NAV CANADA announces third quarter financial results
OTTAWA, July 14, 2017 (GLOBE NEWSWIRE) — 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 air navigation.
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.
“The 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.
Operating 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 employee benefits.
The 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 fiscal 2016.
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.
The Company’s 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.
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.