Budget 2011: Government to reduce stake in Nats air traffic control business

23.3.2011  ( Guardian)

Treasury confirms plan to reduce 49% stake in Nats amid warnings from airlines
of ‘highly damaging’ consequences

by Dan Milmo 

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.


see older news:


Airlines warn Tories not to sell Government 49% stake in NATS

6.2.2011 (Observer)

Seven leading carriers condemn government plans as ‘highly damaging’ for a key
strategic asset
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

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.

see earlier

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

  • Control tower, Edinburgh airport


  • 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

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

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.

 see earlier

‘Shake-Up’ Of Air Traffic Control Service NATS

16.10.2009  (Yahoo news)

Airlines are discussing a shake-up in the ownership of the National Air Traffic Control Service, Sky News can reveal.

Nats is part-owned by a consortium of commercial airlines and directs aircraft
through UK air-space.

The Government currently retains a 49% stake in the business.

Sky’s City editor Mark Kleinman said:  “There are seven airlines which collectively
form the airline group. They own 42% of Nats.

“Some of these airlines including Virgin Atlantic and bmi, which is now owned
by German airline Lufthansa, are keen to sell their stakes in the airline group
to generate cash.

“But there is one stumbling block which is that easyjet, which is another member
of this airline group, does not want the others to sell out.”

He added: “There are also a couple of other potential obstacles to the sale of
this stake.

“One is that none of the airlines can sell until Prestwick, the new national air traffic control
centre, is completed, which is due to take place in the early part of next year.

“The other is that the Government, which owns 49% of Nats, has a right of veto
over any plans by the airlines to sell at any point in the future even after Prestwick
is completed.”

Nats was not on the list of public assets that Gordon Brown earlier this week said would be sold to raise a total of £16bn.

Kleinman said: “That’s partly because it’s potentially very, very sensitive,
particularly in the run-up to the General Election. Nats is what you might call
a strategic asset.”

Nats operates at 15 UK airports.  It handled two million flights and 220 million
passengers in 2007.

In 2001, Nats became a public-private partnership, and in 2008, it made profits
of £66m.  It has debts of £538m.