| Type | Non share capital corporation |
|---|---|
| Industry | Civil aviation |
| Founded | 1996 |
| Headquarters | Ottawa, Ontario, Canada |
| Products | Civil air navigation |
| Employees | Over 5,000 |
| Website | www.navcanada.ca |
Nav Canada is a privately run, not-for-profit corporation that owns and operates Canada's civil air navigation system (ANS).
The company employs approximately 2,000 air traffic controllers (ATCs), 800 flight service specialists (FSSs) and 700 technologists. It has been responsible for the safe, orderly and expeditious flow of air traffic in Canadian airspace since November 1, 1996 when the government transferred the ANS from Transport Canada to Nav Canada. As part of the transfer, or privatization, Nav Canada paid the government CA$1.5 billion.[1]
Nav Canada, which operates independently of any government funding,[2] is headquartered in Ottawa, Ontario.[3]
Contents |
Nav Canada's operations consist of various sites across the country. These include:
NAV Canada has three facilities not located at an airport:
As a non-share capital corporation, Nav Canada has no shareholders. The company is governed by a 15 member board of directors representing the four stakeholder groups that founded Nav Canada. The four stakeholders appoint 10 members as follows:
| Air carriers | 4 |
| General and business aviation | 1 |
| Federal government | 3 |
| Bargaining agents (unions) | 2 |
These 10 directors then elect four independent directors, with no ties to the stakeholder groups. Those 14 directors then appoint the president and chief executive officer who becomes the 15th board member.
This structure ensures that the interests of individual stakeholders do not predominate and no member group could exert undue influence over the remainder of the board.[6] To further ensure that the interests of Nav Canada are served, these board members cannot be active employees or members of airlines, unions, or government. [7]
Early in its history the company established a rate stabilization fund, consisting of retained assets. This fund was used to provide funding for the company during periods of lower revenues caused by seasonal and other fluctuations of air traffic and hence the customer fees that primarily fund the company. The fund was generally kept at $80–100 million, except during the early 2000s recession when it was drawn down to zero and later replenished. In 2008 the company announced that the fund had been reduced to $4M "due to variances from planned results".[8][9]
At the end of the company's third fiscal quarter, 31 May 2009 the rate strabilization fund stood with a recoverable asset balance of $27 M.[10]
Nav Canada felt the impact of the late-2000s recession in two ways: due to losses in its investments in asset-backed commercial paper (ABCP) and because of falling air traffic levels.
In an attempt to provide stable income for the company Nav Canada invested heavily in ABCP. On 13 August 2007 the company announced that certain third-party sponsors of these instruments had become "illiquid" and on 16 August 2007 the company joined with other companies in the Montreal Accord, forming a Pan Canadian Investors Committee, to try to solve the problem. On 12 January 2009 final Ontario Superior Court of Justice approval was granted to restructure the debt as new notes that will mature in several years.[9][11]
As a result of these proceedings Nav Canada wrote off a total of $164M in ABCP losses by January 2009. In July 2009 the company indicated that $66M worth of "asset-backed commercial paper investments should be recoverable over the time that the Company continues to hold them."[9][10][12]
During the recession commercial air traffic levels dropped as airlines reduced the number of flights scheduled in response to lower customer demand. The company reported that "Traffic during the third quarter (2009) was 8.1 per cent lower than in the third quarter of 2008." This resulted in lower revenues for Nav Canada with third quarter revenues reported as $284M, compared to $305M in the same period in 2008. Operating expenses were $241M, $9M lower than the same period in 2008 as the company reduced overtime and employee numbers to contain costs, despite large settlements in union contracts. The company expenses were $2M higher than revenues in the third quarter of 2009, but were offset by use of the rate stabilization account.[10]
In dealing with the recession as well as the investment losses, CEO John Crichton said in July 2009:
| “ | Working with employees and all our stakeholders, the Company has been able to absorb the impact of declining air traffic and revenues without having to increase our service charges. We announced in June that no rate increase is planned at this time.[10] | ” |
Results for the company's fiscal year 2009, which ended on 31 August, showed that air traffic was down. The company reported: "Traffic for the complete fiscal year 2009 was 6.0 per cent lower than 2008, or 5.8 per cent on a normalized basis given that February 2009 had one less day than February 2008 due to the leap year".[13]