Newspaper article The Evening Standard (London, England)

Forgotten Warning That Could Have Kept Nats off Ropes; City Comment

Newspaper article The Evening Standard (London, England)

Forgotten Warning That Could Have Kept Nats off Ropes; City Comment

Article excerpt

Byline: ANTHONY HILTON

WHILE Transport Secretary Stephen Byers received another pasting in the Commons over the Martin Sixsmith affair, MPs missed the rather more significant fact that easyJet, the low-cost airline, yesterday wrote down to zero the value of its holding in the National Air Traffic Control Service.

Byers sold a near-50% stake in this business less than a year ago to a consortium of airlines for ?50 million of equity and a further ?765 million of bank debt. Now one of those investors says the business is worthless. Talk us through this one, Mr Byers.

Nats is on the ropes. The Government has already tossed it an additional ?30 million bung with matching funds from the banks to stave off immediate crisis and has promised to match any further equity capital the business can raise.

Nats chairman Chris Gibson-Smith told the Transport Select Committee last week that he expected to conclude negotiations within the next month over an injection of "in excess of ?50 million" which "the Government has said it will match" to stabilise Nats' balance sheet.

Serco (a loser in the original part-privatisation) and BAA are among the frontrunners to provide the cash, with Nats desperately trying to play them off to minimise the dilution of the other shareholders. But even a load of new cash cannot disguise the fact that this is a terrible mess - and one which should cause Byers every bit as much embarrassment as Railtrack.

The business depends financially on the North Atlantic and that has been the hardest-hit sector since 11 September. It badly needs to be allowed to charge its customers more, and quickly if it is to avoid falling over the edge. Yet all this could have been avoided. At last week's Select Committee, a letter dated July last year emerged from ex-Nats boss Sir Roy McNulty. …

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