Newspaper article The Evening Standard (London, England)

Unsung Hero of Nats Bailout

Newspaper article The Evening Standard (London, England)

Unsung Hero of Nats Bailout

Article excerpt

Byline: ANTHONY HILTON

THE National Air Traffic Service, the most ill-fated Labour Government privatisation, has been thrown a financial lifeline.

Having been sold at too high a price, with too much debt to airlines who cannot afford to finance it through the current slump in air travel which has devastated its income, it has been a running embarrassment to the Government for months. But today things picked up.

The Civil Aviation Authority, which regulates the charges the air traffic control service can levy on its customers, decided to loosen the purse strings. Nats is already one of the most expensive services in Europe but henceforth it will be a little bit more so. That extra profit potential is important, however, because it opens the door to a complex deal that will see the Government and airports operator BAA jointly provide pound sterling130 million of new capital, and persuade the banks into talks to restructure the debt.

There is also an intriguing side deal whereby if traffic shifts dramatically up or down in future, the gain and the pain will be shared equally between shareholders and the user airlines. This makes the income stream for Nats far more predictable and should help insulate it from a repeat of the post-9.11 slump - which may well come during a war. The aim is to make the income stream more predictable, because that makes it more attractive to the bond markets and gives the company the opportunity to raise further finance there in the future.

There are more than a few blanks to be filled in but the package already has the makings of a deal. When Government ministers seek to take the credit, remember that the unsung hero is CAA chairman Sir Roy McNulty, who seems to have been the key figure in brokering a settlement. It makes a change for a regulator to be instrumental in saving a business rather than as more often seems to happen, driving it to the wall.

Cash call

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