RE: Getting a true picture of Porter's profitability.

Hi Mr. Kotyk,

Further to our discussion, you are correct that despite Porter having operated without competition their loads are still poor. However, as I've tried very hard to explain, their loads must be viewed in context of the reality that they have more than doubled their fleet over 1 year.

This places huge downward pressure on load factors because of the influx of available seats not being met "at the same rate" as an increase in demand.
Here's an analogy to hopefully explain why Porter's "low" load factors need to be viewed in context with their expansion - If a developer is selling units in a high-rise Condo and keeps adding new floors (with multiple units per floor) while people are moving in, then the numbers would tell you that the building is only half full and continues to be only half full year over year. It is deceiving to state that the occupancy or load is poor simply because there is no acknowledgment of the very relevant change in capacity.

The undeniable number in all of this is that year over year, Porter has increased their passenger numbers from 448,783 (2008) to 912,614 (2009). If after 1 year of maintaining a constant amount of available seats, Porter cannot increase their load factors, these same concerns would be relevant and warranted.

Whether Porter has expanded too quickly is certainly debatable and opinions on the effects that future competition will have also raise valid concerns.
However, you should acknowledge that Porter has industry leading break-even load factors at about 49% (how many people they need to carry to make money on a flight), compared to 71% at WestJet and 83% for Air Canada. Its break-even load factor is well below the 74% for Southwest and 73% for JetBlue (2 of the most successful American carriers) Most recently, Load factor was 47.0% in 1Q2010, a 5.7 point increase over the same period in 2009.

I'm not an economist, but I have studied Airline Economics in University. I also worked for Air Canada and was given "insider" insight into the very numbers we are discussing
now.

With respect to the 4th Quarter 2009 profitability, the most relevant comparison to that total is the one for the previous 4th Quarter (2008). In 2008 Q4, they lost 11.2 M, in 2009 Q4 they made 455K. The trends are certainly pointing upwards and this has been largely ignored on this blog.

Hope this clarifies my position.

Take Care!
Joe