April 12, 2019
NAV CANADA today released its financial results for the three and six months ended February 28, 2019.
In the second quarter of fiscal 2019, NAV CANADA’s financial performance was in line with expected results. The Company had negative free cash flow(1) of $32 million in the second quarter of fiscal 2019 primarily due to increased capital spending, ending the quarter with cash of $37 million.
The Company’s fiscal year runs from September 1 to August 31. In the second quarter of fiscal 2018, the Company had negative free cash flow(1) of $95 million primarily due to the customer service charge refund, settlements to curtail severance benefits and increased capital spending ending the quarter with cash of $134 million. Financial performance as evidenced by its positive(2) rate stabilization account balance of $135 million which was in line with expected results including the customer service charge revisions implemented September 1, 2017 and reflected a planned reduction of $5 million from August 31, 2017.
“We were pleased to have our credit ratings reaffirmed recognizing our continued financial strength. This allowed us to complete a successful 31.5 year bond issue for $250 million in March. We will use the proceeds from this issue to retire the general obligation notes which mature on April 17th” said Neil Wilson, President and CEO. “I am also pleased to announce that we have begun trialing space-based surveillance technology in our air traffic control operations for both domestic and North Atlantic oceanic airspace at the end of March. We are delighted to be world leaders in implementing this revolutionary new air traffic control technology. The introduction of this new surveillance technology will further enhance air travel safety for the travelling public in what is already considered to be one of the safest air spaces in the world.”
Operating expenses for the second quarter of fiscal 2019 were $360 million as compared to $340 million over the same period in fiscal 2018, mainly due to higher compensation costs.
Net other income and expenses for the second quarter of fiscal 2019 was a net expense of $27 million as compared to a net expense of $30 million over the same period in fiscal 2018, primarily due to lower net interest costs relating to employee benefits.
The Company had a net loss (before net movement in regulatory deferral accounts including rate stabilization) of $70 million in the second quarter of fiscal 2019 as compared to a net loss of $46 million for the second quarter of fiscal 2018.
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 2019 was income of $26 million as compared to income of $1 million over the same period in fiscal 2018. This change in regulatory deferrals is due to deferrals of lower favourable results through rate stabilization adjustments of $10 million and a $15 million net increase in regulatory deferral adjustments to reflect certain transactions in the periods in which they will be considered for rate setting.
The Company’s Financial Statements and Management's Discussion and Analysis for the three and six months ended February 28, 2019 can be found at: