ANNUAL REPORT 2016 CONTENTS 02 Our Business at-a-Glance 28 Awards 04 Message from the Lead Director of the Board 32 Sustainable Mobility Report 06 Message from the President 35 Environment 08 Year at a Glance 36 Key Performance Indicators 10 2016 Milestones 38 Governance and Accountability 12 VIA Rail Looks to the Future 47 Management Discussion and Analysis 16 Review of Operations 66 Financial Statements 26 Safety 118 Corporate Directory OUR BUSINESS VIA RAIL AT-A-GLANCE WHO WE ARE VIA Rail operates Canada’s national passenger rail service on behalf of the Government of Canada. An independent Crown corporation established in 1977, VIA Rail provides a safe, cost-effective and environmentally responsible service from coast to coast in both official languages. The corporation operates close to 494 train departures weekly on a 12,500 km network, connecting over 400 Canadian communities. With approximately 2,700 active employees, VIA Rail carried 3.97 million passengers in 2016. WHERE WE OPERATE PASSENGER REVENUES PER TRAIN ROUTE 77 % Inter-City Travel 21 % Long-Distance 2 % Regional 77 % of passenger revenues are from inter-city travel (in the Corridor) PASSENGER TRIPS PER TRAIN ROUTE 94 % Inter-City Travel 4 % Long-Distance 2 % Regional Inter-City Travel Long-Distance Regional 94 % INTER-CITY TRAVEL LONG-DISTANCE REGIONAL of passenger trips consist of inter-city travel (THE CORRIDOR) TRAVEL AND TOURISM SERVICES (in the Corridor) In the densely populated In Western and Eastern VIA Rail provides passenger corridor between Québec Canada, VIA Rail’s trains service in several rural and COMMUNITIES SERVED City, QC and Windsor, ON, attract travellers from around remote regions of Canada. VIA Rail trains provide the world and support Mandated by the Government downtown-to-downtown Canada’s tourism industry. of Canada to meet essential travel between major urban The Canadian, VIA Rail’s transportation needs, centres, suburban centres Western transcontinental these trains serve many and communities. train, provides service communities where between Vancouver and alternative, year-round Toronto. In Eastern Canada, transportation is limited the Ocean runs between or unavailable. Montréal and Halifax. 400+ served across Canada * Services on Vancouver Island and Gaspé are suspended due to infrastructure availability. 2 VIA RAIL CANADA Our key assets reflect the breadth of our business, from our stations and maintenance centers to the fleet of locomotives and train cars we operate, the passengers we serve, the buildings we occupy and the employees who work for us. FREQUENCY TRAIN DEPARTURES 494 per week of which 92 % of our trains depart on time PASSENGERS EMPLOYEES FLEET PASSENGER TRIPS ACTIVE EMPLOYEES AS OF THE END TRAIN CARS OF THE CALENDAR YEAR (IN AND OUT OF SERVICE) 2,731 426 EMPLOYEE DIVERSITY LOCOMOTIVES 3.97 million 32 % 73 covering 1.37 billion kilometres across of our employees are women, 10 % are visible of which 71 % have been rebuilt for improved Canada of which: 94 % is inter-city travel, minorities, 2 % are people with disabilities and operational and environmental efficiency, 4 % is long-distance and 2 % is regional. 2 % are Aboriginal People to run a safe and fluid service BUILDINGS TRAIN STATIONS OFFICES MAINTENANCE CENTRES 121 7 4 of which 54 are heritage stations 1 head office, 6 regional state-of-the-art facilities OUR BUSINESS AT-A-GLANCE 3 MESSAGE FROM THE LEAD DIRECTOR OF THE BOARD It is with pride that I write this message on behalf of the The Corridor fleet renewal and dedicated tracks Board of Directors of VIA Rail, a company that, by focusing projects are essential parts of the two-pronged viability on the needs of its customers, has now positioned itself strategy we laid out in 2014. The initial focus was on as a key player in the Canadian transportation system. In growing revenues and increasing ridership to show 2016, continuing on the progress we made over the past that Canadians value passenger rail service. This has two years, revenue and ridership numbers grew even been our priority for the past two years and VIA Rail has more and several important milestones were achieved been incredibly successful. Since 2014, ridership and along the way. revenues have grown by 4.6 % and 15.6 % respectively. The year started off well with the 2016 federal budget VIA Rail’s long term strategy to build and operate tracks providing VIA Rail with $ 34 million for improvements to dedicated to passenger service was acknowledged by its stations and maintenance centers. This appropriation both the Canadian Transportation Act Review Report, will cover projects at several stations along the Québec also known as the Emerson Report, which was published City – Windsor corridor, as well as at our two maintenance in 2016, and the 2016 federal budget. The Emerson centers in Montréal and Toronto. The budget also Report was very favourable to VIA Rail and showed a provided support for two major strategic projects. keen understanding of VIA Rail’s operating context by First, VIA Rail was allocated $ 7.7 million to support calling for a separation of passenger and freight rail to technical studies and other pre-procurement activities help modernize the Corporation. The federal budget related to the renewal of its Québec City – Windsor provided financial support for an in-depth assessment of corridor fleet, along with safety upgrades at grade our proposal. Throughout the year we continued to build crossings, and investments in improved security. our relationship with Transport Canada and welcomed As well, Budget 2016 provided Transport Canada with visits from Transport Minister Marc Garneau to VIA Rail’s $ 3.3 million to support an in-depth assessment of headquarters and Montréal Maintenance Centre. our High Frequency Rail (dedicated tracks) proposal. Following this recognition, VIA Rail redoubled its efforts VIA Rail was also recognized with a number of awards and submitted business cases to Transport Canada in 2016, which are further detailed in this report. I’d like in December for both the renewal of the fleet, and High to highlight two of them — both won by our President Frequency Rail. 4 VIA RAIL CANADA and CEO — which focus on issues important to all of departure, I was selected by my fellow directors to be us at VIA Rail. Mr. Desjardins-Siciliano received the the Lead Director of the Board until the nomination of a Women and Boards Award for his work to advance new Chairperson by the Government of Canada. It has the role of women in corporate governance within our been my honour to take on this role. company. VIA Rail has positioned itself as a Canadian leader in diversity in governance and its Board of In closing, I wish to thank everyone who contributed Directors achieved gender parity in 2014. Three of our to our success in 2016, from our almost 4 million eight executives are women, and 30 % of our senior passengers to our employees who always go the extra managers are women. Our President also received mile. I would also like to thank my colleagues on the the “Business Achievement Award” from the Prix des Board of Directors for their continued commitment and Conseillers Juridiques du Québec for both his customer- dedication to VIA Rail. centric commercial strategy and his innovative High Frequency Rail proposal. Creative thinking across all levels of the company has been a key contributor to the company’s success, and will help guide its future. Internally, Eric Stefanson, Interim Chairman of the Board, announced his resignation in March to pursue other projects in his home province of Manitoba. VIA Rail was fortunate to have him for the past nine years and we all benefited from his extensive expertise. On behalf of the Board members and all VIA Rail employees I’d like to thank Mr. Stefanson for his dedicated service. Under his leadership, the Board supported and gave direction to JANE MOWAT VIA Rail’s endeavours, which helped lay the foundation Lead Director of the Board, Chairperson of the Audit for its continued success. Following Mr. Stefanson’s and Finance Committee MESSAGE FROM THE LEAD DIRECTOR OF THE BOARD 5 MESSAGE FROM THE PRESIDENT What a year it’s been! If there were any doubts about good practice for 2017 which will be a big year for our passenger rail’s relevance in Canada, our results this country — and VIA Rail! We’ll be celebrating Canada’s year have settled them. I’m proud to say that for the sesquicentennial and Montreal’s 375th anniversary. third year in a row VIA Rail is celebrating success and 150 years ago the completion of national railway played growth. The progress that began in 2014 created a a major role in bringing the country together in to strong foundation that we have continued to improve confederation. Today, the train still unites our country upon, and are still reaping the rewards of in 2016. Our from coast to coast, but at VIA Rail we envision an even total ridership increased by 4.1 % and our revenues more connected Canada. increased 8.9 % compared to last year. While these numbers are impressive on their own, taken in context In 2017, we will also be launching the celebrations of th they are even more remarkable. The end of 2016 marked VIA Rail’s 40 anniversary. The company was created by our 11th straight quarter of revenue growth, and fourth the transfer of CN’s passenger business in 1977, followed consecutive quarter of increasing ridership. Even more by the transfer of CP’s passenger services in 1978. Canadians made the smart choice this year to take the VIA Rail’s outstanding results and growth over the train. Meanwhile, internally, we increased our employee past three years have given us the confidence to think engagement score by six percent compared to last about how we want to position ourselves over the long year’s survey, which had already shown a 5 % growth term.