Porter to Buy Jets in Long-Haul Challenge to Air Canada

Porter Airlines Inc., the Canadian carrier that now flies only turboprops, plans to add its first jets to start long-haul flights in an expanded challenge to Air Canada and WestJet Airlines Ltd.

Los Angeles and Vancouver will be among the new cities served beginning in 2016 with the conditional purchase of at least 12 Bombardier Inc. CSeries airliners, Toronto-based Porter said today in a statement. The 107-seat planes are valued at about $870 million at list prices.

Buying jets breaks with closely held Porter’s strategy of making shorter flights with Bombardier Q400 turboprops from close-in Billy Bishop airport in Toronto. Flying the smallest CSeries model, the CS100, at Billy Bishop would require lengthening the runway, lifting the airport’s ban on jets and overcoming opposition from nearby residents.

With turboprops and routes such as Toronto to Newark, New Jersey, Porter isn’t a broad competitor for Canada’s two biggest airlines. Air Canada has an international network as well as domestic routes, and WestJet serves Caribbean tourist destinations along with U.S. and Canadian cities.

Porter said today it will make a request “shortly” for two amendments to permit CS100s to fly to Billy Bishop, which is on an island near downtown Toronto. They would permit the use of that model and add a “modest” 168-meter (551-foot) extension over water to each end of the main runway, Porter said.

Photographer: Norm Betts/Bloomberg

Porter Airlines Inc. Chief Executive Officer Ron Deluce stands for a photograph with a Bombardier Inc. CS100 model during a press conference at Billy Bishop Toronto City Airport in Toronto. Close

Porter Airlines Inc. Chief Executive Officer Ron Deluce stands for a photograph with a... Read More

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Photographer: Norm Betts/Bloomberg

Porter Airlines Inc. Chief Executive Officer Ron Deluce stands for a photograph with a Bombardier Inc. CS100 model during a press conference at Billy Bishop Toronto City Airport in Toronto.

Political Review

No changes will be considered “until a determination is first made by the elected representatives on Toronto City Council,” according to a statement from the Toronto Port Authority, which runs the facility under an agreement with the city and Canada’s government. The accord bans jets until 2033.

The agency said today it “takes no position on Porter’s business aspirations.”

The longest of Billy Bishop’s three runways stretches 3,998 feet. That’s shorter than the minimum landing distance of 4,400 feet for the CS100, according to a Bombardier fact sheet provided at a press event last month in Mirabel, Quebec.

Air Canada fell 1.5 percent to C$3.18 at the close in Toronto, while WestJet slid 1.3 percent to C$24.61. Bombardier, which announced the CSeries order in December without identifying the buyer, rose 0.5 percent to C$4.09.

The planemaker is poised to conduct the CSeries’ first flight by the end of June, a commitment that Chief Executive Officer Pierre Beaudoin reiterated to reporters in Montreal yesterday. The goal is six months later than planned, a delay the company attributed to unspecified issues with suppliers.

Less Fuel

Bombardier projects that the CSeries will cost about 15 percent less to operate and burn about 20 percent less fuel than existing competitors. The jet will feature composite materials and the new geared turbofan engine from United Technologies Corp.’s Pratt & Whitney.

Bombardier has amassed 180 firm orders for the CSeries family, and the company is on pace to meet a goal of 300 by the time the jet enters service in mid-2014, Beaudoin said March 21.

For Porter, adding the CSeries will put destinations such as Florida and the Caribbean as well as Canadian cities includling Winnipeg and Calgary within reach. The Q400’s maximum range is 1,014 nautical miles (1,878 kilometers), while the CS100 can fly as far as 2,950 nautical miles, according to Bombardier.

Porter’s order includes options for another 18 CS100s, as well as purchase rights on six Q400s. Should all purchase rights and options be exercised, the value of the deal would increase to about $2.3 billion at list prices, Bombardier said.

Porter doesn’t anticipate difficulties in financing the purchase, CEO Rob Deluce said at a press conference in Toronto.

To contact the reporters on this story: Frederic Tomesco in Montreal at tomesco@bloomberg.net;

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net

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