22-006
February 18, 2022
BC Ferries releases third quarter results
Ferry traffic continues to recover from the impact of the pandemic
VICTORIA – BC Ferries released its results today for the three months ending December 31, 2021. During the third quarter, two million vehicles and 4.1 million passengers accessed the ferry service, an increase of 26 per cent and 43 per cent, respectively, compared to the same period in the prior year. Year-to-date, the company carried 6.7 million vehicles and 14.2 million passengers, an increase of 26 per cent and 34 per cent, respectively, compared to the same period in the prior year.
These increases are significant. Vehicle and passenger traffic in the three months ended December 31, 2021 was lower by just two per cent and 14 per cent, respectively, compared to the same time frame in 2019, a pre-COVID-19 period.
“This quarter’s numbers are encouraging given the pandemic’s ongoing impacts on travel and the uncertainty it added through the holiday season,” said Mark Collins, BC Ferries’ President and CEO. “While COVID-19 continues to present staffing and operational challenges I want to take this moment to recognize the continued commitment of our employees in delivering safe and efficient service to our customers.”
New fare choices, including advance purchase Saver fares launched on the three Metro Vancouver - Vancouver Island routes late in March 2021, along with the removal of travel restrictions in the second quarter, are contributing to the recovery of vehicle traffic.
BC Ferries’ net loss for the third quarter ending December 31, 2021 was $1.6 million, compared to net earnings of $98.5 million in the same quarter the previous year primarily as a result of the timing of recognition of Safe Restart Funding.
Revenue for the third quarter ending December 31, 2021 was $222.2 million, a decrease of $89.7 million compared to the same period in the prior year. Without the recognition of Safe Restart Funding in both periods, revenues would have been $203.0 million, an increase of $45.9 million compared to the same period in the prior year.
Third quarter operating expenses were $209.5 million compared to $199.0 million the same period last year. This increase is due mainly to providing more round trips and higher fuel prices.
Year-to-date since April 1, 2021, net earnings were $83.0 million compared to $74.3 million in the same period in the prior year primarily as a result of higher traffic volumes and net retail sales, partially offset by lower Safe Restart Funding applied to the current year and higher operating expenses.
In December 2020, BC Ferries received $308 million through the Safe Restart Program, a federal-provincial initiative intended to help provinces and territories safely restart their economies. The goals of the Safe Restart Program are to mitigate the impact of revenue losses and COVID-19-related spending, to help restore the level of annual earnings required to maintain service levels, and to keep fare increases to affordable levels through March 31, 2024. Of the $308 million Safe Restart Funding, we have recognized a total of $268 million: $186 million in fiscal 2021 and $82 million in the nine months ended December 31, 2021.
Capital expenditures totalled $131.2 million for the first three quarters ($51.0 million in the third quarter). This included investments in new Island and Salish class vessels, life extension of the Queen of Alberni, major overhauls and inspections to existing ships, hardware upgrades, marine structure upgrades and various other projects.
The company continues to modernize the fleet with the addition of four more battery-electric hybrid Island Class vessels and one more liquefied natural gas-fuelled Salish Class vessel, all resulting in reduced emissions. The Island Class are battery equipped ships designed for full electric operation. The ships are fitted with hybrid technology that bridges the gap until funding and shore charging infrastructure becomes available. All of these new vessels are expected to enter service in 2022 and will help BC Ferries in its transition to a lower carbon future while investing in sustainable technologies.
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.
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Media Contact:BC Ferries, Media Relations
Victoria: (250) 978-1267
Customer Contact:
Victoria: (250) 410-1465
Toll-free: 1-888-BCFERRY (1-888-223-3779)
Note to newsrooms: For urgent media inquiries off-hours, call our off-hours line at (250) 516-7211.
BC Ferries is one of the largest ferry operators in the world based on passengers transported annually and transportation infrastructure, and carried 13.1 million passengers and 6.7 million vehicles during the fiscal year ended March 31, 2021. BC Ferries provides frequent year-round ferry transportation services to the west coast of Canada on 25 routes, currently supported by 35 vessels and 47 terminals, and also manages other remote routes through contracts with independent operators.
FORWARD LOOKING STATEMENTS
This news release contains certain “forward looking statements”. These statements relate to future events or future performance and reflect management’s expectations regarding our growth, results of operations, performance, business prospects and opportunities, and industry performance and trends. They reflect management’s current internal projections, expectations or beliefs and are based on information currently available to management. Some of the market conditions and factors that have been considered in formulating the assumptions upon which forward looking statements are based include traffic, the value of the Canadian Dollar relative to the US Dollar, fuel costs, construction costs, the state of the local economy, fluctuating financial markets, demographics, tax changes, the requirements of the Coastal Ferry Services Contract, and the impact of the COVID-19 pandemic.Examples of forward looking statements included in this release include statements with respect to: the impact of the COVID-19 pandemic, the impact of the federal-provincial Safe Restart Funding, seasonal traffic patterns, and the entering into service of the new Island and Salish class vessels and the resulting reduction in emissions. In some cases, forward looking statements can be identified by terminology such as “may”, “will”, “should”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, “continue” or the negative of these terms or other comparable terminology. A number of factors could cause actual events or results to differ materially from the results discussed in the forward looking statements. In evaluating these statements, prospective investors should specifically consider various factors including, but not limited to, the risks and uncertainties associated with: vendor non-performance, capital market access, interest rates, foreign currency, fuel price, and traffic volume fluctuations, the implementation of major capital projects, security, safety, and environmental incidents, confidential or sensitive information breaches, changes in laws, vessel repair facility limitations, economic regulatory environment changes, tax changes, and Indigenous rights and claims.
Actual results may differ materially from any forward looking statement. Although management believes that the forward looking statements contained in this release are based upon reasonable assumptions, investors cannot be assured that actual results will be consistent with these forward looking statements. These forward looking statements are made as of the date of this release, and British Columbia Ferry Services Inc. assumes no obligation to update or revise them to reflect new events or circumstances except as may be required by applicable law.
NON-IFRS MEASURES
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 2022
Significant events during and subsequent to the Third Quarter of Fiscal 2022 include the following:General
- BC Ferries’ principal priorities continue to be the safety of its passengers and employees and adhering to provincial and federal guidelines and directives as we provide essential ferry service. The company is following closely the COVID-19 directives and guidance provided by the Province and Transport Canada. Wearing face coverings in indoor spaces at terminals and on board vessels is mandatory for all customers five years of age and older regardless of vaccination status. BC Ferries continues with measures to mitigate risk including enhanced cleaning and sanitization stations.
- Due to rising fuel costs, on February 9, 2022, BC Ferries announced the implementation of a fuel surcharge of 1.0 per cent, effective March 1, 2022, on all routes with the exception of the Northern Routes. A 1.5 per cent fuel rebate was introduced on all routes on April 1, 2020 to pass on declines in fuel prices to customers. On August 1, 2021, the fuel rebate was reduced from 1.5 per cent to 0.5 per cent, and effective December 1, 2021, was removed for all routes except the Northern Routes. On the Northern Routes, the 1.5 per cent fuel rebate, which has been in place since April 1, 2020, will be removed effective March 1, 2022.
- On November 5, 2021, BC Ferries launched its COVID-19 Vaccination Policy for all employees. Ship-based employees were required to be fully vaccinated by January 24, 2022 and all other employees by February 28, 2022. The policy’s application to vessel-based employees was mandated by Transport Canada, however, the company believes implementing a mandatory vaccination policy for all employees is the right thing to do to protect everyone who works for, or travels with, BC Ferries.
- On January 10, 2022, BC Ferries announced the potential for unplanned service disruptions on all routes and particularly on Minor inter-island routes, over the coming months. There are a combination of factors driving the service interruptions; including the COVID-19 Omicron variant's potential to impact employee wellness, regular cold and flu season, severe winter storms, vaccination policies that have reduced crew availability and the global shortage of professional mariners making it difficult to hire replacement staff.
Capital Assets
- On December 21, 2021, the last of the four new Island Class vessels arrived in Canada from Damen Shipyard Galati in Romania. The other three vessels arrived in Canada on July 22, 2021, August 13, 2021 and September 27, 2021, respectively. These vessels made the transoceanic journey under their own power, operating approximately one-third of the journey using battery power, with the batteries charged during the voyage by a diesel generator. The arrival of these four new vessels will allow Quadra Island and Gabriola Island to each be serviced by two Island Class vessels. The four new vessels are scheduled to enter service in the spring of 2022 and will bring the fleet total of Island Class vessels to six. The new vessels are outfitted with hybrid diesel-electric propulsion and have the capacity to carry 47 vehicles and up to 400 passengers and crew.
- On December 22, 2021, the Salish Heron departed Remontowa Shipbuilding S.A. in Gdansk, Poland on its way to Canada. The Salish Heron is identical to the three existing Salish Class vessels, which are dual-fuel capable, designed to run primarily on liquefied natural gas (LNG), a cleaner and lower carbon-intensity option. The vessel has the capacity to carry approximately 138 vehicles and up to 600 passengers and crew. This fourth Salish Class vessel will replace the 57-year old Mayne Queen, a diesel-fuelled vessel, and is expected to enter service in the Southern Gulf Islands in the summer of 2022.
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Media Contact:BC Ferries, Communications
Victoria: (250) 978-1267
Customer Contact:
Victoria: (250) 410-1465
Toll-free: 1-888-BCFERRY (1-888-223-3779)