The national air traffic controller has joined the Channel tunnel rail link on the state auction table as the government pushed on with its asset disposal plans.
The budget confirmed plans to further reduce its 49% stake in Nats, the business it co-owns with seven UK airlines and airport operator BAA. “The government intends to realise value from its stake in Nats, subject to considering the views of key stakeholders,” said the Treasury. The announcement follows the sale of a 30-year concession on the High Speed One rail route for £2.1bn last year.
However, government sources said no decision had been made on the scale of the stake sale, amid warnings from airlines of “highly damaging” consequences if the state exits the business entirely. The Airline Group, whose members include British Airways and easyJet and which owns 42% of Nats, has warned that it might dispose of its stake if the government reduces its shareholding to zero.
Potential bidders for the Nats stake include UK service company Serco, Gatwick airport owner Global Infrastructure Partners and Lockheed Martin, the US aerospace and defence group. The Airline Group has expressed concerns over the prospect of a private bidder taking on debt to acquire the business, which made a pre-tax profit of £78.3m last year, and running Nats with profitability as a priority.
The trade union representing 3,000 air traffic controllers and engineers said a further sell-off could diminish Britain’s influence over attempts to consolidate air traffic control across Europe, as well as affecting safety. “We are deeply concerned that a government sell-off would reduce our voice in Europe on air traffic management matters, and lead to greater instability with a drive for profits and dividends which will undermine the very significant strides that have been achieved in relation to safety, service delivery and increases in capacity,” said Garry Graham, an official at the Prospect union.
Airlines warn Tories not to sell Government 49% stake in NATS
Seven leading carriers condemn government plans as ‘highly damaging’ for a key
by Dan Milmo
Seven of Britain’s leading airlines have warned the government not to sell Nats, the national air traffic control service, arguing that the system is a key strategic asset not suitable for full privatisation.
In a letter obtained by the Observer, the Airline Group warns of “highly damaging” consequences if the state sells all of its 49% stake, an option under consideration by transport secretary Philip Hammond.
The Airline Group, which has a 42% stake in Nats, said in the letter to Hammond that it would sell its interest if the government failed to retain a shareholding of at least 25%.
Peter Read, the group’s chairman, said a government sell-out would risk relegating Britain to the status of a bit-player in discussions over reforms of European air traffic control: “It would be highly damaging if we were left on the sidelines to watch while others, notably France, Germany and Spain, decided the future of the air traffic control [ATC] industry. The evidence indicates a real risk that such an outcome would occur if the UK was the only country without a government shareholding in its national ATC company. The country’s interests would be best served if the government were to retain a significant shareholding, perhaps 25% as a minimum.”
Highlighting the consequences for future airline ownership in Nats, he said: “The absence of a government stake would make it difficult to justify continued airline participation in the ownership of Nats.”
The group – British Airways, Virgin, bmi, EasyJet, Monarch Airlines, Thomas Cook and Tui Travel – bought its shareholding in 2001 when the Blair administration part-privatised the business. The carriers are concerned that the government’s remaining Nats stake is among assets earmarked for disposal by the chancellor, George Osborne, alongside the potential sale of the Tote, a stake in the Royal Mail and part of the student loan portfolio.
Read said the government’s need to raise money was “understandable” but it must not be to the detriment of the UK’s main air traffic controller. Citing a recent reduction in flight delays caused by air traffic control, he said: “It would be in no one’s interest, including the government’s, if Nats were to revert, even partially, to its bad old ways.”
Maria Eagle, the shadow transport secretary, said any sale of the government’s Nats stake would be “ideologically driven” and about “short-term profit” rather than safety and security: “They should listen to the warning from the airlines that the country’s best interests would be served by government retaining at least a 25% stake. If they go ahead with this reckless plan, Labour will oppose their plans and vote against them in parliament.”
Potential bidders for the Nats stake include UK service company Serco, Gatwick airport owner Global Infrastructure Partners and Lockheed Martin, the US aerospace and defence giant.
A Department for Transport spokesperson said: “The DfT remains in discussions with the Treasury over Nats and no announcement will be made until the budget next month.”
Nats, which handled 2.2m flights in 2009, posted a pre-tax profit of £78.3m in the year to 31 March 2010, on turnover of £755m. In the current financial year it has already paid shareholders an interim dividend of £20m.
Budget 2010: Air traffic control organisation Nats to be sold off
Treasury in talks to fellow shareholders about selling off its 49% stake in Nats air traffic control service
by Dan Milmo
The government is planning to sell off its stake in Nats, the national air traffic control service. Above, control tower at Edinburgh airport. Photograph: Danny Lawson/PA
Britain’s national air traffic control service could follow the High Speed One rail link into full private ownership after the government raised the sale of its shareholding in Nats (formerly known as National Air Traffic Services) today.
The Treasury is to open discussions with fellow shareholders in Britain’s dominant air traffic controller over selling its 49% stake, the chancellor, George Osborne, said in his budget speech today. Nats is 42%-owned by a consortium of airlines including easyJet, British Airways and Virgin Atlantic, with 5% controlled by staff and a further 4% owned by airport group BAA. A spokesman for easyJet said the airline would oppose selling the shareholding to a private investor more interested in profit than running an efficient service.
“Profit should not take precedence over the efficient running of UK airspace, so we will need to look at this carefully,” he said. The spokesman added that easyJet would not support a sale that would lead to higher air traffic control charges.
Nats was heavily criticised for its handling of the unprecedented six-day closure of British airspace in April, after a cloud of volcanic ash drifted across the UK. However, blame was later shifted by airlines towards the Civil Aviation Authority, which oversaw the safety guidelines that grounded millions of passengers and thousands of flights.
Prospect, the union that represents more than 3,000 air traffic controllers, said the proposal was a “short-sighted” and a “knee-jerk” reaction.
“A safe, efficient and effective air traffic control system is of crucial interest not only to the UK economy but also to every member of the travelling public,” said Garry Graham, Prospect’s national secretary for aviation. “This proposed sale has nothing to do with supporting a safe and effective air traffic control system and is entirely Treasury-driven.”
On Monday the government put a 30-year concession to operate the High Speed One rail link up for sale and hopes to raise £1.5bn from the process. Eurotunnel, owner of the Channel tunnel, confirmed that it is interested in bidding as part of a consortium. The Treasury also confirmed today that it is exploring the sale of the Tote betting service and the Dartford river crossing.