July 8, 2022
NAV CANADA today released its financial results for the three and nine months ended May 31, 2022.
In the third quarter of fiscal 2022, the Company saw air traffic levels, as measured in weighted charging units(1), increase 95.3% on a year over year basis. The Company’s revenue for the third quarter of fiscal 2022 was $381 million, compared to $196 million over the same period in fiscal 2021. However, in comparison to the same period in fiscal 2019 (prior to the COVID-19 pandemic), weighted charging units were 19.4% lower.
The Company had negative free cash flow(2) of $21 million in the third quarter of fiscal 2022 as compared to negative free cash flow of $140 million for the same period in fiscal 2021. The negative free cash flow is attributable to capital expenditures exceeding operating cash inflows. The Company ended the quarter with a cash balance of $321 million.
“During the third quarter, NAV CANADA was focused on meeting service delivery demands as air traffic levels continued to increase while progressing on our strategic plan to improve the Company’s resilience and provide longer-term value for stakeholders. A key component of our strategic plan is consideration of our employees and collaborating closely with partners, customers and other key stakeholders,” said Raymond G. Bohn, President and CEO.
Operating expenses for the third quarter of fiscal 2022 were $361 million as compared to $305 million over the same period in fiscal 2021. The increase is largely due to the end of the Canada Emergency Wage Subsidy program in addition to an increase in overtime costs as traffic levels recover.
Net other income and expenses for the third quarter of fiscal 2022 were a net expense of $28 million as compared to a net expense of $86 million over the same period in fiscal 2021. During the third quarter of fiscal 2021, the Company recorded a $36 million (U.S. $30 million) non-cash reduction to the fair value of its investment in preferred interests of Aireon LLC (Aireon). Lower foreign exchange losses in the third quarter of fiscal 2022 primarily related to the Company’s investment in Aireon also led to the decrease in net expense.
The Company had a net loss (before net movement in regulatory deferral accounts including rate stabilization) of $8 million in the third quarter of fiscal 2022 as compared to a net loss of $186 million for the third quarter of fiscal 2021.
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 third quarter of fiscal 2022 was income of $3 million as compared to income of $194 million over the same period in fiscal 2021. This change in regulatory deferrals is primarily due to favourable rate stabilization adjustments of $20 million in the third quarter of fiscal 2022 as compared to unfavourable adjustments of $119 million for the same period in fiscal 2021, along with a net decrease of $52 million in adjustments to align the accounting recognition of certain transactions to 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 nine months ended May 31, 2022 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.
(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 regulatory assets, 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.