NAV CANADA triumphs on cost control

NAV CANADA’s latest yearly results show continued success in controlling costs while maintaining safe and efficient air navigation services in a period when growth in air traffic volumes struggled to reach one per cent.
In fiscal 2012 for the year ended August 31, the Canadian air navigation services provider achieved positive financial performance, as evidenced by an improvement of $29 million in its rate stabilisation account, finishing with a positive balance of $31 million. When adjusted for rate setting purposes, there is a positive notional balance of $92 million in the rate stabilisation account, which is equal to its target balance.
“These results show the importance of cost control in a sluggish traffic environment,” said John Crichton, president and CEO. “We have ensured strong financial performance while continuing to make strategic investments to improve safety and service. Projects that came online this year are enabling more efficient customer operations, and we continue to focus on game-changing technologies that are on the horizon.”
Revenues before rate stabilization for fiscal 2012 were $1,226 million, compared to $1,210 million in the previous fiscal year.
Operating expenses before rate stabilisation for fiscal 2012 were $987 million as compared to $967 in fiscal 2011. Operating expenses in fiscal 2011 were reduced by $11 million due to a negotiated return of long-term disability premiums. Management said it continues to successfully manage its costs, largely offsetting higher compensation levels, benefit costs and inflationary increases.
Interest, depreciation and amortization expense before rate stabilisation totalling $244 million was $10 million lower than in the previous fiscal year.
Other income before rate stabilization totalled $34 million in fiscal 2012. As at August 31, 2012, the fair value of investments in ABCP restructured and non-restructured notes is $238 million on holdings with a face value of $307 million. Of the total fair value variances from face value of $69 million, $61 million is considered recoverable over the term of the notes.
Based on the above, NAV CANADA had an excess of revenue and other income over expenses before rate stabilization of $29 million for the year.