April 8, 2021
NAV CANADA today released its financial results for the three and six months ended February 28, 2021.
In the second quarter of fiscal 2021, the Company saw air traffic levels, as measured in weighted charging units(1), decrease 56.1% on a year over year basis. The Company’s revenue for the second quarter of fiscal 2021 was $179 million, compared to $322 million over the same period in fiscal 2020. The decrease is mainly due to the continued significant negative impact of the COVID-19 pandemic on global air traffic and the aviation industry. This has been partially offset by the increase in customer service charges, whereby base rates increased on average by 29.5%, effective September 1, 2020.
Operating expenses for the second quarter of fiscal 2021 were $317 million as compared to $387 million over the same period in fiscal 2020 due to Canada Emergency Wage Subsidy receipts and continued cost saving measures.
“The safety of air traffic in Canadian controlled airspace is our primary focus. We continue to face uncertainties associated with the governmental response to the pandemic, including policies related to travel restrictions, quarantine measures, testing and vaccine distribution timelines, and as appropriate, NAV CANADA is aligning our spending with the global outlook for aviation,” said Raymond Bohn, President and CEO. “As I take on the leadership role at NAV CANADA, safety will remain integral to everything we do as we rethink and transform the way we deliver services across the country. With safety at the core, the Company’s continued strength and resilience will see us through the pandemic, its recovery and beyond.”
Net other income and expenses for the second quarter of fiscal 2021 were a net expense of $40 million as compared to a net expense of $25 million over the same period in fiscal 2020, largely due to foreign exchange losses and increased finance costs as a result of carrying additional long-term debt.
The Company had a net loss (before net movement in regulatory deferral accounts including rate stabilization) of $180 million in the second quarter of fiscal 2021 as compared to a net loss of $90 million for the second quarter of fiscal 2020.
The Company had negative free cash flow(2) of $139 million in the second quarter of fiscal 2021 as cash flows for operating expenses and capital expenditures exceeded receipts from customer service charges. During the second quarter, the Company issued $500 million of General Obligation Notes. Net proceeds of these notes were used to repay the $250 million Series MTN 2011-1 General Obligation Notes which matured on February 18, 2021 and the remaining balance will be used for general corporate purposes. Since the onset of the pandemic, the Company has increased its long-term debt by $1,100 million. The Company ended the quarter with a cash balance of $498 million.
The Company is subject to legislation that regulates its approach to setting charges. The timing of the recognition of certain revenue and expenses recovered through charges is recorded through movements in regulatory deferral accounts. The net movement in regulatory deferral accounts for the second quarter of fiscal 2021 was income of $123 million as compared to income of $40 million over the same period in fiscal 2020. This change in regulatory deferrals is primarily due to higher rate stabilization adjustments of $79 million.
The Company’s Financial Statements and Management's Discussion and Analysis for the three and six months ended February 28, 2021 can be found at:
NAV CANADA is a private, not-for-profit company, established in 1996, providing air traffic control, airport advisory services, weather briefings and aeronautical information services for more than 18 million square kilometres of Canadian domestic and international airspace. The Company is internationally recognized for its safety record, and technology innovation. Air traffic management systems developed by NAV CANADA are used by air navigation service providers in countries worldwide.
(1) Weighted charging units represent a traffic measure that reflects the number of billable flights, aircraft size and distance flown in Canadian airspace and is the basis for movement-based service charges, which comprise the vast majority of the Company’s revenue.
(2) Free cash flow is a non-GAAP financial measure used by the Company to enhance the overall understanding of its financial and operating performance. Non-GAAP financial measures do not have any standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other issuers. The Company defines free cash flow as cash generated from operations, less capital expenditures, investments in Aireon LLC and equity related investments and principal payment of lease liabilities. Management places importance on this indicator as it assists in measuring the impact of its investment program on the Company’s financial resources.
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.