Porter Plans Expansion With Proceeds of Share Offer

Porter Aviation Holdings Inc., the owner of a Toronto-based airline formed in 2006, plans to use proceeds from an initial public offering to expand, anticipating a rebound in passenger traffic as the economy recovers.

Porter targets about C$120 million ($118.5 million) from the sale, the Globe and Mail reported yesterday. The company’s filing today with Canadian regulators didn’t say how much money it would raise.

Porter may in the next year buy as many as “nine additional aircraft, including the acquisition of two new aircraft scheduled to be delivered” this month, the company said in the filing. The airline now operates a fleet of 18 turboprop planes.

“A recovery in the North American and global economies, combined with reduced capacity, has the potential to improve carrier’s pricing power and support improved profitability,” the filing showed.

Passenger traffic may rise 4.9 percent in 2011 and 4.8 percent the following year, according to a forecast from Transport Canada, the federal government agency that oversees the airline industry. The airline said it flew 913,000 passengers last year, up 65 percent from 2008 as it added planes and routes.

Airlines in Canada and the U.S. cut capacity last year, Porter said in the filing. Passenger traffic in Canada may have declined 6 percent in that period, though a recovery is anticipated this year, Porter said, citing Transport Canada statistics.

‘Opportunities for Growth’

Porter said it had a loss of C$4.61 million in 2009 on revenue of C$151.2 million as the recession cut passenger traffic.

“Opportunities for continued growth” will come through expanding its route network in eastern Canada and the U.S., according to the filing. Porter may seek code-share agreements, which are arrangements to provide flights and services for other carriers, in 2011.

Porter spokesman Brad Cicero declined in an e-mail to comment on the filing.

Porter, based at the island airport in Toronto’s harbor, serves 11 cities including Ottawa, Montreal, Boston, Chicago and the New York City area using Bombardier Inc. Q400 planes.

The airline has the lowest “breakeven load factor” among Canadian carriers at 49 percent. WestJet Airlines Ltd., based in Calgary, needed to fly its aircraft 71 percent full and Air Canada 83 percent to break even, according to the filing. Porter had a load factor of 48 percent last year, the filing showed.

Long-Term Debt

Porter’s long-term debt was C$322.7 million at the end of December, according to the filing.

The airline was started with C$125 million from investors including Borealis Infrastructure, which invests for the Ontario Municipal Employees Retirement System, Canada’s No. 4 pension fund.

Other investors include EdgeStone Capital Partners, GE Asset Management and Dancap Private Equity Inc.

Don Carty, the former chief executive officer of AMR Corp.’s American Airlines, is Porter’s chairman and an investor.

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