April 12, 2013 16:01 ET

NAV CANADA Announces Second Quarter Financial Results

OTTAWA, ONTARIO--(Marketwired - April 12, 2013) - NAV CANADA (the "Company") today released its financial results for the three and six months ended February 28, 2013. The second quarter results show continued success in controlling costs while maintaining safe and efficient air navigation services in a period when air traffic levels were down 3.3 per cent from the comparable period in the prior fiscal year. Excluding the effect of an extra day for leap year in February 2012, air traffic for the second quarter was 2.2 per cent lower than in the second quarter of the prior fiscal year. The decline in air traffic is attributable to negative economic conditions and airline efforts to constrain capacity growth in order to enhance load factors.

In the second quarter of fiscal 2013, the Company has achieved positive financial performance as evidenced by an improvement of $13 million in its rate stabilization account, finishing with a positive* balance of $52 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.

"Despite recent international forecasts for modest growth in passenger demand in 2013, traffic volumes in Canada have not yet returned to 2008 levels, and continued uncertainty in key markets affecting our traffic is a cause for ongoing concern," said John Crichton, President & CEO. "However, our strong cost control record has allowed us to maintain service charges with no increases in almost nine years despite the protracted period of sluggish or negative traffic growth."

The Company's revenues before rate stabilization for the second quarter of fiscal 2013 were $277 million, compared to $281 million in the previous fiscal year due primarily to a decline in air traffic volumes.

Operating expenses before rate stabilization for the second quarter of fiscal 2013 were $248 million as compared to $247 million for the same period in fiscal 2012. Management continues to successfully manage its costs, largely offsetting higher compensation levels and inflationary increases.

Interest, depreciation and amortization expense before rate stabilization totalling $60 million was $2 million lower than in the comparable period in the previous fiscal year.

Positive fair value adjustments in the second quarter contributed $13 million to other income before rate stabilization. As at February 28, 2013, the fair value of the Company's investments in ABCP restructured and non-restructured notes is $258 million on holdings with a face value of $307 million. Of the total fair value variances from face value of $49 million, $41 million is considered recoverable over the terms of the notes.

Based on the above, the Company had an excess of expenses over revenue after rate stabilization of $29 million for the quarter. 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 $16 million for the quarter.

The Company's Financial Statements and Management's Discussion and Analysis for the three and six months ended February 28, 2013 can be found at:

- Financial Statements

- Management's Discussion and Analysis

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 consolidated balance sheet, 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.

Contact Information

  • Michelle Bishop
    Director, Government and Public Affairs
    (613) 563-7520

    Ron Singer
    Manager, Media Relations
    (613) 563-7303

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