British Columbia Ferry Services Inc. anticipates losing money next fiscal year as revenues drop and expenses rise, President and CEO David Hahn said today.

Hahn was quoted in a news release on the publicly-owned company's second quarter results saying it faces “significant challenges over the next 18 months.”

“Revenue and traffic levels are not expected to return to past levels but we are planning to continue scheduled repairs and maintenance," said Hahn. "As such we expect to incur losses in the next fiscal year.”

Net earnings for the second quarter were down significantly from last year. In the three months that ended Sept. 30 the company earned $54.3 million, which was down from $64.2 million in the same period last year.

Total revenue over the three-month period dropped from $251.8 million to $246 million, but operating expenses rose from $170.3 million to $173.6 million.

Vehicle traffic was down 2 percent from a year earlier, while passenger traffic was down by 0.5 percent.

The ferry company is currently negotiating the terms of its service agreement with the provincial government.

Andrew MacLeod is The Tyee’s Legislative Bureau Chief in Victoria. Reach him here.