This Weeks Travel News: Porter’s IPO Prospectus Reveals Not-So-Rosy Picture

Porter’s IPO Prospectus Reveals Not-So-Rosy Picture
Privately-owned airlines don’t have to reveal their financial situation, so we’ve always had to take Porter Airlines founder Robert Deluce at his word when he claimed the carrier was profitable, even in a fiercely competitive market. But Porter is looking for new funding — $120 million of it – through an initial public offering, so it had to take the wraps off its finances. What was revealed was what most industry insiders have believed for a long time: while Porter has found a willing audience for its high-service, high-convenience offering from Toronto’s Island Airport, it isn’t making a profit. In 2009, Porter lost $4.6 million on revenues of $151.2 million. That number can be added to the $23 million the airline lost between its launch in October 2006 and Dec. 31, 2008. Porter’s initial launch was backed by $125 million in equity financing from shareholders. It started out with just two Bombardier Q400 turboprops – by the end of this month it will own 20 of them. Unlike Air Canada and WestJet, Porter has never had to reveal its load factor either – the percentage of seats sold on flights. Opponents of Porter’s Island Airport expansion have used spotters to estimate loads, and they have maintained that most flights are less than half full. Turns out they were right: in the first quarter of this year load factor hit 47%, up from 41% in the same quarter in 2009. As Brent Jang reported in the Globe and Mail, much of Porter’s competitive edge, particularly in the Toronto/Montreal/Ottawa triangle, can be attributed to its monopoly on the island. That may change later this year, with Air Canada Jazz making plans to move back in. Will Porter’s prospectus picture impact its ability to raise funds? Quite possibly not: the carrier’s P&L numbers aren’t really that bad in comparison with the rest of the industry, and there are plenty of government and Bay Street high flyers loath to lose their leather seats and Porter lounge espressos.