NAV CANADA announces third quarter financial results
(Ottawa, July 10, 2015) – NAV CANADA (the “Company”) today released its financial results for the three and nine months ended May 31, 2015. During the third quarter air traffic volumes grew by 4.7 per cent compared to the same period in the prior fiscal year.
The Company’s fiscal year runs from September 1 to August 31. In the third quarter of fiscal 2015, the Company achieved positive free cash flow(1) and strong financial performance as evidenced by its rate stabilization account, finishing with a positive(2) balance of $79 million. When adjusted for rate setting purposes, there is a positive(2) “notional” balance of $98 million in the rate stabilization account, which is equal to its target balance.
“The increase in air traffic is a reflection of the overall health of the airline industry,” said John Crichton, President & CEO. “The International Air Transport Association reports a notable increase in global passenger traffic and the two major Canadian carriers have announced record profits for the first quarter of 2015. Industry growth and continued effective cost control allows us to keep our rates stable and continue our decade-long record of no increases.”
The Company’s revenue before rate stabilization for the third quarter of fiscal 2015 was $329 million, compared to $315 million in the third quarter of fiscal 2014, mainly due to the growth in air traffic volumes.
Operating expenses before rate stabilization for the third quarter of fiscal 2015 were $279 million as compared to $264 million over the same period in fiscal 2014, mainly due to higher compensation levels, higher pension expense and inflationary increases.
Interest, depreciation and amortization expenses before rate stabilization totalled $59 million as compared to $61 million over the same period in fiscal 2014.
Other income before rate stabilization for the third quarter of fiscal 2015 was $nil as compared to $5 million over the same period in fiscal 2014. As at May 31, 2015, the fair value of the Company’s investments in ABCP restructured and non-restructured notes is $277 million on holdings with a face value of $297 million. Of the total fair value variances from face value of $20 million, $19 million is considered recoverable over the terms of the notes.
Based on the above, the Company had an excess of expenses over revenue and other income before rate stabilization of $9 million for the third quarter of fiscal 2015. Given the normal seasonal variation in traffic volumes and the fact that our costs are predominantly fixed in nature, an excess of expenses over revenues in the Company’s third quarter is expected.
The Company’s Financial Statements and Management's Discussion and Analysis for the three and nine months ended May 31, 2015 can be found at:
• Financial Statements
• Management’s Discussion and Analysis
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.
(1) 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 Canadian GAAP 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.
(2) A positive balance in the rate stabilization account represents a liability on the Company’s balance sheet, reflecting amounts returnable to customers through future customer service charges.
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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.