NAV CANADA announces second quarter financial results

OTTAWA, April 8 /CNW/ - NAV CANADA today released its financial results for the three and six months ended February 28, 2011. The second quarter results show continued success in controlling costs while maintaining safe and efficient air navigation services, as well as more robust air traffic volumes that were up 4.1 per cent from the comparable period in the prior year.

In the second quarter of fiscal 2011, the Company has achieved positive financial performance as evidenced by an improvement of $ 18 million in the rate stabilization account, finishing with a positive* balance of $ 16 million. However, when adjusted for rate setting purposes, there is a positive* "notional" balance of $ 89 million in the rate stabilization account, which is equal to its target balance.

"Thanks to the efforts of all employees, our operational and financial performance during the quarter was excellent, and this has allowed us to maintain the positive notional balance in our rate stabilization account at a level consistent with our target for the year," said John Crichton, President & CEO. "However, while the traffic and revenue picture continues to be positive, global events have once again injected a strong note of caution for everyone in the aviation industry.

"The rising price of oil, the impact of the crisis in Japan, and the unsettled conditions in the Middle East are all beginning to have an effect on industry growth. As a result, NAV CANADA will continue to be vigilant in the management of our costs going forward, while delivering the safe, efficient and modern air navigation services our customers have come to expect."

The Company's revenues before rate stabilization for the second quarter of fiscal 2011 were $ 270 million, compared to $ 263 million for the comparable period in the previous year.

Operating expenses before rate stabilization for the second quarter were $ 235 million, which was $ 3 million higher than in the second quarter of last year. Management continues to effectively manage headcount and overtime to partially offset somewhat higher compensation levels, pension expenses and inflationary increases. The negotiated return of long-term disability premiums from its benefits provider during the second quarter resulted in a reduction of $ 11 million in expenses.

The fair value of the Company's investments in ABCP restructured notes increased by $ 34 million (fair value of $ 234 million) on holdings with a face value of $ 313 million. Of the total fair value provision of $ 79 million, $ 73 million is considered recoverable over the terms of the notes. During the second quarter, the Company sold ABCP restructured notes with a face value of $ 37 million for an amount that was $ 2 million greater than their carrying value.

Interest, depreciation and amortization expense before rate stabilization totalling $ 64 million was $ 4 million higher than in the comparable period of the prior year.

Given the above, the Company had an excess of expenses over revenues and other income after rate stabilization of $ 27 million for the quarter. The second quarter normally has the lowest air traffic levels of the year. Since our costs are predominantly fixed in nature, an excess of expenses over revenues is expected. Excluding rate stabilization adjustments, expenses would have exceeded revenues and other income by $ 9 million for the quarter.

The Company's Financial Statements and Management's Discussion and Analysis for the three and six months ended February 28, 2011 are available on NAV CANADA's website at: www.navcanada.ca.

NAV CANADA, the country's civil air navigation services provider, is a private sector, non-share capital corporation financed through publicly-traded debt. 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/negative balance in the rate stabilization account represents a liability/asset on the Company's consolidated balance sheet, reflecting amounts returnable to/recoverable from 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.

SOURCE NAV CANADA

For further information:

John Morris
Director, Communications 
(613) 563-7032  
Ron Singer
Manager, Media Relations
(613) 563-7303

Media Information Line: 1-888-562-8226 

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