BUSINESS

Fate Of Porter Airlines, Toronto Island Airport Hangs In Election's Balance

10/16/2015 04:08 EDT | Updated 10/16/2016 05:12 EDT
Bloomberg via Getty Images
A Porter Airlines Inc. aircraft lands at Billy Bishop Toronto City Airport in Toronto, Ontario, Canada, on Friday, June 28, 2013. Porter Airlines Inc., the Canadian carrier that now flies only turboprops, plans to add its first jets to start long-haul flights in an expanded challenge to Air Canada and WestJet Airlines Ltd. Photographer: Brent Lewin/Bloomberg via Getty Images
MONTREAL — The fate of Bombardier's lone Canadian CSeries order appears to hinge on the results of Monday's federal election.

Porter Airlines, which placed a conditional order in 2013 for 12 of the 110- to 125-seat planes, hopes to get permission to fly it on a lengthened runway at the Billy Bishop Toronto City Airport.

However, both the Liberals and NDP oppose amending an agreement with the city of Toronto and PortsToronto that would permit jets at the island airport even though CSeries testing suggests it's the quietest commercial jet in its class that is currently available.

The Conservatives said they would "consider a proposal" from the city and port authority once a formal request is made. It said the government approved a passenger tunnel that was previously scrapped by the Liberals.

"This highly popular airport is a vital economic driver in this city," a party spokesman said Friday. "Liberals just don't get it."

Polls suggest the Liberals hold a slight edge and could form a minority government.

The head of a local community group opposed to jets at the airport believes the proposal is "dead" if either of the opposition parties are victorious.

"If I were Bombardier, I wouldn't count on those orders," said CommunityAir chairman Brian Iler.

He said the issue could be resolved quickly if the new government in Ottawa quickly announces its unwillingness to reopen the agreement.

Regardless of the election, PortsToronto said it will continue to work on studies requested by Toronto City Council and deliver them early next year.

Porter wouldn't comment on the electoral impact on its CSeries order, but Bombardier (TSX:BBD.B) says it's not concerned about the order.

"They're going through the appropriate channels; we're following the due process and we'll see what results," said spokeswoman Marianella de la Barrera.

The potential loss of a Canadian order comes as Bombardier scrambles to find a partner for the aircraft, after approaching Airbus, that helps to address its financial challenges. The company has booked orders and commitments for 603 CSeries aircraft, including 243 firm orders. 

Porter's conditional order is valued at US$870 million, rising to nearly US$2.1 billion if it exercises options for another 18 aircraft.

Bombardier says it is pitching the plane to several airlines around the world, including, reportedly, Air Canada.

Analyst David Tyerman of Canaccord Genuity isn't counting on Porter getting a hold of the airplane because political developments are difficult to predict.

"What they say now and what they do later could change but obviously (the opposition parties' positions) would reinforce my view that I cannot count on this order," he said in an interview.

Montreal-based Bombardier said the commercial aircraft has undergone 90 per cent of the testing required to win certification this year before entering into service in the first half of 2016.