Porter headed for success
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widebody300er
- Rank 1
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- Joined: Sun Mar 15, 2009 4:09 pm
Re: Porter headed for success
Porter Airlines – Where’s the Momentum?
Porter Aviation Holdings’ Final Preliminary Prospectus, released last Wednesday, reveals some disturbing numbers in its first quarter (Q1) 2010 financial results.
Having spent $25 million in sales and marketing over the 2009 year, what does it have to show for that spending in 2010? Do the Q1 2010 numbers disclose any momentum in a positive direction?
A comparison between the last two consecutive quarters, Q4 2009 and Q1 2010, tells the story. Revenues dropped by $4,300,000. Operating expenses increased by $2,164,000. Cost per available seat mile increased almost 10% - from 22 cents to 24 cents. Net income of $455,000 in Q4, 2009, slid in Q1 2010 to an operating loss of $5,972,000 in Q1 2010. That loss over three months is $1,363,000 greater than the total loss for all of 2009.
Surprisingly, these worsening numbers were achieved after spending a whopping $7.4 million on sales and marketing in Q1 2010, and regularly offering discounted pricing.
Other numbers also paint a difficult financial picture. Porter’s load factor (percentage of seats filled) dropped in Q1 2010 to 47% from 50.2 % in Q4 2009. The Q1 load factor dropped slightly below the total 2009 figure of 47.9%. Still flying with more than half its seats empty. Working capital deficit ($11,846,000 as of December 31, 2009) deteriorated to $33,467,000 by March 31, 2010.
Restricted cash ( money held by credit card companies as security for unused ticket purchases, should they have to be refunded) jumped from $12,256,000 at December 31, 2009 to $17,581,000 at March 31, 2010 Unrestricted cash fell by $10,732,000 to $9,179,000 at March 31, 2010 – enough for about two weeks’ expenses (monthly expenses are now almost $18 million).
Accounts payable rose to almost $28 million from $24 million at December 31, 2009. Given spending of $14 million per month (excluding salaries) in Q1 2010, suppliers are waiting about two months to be paid. How patient will they continue to be?
As reports from Porter’s customers are positive, one would have expected these numbers to be much more positive. Producing worsening numbers after almost four years of operation and massive expansion suggests there’s something deeply wrong with Porter’s business model.
As one long-time industry insider noted:
"Their operating margin including interest as an expense places them squarely, and quite handily, as the worst performing airline in North America in 1Q 2010. For the record, that margin is -16.11%. As I recall, the next worst was AMR [American Airlines] at -10%."
Another financial analyst put it this way:
"What's wrong with this picture? A 4 year old monopolistic airline with a sophisticated operation generates a $6 million dollar loss in Q1 2010 notwithstanding a doubling of passenger volume vs. Q1 2009 and heavy price discounting across the board.
And Porter could only manage to fill 47% of seats available?"
Keep dreaming....
Porter Aviation Holdings’ Final Preliminary Prospectus, released last Wednesday, reveals some disturbing numbers in its first quarter (Q1) 2010 financial results.
Having spent $25 million in sales and marketing over the 2009 year, what does it have to show for that spending in 2010? Do the Q1 2010 numbers disclose any momentum in a positive direction?
A comparison between the last two consecutive quarters, Q4 2009 and Q1 2010, tells the story. Revenues dropped by $4,300,000. Operating expenses increased by $2,164,000. Cost per available seat mile increased almost 10% - from 22 cents to 24 cents. Net income of $455,000 in Q4, 2009, slid in Q1 2010 to an operating loss of $5,972,000 in Q1 2010. That loss over three months is $1,363,000 greater than the total loss for all of 2009.
Surprisingly, these worsening numbers were achieved after spending a whopping $7.4 million on sales and marketing in Q1 2010, and regularly offering discounted pricing.
Other numbers also paint a difficult financial picture. Porter’s load factor (percentage of seats filled) dropped in Q1 2010 to 47% from 50.2 % in Q4 2009. The Q1 load factor dropped slightly below the total 2009 figure of 47.9%. Still flying with more than half its seats empty. Working capital deficit ($11,846,000 as of December 31, 2009) deteriorated to $33,467,000 by March 31, 2010.
Restricted cash ( money held by credit card companies as security for unused ticket purchases, should they have to be refunded) jumped from $12,256,000 at December 31, 2009 to $17,581,000 at March 31, 2010 Unrestricted cash fell by $10,732,000 to $9,179,000 at March 31, 2010 – enough for about two weeks’ expenses (monthly expenses are now almost $18 million).
Accounts payable rose to almost $28 million from $24 million at December 31, 2009. Given spending of $14 million per month (excluding salaries) in Q1 2010, suppliers are waiting about two months to be paid. How patient will they continue to be?
As reports from Porter’s customers are positive, one would have expected these numbers to be much more positive. Producing worsening numbers after almost four years of operation and massive expansion suggests there’s something deeply wrong with Porter’s business model.
As one long-time industry insider noted:
"Their operating margin including interest as an expense places them squarely, and quite handily, as the worst performing airline in North America in 1Q 2010. For the record, that margin is -16.11%. As I recall, the next worst was AMR [American Airlines] at -10%."
Another financial analyst put it this way:
"What's wrong with this picture? A 4 year old monopolistic airline with a sophisticated operation generates a $6 million dollar loss in Q1 2010 notwithstanding a doubling of passenger volume vs. Q1 2009 and heavy price discounting across the board.
And Porter could only manage to fill 47% of seats available?"
Keep dreaming....
Re: Porter headed for success
http://blog.communityair.org/widebody300er wrote:Porter Airlines – Where’s the Momentum?
Nice quote directly from the Community Air website press release Widebody. I'm sure they're very objective.
Hmm Initial costs for a $45 new terminal. Several new aircraft for Porter during that quarter.
Considering their bias towards an airlines operating from an island, I'm sure they're really looking at the positive sides of Porter...
Re: Porter headed for success
Lifted from another site. The only rebuttal I have seen to the critics of the IPO so far is an attack of the source and an undying belief in the business plan (which the numbers show may not be working so well). So let's try and stick to the point here and discuss how Porter is going to improve operating margins by nearly 40%.
In order produce an EPS of 69 cents that supports the $5.50 stock price at an 8x multiple, Porter is going to have produce an annual operating profit, including interest of something in the order of $60.38m. Knock 30% off for taxes to get it down to $42.3m, (69 cents x the 61.5m shares outstanding).
That's an operating margin of 28.75%.
To put this in perspective, after 4 consistently profitable years, WestJet produced their best year ever in 2000 with operating earnings including interest of $50.52m on revenues of $332.52m, or a margin of 15.1%.
Over the past 15 months, Porter has racked up operating losses including interest of $21.605m on revenues of $200.27m, resulting in a margin of -10.8%, easily the worst numbers produced by any publicly traded airline in North America.
In order to support the IPO share price, Porter has to increase it's operating margin from -10.8% operating margins produced since Jan 1 2009 to 29%, to almost double the best margin WestJet achieved in its best year ever.
This doesn’t even pass the giggle test.
Porter has had a profit in one of it's quarters, and at $455,000 that profit could quite easily be categorized as a rounding error.
They've got toe to toe competition arriving that will knock fares down, fuel going up and the maintenance holiday expiring progressively on their fleet.
Anyone who buys into this fairly tale deserves to lose their shirt.
Their only hope is that there are even dumber investors out there who push this thing up for a little while before reality sets in and the freefall begins.
In order produce an EPS of 69 cents that supports the $5.50 stock price at an 8x multiple, Porter is going to have produce an annual operating profit, including interest of something in the order of $60.38m. Knock 30% off for taxes to get it down to $42.3m, (69 cents x the 61.5m shares outstanding).
That's an operating margin of 28.75%.
To put this in perspective, after 4 consistently profitable years, WestJet produced their best year ever in 2000 with operating earnings including interest of $50.52m on revenues of $332.52m, or a margin of 15.1%.
Over the past 15 months, Porter has racked up operating losses including interest of $21.605m on revenues of $200.27m, resulting in a margin of -10.8%, easily the worst numbers produced by any publicly traded airline in North America.
In order to support the IPO share price, Porter has to increase it's operating margin from -10.8% operating margins produced since Jan 1 2009 to 29%, to almost double the best margin WestJet achieved in its best year ever.
This doesn’t even pass the giggle test.
Porter has had a profit in one of it's quarters, and at $455,000 that profit could quite easily be categorized as a rounding error.
They've got toe to toe competition arriving that will knock fares down, fuel going up and the maintenance holiday expiring progressively on their fleet.
Anyone who buys into this fairly tale deserves to lose their shirt.
Their only hope is that there are even dumber investors out there who push this thing up for a little while before reality sets in and the freefall begins.
You can interpret that however you would like.
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LongShanks
- Rank 1
- Posts: 26
- Joined: Sat Mar 20, 2004 9:06 pm
- Location: Alberta, Canada
Re: Porter headed for success
Well,
A %49.3 Load factor needed to break even, which is low, very low, which is great, maybe even the lowest in all of North America. Average load factors around %40 for the last 4 years or so, recent Quarter load factors of about %47.1. Recent losses of I think 4.6 million on revenues of 151 million for 09 and debt of 308 million I believe, ummmm, not quite yet hitting the numbers after 4 years of operations. I think Deluce hopes to raise around 80 to 120 million for this IPO for route expansion and equipment purchase. Its just me, but I would like to see Porter making money on the routes they currently run before expanding into new markets.
Jazz seems to be working hard to move back into the Billy Bishop (remember Deluce failed to renew their lease in 2006) I am sure Jazz does'nt forget, Continential looking to work out of the Bishop servicing Newark Jersey. So yes great planes and great overall operation and customer service, the visuals for the company on the surface are steller, but as an IPO I'll pass. I think the only ones who willingly own airline stock are airline employees, otherwise I can see no possible reason to own airline stock notwithstanding the recent surge in US based carrier equities.
I wish and hope for the best for Porter and its staff but based on their financials, I choose not to buy up a slice of the %30 being offered to you and me. Now I would'nt go as far to say as Warren Buffet says that it would have been better for the Wright Brothers to be shot down for all of us, at least financially, but he's not far off the mark. For me I'll just enjoy my job as a pilot everyday, blame deregulation, overcapacity, and keep my money working for me not for other people I know not.
Cheers All!
A %49.3 Load factor needed to break even, which is low, very low, which is great, maybe even the lowest in all of North America. Average load factors around %40 for the last 4 years or so, recent Quarter load factors of about %47.1. Recent losses of I think 4.6 million on revenues of 151 million for 09 and debt of 308 million I believe, ummmm, not quite yet hitting the numbers after 4 years of operations. I think Deluce hopes to raise around 80 to 120 million for this IPO for route expansion and equipment purchase. Its just me, but I would like to see Porter making money on the routes they currently run before expanding into new markets.
Jazz seems to be working hard to move back into the Billy Bishop (remember Deluce failed to renew their lease in 2006) I am sure Jazz does'nt forget, Continential looking to work out of the Bishop servicing Newark Jersey. So yes great planes and great overall operation and customer service, the visuals for the company on the surface are steller, but as an IPO I'll pass. I think the only ones who willingly own airline stock are airline employees, otherwise I can see no possible reason to own airline stock notwithstanding the recent surge in US based carrier equities.
I wish and hope for the best for Porter and its staff but based on their financials, I choose not to buy up a slice of the %30 being offered to you and me. Now I would'nt go as far to say as Warren Buffet says that it would have been better for the Wright Brothers to be shot down for all of us, at least financially, but he's not far off the mark. For me I'll just enjoy my job as a pilot everyday, blame deregulation, overcapacity, and keep my money working for me not for other people I know not.
Cheers All!
Re: Porter headed for success
Well... the plot thickens. The IPO has been delayed until the fall. Should be an interesting summer!
Re: Porter headed for success
It doesn't sound good to me...
I was not expecting those numbers based on what I was hearing from Porter's employees.
It's sad...
...but I hope we will hire their F/As if things turn bad
Sorry, it's a bad taste joke, I know...
I was not expecting those numbers based on what I was hearing from Porter's employees.
It's sad...
...but I hope we will hire their F/As if things turn bad
Sorry, it's a bad taste joke, I know...
Re: Porter headed for success
Don't be sad... Porter is not depending on the IPO to stay in business so we'll be keeping our good looking F/A's! I'm sure the expansion plans will have to be reworked though.AirBanana wrote:It's sad...
Re: Porter headed for success
I can't wait till Jazz buys out Porter. Deluce is greedy for money. So just watch and wait to see what the future holds. But Porter's Q400's would be a nice addition to our 30 that we are getting
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widebody300er
- Rank 1
- Posts: 25
- Joined: Sun Mar 15, 2009 4:09 pm
Re: Porter headed for success
Don't get me wrong guys and girls...the last think I would want is for another bankruptcy in this industry !! So good luck to all the Porter Cool Aid drinkers... 
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Jack Klumpus
- Rank 5
- Posts: 379
- Joined: Fri Jan 29, 2010 4:46 pm
- Location: In a van down by the river.
Re: Porter headed for success
Cool aid drinkers are at WestJet, at Porter, they're Steam Whistle drinkers
Get the facts straight.
Klumpus out.
Get the facts straight.
Klumpus out.
When I retire, I’ll miss the clowns, not the circus.
Re: Porter headed for success
longshanks,
love your profile pic or whatever we call that!
love your profile pic or whatever we call that!
Re: Porter headed for success
Selfishness. Our hiring commity is now doing a better job anywayValhalla wrote:we'll be keeping our good looking F/A's!
