Porter Airlines Terminal Sale – The Sale of the Century?
Are reports of Porter Airlines terminal sale a sale of its airport terminal or a sale that’s terminal in another sense? What are media leaks telling us?
The Latest on the Porter Airlines Terminal Sale
On December 15, 2014 Retuers News Agency reported that three unnamed but knowledgeable sources claimed Porter Airlines is close to selling its terminal at the Toronto Island Airport aka Billy Bshop Toronto Centre Airport (BBTCA).
Background on the Porter Airlines Terminal Sale
Porter Airlines first announced the sale in late August. At that time Michael Deluce, Porter vp and Deluce scion, stated that the sale had nothing to do with Porter’s plans to expand the airport but rather to expand Porter. It was an admission that Porter Airlines would not contribute it own capital on the hundreds of millions required to upgrade the airport for for the airlines business scheme.
By late September the Globe and Mail reported the sale was nearly “ready to fly”. The report, citing two unnamed sources, claimed that the deal could close by the end of October. Interestingly, the unnamed sources seemed more concerned in leaking information on how much the terminal was worth, how much income it could generate and who might be interested in purchasing it, in short, a sales pitch.
The Porter Airlines Airport Terminal Sale – The Present
Reuters’ December 15th announcement, cited three unnamed sources, included the names of two bidders, pension fund manager Alberta Investment Management Corp (AIMCo) and Macquarie Group Ltd MQG.AX, both of whom are expected to respond with offers during the week of December 15.
At least one observer wondered about the Reuters’ report, questioning the purpose of privacy leaks from the unnamed sources, wondering why a current Porter shareholder, OMERS that invests in infrastructure, isn’t bidding and noting that the airport expansion plan with its tremendous costs is not a done deal. Indeed, with only 19 years left on the current Tripartite Agreement, which prohibits jets, why any investor would gamble the reported $500 million cost on an asset with an otherwise depreciating value seems a mystery.
Also unknown is whether city council has been informed, from the time Porter Airlines first notified the Toronto Port Authority in April to Porter’s late August public announcement, as required by council’s motion on April 1, 2014 and if councillors would consider the ramifications of the sale within the context of the ongoing viability of the airport.
After all, why wouldn’t Porter hold on to an asset that brings in $60 million annually or borrow against it if it needs capital for expansion?