Porter is looking to sell its terminal at the island airport in downtown Toronto.
According to a senior executive at Porter Aviation Holdings, who said the move was unconnected to the push to expand the airport, the company plans to continue to use the facility.
“A sale lease-back is going to allow Porter Aviation Holdings to really focus in on our core airline business,” said Michael Deluce, the executive vice-president and chief commercial officer. “The proceeds from the sale will help invest in growth opportunities going forward.”
He would not confirm that the company expects to get at least $500-million, a figure cited by the Wall Street Journal, which broke the story, calling it “speculation.” According to the Porter’s 2010 prospectus, the terminal cost $49-million to build.
The move comes four years after Porter shelved an initial public offering, citing market conditions. As the airline struggles to persuade the city to allow it to fly jets, there has also been a chorus of questions from critics about the financial health of the company. Mr. Deluce denied, though, that the sale indicated a cash-flow problem.
“No, it’s quite the opposite,” he said. “Porter’s successful and sustainable and this transaction’s intended to further strengthen our business and it will position us for continued growth.”
According to Geoffrey Wilson, CEO of the Toronto Port Authority, which oversees the airport, the agency has “no concerns about the potential sale of the terminal” and noted that the TPA had not funded the terminal’s construction. He wrote in an e-mail that the port authority was first notified that Porter was exploring a sale of the terminal in April, which is when city council most recently debated the expansion issue.
“The sale of the terminal sets up a scenario whereby Porter can focus on airline carrier operations as one of the airport’s lead airlines,” he wrote.
“TPA can focus on airport and airfield operations and the new owner can focus on terminal operations. This diversifies the ownership structure and will ideally ensure greater ability to invest in all areas of [the airport], which is positive news for travellers.”
In a news release announcing its desire to sell, Porter noted that there is a “global trend” of using experienced operators to run terminals.
It added that the terminal, which is currently operated by Porter subsidiary City Centre Terminal Corp., could be expected to see “continued and focused development” of shops and concessions.
The news comes as the airline is engaged in a high-stakes push to get approval for lengthening the runways to allow for jets. The politically controversial idea could allow Porter to fly to destinations farther away.
This spring, Toronto city council approved a framework that could ultimately lead to airport expansion, but set a long list of conditions that would have to be met.
The process almost immediately appeared stalled, with the city and TPA arguing over whether it was necessary to set caps on the numbers of passengers and planes before anything else. The port authority appeared to win that dispute, with the city recently agreeing to participate in an environmental assessment without a deal on caps. The expansion issue is not expected to come back to council until some time next year.
Mr. Deluce called Friday’s announcement “not linked in any way” with the push to expand the airport. “Obviously, this is a transaction that’s independent of our expansion plans,” he said.