B.C. Ferries president and CEO David Hahn is stepping aside as he announced his retirement last week.
While announcing his retirement plans, which come into effect as of Dec. 31, 2011, Hahn also announced a major cost containment program for the corporation.
"This has not been an easy decision, but it will help facilitate a more constructive dialogue around future service levels and funding," said Hahn in a news release about his retirement plans. "I want to be clear on one thing -it's my choice to retire and it is on my terms that I'm leaving. I believe it to be in the best interests of the organization; otherwise, I would have never considered it.
"On a personal note, let me thank all our employees for making B.C. Ferries the best ferry system in the world. It has been a special honour and privilege to lead this organization for the last eight years."
Hahn's cost containment program is his plan to address a significant drop in revenues in the first half of this fiscal year.
"I want to stress that this is by no means a crisis situation," Hahn said. "We are taking prudent action now to reduce our operating and capital expenditures over the next 18 months until the final price caps are determined by the B.C. Ferry Commissioner. This past summer, we have seen a significant drop in our traffic levels and we need to manage our costs to match our anticipated revenue shortfall for this fiscal year.
"This drop off in traffic is largely due to a number of factors, including a weakening economy, decline of the American tourism market and an exodus of Canadian tourists to the United States."
According to the corporation, B.C. Ferries traffic is at a 20-year low in passenger levels and an 11-year low in vehicle traffic. This situation has resulted in vehicle and passenger traffic being down about three and four per cent, respectively, this year. In its Aug. 24 first quarter report, B.C. Ferries reported that it anticipates a year-end loss to be in excess of $20 million for fiscal year 2011/12.
Over the last month, Hahn said he has conducted an extensive review of the operating and capital costs with the following cost-saving actions to be undertaken:
A hiring freeze of all non-essential positions, a wage and salary freeze for the next two years, select early retirements, reductions in executive compensation through elimination of the long-term incentive plan, cancellation of discretionary expenses, the reduced use of outside contractors and consultants, the elimination of many charitable and community donations, the cancellation of Vancouver Canucks partnership, an 18-month delay in select capital expenditures and an application to provincial government for cancellation of up to 400 round trips per annum (major routes only).
"I anticipate these adjustments will generate approximately $11 million this fiscal year," said Hahn. "We are confident that these actions will contribute positively to the ongoing financial sustainability of B.C. Ferries, pending the B.C. Ferry commissioner's final price cap ruling."
