January 12, 2022
NAV CANADA today released its financial results for the three months ended November 30, 2021.
In the first quarter of fiscal 2022, the Company saw air traffic levels, as measured in weighted charging units(1), increase 68.7% on a year over year basis. The Company’s revenue for the first quarter of fiscal 2022 was $345 million, compared to $202 million over the same period in fiscal 2021. However, in comparison to the same period in fiscal 2019 (prior to the COVID-19 pandemic), weighted charging units were 30.1% lower.
“While air traffic remained well below pre-pandemic levels during the first quarter of fiscal 2022, we have observed positive signs of air traffic recovery. We remain cautiously optimistic, but as demonstrated by recently imposed travel restrictions, the aviation industry continues to face uncertainty and as such, we continue to take a measured approach to spending; positioning ourselves to support the post-pandemic recovery in air travel, while strategically investing in the long-term future of NAV CANADA,” said Raymond Bohn, President and CEO. “Looking forward, we have launched a new Strategic Direction designed to transform air navigation services which, along with the skills and support of our talented workforce, will keep pace with the evolving needs of our customers, partners, and stakeholders and support the aviation industry’s environmental efforts; while continuing to ensure that the safety of air traffic in Canadian airspace remains our top priority.”
Operating expenses for the first quarter of fiscal 2022 were $337 million as compared to $309 million over the same period in fiscal 2021. The increase is largely due to an overall increase in compensation costs primarily as a result of lower receipts from the Canada Emergency Wage Subsidy program.
Net other income and expenses for the first quarter of fiscal 2022 were a net expense of $24 million as compared to a net expense of $31 million over the same period in fiscal 2021, largely due to lower net interest expense relating to employee benefits.
The Company had a net loss (before net movement in regulatory deferral accounts including rate stabilization) of $16 million in the first quarter of fiscal 2022 as compared to a net loss of $138 million for the first quarter of fiscal 2021.
The Company had positive free cash flow(2) of $18 million in the first quarter of fiscal 2022. This compares to negative free cash flow of $146 million for the same period in fiscal 2021. Receipts from customer service charges exceeded cash flows for operating expenses and capital expenditures, and the Company ended the quarter with a cash balance of $335 million.
The Company is subject to legislation that regulates its approach to setting 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 first quarter of fiscal 2022 was an expense of $41 million as compared to income of $68 million over the same period in fiscal 2021. This change in regulatory deferrals is primarily due to favourable rate stabilization adjustments of $59 million in the first quarter of fiscal 2022 as compared to unfavourable adjustments of $42 million for the same period in fiscal 2021, along with an $8 million net decrease in adjustments to align the accounting recognition of certain transactions to the periods in which they will be considered for rate setting.
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.
(1) Weighted charging units represent a traffic measure that reflects the number of billable flights, aircraft size and distance flown in Canadian airspace and is the basis for movement-based service charges, which comprise the vast majority of the Company’s revenue.
(2) 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, investments in regulatory assets, investments in Aireon LLC and equity related investments and principal payment of lease liabilities. Management places importance on this indicator as it assists in measuring the impact of its investment program on the Company’s financial resources.
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.