October 20, 2022
NAV CANADA today released its financial results for the year ended August 31, 2022.
The Company saw air traffic levels for fiscal 2022, as measured in weighted charging units(1), increase 76.8% on a year-over-year basis. In comparison to pre-pandemic levels in fiscal 2019 however, weighted charging units were 21.5% lower. The Company’s revenue for fiscal 2022 was $1,507 million as compared to $870 million in fiscal 2021.
The Company had positive free cash flow(2) of $175 million in fiscal 2022 as compared to negative free cash flow of $509 million in fiscal 2021. The positive free cash flow in fiscal 2022 is largely attributable to higher than expected receipts from customer service charges and proceeds from strategic divestments during the year.
“Throughout fiscal 2022, NAV CANADA’s dedicated employees have maintained a strong focus on supporting and collaborating with customers and stakeholders as air traffic continued to increase, while laying the foundations for its long-term strategic direction by strengthening key partnerships and leveraging world-leading technologies,” said Raymond G. Bohn, President and CEO. “Our commitment to driving value for our customers, stakeholders and society to meet the needs of an evolving industry has never been stronger. We are confident in our ability to invest in people, safety, and our core business as we set our sights on the future.”
Operating expenses for fiscal 2022 were $1,416 million as compared to $1,278 million in fiscal 2021. The increase is largely due to the Canada Emergency Wage Subsidy program ending in fiscal 2022 as well as an increase in overtime costs as air traffic levels recover.
Net other income and expenses for fiscal 2022 were a net expense of $183 million as compared to a net expense of $176 million in fiscal 2021. During fiscal 2022, the Company recorded an $82 million (U.S. $63 million) non-cash reduction to the fair value of its investment in preferred interests of Aireon LLC as compared to a non-cash reduction of $24 million (U.S. $21 million) recorded in fiscal 2021. Foreign exchange gains in fiscal 2022, as compared to foreign exchange losses in fiscal 2021, primarily related to the Company’s investment in Aireon LLC, along with lower interest costs related to employee benefits and long-term debt partially offset the negative change in fair value.
The Company had a net loss (before net movement in regulatory deferral accounts including rate stabilization) of $79 million in fiscal 2022 as compared to a net loss of $577 million in fiscal 2021.
The Company is subject to legislation that regulates its approach to setting customer service charges. The timing of the recognition of certain revenue and expenses recovered through customer service charges is recorded through movements in regulatory deferral accounts. The net movement in regulatory deferral accounts for fiscal 2022 was income of $79 million as compared to income of $577 million in fiscal 2021. This change in regulatory deferrals is primarily due to favourable rate stabilization adjustments of $82 million in fiscal 2022 as compared to unfavourable adjustments of $401 million for the same period of fiscal 2021, along with a net decrease of $15 million 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.
(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 and provides users a more stable indication of the Company’s ability to meet its debt obligations and continue to invest in the air navigation system.
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.