0

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

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.

Making A Mountain Out Of A Volcano? Experts Don’t Think So
In April 1982, British Airways Flight 009 heading to Auckland from London flew into a cloud of dust and ash produced by an Indonesian volcano, causing all four engines to fail. Happily, the pilots were able to glide the Boeing 747-200 out of the ash cloud and restart three of the engines, allowing the crippled flight to land safely. At the time it was hailed as the longest glide in a non-purpose-built aircraft. In December 1989, KLM Flight 867 en route to Anchorage from Amsterdam flew into a normal looking cloud, which turned out to be filled with volcanic ash. Again, all four engines on the Boeing 747-400 failed. The crew eventually managed to restart the engines and land safely, but post-flight inspection revealed extensive damage to the windshields, internal aircraft systems, avionics and electronics. For most air passengers, these anecdotes from a CNN story explaining the dangers of volcanic ash clouds would be enough to quell any complaints about being ‘stranded’ in Venice for a few days. Volcanic ash contains particles with a melting point below that of an engine’s internal temperature. If they enter an engine during flight they will immediately melt, then rapidly cool as they travel through the turbine, sticking on the vanes and potentially stalling the engine. According to aircraft manufacturer Airbus, costly damage can also occur to aircraft surfaces, windshields and power plants, while ventilation, hydraulic, electronic and air data systems can also be contaminated. Want more? Airbus says sucking in volcanic ash can cause serious deterioration of engine performance due to erosion of moving parts and partial or complete blocking of fuel nozzles. Another danger of ash clouds is that they can’t easily be distinguished from regular clouds. As weather radar is not effective in detecting volcanic ash clouds, pilots rely on accurate forecasts of volcanic eruptions generated by a series of Volcanic Ash Advisory Centers located around the world. Millions of people fly safely over volcanic regions each year, which is just one more reason why it makes sense to err on the side of caution when scientists wave the red flag.

Come Insured Or Not, Says Cuba
The official position of the Cuban government is that as of May 1, any foreign visitor to Cuba who does not have a travel medical insurance policy from an insurer in their home country will be required to buy coverage from Cuban companies upon arrival. The Cuban announcement states that visitors will have to produce on demand “a policy, insurance certificate or travelling assistance card valid for the time span they will stay in Cuba.” However, according to Sunwing’s Stephen Hunter, this is not accurate. A Sunwing press release issued April 22nd indicates that, after meetings with senior Cuban officials, it has been established that a provincial health card is sufficient proof of health coverage for Canadians. Still, travel health insurance is a wise investment no matter what the destination.

Best Of A Bad Lot: U.S. Airlines Rated
There was some good news in the annual ranking of U.S. airlines, dubbed the Airline Quality Rating. As Aviation News reported, of the 17 carriers rated in both 2008 and 2009, all but one improved on its 2008 rating. The exception was Alaska Airlines, which plummeted from 5th to 11th. Four major categories make up the AQR: on-time performance, baggage handling, customer complaints and denied boarding. The top four carriers are: Hawaiian Airlines, AirTran, JetBlue and Northwest. American Airlines placed 9th, United 11th and Delta 13th.

By: Bruce Parkinson
Bruce Parkinson is a travel industry journalist and regular contributor to Takeoffeh.com as well as sister company, OpenJaw.com

Photo Credits: flyporter.com, warrengoldswain, gocuba.ca, wikimedia.org




 

Sign in to comment.