12, 2017) – NAV
CANADA today released its financial results for the three and six months ended February
The results reflect growth in air traffic volumes as
measured by weighted charging units of 3.9% over the same period in the prior
fiscal year (5.1% excluding the effect of the leap year in fiscal 2016) and
demonstrate the Company’s continued success in controlling costs and making
strategic investments in its core services while maintaining safe and efficient
fiscal year runs from September 1 to August 31. In the second quarter of fiscal
2017, the Company had cash of $276 million, a negative free
cash flow(1) of $46 million due to seasonally weaker air traffic but
strong financial performance as evidenced by its rate stabilization account, which
finished the quarter with a positive(2) balance of $179 million which
is above its target balance of $101 million.
revenue for the second quarter of fiscal 2017 was $296 million, compared to $309
the same period in fiscal 2016, mainly due to the lower revised
service charges (7.6% on average) that became effective September 1, 2016
partially offset by a 3.9% growth in air traffic volumes.
“Even with the seasonal changes in air
traffic volumes we continued to see strong air traffic growth in the second
quarter, this increase is being driven primarily by the growth in
trans-Atlantic air traffic volumes,” said Neil Wilson, President and CEO.
NAV CANADA continually monitors
financial requirements and air traffic, and regularly updates the Company’s
financial forecasts to account for changes in the economic environment. “Given
the current strength of the rate stabilization account and our positive
financial outlook for fiscal 2017, over the next fiscal quarter we will
consider changes to our customer service charges that, if enacted, would likely
be implemented in September 2017. We will be closely monitoring this situation
over the next several months,” concluded Wilson.
Operating expenses for the second
quarter of fiscal 2017 were $328 million as compared to $307 million over the
same period in fiscal 2016, mainly due to higher pension
current service costs and higher compensation costs. The Company
uses a regulatory approach to determine the net impact charged to net income
(loss) for its pension costs. The objective of this approach is to expense the
cost of the Company’s cash going concern and special payment contributions. Going concern pension contributions were
lower in the second quarter of fiscal 2017 and this reduction in expense was
recorded as a net increase in regulatory deferrals adjustments.
income and expenses for the second quarter of fiscal 2017 were an expense of $15
million as compared to an expense of $25 million over the same period in fiscal
2016, primarily due to higher positive fair value
adjustments on the investment in preferred interests of Aireon LLC due to the
fourth tranche investment made during the quarter and lower interest expense,
partially offset by higher net interest costs related to employee benefits and
higher foreign exchange losses.
The Company had a net loss (before net
movement in regulatory deferral accounts including rate
stabilization) of $52 million in the second quarter of fiscal 2017 as compared
to a net loss of $24 million for the second quarter of fiscal 2016.
The Company is
subject to legislation that regulates the level of its charges. The timing of the
recognition of certain revenue and expenses recovered through charges is recorded
through movements in regulatory deferral accounts. The net movement in
regulatory deferral accounts for the second quarter of fiscal 2017 was income
of $18 million as compared to a loss of $15 million over the same
period in fiscal 2016. This change in regulatory
deferrals of $33 million as compared to the same period in fiscal 2016 is due
to lower deferrals of favourable results through rate stabilization adjustments
of $16 million and a $17 million net increase in regulatory deferral adjustments
to adjust the accounting recognition of certain transactions to the periods in
which they will be considered for rate setting.
During the six
months ended February 28, 2017, the Company received the remaining $285 million
principal balance of Master Asset Vehicle II Class A-1 and A-2 notes ($212
million was received in the second quarter of fiscal 2017). Neil Wilson stated
that “The Company participated in the restructuring of third party sponsored
ABCP in Canada as a member of the Pan Canadian Investors Committee and we are
gratified to see that the hard work of that committee resulted in a restructuring
that occurred as anticipated”. The early partial redemption of the Company’s series
MTN 2009-1 General Obligation Notes was financed out of proceeds from the ABCP
investments received in the first quarter of fiscal 2017 along with surplus
The Company’s Financial Statements and Management's
Discussion and Analysis for the three and six months ended February 28, 2017
can be found at:
NAV CANADA is the country’s private sector civil air navigation
services provider. With operations from coast to coast to coast, NAV CANADA
provides air traffic control, flight information, weather briefings,
aeronautical information services, airport advisory services and electronic
aids to navigation.
Free cash flow is a non-GAAP
financial measure used by the Company to enhance the overall understanding of
its financial and operating performance. Non-GAAP financial measures do not
have any standardized meaning prescribed by IFRS and therefore may not be
comparable to similar measures presented by other issuers. The Company defines
free cash flow as cash generated from operations, less capital expenditures and
investments in Aireon LLC and other subsidiaries. Management places importance
on this indicator as it assists in measuring the impact of its investment
program on the Company’s financial resources.
A positive balance in the rate
stabilization account represents a regulatory credit balance on the Company’s statement
of financial position, reflecting amounts returnable to customers through
future customer service charges.
information, please contact:
Director, Government and Public Affairs
National Manager, Media Relations
Media Information Line: 1-888-562-8226
This press release contains certain forward-looking statements that are subject to important risks and uncertainties. Actual results may differ materially from the results indicated in these statements for a number of reasons. NAV CANADA disclaims any intention to update any forward-looking statements.