NAV CANADA announces first quarter financial results

OTTAWA, Jan. 13, 2021 (GLOBE NEWSWIRE) — NAV CANADA today released its financial results for the three months ended November 30, 2020.

In the first quarter of fiscal 2021, the Company saw air traffic levels, as measured in weighted charging units, decrease 58.8% on a year over year basis. The Company’s revenue for the first quarter of fiscal 2021 was $202 million, compared to $364 million over the same period in fiscal 2020. The decrease is due to the continued significant negative impact of the COVID-19 pandemic on global air traffic and the aviation industry and has been partially offset by the increase in customer service charges, whereby existing base rates increased on average 29.5%, effective September 1, 2020.

“Since the beginning of the pandemic, NAV CANADA has taken unprecedented measures to drive our operating expenses down. In fiscal 2021, we continued to implement cost-containment measures to manage the significant downturn in air traffic in the ever-changing landscape of this pandemic. This includes announcing an optimal staffing strategy, launching rigorous, safety-focused reviews of the level of service for air traffic control towers and aerodromes and restructuring efforts that will impact approximately 900 jobs across the country,” said Neil Wilson, President and CEO. “While the decision to make these changes is very difficult, the restructuring is critical to safely and responsibly streamline our operations to adapt to today’s realities. NAV CANADA must continue to fulfil its commitment to safely and efficiently run Canada’s air navigation system, ensuring that the services provided align with market demands.”

In September 2020, the Canadian Transportation Agency (CTA) received an appeal by WestJet of the revised customer service charges implemented on September 1, 2020, requesting, among other things, the cancellation of the revised charges. The appeal alleged that the Company did not comply with two of the charging principles in the Civil Air Navigation Services Commercialization Act. On January 12, 2021, the CTA dismissed the appeal filed by WestJet and in doing so, upheld the Company’s revised service charges which came into effect on September 1, 2020.

Operating expenses for the first quarter of fiscal 2021 were $309 million as compared to $369 million over the same period in fiscal 2020 due to cost saving measures as well as Canada Emergency Wage Subsidy receipts partially offset by costs relating to restructuring efforts.

Net other income and expenses for the first quarter of fiscal 2021 and 2020 were a net expense of $31 million.

The Company had a net loss (before net movement in regulatory deferral accounts including rate stabilization) of $138 million in the first quarter of fiscal 2021 as compared to a net loss of $36 million for the first quarter of fiscal 2020.

The Company had negative free cash flow(1) of $146 million in the first quarter of fiscal 2021 as cash flows for operating expenses and capital expenditures exceeded receipts from customer service charges. In addition, the Company repaid borrowings under its syndicated credit facility and ended the quarter with a cash balance of $320 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 first quarter of fiscal 2021 was income of $68 million as compared to income of $39 million over the same period in fiscal 2020. This change in regulatory deferrals is primarily due to higher rate stabilization adjustments of $42 million, partially offset by a $13 million net decrease to adjust 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 months ended November 30, 2020 can be found at: