NAV CANADA Announces Year-End Financial Results
Nov. 27, 2007, Ottawa, Ont.- NAV CANADA today released its financial results for the year ended Aug. 31, 2007.
Nov. 27, 2007, Ottawa, Ont.- NAV CANADA today released its financial
results for the year ended Aug. 31, 2007. Growth in air traffic and
favourable cost variances from plan continued to strengthen the Company's
financial position during the year.
"Operationally it was a good year, with improvement in the financial
position of the pension plan, healthy air traffic and revenue growth, and the
continued successful efforts by employees to control costs," said John
Crichton, NAV CANADA President & CEO.
Just prior to the fiscal year end, NAV CANADA implemented a service
charge reduction of 4 per cent for the period August 1, 2007 to August 31,
2008. The reduction will save customers approximately $ 50 million in fiscal
2008. The Company expects to achieve breakeven financial results in 2008,
consistent with our mandate.
The Company's revenues before rate stabilization and the approved
transfer from the rate reduction obligation for fiscal 2007 were
$ 1,205 million, compared to $ 1,179 million for the previous year. The higher
revenues arose primarily from a 4.7 per cent year-over-year increase in air
traffic volumes, partially offset by the average 1.8 per cent reduction in
customer service charges that was implemented on September 1, 2006 and the
additional 4 per cent reduction in customer service charges that was
implemented on August 1, 2007 referred to above.
Operating expenses before rate stabilization for the year were
$ 961 million which was $ 64 million higher than last year. This increase was
primarily due to higher pension costs and compensation levels, and the
recording in fiscal 2006 of the recovery of unpaid customer service charges.
During fiscal 2007, other expenses totalling $ 264 million were
$ 36 million higher than in the prior year. This was primarily due to a
decline of $ 34 million in the value of investments in asset-backed commercial
paper, and the depreciation of new capital assets, partially offset by reduced
interest costs due to incremental interest expense incurred in fiscal 2006
associated with the early redemption of the 6.6 per cent revenue bonds.
The foregoing resulted in an excess of expenses over revenues of
$ 20 million in fiscal 2007. In order to achieve breakeven results, the
Company recorded a $ 9 million improvement in the rate stabilization account
due to variances from planned results and a $ 29 million transfer from the
rate reduction obligation.
During fiscal 2007, the Company's rate stabilization account decreased by
$ 3 million to $ 60 million. This resulted from the $ 9 million variance from
planned results, offset by the $ 12 million drawdown approved for fiscal 2008.
As a result of strong investment performance and significant
contributions by the Company during the year, the funded status of the pension
plan at its May 31st measurement date improved by $300 million.
The Company's financial statements, Annual Information Form and
Management's Discussion and Analysis for the year ended Aug. 31, 2007 are
available on NAV CANADA's website at: www.navcanada.ca.