Porter to Get Plane Financing to Challenge Air Canada
June 12 (Bloomberg) -- Porter Airlines Inc., a startup commuter carrier, will arrange financing by September to more than double its fleet as it expands on routes dominated by larger rival Air Canada.
``We purposefully raised enough equity to make sure we had long-term sustainability,'' Chief Executive Officer Robert Deluce said in an interview yesterday. ``We expect we'll have in place by September the financing for airplanes five through 10.''
The financing will let closely held Porter buy six turboprops, bolstering the four with which it began flying in October. Toronto-based Porter now serves Montreal and Ottawa, and will add Halifax, Nova Scotia, on June 29. The company aims to start flights to Newark, New Jersey, later this year.
``While the numbers right now may be small, we believe Air Canada is losing frequent traveling business customers to Porter,'' Cameron Doerksen, a Versant Partners analyst in Montreal, said in a June 4 research note. That impact ``could become more material'' if Porter succeeds in adding more destinations in Canada and the U.S, he said.
Porter, which offer free newspapers, snacks and drinks at its Toronto boarding lounge and onboard, first turned a profit last month, and June is ``already looking substantially ahead of May,'' Deluce, 57, said in an interview at Toronto City Centre Airport, located on an island near the city's downtown.
May Borrow Against Aircraft
Deluce raised C$126 million ($118.7 million) for the four 70-seat Bombardier Q400s to start the airline. Porter may borrow against those planes to buy the next six, Deluce said.
Newark flights will require U.S. Transportation Department approval of a transborder license, which has been held up by objections from carriers including regional airline Jazz Air LP. Jazz is controlled by Air Canada parent ACE Aviation Holdings Inc.
Porter's agreement with the Toronto Port Authority to operate at City Centre Airport is a ``virtual monopoly,'' Jazz attorney Earl Cherniak said at a hearing last month.
There's ``no good reason for us not to be granted those licenses, and we will be granted those licenses,'' Deluce said yesterday. ``We don't think they can delay much longer.''
US Airways Group Inc., the seventh-biggest U.S. airline by traffic, received preliminary approval to fly from the Toronto airport in March. It said at the time that it has no immediate plans to start flights there.
Porter aims to add Boston, Chicago, Philadelphia and Washington D.C. to its list of destinations once it secures its transborder license, Deluce said.
The airline is also setting up a frequent flyer program, expected by early autumn, to lure regular Air Canada flyers away from that carrier's Aeroplan loyalty program, Deluce said.
Source - Bloomberg