Porter Aviation Holdings Inc., the biggest operator of flights at Toronto’s island airport, is working to sell and lease back its passenger terminal this year to raise cash.
Proceeds from any potential sale of the facility at Billy Bishop Toronto City Airport would go to “continued investment in the airline’s growth,” closely held Porter said today in a statement. The airline hired Barclays Capital Canada and RBC Capital Markets as advisers.
“This could be up to a four-month process,” Executive Vice President Michael Deluce said today in a telephone interview from Toronto.
Porter owns most of Billy Bishop’s takeoff and landing slots, with the rest held by Air Canada, the country’s largest carrier. Both airlines fly turboprops from the airport, which is favored by financial professionals for proximity to downtown and flights to U.S. cities including Chicago and Boston.
Billy Bishop’s terminal “is a piece of real estate on our balance sheet that was a non-core asset,” Deluce said. “At the core we are airline operators. We’ve achieved everything we needed with the terminal. A focused operator would take the terminal and the customer experience to the next level.”
Porter Chief Executive Officer Robert Deluce, the airline’s founder, unveiled plans last year to add as many as 30 Bombardier Inc. CSeries jets, in an order worth as much as $2.1 billion to help add longer-range flights. Jet are now banned from the airport.
While there is “no linkage” between a terminal sale and the conditional agreement to buy CSeries jets, the transaction “would assist in that process,” said Michael Deluce, who is the CEO’s son. “Having the sale and leaseback done would only strengthen us to pursue CSeries growth or other growth in the future.”
Initial interest by potential buyers has been “very strong,” Deluce said, citing “positive feedback” from investors such as pension and infrastructure funds. He declined to identify any suitors, saying, “The infrastructure and airport and pension space is more than Canada, but there is strong Canadian interest as well.”
Porter has no plans to revive four-year-old plans for a public offering, Michael Deluce said. He declined to provide financial details of the company’s operations, saying only that “Porter is a successful and sustainable” airline.
Billy Bishop served about 2.3 million passengers last year, about 88 times as many as used the airfield when Porter began operating in 2006. Traffic may approach 2.4 million this year, the Toronto Port Authority said in its 2013 annual report.
The airport sits on a Lake Ontario island about 100 meters (328 feet) from Toronto’s downtown waterfront. The Toronto City Council’s executive committee voted in December to defer approval of a runway expansion proposal that would allow jets to use the airport.