Porter - interesting take from aeforum

[Squid]

Posted: Jun 13 2008, 05:41 PM

Unless the YTZ authority is fibbing, which would be tantamount to fraud, given the airport is taxpayer owned and many fees and charges are on a per head basis, the Island had a total of 45,000 passengers thru the facility in April 2008.

Porter ran 89,040 seats in the month of April thru YTZ.

In order to believe the premise Porter is profitable, and therefore, a sustainable venture, you must believe that with, at best, the same fare structure as AC and WJ, with very significantly higher unit costs than WJ, and higher than AC mainline service, Porter has magically produced a break-even load factor well below 50%, or at least 15% point below the next lowest North American BELF at 64%, below LUV, below WJA, way below Horizon who have a fleet of Q400's, and about 35% points below the industry average......at a time when oil is $125 a bbl.

Porter is achieving no significant yield premium on the routes over airlines operating out of YYZ. Check the fares yourself. They may actually be a little lighter than AC's on the routes.

So.....do the math. The same yields, far higher unit costs and loads 30% pts below either of the other carriers. How do ya think the rasm looks? I'll tell you. Ugly.

On a fully allocated basis, which is the only way to look at it, Porter is bleeding cash.

Does expansion mean it's profitable? Only if you believe expansion was profitable for Jetsgo, CanJet, Royal, Canada 3000 and about another 50 airlines who have tried the expand into profitability strategy..........you know, the "lose a little on every flight, but make it up on volume" strategy.

How long will it last? Like Jetsgo, as long as there is cash to pay the daily bills, and not a day longer. You tell me what

[sanjet]

I understand that we can rely on the 45000 pax through terminal since those numbers can be found public. Im just curiouse how you got the capacity figure for that month?

[dashx]

I don't suppose having the Esso franchise on the island is helping them?

[EI-EIO]

If BBD is to be believed, they could still be profitable...
http://www.bombardier.com/q400/en/turbo.jsp

(ironically, if Miller hadn't sabotaged the bridge, Deluce wouldn't have gotten a $30m settlement to bankroll his launch...)

[V1RotateV2]

I don't know where you got the available seats figures, but even if they are correct (with a little patience, a POE schedule and knowing that the the Q400 has 70 seats you could work it out) the cost structure of Porter is very different from other airlines.

US carriers usually start up with huge loans and leased planes, which put them deep into red ink from day one and then hope for the best outcome out of their business model. Carriers out of YYZ have huge overhead just for operating out of what has been determined to be the most inefficient airport in the world.

Porter caters to business travelers, who will pay a premium for good service and convenience.

Anyway, I guess that we can wait a few months and find out what the real situation is. Either an IPO will put all the information out in the open or the profit sharing for the employees will give an indirect indication of what the audited results were for the past year.