The founder of Porter Airlines is dismissing speculation the upstart regional carrier is doomed to follow in the footsteps of the former Jetsgo, CanJet and now Harmony Airways, saying the fledgling airline is quickly gaining financial altitude.
While Porter isn't required to reveal its financial health as a privately held company, CEO Robert Deluce suggested to a Bay Street audience yesterday that his airline, based at the Toronto Island airport, is already enjoying a positive cash flow barely five months after taking to the skies.
"For a little less than 60 days now, we've been cash-flow positive," Deluce said yesterday at a transportation and logistics conference hosted by National Bank Financial.
"We think we are well on our way to long-term ... sustainable profitability."
Porter launched in late October from the Toronto City Centre Airport and currently offers several daily flights to Ottawa and Montreal - busy routes dominated by Air Canada.
Deluce's comments come a day after Harmony Airways, launched in 2002 by Vancouver billionaire David Ho, said it was pulling out of the scheduled airline business because of rising costs and fierce competition from Air Canada and WestJet Airlines Ltd.
Harmony, which will cease flights to Toronto tomorrow and all others April 9 and says it may continue as a charter business, attempted to offer a "premium" service - including meals designed by Vancouver celebrity chef Rob Feenie and free glasses of B.C. wine - at a time when most other airlines were cutting costs.
Observers noted that Porter, whose motto is "flying refined," is chasing after a similar market segment as it attempts to woo mostly business flyers away from Air Canada.
Case in point: Deluce yesterday offered conference attendees in Toronto a free round-trip flight on Porter.
"It's a tough market to make money in," said Karl Moore, a business professor at McGill University, who noted media reports and anecdotal evidence that Porter's flights are seldom full. "And what do they mean by cash-positive? That doesn't necessarily mean they're profitable."
Moore said it will be some time before Porter is out of the financial woods. "I think it will take them a year or two."
Nevertheless, Porter does have a few advantages over most airline start-ups - not the least of which is $125 million in equity backing.
Also, Porter's Q400 turboprops are cheaper and more fuel-efficient to operate than most of the planes flown by its competitors, meaning the airline needs fewer passengers to break even or make money.
More importantly, Porter has managed to get off the ground at the island airport without any direct competition from Air Canada's regional carrier Jazz, which flies only out of suburban Pearson airport after it was kicked out of its terminal at the airport last year by one of Deluce's companies.
Jazz tried to relaunch flights from the island, arguing unsuccessfully in federal court that the airport's operator, the Toronto Port Authority, has taken steps to ensure Porter has a "virtual monopoly" by guaranteeing the airline a majority of the available takeoff and landing slots.
Now Porter is facing more challenges from Air Canada, as well as from U.S. airlines and their industry associations, over its application to begin flights to New York next month.FAA docket
Deluce, meanwhile, says he is confident the U.S. Department of Transportation will grant Porter's application to fly to Newark Liberty International Airport. He has accused Air Canada of "bullying tactics" and taking its legal battle against Porter south of the border.
"They have been very proactive litigiously," he said yesterday.
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