HOTR: Porter confirmed as customer in E195-E2 deal

By the Leeham News Team

May 19, 2021, © Leeham News: Embraer got a big boost for its E-Jet E2 order book in April when it announced a firm deal for 30 E195 E2s.

“On April 23, the Company signed a firm order for 30 E195-E2 jets with an undisclosed customer, with deliveries starting in 2022. The 30 firm orders will be included in Embraer’s second quarter backlog,” Embraer said in its April 29 earnings release.

Embraer delayed E-Jet deliveries because of the COVID-19 pandemic. Thin backlogs for the E2 pre-date the pandemic. This order, with deliveries starting next year, illustrates Embraer’s thin skyline.

Airfinance Journal on May 13 first reported the customer is Canada’s Porter Airlines. Porter, pre-pandemic, operated De Havilland Dash 8-400s exclusively from Billy Bishop Airport, Toronto’s downtown in-city airport. AFJ cited multiple sources. Porter Airlines denied it ordered the airplane or that it had signed lease deals to acquire the E2. The carrier told the Toronto Globe and Mail it isn’t going to “switch” fleet types.

However, LNA confirmed this week that the airplanes are going to Porter. Porter declined to answer any questions from LNA.

“Our response to this speculation has been provided to others and published. We do not have anything further to add,” Porter said in an email.

Aircraft deliveries begin in 2022

Porter placed a conditional order in 2013 for up to 30 Bombardier C Series.

Embraer said the first deliveries will be next year. According to LNA’s information, the first of 12 E195-E2s will be delivered in the middle of next year. Another 18 will be delivered in 2023.

Since Porter Airlines denied being the one that ordered the E2, or that it had lease agreements, the obvious question is, who is the customer?

Embraer won’t say.

One possibility is that Porter’s parent, Porter Aviation Holdings, placed the order. This allows the airline to deny it is the customer.

And if Holdings is the customer, a lease agreement doesn’t have to be in place—yet. This, too, allows the airline to deny it has lease arrangements in place.

While the airline denied to the Globe and Mail it was going to “switch” aircraft types, this doesn’t preclude adding a fleet type.

The airline declined to answer LNA questions on these points.

Billy Bishop remains closed to jets

Potential jet routes Porter could operate from Toronto. Map created concurrent with C Series order.

Next, the question remains, where will the E2s be used? Billy Bishop Airport, the downtown city field that serves as the hub for the airline, prohibits passenger jets by government fiat. The airline in 2013 placed a conditional order for up to 30 Bombardier CS100s for use at Billy Bishop. The order was contingent on the governments changing policy to allow the jets there. Approval never came. The conditional order, assumed by Airbus when it took over the C Series program from Bombardier, still shows the transaction under Letters of Intent in the Cirium data base. But the Embraer deal means certain cancellation of the now-named A220 conditional order.

So, where will the E2s be used? According to LNA’s information, the airline will open operations at Toronto Pearson Airport, an option previously considered.

The airline declined to answer a question on this topic.

Why E2s vs A220s?

Airbus no longer has early delivery positions for the A220. Embraer has delivery positions for the E2 beginning next year. Lots of them in 2022 and 2023.

The Bombardier conditional order terms were never revealed, beyond its conditional nature. With Porter Airlines being privately held, it was not possible to examine its financial statements and determine the financial commitment to Bombardier.

However, in 2013, Bombardier wasn’t yet willing to wheel and deal on pricing like it did later for Air Canada (February 2016) and Delta Air Lines (April 2016). It’s pure speculation, but likely, Porter’s C Series price began with a “3”. Escalation clauses would only increase the delivery price.

With Embraer hurting for orders and with big production gaps, EMB was likely willing to wheel and deal. Speculatively, it’s not beyond the realm of possibility this E195-E2 price could be in the high $20m range. With credits, fleet integration support and other considerations, the effective price may be much lower.

And then there’s financing support. Embraer could offer Porter Brazilian export credit financing, something not available with the A220.

Political fallout

Dumping the Canadian A220 deal in favor of the Brazilian E2 will, no doubt, cause political blow-back. The airline received C$135m in government support in 2020, related to the COVID crisis. The A220 almost certainly would have been assembled in Montreal, at the former Bombardier site now owned by Airbus. Aerospace jobs are Holy Grail in Canada.

But a Canadian airline buying Brazil vs Canada is not unprecedented. Air Canada bought the Embraer E190 (E1) years ago. As it ultimately turned out, these are being replace by A220s and Boeing 737-8s.

Still, with no early delivery slots remaining for the A220, slots available for 30 E2s in 2022 and 2023 and the potential of export credit financing, there is solid argument to be made for Porter to drop the A220 in favor of the E2.

Assuming all this is true. And LNA believes the underlying transaction to be true even if some details remain foggy.

48 Comments on “HOTR: Porter confirmed as customer in E195-E2 deal

  1. The fog is very dense.
    Unlike most airlines in North America, Porter is still not flying after covid.
    Moving to YYZ and switching to larger jets mandates a completely different business plan and a major change in the operation of the airline.
    To day they offer a very special product, flying out from downtown to short range destinations, with very little competition.
    The map shows new routes far longer than the present network, and in most of the new city pairs they will face very fierce competition from Canadian and American main and LCC airlines.
    It’s hard to believe that a rather quite conservative airline will make such a drastic change. It will be a very bold step.
    It reminds me the decision made by Air Baltic to be the first to order the
    C-300 (at that time it was still Bombardier), replacing older versions of B-737 and new Q-400, becoming an all-jet single type operator. The precarious situation of Air Baltic at that time probably required such a step, but is this absolutely necessary for Air Porter?

    • There is no reason that Porter cannot do both BB Airport and Toronto.

      Maintain what they have in BB and expand.

      With no ability to expand Porter is locked into a maximum of whatever BB offers.

      Now, is it viable to operate out of Toronto with the competition there ?

      One aspect of clue is its the biggest regional offered and it is not a trans con capable aircraft so nearer destinations that undercut the 737/A220 operators and maybe there is an opening there.

  2. It definitely a strategy change.

    Technically, the E195E2’s are very lean, quiet and affordable. They have good enough capacity (132 seats at KLM) to operate longer flight to all of the US and Caribbean.

    Maybe Canadian government likes the prospect of additional competition. It might free up Transat to merge with Air Canada.

  3. Porter order the c series on condition to operate from Island Airport pending approval. Approval never came but I dont remember Porter canceling the c series. Did they cancel c series and now bought Embraer jets. They still can’t operate from Island Airport.

    • I believe it was more than just approval. I seem to recall a small runway extension was also required.

      What is interesting is I don’t believe the E2195’s can operate out of TYZ either, if anything I bet the A220-100 has better short field performance being the shrink. That implies Porter is willing to expand into jets without doing it out of downtown.

      Bit of a shame, the A220 flying out of TYZ would have put residents of downtown within 20 minutes of an airport from which Porter could have offered direct flights to anywhere in Canada.

      • Agreed. But if you block them into a corner and they want to expand and feel they can do so, then Toronto is their only choice.

        Run two parallel operations.

        The viability of the Turbo Prop (and desirability by passengers) as a main flying option continues to wane.

        Anchorage to Fairbanks on Alaska Airlines sis a case in point (and the Alaska residents are well used to prop jobs down to Super Cubs to go hunting in Swamps)

        The larger flying public on that route did not like loosing the 737s (that goes back to the 70s for Wien and then 727 AK and some of the buy outs back and forth)

        So AK has put E-170 on that route despite it being an ideal Dash-8 in 350 miles direct.

        If successful Porter may transition out of BB and leave them to stew in their juices (yes I am a proponent of a balance and Porter seems to have been a good operation to work with).

        We get a fair amount of jet noise in Anchorage due to cargo flights. Sometimes with a runway shut down (sometimes extensive revamp and all summer) one part of town gets it continuous.

        I am happy to accept it as its a jobs created for an economy that is otherwise all dependent on oil.

        • Except it’s not very comparable. There is a solid mountain range between ANC and FAI whereas the GTA is covered in suburbia and rapid transit.

          • The mountain ranges are on either side of the ANC – FAI route. The pass is all of 2500 feet (its not like going West out of Denver)

            The Dash 8 did not fly at any higher level than SEA to Bellingham.

            A jet of a TP goes to an altitude based on fuel burn profile unless terrain is a factor.

  4. This is indeed stunning news in Canadian commercial aviation. As others have noted ordering the E2 does not solve Porter being fenced in at YTZ.

    Possible scenarios:
    1) Porter keeps the Q400s, keeps their home base at YTZ, and sets up another hub for jet ops per above. This lets them keep their core downtown Toronto market while letting them expand jet service BUT will their customers continue to tolerate turboprop service out of YTZ? Are they willing to connect thru their jet hub for any destinations outside Q400 range? Will they be able to manage two segregated and vastly different inflight products? For a boutique airline catering to upscale business passengers this may not fly. Pun maybe intended.

    2) Porter abandons YTZ, (possibly) drops the Q400s, relocates to YYZ. This runs the risk of abandoning their key clientele (the proximity of YTZ to downtown Toronto is a key draw.) Plus they risk turning into Just Another Canadian Airline with little differentiation to pull customers away from AC/WS.

    There is a possibility Porter keeps the A220 order in limbo in case they want to expand to the west coast (something I’d personally welcome! Prices for YVR-YYZ/YUL are highway robbery, even ULCC Flair has barely made dents into.) but that would drive up costs given the small fleet sizes.

    Either way, ordering the E2 has shades of Breeze/Moxy, who started with a headline CS/A220 order then settled on leased E190/195s to start operations. Both airlines may end up operating both AIB and EMB in the near term.

    Count my eyeballs peeled on this space.

    • I could also be that Porter still really wants to operate A220’s out of TYZ and this is a way to force the government’s hand. Get some E2195’s at a great price, create a political storm, then state the A220 were the first choice but government inaction left Porter no choice. Promise that if jets are allowed they will switch to the A220. If that happens sell the cheaply acquired E2’s and get A220’s.

      • At this point I don’t see any political storm brewing – the situation now is vastly different than before, when the Porter order was critical to Bombardier. Now with over 600 orders, the 30 Porter units are not as important to Airbus.

        I have a notion that Porter may try to fly the Embraers from Hamilton John Munroe, as a GTA west airport. Other operators have been here and pulled out, but it could work with a full number of routes and schedules.

      • The flaw in that is the E2 slow sales and there is no market for that aircraft they can sell to.

        Unless the deal is structured as a get out of jail free card, no.

        Yes Porter could add A220 but at that point you would be into the 500 model and you have to sustain the 30 E2-195 buy.

        They can buy some range with fewer pax and or Embraer can make a heavy E2-195 that offers more (it suddenly gained a bunch of range after the A220 US trade debacle was settled)

      • They’ve been playing this card ever since the A220 order and they’ve faced roadblocks from all three levels of govt, not to mention the NIMBY community.

    • It sounds like they would want to open another base, which wile logistically raises challenges it could bring the “experience” to longer range flights and retain loyalty among customers. May also be a bargaining chip in the “bring jets to Billy Bishop” argument and shows they’re ready to expand elsewhere if the airport won’t assist. It seems they’ve reached the limits of their strategy and equipment currently, and by going with E2 they still aim to be a JetBlue type carrier offering more boutique services otherwise they would have gone a320/737 sized. Likewise if their hub allowed jets (E2 would have the same engines and noise footprint as a220) they would retain most of their original bargain and be able to operate there.

      • Nice point on the engine the same.

        I can see that as leverage to allow the E2-195 to operated out of BB or we will be folding air ops there and all that brings to that Airport and city for the pretty large numbers that value that close connection.

        • The E195-E2 and A220-100 are not interchangeable (in Porter’s world). One advantage the A220-100 brings is that it is an overpowered aircraft, so has good short field performance – essential to fly out of Billy Bishop. The E195-E2 doesn’t have the same short field characteristics. Think LCY.

          Airbus 4,800′ versus Embraer 6,463′

          From YYZ, the E195 is just fine bit that dog won’t hunt from YTZ.

          Having said that, as a resident of Toronto0, I can assure you that NIMBYism will ensure that jets never fly from YTZ.

          • Good to get it from the local level as that was my impressions.

            Which means Porter is looking to the future and that may mean a long term dropping of BBD is envisioned.

          • Yet, the E195-E2 is coming to LCY next year with KLM and Helvetic. And operates in SDU, a 1250 m runway, with full pax. Therefore, don’t underestimate the E195-E2 shortfield performance.

          • “A220-100 brings is that it is an overpowered aircraft”
            All airlines now usually have a range of TO thrust to choose from when buying the engines . Lowest thrust is usually a bit cheaper and lower maintenance costs, while to upgrade the TO thrust from existing settings to higher level is just some $$$ and a different computer module.
            The PW1500 series have ( roughly) thrust choices at 18,600lb, 20,700 and 23,000. I think the -100 is going to be mostly at 18.6k

          • The A220-100 has a bigger relative wing as its the short model

            The E-195 E2 (getting my terminology right) is the stretch version.

            The relative wing comparisons would be the -300 and the 170/175 though its not an apples to apples.

            Both the -100 and 195 have the same max thrust.

          • The E195 model is pretty long for its size
            “It’s longer than the Boeing 737-8 but shorter than the Boeing 737-9. ”
            Remember all the fuss about possible A220-5 being too long for its diameter fuselage, well the E195 is well past that.
            There may also be rotation issues for long haul out of BB. The comparison with London City has been made , but Canada has much longer routes than typical LCY ones.
            https://leehamnews.com/2019/09/18/milestone-for-embraer-with-the-e195-e2/

          • A point to keep in mind when evaluating whether a a particular aircraft can operate out of a particular airport, is that takeoff runway lengths listed in generic specification tables are typically for an aircraft at maximum takeoff weight, at standard temperature and pressure, with no wind. Actual takeoff runway length required will vary with actual weather and takeoff weight. The runway length required for an aircraft operating a flight well below its maximum range, and carrying only the fuel needed for that flight, will often be much less than that required for a maximum gross weight takeoff, even on a hot day with unfavorable wind.

            As an example, the following flights took off from John Wayne Airport in Orange County California today 5-23, whose longest runway is 5,701 feet long, all operating with aircraft whose takeoff runway length requirements listed in Wikipedia are longer than 5,701 feet. Listed by aircraft type from shortest to longest takeoff runway requirement as listed by Wikipedia. All performance specs are from Wikipedia, route lengths are straight line distances per the Web-Flyer mileage calculator as converted from sm to nm by me.

            757-200, Wiki runway length = 6,800 ft, max range = 3,915 nm
            Delta 2413, to Atlanta (1,660 nm)

            A320, Wiki runway length = 6,900 ft, max range = 3,300 nm
            Alaska 527, to Seattle (850 nm)

            737-800, Wiki runway length = 7,598 ft, max range = 2,935 nm
            American 2872, to Dallas-Fort Worth (1,043 nm)
            United 641, to Denver (733 nm)

            737-8, Wiki runway length = 8,300 ft, max range = 3,550 nm
            Southwest 883, to Salt Lake City (485 nm)

            A Delta pilot who I once struck up a conversation with in airport waiting lounge, told me that the limiting factor for operating out of short runways was usually landing, rather than takeoff distance. Real world takeoff lengths more closely approximate the raw data listed in aircraft flight manuals than do real world landing distances. For takeoff you apply takeoff thrust, release the brakes, and accelerate down the runway, which is pretty much what was done in the test flights on which the flight manual data is based. The flight manual data includes allowances for the extra distance required in the case of an engine failure. For landings, sometimes you land further down the runway than you were aiming for, then sometimes you bounce, then sometimes you bounce again, and on a really bad day you might bounce another time before all wheels are on the ground and you can start braking and hit the reverse thrust. Some days the runway is so wet or icy that the wheel brakes are not of much use. For airline jet aircraft, the FAA requires that at the time of dispatch, the required landing runway length calculated for the estimated landing weight using the no bounces, no malfunctions, flight manual data be no more than 60% of the runway length available at the destination airport or an alternate. See below.

            “(b) Except as provided in paragraph (c), (d), or (e) of this section, no person operating a turbine engine powered airplane may take off that airplane unless its weight on arrival, allowing for normal consumption of fuel and oil in flight (in accordance with the landing distance set forth in the Airplane Flight Manual for the elevation of the destination airport and the wind conditions anticipated there at the time of landing), would allow a full stop landing at the intended destination airport within 60 percent of the effective length of each runway described below from a point 50 feet above the intersection of the obstruction clearance plane and the runway.”

            https://www.law.cornell.edu/cfr/text/14/121.195

          • If weather forecasts indicate that the destination runway may be wet or slippery at arrival time, then the landing distance calculated from flight manual data must be no more than .6/1.15 = .52 or 52% of the destination runway length. Thus, in the case of Billy Bishop airport, the landing distance calculated at time of dispatch from flight manual data, on a day when the runway is wet or slippery, could be no more than .52 x 3,998 ft = 2,079 ft for a jet aircraft operated by a US Airline. See below.

            “no person may takeoff a turbojet powered airplane when the appropriate weather reports and forecasts, or a combination thereof, indicate that the runways at the destination airport may be wet or slippery at the estimated time of arrival unless the effective runway length at the destination airport is at least 115 percent of the runway length required under paragraph (b) of this section.”

            https://www.law.cornell.edu/cfr/text/14/121.195

          • I left the aircraft that was most used by airlines at John Wayne Airport (SNA) this morning (5-23) off my list of airliners that departed SNA this morning whose max gross weight runway length requirements were greater than the 5,701 foot length of SNA’s longest runway. This was because this aircraft, the 737-700, had the lowest max gross weight runway length requirement of those airliners that were used, and thus was the least dramatic example of the point I was trying to illustrate. Upon further reflection I thought perhaps for completeness and context I should include data on 737-700 flights.

            Number of airline departures from SNA from 8:21 AM to 9:05 AM on 5-23-21 by aircraft type.
            737-700: 5
            737-800: 3
            757-200: 1
            A320: 1
            E175: 1

            737-700, Wiki runway length = 6,699 ft, max range = 3,010 nm
            United 411, to Honolulu, HI (2,243 nm)
            Southwest 2008, to Houston, TX (1,173 nm)
            Southwest 763, to Puerto Vallarta, Mexico (1,180 nm)
            Southwest 2029, to San Jose, CA (297 nm)
            Southwest 2015 to Oakland, CA (321 nm)

            Are aircraft with transcontinental or transatlantic range optimal for 300 nm California intercity routes such as SNA, LAX, or Hollywood-Burbank to Oakland, San Jose, or San Francisco?

    • Hello pheonix00,

      Here is one possibility that you didn’t include in your list.

      Porter Aviation Holdings could be starting a new airline which will be all jet, won’t fly out Toronto Pearson, and might have a completely different marketing and pricing strategy. This possibility would be consistent with the Porter Airlines statement that they are not switching fleet types, because it would be a new airline that would be operating the E195’s.

      • AP:

        Different branded Airlines seems plausible.

        But Toronto is their home market so it almost has to at least start out of Pearson and expand ops as point to point and then fly to another destination per South West.

        To jump into Montreal and Quebec would be very difficult I would think and have West Jet and Air Canada a fierce response to defend routes.

      • That’s a corollary to 1), except with new name who dis 🙂 and does not obviate the drawbacks I listed above.

      • In my post above I got the names of Toronto’s largest airport and the small airport that Porter has been operating out of confused. Here is what I meant to write.

        Porter Aviation Holdings could be starting a new airline which will be all jet, won’t fly out of the small Toronto Billy Bishop airport, and might have a completely different marketing and pricing strategy. This possibility would be consistent with the Porter Airlines statement that they are not switching fleet types, because it would be a new airline that would be operating the E195’s.

        • AP:

          I too get acronyms mixed up and BB has its own 4 letter ICAO and…..

          I agree 100% Porter is going very different with the E-195 E2 (that an awkward phasing -E2-195 more better).

          Pearson would be the logical place, Billy Bishop not allowed and the next bit city and a major shift seems implausible.

          Do they crop Billy Bishop and the Dash 8 entirely?

  5. There is Saint-Hubert airport on the South Shore of Montréal… Readily available, no runway extension needed, easy to connect to Billy Bishop, easily accessible from downtown Montréal. Montréal is a solid market, especially with potential Porter connections for points East.

    https://goo.gl/maps/Gf8Q85ekJyE2ZofM6

    • I am missing something. Porter already can connect to Saint-Huber from BB but only if they use Turbo Prop.

      Otherwise for jet ops its Pearson or a close by Airport (I don’t know Toronto area so not sure if there are other possible or not)

      Pearson makes sense as it would collect other traffic as not everyone is going to be on a full Porter flight route.

      • The idea is in case Porter wants to use YHU as their jet hub. There are already jets flying from there. Yes, this airport would need upgrades in infrastructures and services. It’s very close to downtown Montréal, as BB is very close do downtown Toronto.

        • Thanks.

          It would seem Porter would want to at least start in Toronto with a clientele established.

          Equally they would need a full ops airport, trying to build a new system and a new airport would be a serious problem success wise.

          It will be interesting to see.

    • Does YHU have customs facilities? That will be needed for transborder routes which is the majority of Porter’s business pre-COVID 19.

      Just as easy (if not easier) to re-open Mirabel YMX.

  6. I dug out a bit of the original discussion on the CS100 out of Billy Bishop airport.

    This article discusses the public response to a CS100 only exemption to fly jets out of BB. It also asked about the runway extensions needed:
    https://skiesmag.com/press-releases/18742-porter-says-66-2-per-cent-of-torontonians-support-use-of-cs1-html/

    And this one is a Porter white-paper discussing the CS100 vs other jets and turbo-props. I think it is making the argument that the CS100 will be no more disruptive than the existing Q400’s. Of course since may residents just want no airport the fact that the CS100 may be quieter is not really an argument for allowing it.
    https://www.toronto.ca/wp-content/uploads/2017/11/98f9-porter-cs100-overview.pdf

    • Same engines as CS100/A220 , so should have same noise footprint. With a fairly new Conservative government and liberal voting suburbs in the area around the airport, a change could be coming. The real bogey man to jets would be Air Canada and its dominance in Pearson airport business travellors

    • Never ever underestimate the power of the Canadian NIMBY. GTA’s full of them, as is Vancouver.

  7. I am beginning to think Porter is getting the E2 at rock bottom price and they are using it to diversify their business model. Covid lock down has shown business can be done online using skype, zoom and likes.

    Porter model is heavily based on business flying and they might not see enough travelers come back to them.

    Maybe they will fly from Toronto or Hamilton to Sun destinations or fly ULC and under cut AC and WJ. With Air Transat struggling and WJ calling itself low cost but having same ticket cost as AC there is room for both type of flying.

  8. Don’t forget Connect Aiways is looking to start a Porter Like operation in the fall out of the island. Using Q400’s and some of the routes Porter was running. Google it.

  9. If this rumour turns out to be true, it sounds like Porter are trying to bounce the government into allowing jets at Billy Bishop. And I really don’t see why not; most ‘city’ airports allow selected jets these days, as the noise issue really isn’t the thing it used to be.
    All this speculation about Porter doubling their fleet, or moving entirely to another airport sounds a bit unlikely, especially as they aren’t even flying at all at the moment.
    But in aviation, as in life, anything is possible, I suppose …

    • The counter to that is Porter has to put money down to get the E2-195.

      I don’t see them doing that on a gamble.

    • The approval to extend airport requires the city, province, and fed buy in. Approval will be lengthy given the environmental studies to be done again and the resistance from local residence. It will go to court either way.

      Then you have the time to actually fill and make the extension. This airport extension won’t be done anytime soon. We are looking at minimum 5 to 10 years. We dont even have approval and agreement on who will pay for this.

      The government wont be as easy sell either as Porter bought Brazilian jets noy a220 which are made in Canada or have option of being build in Canada.

      Moving or having a second base is more feasible and norm then extending an airport.

        • It does not matter at Billy Bishop. Its been no and hell not by enough to stop anything let alone an extensions.

          Having watched it, if they needed 6 inches it would be fought until 2050.

          Porter is not stupid, they know its useless so they are shifting operations.

          Well, anyone that gets into the Airline Passenger business has some screws loose. Why they want to fly anything anywhere is a good question to ask Porter!

  10. Well, gosh, mebbe Porter Airlines wants to keep its business plan to itself.

    What a concept!

    (I’ve often pointed to Cessna as doing that with the Mustang VLJ and IIRC the Skycatcher single. Revealing existence only when had to leave the factory/hanger for taxi testing. IIRC P&W likewise kept the new lower cost engine for the Mustang under wraps.))

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