NAV CANADA announces strong Q3 results
By NAV CANADA
NAV CANADA has released its financial results for the three and nine months ended May 31, 2015. During the third quarter air traffic volumes grew by 4.7 per cent compared to the same period in the prior fiscal year.
By NAV CANADA
The Company’s fiscal year runs from September 1 to August 31. In the third quarter of fiscal 2015, the Company achieved positive free cash flow and strong financial performance as evidenced by its rate stabilization account, finishing with a positive balance of $79 million. When adjusted for rate setting purposes, there is a positive “notional” balance of $98 million in the rate stabilization account, which is equal to its target balance.
“The increase in air traffic is a reflection of the overall health of the airline industry,” said John Crichton, President and CEO. “The International Air Transport Association reports a notable increase in global passenger traffic and the two major Canadian carriers have announced record profits for the first quarter of 2015. Industry growth and continued effective cost control allow us to keep our rates stable and continue our decade-long record of no increases.”
The Company’s revenue before rate stabilization for the third quarter of fiscal 2015 was $329 million, compared to $315 million in the third quarter of fiscal 2014, mainly due to the growth in air traffic volumes.
Operating expenses before rate stabilization for the third quarter of fiscal 2015 were $279 million as compared to $264 million over the same period in fiscal 2014, mainly due to higher compensation levels, higher pension expense and inflationary increases.
Interest, depreciation and amortization expenses before rate stabilization totalled $59 million as compared to $61 million over the same period in fiscal 2014.
Other income before rate stabilization for the third quarter of fiscal 2015 was $nil as compared to $5 million over the same period in fiscal 2014. As at May 31, 2015, the fair value of the Company’s investments in ABCP restructured and non-restructured notes is $277 million on holdings with a face value of $297 million. Of the total fair value variances from face value of $20 million, $19 million is considered recoverable over the terms of the notes.
Based on the above, the Company had an excess of expenses over revenue and other income before rate stabilization of $9 million for the third quarter of fiscal 2015. Given the normal seasonal variation in traffic volumes and the fact that our costs are predominantly fixed in nature, an excess of expenses over revenues in the Company’s third quarter is expected.