OTTAWA, July 14 /CNW Telbec/ - NAV CANADA today released its financial results for the three and nine months ended May 31, 2010. The results show continued success in controlling costs while maintaining safe and efficient air navigation services.
Air traffic levels have been 2.2 per cent lower for the first nine months of the year, but grew by 0.6 per cent during the third quarter. Year-over-year traffic growth was 3.0 per cent in March, 1.9 per cent in May and -3.3 per cent in April, due to the Icelandic volcanic eruption. Revenues during the third quarter of fiscal 2010 were essentially unchanged from a year ago.
In the third quarter of fiscal 2010, the Company had an excess of expenses over revenues and other income after rate stabilization of $ 5 million. The Company finished the quarter with an asset balance of $ 10 million in its rate stabilization account.
However, when adjusted for rate setting purposes, there is a notional balance in the rate stabilization account of $ 103 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. This current notional balance is above the fiscal year 2010 target balance of $ 93 million.
"The air traffic and revenue environment continues to improve; however, the pace of growth is slower than we would like to see, reflecting the latest trends in the global economy" said John Crichton, NAV CANADA President & CEO. "Continued growth at these less-than-robust levels - even in the face of rigorous cost control throughout the business - may soon require the Company to propose its first service charge increase in six years."
NAV CANADA will continue to actively monitor economic and industry conditions, and intends to make a decision with regard to service charges this autumn. Any resulting service charge proposal would be based on the principle of meeting the Company's financial requirements, and would be subject to appropriate consultation and notification, all in accordance with the ANS Act.
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 the third quarter of fiscal 2010 were $ 282 million, compared to $ 284 million for the comparable period in the previous year.
Operating expenses before rate stabilization for the quarter were $ 237 million, after capitalizing $ 11 million more of internal labour and travel costs than in the prior year period, in line with the Company's revised accounting policy. Operating expenses were $ 4 million lower than in the third quarter of last year. Management continues to effectively manage headcount and overtime to offset somewhat higher compensation levels.
Interest, depreciation and amortization expense before rate stabilization totalling $ 62 million was $ 4 million lower than in the comparable period of the prior year. The fair value of the Company's investments in ABCP restructured notes remained stable at $ 202 million on holdings with a face value of $ 359 million. Of the total fair value provision of $ 157 million, $ 113 million is considered recoverable over the term of the notes.
The Company's Financial Statements and Management's Discussion and Analysis for the three and nine months ended May 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.
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: 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, www.navcanada.ca