Traffic levels hit a record high for a third consecutive quarter
February 17, 2023
VICTORIA – BC Ferries released its results today for the three months ending December 31, 2022 and vehicle traffic levels hit a record high again as customers revert to pre-pandemic travel patterns.
During the third quarter ending December 31, 2022, 4.5 million passengers and 2.0 million vehicles travelled on the ferry system, an increase of 10 per cent and 3 per cent, respectively, compared to the same period in the prior year. Year-to-date, 17.4 million passengers and 7.5 million vehicles were carried, an increase of 23 per cent and 12 per cent, respectively, compared to the same period in the prior year.
Revenue for the third quarter ending December 31, 2022, inclusive of Safe Restart Funding, was $234.8 million, an increase of $12.6 million compared to the same period in the prior year. This increase is primarily a result of higher traffic volumes, net retail sales and fuel surcharges.
Quarterly results are affected by the seasonality of leisure travel patterns and the third quarter results reflect a seasonal reduction in traffic. This time is used by BC Ferries to perform upgrades and major maintenance and refits, as well as mandatory inspections on the majority of vessels.
Net loss for the third quarter ending December 31, 2022 was $22.7 million compared to a net loss of $1.6 million in the same quarter the previous year, primarily as a result of less Safe Restart Funding being applied in the quarter and higher operating costs.
During the nine months ending December 31, 2022, net earnings were $65.6 million compared to $83.0 million in the same period in the prior year, primarily as a result of higher traffic volumes and net retail sales, partially offset by less Safe Restart Funding being applied in the current year and higher operating expenses.
Third quarter operating expenses were $245.2 million compared to $209.5 million the same period last year. This increase is mainly due to an increased number of sailings, with corresponding higher labour costs, as well as higher fuel prices and maintenance expenses.
“While expenditures are up, it’s important we continue to support our employees, who are the heart of our organization,” said Jill Sharland, BC Ferries’ interim President and CEO. “We’re proud of their exceptional efforts to move record amounts of traffic and keep sailing cancellations to a minimum.”
Continuous investment in infrastructure is critical to the operation of a safe, reliable and sustainable ferry system. Capital expenditures in the three and nine months ending December 31, 2022 totalled $37.3 million and $86.2 million, respectively, and included investments in existing ships, hardware upgrades and various other projects.
In December 2020, BC Ferries received $308.0 million from the Province as part of the provincial and federal governments’ Safe Restart Funding program. All of the direct operating relief funding has now been applied with the remaining funding intended to offset the costs of discretionary sailings and to limit fare increases. In the three months ending December 31, 2022, BC Ferries recognized $2.1 million ($7.7 million year-to-date) of Safe Restart Funding compared to $19.2 million ($82.0 million year-to-date) in the same period in the prior year.
BC Ferries’ full financial statements, including notes, and Management’s Discussion and Analysis are filed on SEDAR and will be available at www.sedar.com.
In addition to providing measures prepared in accordance with International Financial Reporting Standards (IFRS), we present certain financial measures that do not have any standardized meanings prescribed by IFRS and therefore are unlikely to be comparable to similar measures presented by other companies. These supplemental financial measures are provided to assist readers in determining our ability to generate cash from operations and improve the comparability of our results from one period to another. We believe these measures are useful in assessing operating performance of our ongoing business on an overall basis.
SIGNIFICANT EVENTS THIRD QUARTER OF FISCAL 2023
Significant events during and subsequent to the Third Quarter of Fiscal 2023 include the following:
- On October 4, 2022, BC Ferries announced that its Performance Term Six submission had been provided to the British Columbia Ferries Commissioner (the “Commissioner”). This begins the process of price cap setting by the Commissioner and negotiations with the Province regarding changes in core service levels and related ferry transportation fees for the four year period from April 1, 2024 through March 31, 2028 (“PT6”). The Commissioner establishes price caps for designated ferry route groups for the purpose of regulating fares. The Commissioner will make a preliminary determination on the PT6 price caps by March 31, 2023, and a final price caps determination by September 30, 2023. The Commissioner welcomes public input throughout this process. The submission document can be found at: www.bcferrycommission.ca.
- On November 1, 2022, due to sustained high fuel prices, fuel surcharges increased by 1.5 per cent on fares for all routes, bringing the fuel surcharge to 4 per cent on all routes. A fuel surcharge of 2.5 per cent had been in place on all routes since June 1, 2022.
- On November 21, 2022, S&P Global Ratings affirmed the company’s long-term issuer credit and senior secured debt ratings of “AA-” with a stable trend.
- On December 9, 2022, BC Ferries and W̱JOȽEȽP (Tsartlip First Nation) entered into a relationship protocol agreement to establish a framework for collaborating on areas of mutual interest. Currently, BC Ferries operates eleven terminals within W̱JOȽEȽP (Tsartlip)’s traditional territory. The agreement outlines shared goals, is grounded in mutual respect and recognition, establishes lines of communication, and identifies topics for ongoing collaboration.
- On January 17, 2023, the company’s board of directors appointed Nicolas Jimenez as President and Chief Executive Officer of BC Ferries, effective March 6, 2023. Over the last 20 years, Mr. Jimenez has held a number of senior roles at the Insurance Corporation of B.C., including as President and CEO for the last five years. Jill Sharland, who has been serving as Interim President and Chief Executive Officer, remains as Vice President and Chief Financial Officer of BC Ferries.
- On February 9, 2023, DBRS Morningstar confirmed BC Ferries’ credit rating at A (high) with Stable trend.
- On October 14, 2022, the Commissioner issued Order 22-02A, approving an application for a major capital project to redevelop the Fleet Maintenance Unit site, which is BC Ferries primary vessel maintenance and refit facility located at Deas Basin in Richmond, BC near the George Massey Tunnel.
- On January 18, 2023, the Island Nagalis and Island K’ulut’a began service on the Campbell River – Quadra Island route enabling round trip service to grow from up to 18 trips per day, to up to 29 trips per day, delivering more service at peak times and providing more capacity overall. These two hybrid-electric Island Class vessels replaced and allowed for the retirement of the 58-year old Powell River Queen.
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