Community Air Press Release:

Porter's IPO (Part 2): Questions about Q400 and Fuel Efficiency

Porter’s Preliminary Prospectus, released recently for its intended Initial Public Offering,
refers repeatedly to the fuel efficiency of the Q400, the only aircraft Porter flies.
We were curious about this, given the following:
Section 56 of the Ontario Securities Act states,
“A prospectus shall provide full, true and plain disclosure of all material facts
relating to the securities issued or proposed to be distributed …
CommunityAIR had written to Porter CEO Bob Deluce on April 21, 2009 on the
issue of the Q400’s fuel efficiency, pointing out that, compared to the aircraft used
by Porter’s competitors on the Toronto-Ottawa/Montreal triangle, it was fuel
inefficient. The email is below.
From then, Mr. Deluce had ceased to laud the fuel efficiency of his planes – until the recent
release of the Preliminary Prospectus.
The issue is what the appropriate comparison is – for an aircraft to be more fuel efficient,
the question is, “As compared to what?”
We note that that the Q400 manufacturer Bombardier, on its website “Q400 Green
Machine” www.q400.com/q400/en/green.jsp, claims 30-40% less emissions –
presumably the source for Mr. Deluce’s past declarations – and the statements in this
Preliminary Prospectus:
“Each Bombardier Q400 aircraft produces 30-40% less emissions on routes where it
has replaced similar capacity older generation and/or 50-seat jet aircraft [our
emphasis].“
In other words, the Q400 is cleaner than older and smaller aircraft – by a lot (if we’re to
believe Bombardier – the actual data is not available on their website).
That’s not the right comparison, to our mind. And not the comparison that the Preliminary
Prospectus suggests is being made.
As the UK airline Flybe’s calculations show:

1. Using International Civil Aviation Organization
data, compared to modern jet aircraft that compete with Porter’s Q400, the standard Q400 is
precisely in line with them. But given the reduced number of seats in Porter’s 70-seat Q400
(owing to the short runway at the Island Airport);

2. As compared to the standard 78-passenger Q400,
Porter’s aircraft are, in fact, LESS efficient, on a per passenger basis.
And as the Preliminary Prospectus makes clear, Porter’s planes are, on average, less than half
full, compared to its competitors who have load factors in the high 70% or more. Porter’s
Q400 greenhouse gas emissions per passenger-kilometre (and therefore its fuel
consumption) are therefore far greater than its Pearson-based competition.
These statements in the Preliminary Prospectus are therefore misleading, and do not, in our
view, meet the standard required by the Securities Act for “full true and plain disclosure”:

At Page 7:
“The Q400 is estimated to use as much as 23% less fuel than comparable jet
aircraft currently in operation ...”

At Page 14:
“In an effort to manage operating costs, airlines have increasingly focused on
the fuel efficiency of their aircraft and are continually looking at cost
effective opportunities to refurbish their fleet with more economical aircraft.
Manufacturers have responded to this demand by developing more fuel
efficient aircraft such as the Bombardier Q400 turboprop aircraft (the
“Q400”). Optimized for short-haul airline operations, the Q400 offers lower
costs relative to similarly sized mainline jets through reduced fuel burns
(attributed to the new Pratt & Whitney PW150A turboprop engine)…”

At Page 26:
“Of particular importance in management’s selection of the 70-seat Q400
was the aircraft’s low operating costs when compared to regional and
mainline jets for short-haul flights. The Q400 uses as much as 23% less fuel
than 70-seat jet competitors currently in operation.” [None of Porter’s
competitors in its key Toronto/Montreal/Ottawa market use 70 seat jets: Air
Canada primarily uses Airbus 319 and Airbus 320 aircraft and Westjet uses
Boeing 737 and Airbus 320 aircraft ]

This is CommunityAIR’s email to Porter’s Bob Deluce:
From: Brian Iler
Sent: April 21, 2009 8:10 PM
To: Deluce@Flyporter. Com Robert. (robert.deluce@flyporter.com)
Subject: Fuel Efficiency and the Q400
Bob – once again you were quoted today saying: “But the big plus is that it burns 30
- 40% less fuel than do comparable narrow-bodied regional jets.”
How’s that?
This UK site: www.flybe.com/pdf/eco_labels_make_own.pdf uses ICAO
emissions data.
Fuel efficiency correlates directly with CO2 emissions, of course.
The 78-passenger Q400 is absolutely in line with those aircraft used by your
competitors on short haul flights such as the Airbus 319 and Boeing 737 for CO2
emissions on a passenger seat basis for a 500km flight:
Here is Flybe’s analysis:
Standard Q400 with 78 seats: Total fuel consumed 1044kg and CO2
emitted/passenger 42 kg
Porter Q400 with 70 seats owing to the short runway at the Island Airport:
Total fuel consumed 1044kg and CO2 emitted /passenger 46.8 kg – higher
owing to the reduced number of seats
Airbus 319 with 156 seats: Total fuel consumed1961 kg and CO2 emitted
/passenger: 40
Boeing 737-300 with 149 seats: Total fuel consumed 2002kg and CO2
emitted /passenger: 42
These per passenger figures assume 100% of the seats are filled.
What these figures say is that your Q400s are more than 11% LESS fuel-efficient
than competitor jets.
Highly fuel INEFFICIENT, no?
Your thoughts?
Mr. Deluce did not respond