Porter Aviation secures loan from QIC

[8895]

https://realassets.ipe.com/news/porter- ... 77.article

Thoughts? Sale leaseback cash drying up or smart financing?

[CaptDukeNukem]

https://realassets.ipe.com/news/porter- ... 77.article

Thoughts? Sale leaseback cash drying up or smart financing?

Did you get a pay cheque today? I did. Proceed as planned.

[dontcallmeshirley]

https://realassets.ipe.com/news/porter- ... 77.article

Thoughts? Sale leaseback cash drying up or smart financing?

Thoughts? Use other people's money to expand faster and make more money for yourself.

Business as usual for cash-positive businesses. I only get concerned when companies are unable to get loans... cough couch Flair.

[ashtray]

"QIC Private Debt Infrastructure has reached financial close on a loan to a wholly owned subsidiary of Porter Aviation Holdings Inc. The funding supports Porter’s overall growth as it continues expanding its presence with new routes across North America - this includes development of the first commercial aviation terminal at Montreal Metropolitan Airport, as well as working capital for the company."

Some of this debt financing will be used to increase working capital. Working capital is the amount of cash and other current assets a business has available after all its current liabilities are accounted for. No mention of the total amount loaned to Porter.

In July 2021, Porter was able to borrow up to $250 million from the Federal Government under the Large Employer Emergency Financing Facility (LEEFF) program offered to companies during Covid-19. The first 20 percent of the loan ($34 million) was secured against Porter's assets and the interest rate charged is the same as the interest rate of the Porter’s existing senior secured debt. The remaining 80 percent of the loan ($216 million) is unsecured and comes with an increasing annual interest rate bump. On July 1, 2024, the interest rate on the unsecured portion of the loan will be 12 percent. As of February 4, 2024, all of the $250 million loan amount had been withdrawn. On July 1, 2025, the interest rate will increase to 14 percent.

The duration of the unsecured facility will be five years, so Porter will need to re-finance this loan by July 1, 2026. The duration of the secured loan facility will match that of the borrower’s existing secured debt.

The challenge for Porter is this: Growing airlines consume considerable cash. QIC's loan to PAH is likely secured against the new terminal at MMA. To date, Porter has performed sale and leasebacks on its jets in an effort to raise capital. This increases future operating expenses, but more importantly, Porter is unable to use the jets as collateral when they look to re-finance the $216 million in July 2026. In 2022, PAH performed sale/leasebacks on some of their Q400s. Sale/leasebacks on the remaining are an option, but again, increase operating costs, as a third party is now part of the cost structure.

[Realitychex]

https://realassets.ipe.com/news/porter- ... 77.article

Thoughts? Sale leaseback cash drying up or smart financing?

Thoughts? Use other people's money to expand faster and make more money for yourself.

Business as usual for cash-positive businesses. I only get concerned when companies are unable to get loans... cough couch Flair.

Even Jetlines gets loans.

[Realitychex]

https://realassets.ipe.com/news/porter- ... 77.article

Thoughts? Sale leaseback cash drying up or smart financing?

Thoughts? Use other people's money to expand faster and make more money for yourself.

Business as usual for cash-positive businesses. I only get concerned when companies are unable to get loans... cough couch Flair.

Even Jetlines gets loans. Loans cost money. That increases unit operating costs.

There is nothing low cost about the Porter operation. High capital cost aircraft operating with just over 80% of the utilization achieved by US airlines operating similar sized aircraft over the same ASL,

And keep in mind Porter’s E2 asl is longer than both Delta and AA’s in 2019. Indeed, the only airline in the US with a longer ASL than Porter is United. And yet Porter uses a 132 seat jet. WS hasn’t acquired a 132 seat jet since 2011.

All this wouldn’t matter as much if Porter was attracting a huge premium in yield, operating head to head out of AC’s fortress hub and core markets. But they aren’t. And chasing sun routes in the winter isn’t going cause that pattern to change much

Equity investment is far preferable, but much harder to access if the company is already churning through cash with results that make an IPO impossible.

Airlines need to show a history of profitability before going public and having the ability to access the mountain of cash available via that source.

WS was public with 10 airframes and consistent profits after 4 years. Porter’s E2 operation has 35 airframes after less than 18 months and is burning through cash.

June 26, 2024 8:50 AM EDT
TORONTO, ON / ACCESSWIRE / June 25, 2024 / Canada Jetlines Operations Ltd. (Cboe CA:CJET) ("Canada Jetlines" or the "Company"), a leisure carrier which also offers charter and ACMI (Aircraft Crew Maintenance Insurance) services, today announces that it has closed a non-convertible term Loan Agreement for a $2,000,000 loan (the "Loan") with an arm's length third party corporation. The terms of the Loan include:

the Loan will be advanced in tranches of $200,000 with the full amount to be advanced on or before July 2, 2024;
the Loan bears interest at the rate of 12.00% per annum, payable monthly, and has a maturity date of October 31, 2024;
the Borrower shall pay the document closing costs of the lender; and
the Loan is unsecured.

The Company intends to use the net proceeds of the Loan to repay the remaining principal amount owing to Square Financial Investment Corporation pursuant to its $2 million loan announced on May 10, 2024 and for general corporate and working capital.

[8895]

https://realassets.ipe.com/news/porter- ... 77.article

Thoughts? Sale leaseback cash drying up or smart financing?

Thoughts? Use other people's money to expand faster and make more money for yourself.

Business as usual for cash-positive businesses. I only get concerned when companies are unable to get loans... cough couch Flair.

Even Jetlines gets loans.

Hey jimbo