BC Ferries benefits from strong quarter – gets new ships nod

2023-12-14T21:49:33+00:00 December 14th, 2023|Finance|

Canada’s BC Ferries’ net earnings for the second quarter of 2023 were $102.1 mill, an increase of $21.7 mill over the same quarter of the previous year.

For the first six months of the year, net earnings were $117.3 mill, compared to $88.3 mill in 1H22.

In 2Q23, BC Ferries carried 7.8 mill pax and 3 mill vehicles, compared to 7.5 mill and 3 mill, respectively in the same period in 2022.

Year-to-date, the company carried 13.6 mill passengers and 5.5 mill vehicles, an increase of 5% and 2%, respectively, compared to 3Q22, which contributed to BC Ferries’ financial performance.

Revenue for 2Q23, at $381.5 mill, was up $38.4 mill or 11% over the same period in 2022, primarily as a result of an increase in vehicle and passenger traffic levels, tariff rates, fuel surcharges and retail revenue.

Year-to-date, revenue was $668.4 mill, up $60.4 mill or 10% over the same period in the previous year impacted by factors, such as changes in overall traffic levels, traffic types and tariff rates.

While revenues were higher, expenses from operations in the second quarter increased by $20.7 mill or 11% to $269.6 mill, compared to 2Q22, mainly due to continued inflationary pressure across all cost categories, BC ferries said.

Year-to-date, expenses from operations increased $39.2 mill or 8% to $530.2 mill.

It should be noted that due to the seasonality of ferry travel, BC Ferries typically generates higher net earnings in the first and second quarters (driven by high system utilisation), which are subsequently reduced by net losses in the last two quarters of the fiscal year, the company advised.

“While traffic revenues are strong, like many other transportation companies, BC Ferries continues to experience significant cost pressures,” said Nicolas Jimenez, BC Ferries’ President and CEO.

“The outlook for year end remains subject to these cost pressures, variability of economic conditions, and travel demand (which slows in the Autumn and Winter months).”

“As we look to our final two quarters this year, our annual refit season is underway, during which time we’ll make substantial investments in vessels and terminals to maintain high levels of service reliability.

“We’ll also continue to focus on catching up on multiple years of deferred investments in our people and our infrastructure. This includes our early wage re-opener to provide employees with increases in advance of the timing in the collective agreement, as well as our recent application to the regulator to expand capacity on our minor routes with four new Island Class hybrid electric vessels,” he said.

The company undertook over 24,277 round trips from July through September, 2023, a 5% increase over the same period in the 2022, primarily as a result of the introduction of two-ship service on the Campbell River – Quadra Island route and supplemental summer service on the Buckley Bay – Denman Island route.

Over 1,204 new employees have joined BC Ferries thus far this calendar year, helping to reduce sailing cancellations, due to crewing issues, from 0.6% to 0.4%. However, total cancellations are 1% of sailings, reflecting an increase in mechanical problems during the quarter.

With today’s major capital expenditure approval by the BC Ferries Commissioner, BC Ferries is able to take the next step towards the purchase of four new hybrid electric Island Class vessels that will increase capacity for passengers across the ferry system.

Subsequently, it was announced that the major capital expenditure for the new ferries was approved by the BC Ferries Commissioner.

By 2027, the four new Island class vessels will enter service on the routes connecting Nanaimo Harbour and Gabriola Island (two vessels) and Campbell River and Quadra Island (two vessels), with corresponding electrical upgrades for shore-based rapid charging made to the four terminals on these routes.

“BC Ferries proposed these four new hybrid Island class vessels because added capacity is critical to helping us get people where they need to go efficiently and reliably,” said Jimenez.

“As the Commissioner has noted in her decision, this project will deliver improved customer service, help lower our costs related to crewing and training, and contribute to safe and reliable service for passengers up and down the coast.”

The Island Class vessels that currently serve on the routes will be redeployed to greatly benefit a number of communities with increased capacity to help address current and future demands.

Specifically, the Crofton to Vesuvius route will see capacity increased by 20% along with increased frequency provided by a two-vessel service. The Quadra to Cortes route capacity will increase by about 70% through the deployment of a larger vessel, and the existing system relief vessel will be redeployed to the Denman to Hornby route year round, doubling its capacity and particularly improving travel certainty throughout the year.

In addition, their introduction will take BC Ferries a step closer toward standardising its fleet, which can help reduce the number of vessel classes the company operates, which in turn helps with maintenance, refit, training and other operational activities.

The Island class electrification project will also receive funding from the Government of British Columbia through the monetisation of low carbon fuel credits that BC Ferries will earn under the Province’s Renewable and Low Carbon Fuel Requirements Regulation.

This project is estimated to reduce emissions by 10,000 tonnes of CO2 equivalent, supporting the Province’s CleanBC goals and bringing BC Ferries closer to its 2030 targets.

BC Ferries will now start the procurement process, with negotiations to begin imminently, the company said.