A £60 million ($86 million) UK government rescue deal for the part-privatised National Air Traffic Services (NATS) is under discussion but has not yet been approved, according to UK Treasury sources.
The purpose of the plan is to stabilise NATS' finances. They have taken a beating because revenue from airline user charges after the 11 September attacks on the USA is far below that anticipated when The Airline Group purchased its 46% share of the state-owned air traffic services provider in mid-2001.
Although none of the parties to the deal will confirm it, £30 million is expected to come from the UK Department of Transport, Local Government and the Regions (DTLR), in a move designed to encourage the four banks that backed the original Airline Group share purchase to put up an equal amount.
The Treasury - which has the ultimate authority to approve the loan - says that any release of funds is "some way off yet", but has confirmed that the figures quoted are "a fair indicator of what's under discussion".
The £60 million loan is being justified as a bridging loan until the government has had time to consider NATS request, filed on 2 February, for a three-year relaxation of the price-capping mechanism. This was designed to reduce, over time, the real value of user charges.
NATS has already reduced its charges by 1% for 2002, while other European ATS providers have raised their charges by up to 15%. NATS has asked for the price cap to be modified to inflation plus 4% in 2003, plus 3% in 2004 and 2% in 2005.
Richard Golaszewski of US aviation consultancy GRA comments: "The UK air traffic control privatisation came at one of the worst times ever - they had no time at all to build up financial reserves before 11 September."
Source: Flight International
