Porter Airlines - Organization

Organization

Porter Airlines along with Porter FBO Limited, which operates the Porter facilities at Billy Bishop, and City Centre Terminal Corp., are owned by Porter Aviation Holdings (PAHL) formerly known as REGCO Holdings Inc. The company was founded in 1999.

Porter Aviation Holdings Inc. is controlled by :

• Robert Deluce (whose brother Peter Deluce ran Canada 3000 until its demise in late 2001)
• Larry Tanenbaum – part owner of Maple Leaf Sports and Entertainment

Principal executives

• Robert J. Deluce is President and CEO of Porter Airlines and Porter Aviation Holdings Inc. He was an executive with Air Ontario and other airlines. His salary is $204,167 for 2010.
• Michael Deluce, Robert's son, is the Chief Commercial Officer of Porter Airlines. His salary is $145,833 for 2010.
• Donald J. Carty, a former American Airlines chief executive, is Chairman of the Board of Directors. Carty is also Vice Chairman and CFO at Dell Inc.

Investors

At startup, $125 million CAD was put into the airline including money from:

• EdgeStone Capital Partners
• Borealis Infrastructure – the investment arm of the Ontario Municipal Employees Retirement System (OMERS).

As of 2009, Porter's institutional investors include EdgeStone Capital Partners, Borealis Infrastructure, GE Asset Management Incorporated and Dancap Private Equity Inc.

The then REGCO Holdings purchased the Toronto island airport assets of City Centre Aviation Ltd in 2005. This included the terminal used by Air Canada's Jazz airline, which at the time operated daily flights to Ottawa from the airport. On February 15, 2006, Air Canada had announced that its contract to operate its Jazz Airline service out of the REGCO terminal at the airport had been terminated. On February 27, 2006, REGCO was able to evict Air Canada Jazz from the publicly owned airport. Air Canada took the case to court, but lost an Ontario Superior Court ruling. REGCO's fully owned subsidiary 'City Centre Aviation' (now Porter FBO) then commenced renovations of the terminal building to serve Porter Airlines, which started flights in October 2006. Porter FBO continues to operate the terminal today, along with fuel and other services.

A new subsidiary, City Centre Terminal Corp., was set up in 2009 to manage Porter's new terminal at the Toronto island airport. The new terminal's cost of construction is estimated at $50 million CAD. The first half of the new terminal opened on March 7, 2010. The terminal will be completed in early 2011. When complete, the new terminal will have ten gates, two lounges, check-in and security areas, a duty free shop and food outlets. Porter is interested in locating a US Customs pre-clearance facility in the terminal.

The airline's mascot is a stylised raccoon named "Mr. Porter". The raccoon appears in Porter newspaper ads. Porter also advertises on radio, using an announcer. The design of staff uniforms is based on 1960s standards of airline fashion. Porter has 933 employees as of March 31, 2010.

Porter was initially organized as a private company. On April 16, 2010, Porter Aviation Holdings announced they were going to be listed as a publicly traded company. The company filed a preliminary prospectus — a business plan — with securities commissions across the country, a requirement before it can offer shares. The company has $306 million of debt and leases and intended to raise $120 million of new shares in the company and order seven new Q400 planes. However, after twice delaying the final deadline for the offering, and lowering its share price from between $6 and $7 per share to $5.50, Porter cancelled the initial public offering. According to Robert Deluce "We came to the conclusion that it was really prudent to defer the offering at this time and to wait until better market conditions existed. We wanted to raise some capital. We thought the IPO was the way to go, but we weren't prepared in any way to sell our stock at just any price."

The media had openly speculated on the profitability of Porter as being a money-losing operation, as would be typical of a start-up. CEO Deluce had been asked by the media to provide information on the financial status of Porter, but declined. In its prospectus, the company outlined a loss of $4.6 million on revenues of $151 million for 2009. To be profitable, the airline needs to be filling 49.3% of its seats with paying customers. In 2009, the airline filled 41% of its seats, and in the first quarter of 2010, it filled 47%. Overall, the airline carried 900,000 passengers in 2009, 800,000 through Toronto island airport. In 2011, the airline filled 55.9% of its seats. As part of disclosure for its public offering, Porter disclosed that from its startup in 2006 until May 2010, Porter lost $44.5 million.