announces third quarter financial results
(Ottawa, July 14, 2017) – NAV
CANADA today released its financial results for the three and nine months ended
May 31, 2017.
The results reflect growth in air traffic volumes as
measured by weighted charging units of 5.9 per cent over the same period in the prior
fiscal year (5.5 per cent excluding the effect of the leap year in fiscal 2016) and
demonstrate the Company’s ongoing efforts in controlling costs and making
strategic investments in its core services while maintaining safe and efficient
The Company’s fiscal year runs from
September 1 to August 31. In the third quarter of fiscal 2017, the Company had cash of $218 million, a negative free cash
flow(1) of $34 million due to seasonally weaker air traffic but continued
its strong financial performance for the fiscal year as evidenced by its rate
stabilization account, which finished the quarter with a positive(2)
balance of $177 million which is above its target balance of $101 million.
The Company’s revenue for the third quarter of fiscal 2017 was $332
million, compared to $337 million over the same period in fiscal 2016,
mainly due to the lower service charges (7.6 per cent on average) that became effective
September 1, 2016 partially offset by a 5.9 per cent growth in air traffic volumes.
steady and sustained traffic growth that we have seen over the past three years
has continued into the third quarter of fiscal 2017,” said Neil Wilson,
President and CEO. “This strong traffic and the increases we have seen to our
rate stabilization account put the Company in good stead to implement the proposed
rate reductions and a customer refund slated for the next fiscal year.” The Company
issued a notice of revised service charges for consultation on May 30, 2017,
providing details of the proposed revisions.
The consultation period concludes on July 31, 2017.
expenses for the third quarter of fiscal 2017 were $348
million as compared to $319 million over the same period in fiscal 2016, mainly
due to a curtailment loss recorded on the voluntary elimination of severance
benefits for employees represented by the CATCA collective agreement, 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 third quarter of
fiscal 2017 and this reduction in expense was
recorded as a net increase in regulatory deferrals adjustments.
Net other income and expenses for the
third quarter of fiscal 2017 were a net expense of $16 million as compared to a
net expense of $34 million over the same period in fiscal 2016,
primarily due to gains recorded on the partial sale of the Company’s investment
in a subsidiary during the quarter, lower interest expense and higher foreign
exchange gains, partially offset by higher net interest costs related to
Company had a net loss (before net movement in regulatory
deferral accounts including rate stabilization) of $35 million in the third quarter of
fiscal 2017 as compared to a net loss of $16 million for the third quarter of
The Company is subject to legislation
that governs how it sets 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 third quarter of fiscal 2017 was income of $27 million as compared to
income of $8 million over
the same period in fiscal 2016. This change in regulatory
deferrals of $19 million as compared to the same period in fiscal 2016
is due to lower deferrals of favourable results through rate stabilization
adjustments of $18 million and a $1 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.
Financial Statements and Management's Discussion and Analysis for the three and
nine months ended May 31, 2017 can be found at:
About NAV CANADA
NAV CANADA is a private, not-for-profit company, established in 1996,
providing air traffic control, airport advisory services, weather briefings and
aeronautical information services for more than 18 million square kilometres of
Canadian domestic and international airspace.
The Company is internationally recognized for its safety record, and technology
innovation. Air traffic management systems developed by NAV CANADA are used by
air navigation service providers in countries worldwide.
We are a founding partner of Aireon LLC, an international joint venture
deploying a space based Automatic Dependent Surveillance-Broadcast (ADS-B)
system that will expand air traffic surveillance to all regions of the globe.
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 equity related investments. 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.
For further information, please contact:
and Public Affairs
National Manager, Media Relations
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