NAV CANADA announces second quarter financial results
NAV CANADA today released its financial results for the three and six months ended February 28, 2018.
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.
The Company’s revenue for the second quarter of fiscal 2018 was $305 million, compared to $296 million over the same period in fiscal 2017, mainly due to a 4.0% growth in air traffic volumes. The second quarter typically has the lowest air traffic volumes of the year due to seasonal nature of air traffic.
“Even with the seasonal changes in air traffic volumes we saw growth in air traffic in the second quarter,” said Neil Wilson President & CEO. “We were also pleased to have our credit ratings reaffirmed recognizing our continued financial strength and the current strength of our rate stabilization account. This allowed us to complete a successful 30 year bond issue for $275 million at the end of March. We will use the proceeds from this issue to partially retire the general obligation notes which mature on April 19th. ”
Operating expenses for the second quarter of fiscal 2018 were $340 million as compared to $328 million over the same period in fiscal 2017, mainly due to higher compensation costs.
Net other income and expenses for the second quarter of fiscal 2018 were a net expense of $30 million as compared to a net expense of $15 million over the same period in fiscal 2017, primarily due to fair value adjustments on our investment in Aireon in fiscal 2017.
The Company had a net loss (before net movement in regulatory deferral accounts including rate stabilization) of $46 million in the second quarter of fiscal 2018 as compared to a net loss of $52 million for the second quarter of fiscal 2017.
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 2018 was income of $1 million as compared to income of $18 million over the same period in fiscal 2017. This change in regulatory deferrals of $17 million as compared to the same period in fiscal 2017 is due to higher deferrals of favourable results through rate stabilization adjustments of $4 million and a $13 million net decrease in regulatory deferral adjustments to reflect certain transactions in the periods in which they will be considered for rate setting.
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