Porter Aviation Puts Billy Bishop Airport Terminal on Auction Block
The Wall Street Journal tweeted the story at 8:45 a.m. Friday, August 29. Porter Aviation Holdings put out the media release at 11:45 a.m. the same day. Two minutes later, the Globe and Mail got in on the act. For the next few days, the story had legs.
The official line from Michael Deluce was “Porter’s successful and sustainable and this transaction’s intended to further strengthen our business and it will position us for continued growth.” In short, the airline wanted cash to expand. ‘Not so fast’ was the reaction from some in the airline community. Desperately seeking cash and death watch were opinions counter Michael Deluce. No doubt the truth will out but in the meantime caveat emptor to propsective buyers. Sound answers to the following questions might help.
- Porter built the terminal at a cost of $49 million and is reported to want $500 million. What’s a fair price?
- Why does Porter needs cash to further strengthen a business that is a going concern?
- Under the current Tripartite Agreement, the lease on the airport runs out in 2033. What guarantees are there that the new owner will see an extension to the lease?
- If there is no lease extension, does the buyer need to recoup costs and make a profit in the lease’s remaining 19 years?
- With the port authority already charging a $20 Airport Improvement Fee to pay for the tunnel, what room is there for an additional passenger fee?
- Porter currently holds 85% of the money-producing slots and considered opinion is that with competition from Air Canada and WestJet, Porter’s traffic will fall off. 2014 07 10 COPA Porter Airline’s outlook grows more difficult in the fast-changing Canadian landscape If Porter should fail, what guarantee is there that other airlines will take up all of the slots?
- A newly elected Toronto City Council won’t vote until next year on the port authority’s current initiative to expand the airport. Why would a prospective buyer commit before then?
Traditionally, the airport has served the Eastern Triangle, Toronto-Ottawa-Montreal, and the New York area and airlines have managed as long as there was little or no competition on these routes. Unless the port authority, which doles out the slots, continues to favour Porter with its 85% allotment and Porter continues in business, the terminal sale stands to be a game-changer for the new owner.