T.O. JETS DENIED
Blow to Porter Airlines, Bombardier as Liberals abruptly rule out allowing CSeries at Toronto’s city airport
The federal Liberals have put the kibosh on Porter Airlines’ expansion plans, dealing a blow to Bombardier
Inc., even as Quebec asks Ottawa to throw the struggling company another lifeline. New Transport Minister Marc Garneau tweeted Thursday night that Ottawa will not re-open the tripartite agreement that currently bans jets from flying out of the Billy Bishop Toronto City Airport.
Although the agreement also includes the City of Toronto and Ports- Toronto, any amendments require the unanimous consent of all three signatories, meaning Ottawa’s refusal will likely thwart Porter’s plans no matter what the city and port authority decide.
This will likely force Porter to cancel its conditional order for up to 30 of Bombardier’s struggling CSeries jets — the only order Bombardier has managed to secure from a Canadian customer. The deal would have been worth more than US$2 billion at list prices, if all options were exercised.
It was a quick decision from the new transport minister, appointed only eight days prior, and it appeared to contradict his comments earlier in the day.
“What I’m doing at the moment is examining all of the factors that are involved in this. It’s a complex issue, it’s one that’s been going on for a number of years,” Garneau told reporters in Ottawa following a cabinet meeting Thursday afternoon.
The decision also comes before various studies, including an environmental assessment of the proposal, have been completed.
PortsToronto said it is paying for the studies and is close to completing them, with a plan to provide them to city council and staff by early 2016.
“To date we have received no direct communication from the minister or other representatives of the federal government regarding how the government would like to proceed in this matter and no communication from Toronto City Council that would indicate that the studies are no longer required or that the results are no longer important to its process, constituents and understanding the airport,” spokeswoman Deborah Wilson said in an email.
Several Toronto politicians, led by Liberal MP Adam vaughan, have opposed the plans, which would have seen Porter extend its runway by 400 metres into Lake Ontario and add the CS100 jets to its existing fleet of bombardier’s Q400 turboprops.
One of the primary concerns of Porter’s opponents was the spectre of noisy jets flying along Toronto’s heavily populated waterfront, even though the CSeries has been confirmed as the quietest commercial jet in its class.
A spokesperson for Porter said the company is assessing the situation and could not comment at this time.
The decision is yet another punch in the gut for struggling bombardier, which saw its shares fall 7.25 per cent to $1.28 Friday. Porter was one of only two CSeries customers in North America; the other order, from republic Airways Holdings Inc., is also thought to be at risk as the airline’s business model has changed and CEO bryan bedford told bloomberg News last year that “there is no place to operate the CSeries in that model.”
bombardier did not respond to a request for comment Friday.
Two weeks ago, the Quebec government agreed to give bombardier a US$1-BILLION bailout in exchange for a 49.5-per-cent stake in a new limited partnership that will take control of the CSeries program, as well as the right to buy up to 200 million bombardier Class b shares.
Quebec economy minister Jacques daoust has said he’d like to see Ottawa match the province’s contribution, but Prime minister Justin Trudeau replied that it would have to make a “strong business case.”
In an interview this week, Porter CeO robert deluce said one of the best ways to make a business case for the CSeries would be allowing a “showcase operation right here on the waterfront that might help with the sale of future CS100s.”
“Our part in terms of helping that process will be to move from a conditional order to a firm order, and we can do that once we have the necessary approvals in place,” deluce said Tuesday, before Garneau made his decision.
“That will probably go further toward strengthening a company like bombardier than any other single event.”
Although deluce was reluctant to discuss the airline’s Plan b, he acknowledged that Porter has examined the possibility of operating out of other hubs besides billy bishop, including airports in Western Canada.
Airline consultant robert Kokonis said another option would be for the airline to maintain its existing turboprop operations at billy bishop while flying the CSeries out of Toronto’s Pearson International Airport.
The union-Pearson express train, which started operating earlier this year and runs between downtown and Pearson, would make it relatively easy for Porter passengers to connect between the two airports, said Kokonis, president and managing director of AirTrav Inc.
“A lot of people said initially that the (union-Pearson) express would undermine the convenience factor of Porter. Now you could view it as a potential white knight,” Kokonis said.
“I’m sure Porter’s people are studying that very carefully. I’m sure they don’t want the CSeries order to die.”