, whilst enjoying a monopoly in Canada's largest aviation market.

In WJ's first three years, (from Feb 29 1996 to to April 30 1999), they generated $269.6m in revenue, earned an operating profit of $34.4m and a margin of 12.8%, all the time fighting off two very aggresive legacy airlines.

https://www.westjet.com/pdf/investorMed ... pectus.pdf

In Porter's first three years, (from Oct 23 2006 to Dec 31 2009), they generated $307.7m in revenue, earned an operating loss of $17.9m and a margin of -5.9%, whilst operating in a cosy monopoly in Canada's largest city.

It's all there on page 41 of the Final Prospectus dated May 21 2010.

WJ earned a net profit of $15.8m in 1999, its 4th full year of operations and $30.2m in 2000. Porter reported a net loss of almost $6m in the first quarter of it's 4th year of operations. That's a heck of a pit to dig out of if there are any expectations of even breaking even this year.

You can see why, financially speaking, it's pretty hard to get excited about Porter's "success".

I think Porter has produced an excellent product and the staff should be commended for that achievement.

Unfortunately, like every failed airline experiment, it amounts to nothing if the venture can't generate anything close to a profit.

It's not going to be any easier with competition arriving in your backyard....

[To The Line]

I think Porter has produced an excellent product and the staff should be commended for that achievement.

Thanks, stay tuned for more to come.

[Realitychex]

I think Porter has produced an excellent product and the staff should be commended for that achievement.

Thanks, stay tuned for more to come.

Adding more capacity to Newark smells of desperation.

The route saw some growth in traffic in 2009, peaked in Porter's best quarter, 4Q 2009, at 14,557 passengers a month, then, even with the benefit of massive daily full page advertising in Toronto focussing on price, price and price, fell to 13,702 a month in 1Q 2010.

Most profit oriented airlines wouldn't be adding capacity in those circumstances unless they simply had no where else to place the equipment.

Then again, if one looks at Porter's history in Boston, it's pretty obvious there's no point adding capacity there. In 4Q 2009 with 36,400 seats Porter managed a 40.8% l/f. In 1Q 2010, with 39,270 seats, they managed a 27% l/f. MDW was worse.

Even a modest competitive response from Continental to their EWR hub will cause those yields to tumble. As much as folks say they are loyal to Porter, an airline seat is a commodity, period. If I were at Continental, I'd be offering a "fly 8 trips, get a r/t to Florida gratis", then watch the wingwalkers shift loyalties overnight. It doesn't take many people switching loyalties to materially change financial results, which in the case of Porter's aren't exactly great to begin with. It's all there on page 41 of their Final Prospectus, available on Sedar.

Calgarian's swore they'd never buy gas at Petro Canada, but once the price was a penny less a litre, folks shopped with their wallets. It's no different in the airline business. For most people, price is the #1 issue.

Poindexter in Accounting will stop approving the $700 one way trips to EWR in favor of the $399 trips. Everyone will be forced to match. Yields will tumble and break-even loads at the higher unit cost airlines will shoot north. Then we move into the Cdn Airlines model where they lost a little on each flight but tried to make it up with volume.

We all saw how that movie ended.

Month From To Passengers Seats LF
Jan-09 EWR YTZ 6,605 22,400 29.5%
Feb-09 EWR YTZ 7,481 22,120 33.8%
Mar-09 EWR YTZ 10,325 25,060 41.2%
Quarter Total 24,411 69,580 35.1%

Apr-09 EWR YTZ 5,468 11,690 46.8%
May-09 EWR YTZ 6,163 12,670 48.6%
Jun-09 EWR YTZ 5,870 12,390 47.4%
Quarter Total 17,501 36,750 47.6%

Jul-09 EWR YTZ 12,741 25,480 50.0%
Aug-09 EWR YTZ 14,602 25,620 57.0%
Sep-09 EWR YTZ 14,372 26,390 54.5%
Quarter Total 41,715 77,490 53.8%

EWR Pax Capacity Trips L/F
Oct 15,772 26,530 379 59.4%
Nov 15,049 27,440 392 54.8%
Dec 12,851 24,780 354 51.9%
Total 43,672 78,750 1,125 55.5%

EWR Pax Capacity Trips L/F
Jan 12,004 26,670 381 45.0%
Feb 12,782 26,250 375 48.7%
Mar 16,322 30,730 439 53.1%
Total 41,108 83,650 1,195 49.1%


All stats from US DoT T100 Data

[altiplano]

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