More Q400's for Porter

[Realitychex]

Perhaps reality is an ex-porter employee?

Read the first line of my last post.....

[sanjet]

Interesting remarks by reality chex. Although he/she has some points regarding the industry, as a frequent jumpseater on Porter I have noticed the loads have sigficantly increased system wide and would not be surprised to see a solid profit this coming quarter. This is just not any other airline, lots of capital was spent on acquiring property on CYTZ, building of the new terminal and acquiring brand new aircraft. To think an airline would be in immediate profit after all these challenges would be naive and I'm sure the private investors of this company also knew hence the reason of more capital raised last week in order to order more aircraft. YTZ was never meant to be a monopoly and other airlines arriving in YTZ was inevitable. Why do you think Porter Aviation Holding holds the lease to the majority of the property on YTZ for the next few decades?

[bigskyjoc]

I have a passionate distaste for company's that promise the world to their investors but produce nothing but red ink.

With reference to the above what should investors think of a company that produces 54 of 58 profitable quarters and yet their stock is still stuck in the mud between $10 and $14 bucks for years now? I see WJA is down 3.8% today as well, not exactly time to break out the bubbly but it sure is collecting dust on that shelf don't ya think? As far as I know investors don't get any younger.

[Realitychex]

I have a passionate distaste for company's that promise the world to their investors but produce nothing but red ink.

With reference to the above what should investors think of a company that produces 54 of 58 profitable quarters and yet their stock is still stuck in the mud between $10 and $14 bucks for years now? I see WJA is down 3.8% today as well, not exactly time to break out the bubbly but it sure is collecting dust on that shelf don't ya think? As far as I know investors don't get any younger.

I guess it's all a matter of when you bought in.

There are many folks who buy in the $11's and sell in the low $13's making good money. Long term investors have the benefit of the three 3-2 splits.

No one has ever gone too far wrong investing in a company that produces industry leading profits year in and year out. The problem is there are always wannabes out there that lose cash handover fist year after year and their foibles tend to taint the industry segment.

Porter's IPO attempt didn't exactly make a great impression on potential Canadian airline investors and until they change the foreign ownership caps, WestJet is stuck in this predicament.

In the meantime, the best they can do is to continue what they are doing. Porter can only dream of the margins WJ produces every quarter. As a potential investor, I'd look forward to that too, but I don't see it happening any time soon.

As for full airplanes in the peak summer months, well, they SHOULD be full. It has been said for many years that a duck with a chair on it's back could make money in Canada in the 3rd qtr. The trick is not handing it all back in the 4th and following 1st and 2nd quarters.

I wouldn't want to be a Q400 operator matching 3Q leisure fares with Airbus/Boeing LCC operators. That 26 cent casm, even with a 350 mile asl, isn't competitive with a 12.2 cent casm over 950 miles.

[Jack Klumpus]

Perhaps reality is an ex-porter employee?

Read the first line of my last post.....

I really don't care to do that.

[altiplano]

done.

[sanjet]

Is this guy still going? Blah blah blah... go somewhere else... you win... let us commoners talk amongst ourselves...

Lay easy on the fella
I like his theories on this. Its an interesting topic

[bmc]

That 26 cent casm, even with a 350 mile asl, isn't competitive with a 12.2 cent casm over 950 miles.

An apple seldom tastes like an orange.

[tailgunner]

Reality,
I generally think that you are accurate in your read of Porter, however, would you please enlighten us on WJ's accounting practices.
As I recall, there was a bit of concern on how WJ was accounting for the depreciation of their owned 737's. It was not illegal by any means, just not the normal way airlines show the depreciation....I know that AC always shows depreciation every quarter, but I have failed to see it in WJ's numbers.
My only comment is this, I believe that WJ's real numbers will be quickly and dramatically ratcheted down when the dpreciation on those shiney 737's are accounted for. Lets take 10 737's that are all undergoing their d checks this year...If WJ shows 10 mil. per fin, then you can subtract 100 mil. from WJ's profit numbers...Just saying.

[Jastapilot]

I'd like to thank Realitychex for his honesty, brutal as it is. It's a refreshing change from what we usually get. For those of you so quick to bash him, he's been around long enough, and has proven himself enough times he's entitled to be confident when he speaks. He has my attention, that's for sure!

It's also obvious(even to us non analysts) that Deluce has some serious work to do to turn things around financially for Porter, since an investor who's worth millions and who may have invested millions will only have so much patience for consecutive quarterly losses for only so long before they walk.

Porter employees, I hope this venture works out long term for you, you have a great product and it would be a shame to see it fizzle like so many others did before you. As positive as things seem right now for you the reality is your company is being kept afloat with investors money, not self generated profits. Hold the boss accountable for steering the ship! Next time you see him ask him how many more quarterly losses you'll have to endure before the ship's on track.

[CanadaEH]

Hi Tailgunner, I can answer your question (I think):

While most aircraft generally have heavy maintenance checks all in one shot (C/D), the 737's do what is called phase checks. A phase check is a series of checks over an extended period of time instead of all at once. The aircraft is out of service for less time (a phase check can be completed overnight) and is maintained the same way as a C-check, only in parts. This allows the costs of aircraft mainteance to be spread out over quarters/years when the phase check is performed and not all at once, which is generally how heavy maintenance checks are done.

[V1RotateV2]

Remember that the incumbents had 100% of the capacity in WJ's world prior to 1996. It's amazing what happens when prices drop 40% overnight.

Numbers don't lie. You can like or dislike them, but accept it as data and try to make good sense out of them. Obviously Realitychex knows quite a bit about this business.
Pilots, in my experience, tend to believe that their company is doing well and will get out of any bind, even when the writing is on the wall. Have been there, done that. The thought of loosing our seniority, perks and maybe downsize if forced to start over at another airline is a powerful force that may keep some in this industry dancing on the deck, even if the ship is the Titanic (not that I think that Porter is sinking, but you get my drift).

It would be a nice math exercise to look into an airport that had one airline serving it (a monopoly), and then competition starts by having another carrier fly a few flights at a lower fare. Would Realitychex take me up on this and find out what happened to JZ in Sudbury, after Porter added a flight a day?

[OceansEdge]

Numbers don't lie. You can like or dislike them, but accept it as data and try to make good sense out of them. Obviously Realitychex knows quite a bit about this business.

"There are lies, damned lies, and statistics"

I'm not saying RealityChex is right or wrong, or anyone else is. I think it's way too early to tell. Porter is still in 'start up' mode IMO, and that's always the most resource draining period. You cannot expect to be making money day one in this game.

I think putting off the IPO was a carefully calculated and correct move, if rushed at the wrong time, just because a deadline was set, it could be a bad mistake. That they're taking the time and moving cautiously with that certainly doesn't smell of desperation. Until the initial offering and the prospectus that goes with it is made - and even then the bean counters will spin the numbers to say exactly what they want them to say to the public - non of us really know. And it's all just a guessing game.

Hell most stock brokers I know are just bookies in better suits.

Yeah I've heard both good and bad about the conditions inside Porter, but then that can be said for every employer in Canada.... including Big Red, and the Blue Machine, it's a screwed up industry, and there's gonna be unhappy and happy people just about everywhere. It's find an atmosphere and a corporate culture where you feel comfortable, valued, and respected and support it.

If people have found that at Porter, or anywhere, I'm not gonna question it.

[Realitychex]

That 26 cent casm, even with a 350 mile asl, isn't competitive with a 12.2 cent casm over 950 miles.

An apple seldom tastes like an orange.

I don't know how many airlines have bankrupted themselves because they've ignored the concept of stage length adjusted casm. Do you really think Porter's casm is 26 cents regardless of stage length?

As for depreciation, the number is clearly identified in the P&L. It's about $120m a year.

WestJet does segmented C checks and expenses costs as incurred.

Heavy checks occur roughly every 7 years. WJ's financial covenant is such that I doubt they are paying much in the way of reserves on most, if not all of the leased fleet. They pay the bills as incurred. Try telling your auditor to expense what hasn't occured and see what happens.

The oldest NG is currently about 9 years old so it's likely the first 20 or so NG's have already been through heavy maintenance in the past few years. I would imagine there's an aircraft in heavy check pretty much full time these days.

All Porter's aircraft operate under the manufacturers maintenance holiday, meaning they are paying a fraction of the true costs of operating the aircraft. With that sort of advantage, not to mention the cosy monopoly at YTZ, they should be printing cash year round.

I have a hard time believing Porter's business plan was to lose money for the first 5 years of operations. Do you know many investors that would tolerate that sort of return? I don't.

[Jastapilot]

Porter is still in 'start up' mode IMO, and that's always the most resource draining period. You cannot expect to be making money day one in this game.

Then based on that Westjet is still in start up mode... and Sunwing, and Jazz and Air Canada.

[OceansEdge]

Lets see...
Sunwing - charter operator - 2005 - 5 yrs - whole different kettle of fish (just ask Canada3000 folks about the difference between charter and scheduled airline)
Jazz - 2001 - 9 yrs - built on the structure and amalgamation of preexisting airlines
WestJet - 1996 - 14 yrs
Air Canada - 1936 - 64 yrs

Porter - 2006 - 4 yrs
I don't think you can honestly say that ...

Then based on that Westjet is still in start up mode... and Sunwing, and Jazz and Air Canada.

There's a lot of things you can say - say that 4 years is no longer a start up, say that you expect anyone starting a new endeavour should be making a profit right out of the gate, tell me how long YOU think a start up should have to quit making capital expenditures and start raking in the dough, say a lot of things.... but say something that remotely sounds like a logical argument. I quite expect that, especially in a thread like this, not everyone is going to agree with me, or my interpretation. And it is just that - my opinion - nothing more or less. Same as you.

But please at least apply some logic.

[airliner]

I think at Porter we should charge a premium to do banner towing out of the island. The additional revenue would defiantly help.
Any thoughts?

[sanjet]

I think at Porter we should charge a premium to do banner towing out of the island. The additional revenue would defiantly help.
Any thoughts?

Not sure... Is that a joke?

[aerosexual]

I think at Porter we should charge a premium to do banner towing out of the island. The additional revenue would defiantly help.
Any thoughts?

That's a great idea! If you are going to be hindered by operating slow prop planes at lower altitudes than the competition, might as well tow banners to generate revenue!

[DanJ]

Lets see...
Sunwing - charter operator - 2005 - 5 yrs - whole different kettle of fish (just ask Canada3000 folks about the difference between charter and scheduled airline)
Jazz - 2001 - 9 yrs - built on the structure and amalgamation of preexisting airlines
WestJet - 1996 - 14 yrs
Air Canada - 1936 - 64 yrs

Porter - 2006 - 4 yrs
I don't think you can honestly say that ...

Then based on that Westjet is still in start up mode... and Sunwing, and Jazz and Air Canada.

There's a lot of things you can say - say that 4 years is no longer a start up, say that you expect anyone starting a new endeavour should be making a profit right out of the gate, tell me how long YOU think a start up should have to quit making capital expenditures and start raking in the dough, say a lot of things.... but say something that remotely sounds like a logical argument. I quite expect that, especially in a thread like this, not everyone is going to agree with me, or my interpretation. And it is just that - my opinion - nothing more or less. Same as you.

But please at least apply some logic.

Check the math.

[Valhalla]

I find it hard to believe that the motivation for Realitychex and others to spend countless hours reseaching Porter to find arguements to its demise has anything to do with a pet peeve for companies that are not profitable.

I believe the real reason for all this effort to demoralize Porter is that Porter has become a proper threat to Westjet. In the eastern triangle, Porter is now bigger than Westjet, and in Eastern Canada, Porter is making serious inroads in Moncton, Halifax and St. John's.

Besides, if Realitychex really felt that Porter is truly a "financial epic failure" as he described, then why beat a dead horse?

[fish4life]

I believe the real reason for all this effort to demoralize Porter is that Porter has become a proper threat to Westjet. In the eastern triangle, Porter is now bigger than Westjet, and in Eastern Canada, Porter is making serious inroads in Moncton, Halifax and St. John's.
?

personally I'd love to see porter be a profitable company and very successful they seem to be trying to bring back the "prestige" to flying instead of making it just a transit bus in the air. But they are by no means a threat to Westjet. if they did go through with the rumoured plans to be the launch customer for the bombardier C-series jets then they could start to be a threat but right now they are still just a short haul turbo-prop operator.

ps i know a fair bit of people at porter and wish them all the best, it would be nice if every company had the same philosophy to air travel that porter did towards the passengers

[airliner]

With a few banners in tow Porter is nothing but win win.

[sanjet]

With a few banners in tow Porter is nothing but win win.

Ha

[Realitychex]

I find it hard to believe that the motivation for Realitychex and others to spend countless hours reseaching Porter to find arguements to its demise has anything to do with a pet peeve for companies that are not profitable.

I believe the real reason for all this effort to demoralize Porter is that Porter has become a proper threat to Westjet. In the eastern triangle, Porter is now bigger than Westjet, and in Eastern Canada, Porter is making serious inroads in Moncton, Halifax and St. John's.

Besides, if Realitychex really felt that Porter is truly a "financial epic failure" as he described, then why beat a dead horse?

Countless hours?

Porter would only be a threat to other airlines if it had a sustainable business model. Losing $40m+ in the first four years of operations is not a sustainable business model.