Marie,

 The financial statements provided by Porter, as of last March 31 demonstrate it's in very precarious financial situation.

* 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.

* Working capital deficit ($11,846,000 as of December 31, 2009) deteriorated to $33,467,000 by 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?

Obviously, with the failure of its IPO, Porter managed to find some private source of money to keep operating a little longer.

But Porter is canceling flights, and discounting fares, to improve its passenger load factors, but that can't be a viable way to get out of the financial box it's in.

Worse, there are a number of covenants on their loans that are already violated, or soon will be, if its financial condition is anywhere near what was disclosed to March 31.

While we'd love to win this by actually getting the Tripartite Agreement constraints placed on the airport by the City enforced,as the mayoralty candidates are now promising to do, we won't mind if Porter fails because it couldn't sell enough tickets at a price high enough to be viable.

What its failure would provide is an opportunity to revisit the whole idea of a commercial operation out of the Island Airport.

As Air Canada has abandoned the Island Airport once before, it's likely it would do so once again, once it has ridded itself of pesky Porter - for the same reasons - it is inefficient to operate out of two locations when one will do: the market served by the Island Airport will use Pearson if the alternative isn't available, particularly with the forthcoming rail link.

Of course, other carriers could jump in - we'd work hard to make that as unattractive as possible.

We've experienced the damage Island Airport expansion has done, and is continuing to do.

And the political support that Porter has been able to muster will surely dissipate once Porter's no longer around, and politicians realize what a mess they've allowed.

Brian Iler