Porter to sell and lease back its Billy Bishop terminal

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Porter Aviation Holdings, parent company to Porter Airlines, is seeking to sell and lease back its passenger terminal at Billy Bishop Toronto City airport.

The company, which expects the deal to be completed by the end of this fall, is divesting the terminal so as to more closely manage is prime business unit Porter Airlines, says Michael Deluce, executive vice president and chief commercial officer of City Centre Terminal Corp.

City Centre Terminal, another Porter Aviation subsidiary, operates the terminal.

“Porter Aviation Holdings took on the initial capital risk in the early stages of [the airport’s] rehabilitation,” Deluce tells Flightglobal. “Completion [of the sale] will allow Porter to focus on its core business processes and will help [Porter] invest in growth.”

“Now that the airport is developed, [the terminal] is a non-core asset,” he adds.

Deluce says the deal will have “no impact at all” on other airlines operating from the terminal or on the Toronto Port Authority’s (TPA) slot-allocation process, which has been criticised by Air Canada.

“The Toronto Port Authority is the airport operator… They control slots through their process,” Deluce says. “This is strictly the passenger terminal.”

Porter, which financed construction of the terminal building, began serving Billy Bishop in 2006 under an exclusivity agreement with the TPA that made Porter the only airline serving the airport.

That agreement ended in 2010. Around that time, Air Canada was granted 30 slots at Billy Bishop and Porter was granted an additional 44 slots.

Air Canada, which had requested 74 slots, accused the TPA of showing favouritism and unsuccessfully challenged the slot allocation in court.

Air Canada, which began serving Billy Bishop in 2011, did not respond immediately to a request for comment about Porter’s planned sale.

But Air Canada chief executive Calin Rovinescu told Flightglobal last year that slot allocations should be conducted in a “more open fashion.”

Deluce declines to discuss a potential sale price for the terminal, calling a media report that pegged the value at $500 million purely speculative.

But he says Porter’s initial investment in the terminal helped the airport modernise and is part of the reason why passenger traffic at Billy Bishop increased from 20,000 in 2005 to 2.3 million in 2013.

Porter has retained firms RBC Capital Markets and Barclays Capital Canada to assist with the sale.