Porter Airlines Inc.'s chief executive officer says the three-year-old company is able to break even when its planes are half empty, giving it a competitive edge over rival carriers.
Robert Deluce, who has served as CEO since Toronto-based Porter launched regional service in October, 2006, said his rivals need to fill a lot more seats on their aircraft to avoid losing money.
Mr. Deluce disclosed yesterday that the privately owned carrier's load factor, or the proportion of seats filled by paying customers, had to reach only 49.3 per cent last year for Porter to break even.
While he did not give details on Porter's actual financial performance in 2009, he said the regional airline was profitable on a "fully allocated basis" from mid-2007 through 2008, issuing profit-sharing cheques to employees for both 2007 and 2008.
He estimated last year's break-even load factor to be 71 per cent at Calgary-based WestJet Airlines and 83 per cent at Montreal-based Air Canada. The 2009 load factor at WestJet was 78.7 per cent while it was 80.7 per cent at Air Canada, the two carriers previously said.
Air Canada and WestJet declined comment yesterday, but Calgary-based aviation consultant Rick Erickson said it's hard to independently verify Porter's internal data because it is privately owned. Porter's break-even load factor "is perhaps aggressive and a little lower than I thought," Mr. Erickson said.
Mr. Deluce said Porter's break-even load factor has steadily declined from 58.4 per cent in 2007 and 51.1 per cent in 2008.
"There are some obvious gaps between Porter and Air Canada, and with respect to WestJet," he said during a transportation conference webcast by National Bank Financial.
Industry observers say Porter has been able to keep operating costs under control with its single-fleet type of fuel-efficient Bombardier Q400 turboprops, while attracting a loyal following among corporate customers who prefer Billy Bishop Toronto City Centre Airport over Pearson International Airport.
Mr. Deluce said Porter has its hands full now with regional growth prospects, but within a few years, it will mull over acquiring a mid-range jet that would help it compete outside its hub near downtown Toronto against WestJet and Air Canada.
"Longer-term possibilities leave open consideration for a mid-range jet type that could be utilized outside of our Toronto base and capitalize on opportunities beyond the current regional focus, including transcontinental routes," he said, referring to point-to-point flying that doesn't involve landing or taking off in Toronto.
Mr. Deluce added that no decision has been made on whether Porter will be embarking on an initial public offering this year, but the IPO route is one option for raising money to fuel expansion plans.
Gregg Saretsky, who will become WestJet's chief executive officer next Thursday, said his airline continues to explore whether it makes sense to add either a long-range jet and/or regional aircraft in the long term.
For the next three or four years, WestJet has plenty of growth opportunities with its single-fleet type of Boeing 737s, he said during the webcast.
Mr. Saretsky said he intends to carry on plans, started by departing CEO Sean Durfy, to sign partnerships with foreign carriers. Under such pacts, carriers are able to sell more tickets on each other's planes, as well as co-operate on connecting flights, baggage handling and electronic ticketing.Report Typo/Error