VANCOUVER (Reuters) – Porter Aviation Holdings Inc, an upstart regional challenger to Canada’s major airlines, said on Tuesday it was suspending plans for an initial public stock offering, the latest company to be burned by the equity market’s recent volatility.
The small, 3-1/2-year-old carrier, which has been luring travelers from Air Canada (ACa.TO) and WestJet Airlines (WJA.TO) in Eastern Canada, had planned to raise C$120 million ($114 million) to potentially buy new aircraft before shaky equity markets took another tumble.
“We all know it has been a difficult May in the marketplace … We certainly were not prepared to sell our stock at any price,” said Porter Chief Executive Robert Deluce.
The Globe and Mail newspaper reported last week that Porter was chopping the price on its offering to about C$5.50 a share from between C$6 and C$7 a share.
Deluce said that once markets settle down Porter will again consider a public offering as well as “other forms of public financing”. The company was in good shape, with passenger numbers and profitability up in the first quarter, and did not need the money now.
“Quite frankly, it’s all moving nicely in the right direction and there is no pressure on us to do anything that we don’t want to,” Deluce told Reuters in an interview.
Porter Airlines, as it is known, has become a favorite with business travelers because of its “business-class-for-all” service and the close proximity to downtown Toronto of the Billy Bishop airport out of which it flies.
It started operations in 2006 with just two aircraft but now flies 20 Bombardier (BBDb.TO) 70-seat Q400 turboprops to 13 destinations in Eastern Canada and into the United States.
Over the past several weeks, initial offerings by Canadian companies have not fared so well, raising less cash than expected in some cases and dropping below their IPO price soon after trading began in others.
Stock of Athabasca Oil Sands Corp (ATH.TO), Canada’s largest IPO in a decade, has plunged 42 percent since it went public in April.
“IPOs are dangerous territory to begin with and airlines maybe add a bit,” said Michael Sprung, president of Sprung & Co Investment Counsel.
“You could easily get caught in a downdraft. The last thing a new IPO wants is for there to be a lot of stock on the shelf,” Sprung said.
Porter said in its offering prospectus that it plans to acquire up to nine new aircraft over the next 12 months, including two that were delivered in April.
By Nicole Mordant
(Additional reporting by Pav Jordan; editing by Rob Wilson)