BC Ferries is bracing the public for a series of losses over the next 18 months as declining passenger volumes and increased maintenance costs push the corporation into the red.
“Revenue and traffic levels are not expected to return to past levels, but we are planning to continue scheduled repairs and maintenance,” said David Hahn, BC Ferries’ president and CEO. “As such, we expect to incur losses in the next fiscal year.”
The corporation still reported a net profit for the third quarter ending September 30, 2010, of $54.3 million, down from $64.2 million in the same period last year.
A 2% increase in expenses and a 2.3% decline in revenue to $246 million from $251.8 million were the key contributors to the drop in profit in the quarter. The fall in revenue was due to a 2% decline in vehicle traffic and a 0.5% drop in passenger volume.
Despite the decline, Hahn said the duty remission of $119.4 million for its new ferries will be used for an across-the-board 2% tariff reduction and $20 million in upgrades to the corporation’s repair and maintenance facilities.
While the return will benefit BC Ferries, it is likely to have serious ramifications on B.C.’s ship building industry. (See “Tariff cut targets shipbuilders,” Business in Vancouver, issue 1094, October 12-18.)