NAV CANADA announces year end financial results

OTTAWA, Oct. 22 /CNW/ - NAV CANADA today released its financial results for the year ended August 31, 2010. The results show continued success in controlling costs during a period of weak air traffic revenues, while maintaining safe and efficient air navigation services. In fiscal 2010, the Company had an excess of expenses over revenues and other income before rate stabilization of $ 21 million compared to $ 26 million in fiscal 2009.

Air traffic levels were 0.8 per cent lower in fiscal 2010 than in the prior year. However, traffic grew by 2.8 per cent during the fourth quarter when compared to the same period last year.

The Company finished the year with a negative^* balance of $ 20 million in its rate stabilization account. However, when adjusted for rate setting purposes, there is a positive^* "notional" balance in the rate stabilization account of $ 92 million, which reflects the Company's expectation that the market value portion of the fair value adjustments to the carrying value of its restructured notes and asset-backed commercial paper (ABCP) investments will be recovered over the terms of these investments. The current "notional" balance is very close to the fiscal year 2010 target positive balance of $ 93 million.

"Air traffic growth in the first part of fiscal 2010 mirrored the less-than-robust recovery in the global economy, which is reflected in our annual revenues," said John Crichton, NAV CANADA President & CEO. "Traffic began to grow more strongly in the fourth quarter. Throughout the year, our employees once again contributed to our efforts to control costs in line with safety, thus allowing us to maintain a positive notional balance in our rate stabilization account.

"We will continue to actively monitor economic and industry conditions. While a service charge increase is not required at this time, there may be a requirement to adjust charges in 2011 - depending on traffic and the revenue environment. Such an increase would be based on the principle of cost recovery, and subject to appropriate consultation and notification."

NAV CANADA service charges have gone up by only five per cent since they were fully implemented eleven years ago in 1999 - 20 percentage points below the rate of inflation. Service charge reductions implemented in 2006 and 2007 are still in effect.

The Company's revenues before rate stabilization for fiscal 2010 were $ 1,154 million, compared to $ 1,163 million for the previous year.

Operating expenses before rate stabilization for the current fiscal year were $ 933 million as compared to $ 905 million in fiscal 2009, after capitalizing $ 44 million more of internal labour and travel costs than in the prior year, in accordance with the Company's revised accounting policy. Operating expenses in fiscal 2010 were higher due to an increase of $ 25 million in pension expense and the recording in fiscal 2009 of a $40 million one-time gain on curtailment and settlement within a post-employment benefit plan. Management continues to effectively manage headcount and overtime to offset somewhat higher compensation levels.

Interest, depreciation and amortization expense before rate stabilization totalling $ 247 million was $ 5 million lower than in the prior year. The fair value of the Company's investments in ABCP restructured notes remained stable at $ 203 million on holdings with a face value of $ 351 million. Of the total fair value provision of $ 148 million, $ 112 million is considered recoverable over the term of the notes.

The Company's Financial Statements, Annual Information Form and Management's Discussion and Analysis for the year ended August 31, 2010 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.

For further information:

John Morris    Director, Communications       [phone]

Ron Singer    Manager, Media Relations   [phone]

Media Information Line: 1-888-562-8226