NAV CANADA announces second quarter financial results
(Ottawa, April 11, 2014) – NAV CANADA (the “Company”) today released its financial results for the three and six months ended February 28, 2014. The results show continued success in controlling costs while maintaining safe and efficient air navigation services, as well as growth in air traffic volumes of 3.2 per cent for the second quarter compared to the same period in the prior fiscal year.
The Company’s fiscal year runs from September 1 to August 31. In the second quarter of fiscal 2014, the Company achieved positive financial performance as evidenced by an improvement of $7 million in its rate stabilization account, finishing with a positive* balance of $67 million. When adjusted for rate setting purposes, there is a positive* “notional” balance of $93 million in the rate stabilization account, which is equal to its target balance.
“Traffic volumes have grown modestly but steadily for almost a full year now,” said John Crichton, President & CEO. “However, traffic is still not at the level it was in 2008. Despite that, rigorous cost control has enabled the Company to continue to keep its rates below what they were over a decade ago.”
“As the price of fuel continues to rise for our customers, investments we have made in new technologies that enhance safety and save fuel costs are particularly important,” added Crichton.
The Company’s revenues before rate stabilization for the second quarter of fiscal 2014 were $281 million, compared to $277 million in the second quarter of fiscal 2013, mainly due to the growth in air traffic volumes.
Operating expenses before rate stabilization for the second quarter of fiscal 2014 were $258 million as compared to $248 million over the same period in fiscal 2013, mainly due to higher compensation levels, higher pension expense and inflationary increases.
Interest, depreciation and amortization expense before rate stabilization totalling $60 million was in line with the comparable period in the previous fiscal year.
Positive fair value adjustments on investments in the second quarter of fiscal 2014 contributed $7 million to other income before rate stabilization. As at February 28, 2014, the fair value of the Company’s investments in ABCP restructured and non-restructured notes is $276 million on holdings with a face value of $307 million. Of the total fair value variances from face value of $31 million, $26 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 after rate stabilization of $33 million for the second quarter of fiscal 2014. The second quarter normally has the lowest air traffic levels of the fiscal year. Since our costs are predominantly fixed in nature, an excess of expenses over revenues in the quarter is expected. Excluding rate stabilization adjustments, expenses would have exceeded revenues and other income by $26 million for the quarter.
The Company’s Financial Statements and Management's Discussion and Analysis for the three and six months ended February 28, 2014 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.
* 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.