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Nav Canada (the “Company”) has released its financial results for the year ended August 31, 2013. The results show continued success in controlling costs while maintaining safe and efficient air navigation services in a period when air traffic levels were slightly lower than in the prior fiscal year (a decline in air traffic volumes of 0.5 per cent). The decline in air traffic is primarily attributable to weak economic conditions and ongoing airline efforts to constrain capacity growth in order to enhance load factors.
In fiscal 2013, the Company achieved positive financial performance as evidenced by an improvement of $22 million in its rate stabilization account, finishing with a positive balance of $53 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 an overall decline in annual traffic, we have seen some modest growth in the fourth quarter”, said John Crichton, President & CEO. “Although this is an encouraging sign, traffic volumes are still lower than they were in 2008. Cost control has been essential to our financial success, evidenced by the fact that we have had no general rate increases since 2004 and two decreases since that time,” noted Crichton.
The Company’s revenues before rate stabilization for fiscal 2013 were $1,231 million, compared to $1,226 million in the previous fiscal year.
Operating expenses before rate stabilization for fiscal 2013 were $997 million as compared to $987 million for 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 totaling $241 million was $3 million lower than in the previous fiscal year.
Positive fair value adjustments in fiscal 2013 contributed $24 million to other income before rate stabilization. As at August 31, 2013, the fair value of the Company’s investments in ABCP restructured and non-restructured notes is $261 million on holdings with a face value of $307 million. Of the total fair value variances from face value of $46 million, $40 million is considered recoverable over the terms of the notes.
Based on the above, the Company had an excess of revenue and other income over expenses before rate stabilization of $22 million for the year.
