June 8, 2023
HIGHEST VEHICLE TRAFFIC EVER RECORDED IN 63-YEAR HISTORY
VICTORIA – BC Ferries’ year-end results for the fiscal year ended March 31, 2023 (fiscal 2023) showed significant growth in traffic and revenue and continued pressure on operating expenses. Excluding the federal/provincial Safe Restart Funding, revenues increased $170.4 million or 20 per cent compared to the prior year, which was $46.9 million higher than the $123.5 million or a 14 per cent increase in expenses.
During the year, BC Ferries carried 9.4 million vehicles and 21.6 million passengers, an increase of 11 per cent and 21 per cent respectively, compared to the same period in the prior year, primarily as a result of the removal of travel restrictions. To meet demand, the company delivered 86,835 round trips, an increase of over 4,000 trips over the prior year.
BC Ferries is further managing the increase in traffic on the Major Routes by using the Saver fares introduced two years ago. These new fares provide customers with more choice and value, and contribute to increased vehicle traffic on traditionally lower utilized sailings and less sailing waits overall. Since March 2021, over one million customers have taken advantage of Saver fares. Customers can book Saver fares on the company’s recently introduced mobile app, which makes travel planning easy and convenient.
During fiscal 2023, BC Ferries experienced a high level of sailing cancellations due to the company’s inability to secure sufficient crew. This resulted in an increase in total cancellations as a per cent of total sailings from 1.2 per cent in fiscal 2022 to 1.6 per cent in fiscal 2023.
“Like many companies facing staffing challenges, we are working hard to fill key positions to meet our commitment to our customers to deliver the service they rely on each and every day,” said Nicolas Jimenez, BC Ferries’ President and CEO. “We know that even one cancellation is one too many for the millions of travellers who depend on the coastal ferry system.”
In fiscal 2023, BC Ferries experienced a net loss of $1.8 million compared to net earnings of $34.1 million in the previous year. The prior year net earnings included $102.3 million in Safe Restart Funding. Excluding Safe Restart Funding, the company had a loss of $68.2 million in the previous year.
“Despite high inflation and operating costs, we will continue to invest in our most valuable asset, our people, who are the backbone of BC Ferries,” said Jimenez. “I am constantly impressed by their commitment to provide the best possible customer experience for every passenger who travels with us.”
Revenue for the year ended March 31, 2023 was $1.04 billion, an increase of $77.4 million or
8 per cent from the prior year, primarily due to the lifting of travel restrictions which led to an increase in vehicle and passenger traffic levels and net retail sales.
Operating expenses in fiscal 2023 increased to $991.5 million, up 14.2 per cent from $868.0 million in the prior year. The increase is mainly due to the increased number of round trips with corresponding higher labour costs and fuel consumption, as well as increased fuel prices, maintenance expenses and depreciation.
BC Ferries continues to make significant investments to help ensure the long-term sustainability of the coastal ferry system. In fiscal 2023, the company invested $131.4 million in vessel upgrades and modifications, terminal marine structures, information technology, terminal building upgrades and equipment, and various other projects.
While BC Ferries is cautiously optimistic that traffic will continue to be strong, leading to improved conditions, the company cannot predict with certainty future traffic volumes. Traffic levels can be affected by a variety of factors, such as weather, transportation costs including fuel, economic conditions and disposable personal income of travellers.
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.
SIGNIFICANT EVENTS FISCAL 2023
- On September 30, 2022, BC Ferries filed with the British Columbia Ferries Commissioner (the “Commissioner”), its submission for the sixth performance term. This began 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 period April 1, 2024 through March 31, 2028 (“Performance Term Six” or “PT6”). The Commissioner establishes price caps for designated ferry route groups for the purpose of regulating fares. The submission document can be found at: www.bcferrycommission.ca.
- On each of April 8, 2022, and April 12, 2023, BC Ferries implemented average tariff increases of 2.3 per cent in accordance with the Commissioner’s Order 19-04 dated September 30, 2019 and in accordance with the Safe Restart Contribution Agreement between BC Ferries and the Province of British Columbia dated November 11, 2020.
- On November 1, 2022, due to sustained high fuel prices, BC Ferries increased fuel surcharges by 1.5 per cent on fares for all routes, bringing the fuel surcharge to 4 per cent on all routes.
- On February 26, 2023, the Province, after collaboration with BC Ferries and in response to the PT6 submission, announced $500 million in new funding for BC Ferries, with the goal of keeping annual average fare increases at or below 3 per cent a year for the PT6 term. In addition to helping to keep fares affordable, the new provincial funding to be received during PT6 may also be used to support greenhouse gas emission reductions through support for the electrification of vessels, terminals and other initiatives. BC Ferries gratefully acknowledges the financial support from the Province of British Columbia through the Ministry of Transportation and Infrastructure.
- On March 3, 2023, BC Ferries submitted a Supplemental Filing in addition to the PT6 submission, which had been provided to the Commissioner on September 30, 2022. This Supplemental Filing included updated assumptions to BC Ferries’ traffic forecasts, projected labour and maintenance expenses and capital plan.
- On March 31, 2023, the Commissioner released a preliminary decision on price caps for PT6, April 1, 2024 through March 31, 2028, setting allowed increases at a maximum of 9.2 per cent per year. Due to the late announcement of assistance, this rate decision did not factor in the favourable impact of the $500 million provincial contribution towards fare relief. The provincial contribution will be included in the Commissioner’s final price cap determination on September 30, 2023.
- Effective June 24, 2022, the B.C. Ferry Authority appointed six new members to the company’s Board of Directors, each for a two-year term. On June 29, 2022, Joy MacPhail was appointed as the Chair of the BC Ferries Board of Directors.
- On July 22, 2022, the company’s board ended Mark Collins’ appointment as President and Chief Executive Officer of BC Ferries and appointed Jill Sharland as interim President and Chief Executive Officer.
- On July 28, 2022, BC Ferries and Snuneymuxw First Nation entered into a relationship protocol agreement to guide their work together. The protocol is the first step in building a stronger relationship between the two parties built on mutual respect, recognition, benefit and cooperation. There are four BC Ferry terminals currently operating in Snuneymuxw’s territory, of which three are located in Nanaimo and one is located on Gabriola Island.
- On November 21, 2022, S&P Global Ratings affirmed BC Ferries’ 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 11 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 British Columbia, including as President and CEO for the last five years. Jill Sharland, who had 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 a stable trend.
- On April 12, 2022, BC Ferries introduced two-ship service on the Nanaimo Harbour – Gabriola Island route, providing enhanced vehicle and passenger service to these communities. This augmented service using two of the four new Island Class vessels, results in increased capacity and sailing frequency to these communities.
- On May 6, 2022, the Salish Heron entered service in the Southern Gulf Islands. The Salish Heron is identical to the three existing Salish Class vessels, which are dual-fuel capable and designed to run primarily on liquefied natural gas, a cleaner and lower carbon-intensity option as compared to marine diesel. The vessel has the capacity to carry approximately 138 vehicles and up to 600 passengers and crew. This fourth Salish Class vessel replaced the 58-year old Mayne Queen, a diesel-fuelled vessel.
- On October 14, 2022 the Commissioner issued Order 22-02 and Order 22-02A, approving a project for the redevelopment of the Fleet Maintenance Unit (FMU), which is BC Ferries’ primary vessel maintenance and refit facility located at Deas Basin in Richmond, B.C. near the George Massey Tunnel.
- On January 18, 2023, two Island Class vessels 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 each have the capacity to carry 47 vehicles and up to 400 passengers.
- The introduction of the new Island Class vessels and the new Salish Class vessel, allowed for the retirement of the 57-year old Bowen Queen and the 58-year old Powell River Queen. The Mayne Queen is scheduled to retire from service in the fall of 2023.
- On April 28, 2023, BC Ferries submitted a Supplemental Filing with the Commissioner to update the pricing and revise other elements of the capital budget for the FMU project.
- On May 12, 2023, the Commissioner issued Supplemental Order 22-02A approving the updated filing for the FMU project. On the same day, BC Ferries signed a construction agreement with Bird Construction Group for the project.
BC Ferries, Media Relations
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Toll-free: 1-888-BCFERRY (1-888-223-3779)
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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. Some of the factors that have been considered in formulating the assumptions upon which forward looking statements may be based include: traffic levels, currency exchange rates, fuel costs, construction costs and timelines, the state of the economy, financial markets, demographics, tax changes, and our regulatory and contractual requirements.
Examples of forward looking statements included in this news release include statements with respect to: the impact of Saver fares on demand, the impact of inflation on operating costs, investments in assets and employee resources, and seasonal traffic patterns. 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 the risks and uncertainties associated with, among other things: vendor performance, capital market access, interest rates, foreign currency, fuel prices, traffic volume, timelines for major capital projects, security, safety, environmental incidents, cyber security, legislative and regulatory changes, vessel repair facility limitations, tax changes, and Indigenous consultations.
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.
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.