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Tuesday, 19 February, 2002, 10:56 GMT
National Air Traffic Services in crisis
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By Tom Symonds
BBC transport reporter

Less than a year after it was part-privatised, National Air Traffic Services, the firm which runs traffic control centres, is facing a financial crisis.

Banks have threatened to withdraw support for the firm, reports have said, threatening it with bankruptcy.

Why has Nats has run into trouble so soon after the partial sell-off, and what are the implications for air travel?

Why are banks threatening to ditch Nats?

National Air Traffic Services says the banks are in support of the board's proposals to improve the company's finances, and the Department for Transport, Local Government and the Regions has confirmed no request has been made by the banks for more public money.

But the banks have lent more than 1bn to Nats and would probably welcome any financial support the government could offer.

The government is, after all, the majority shareholder.

Why is Nats in financial difficulty?

The downturn in air travel triggered by the 11 September attacks has affected air traffic control as well as airlines.

Nats makes money by charging airlines for using UK airspace and landing in Britain.

The amount of money the company has lost, has not been disclosed, but Nats has had to make 200m of savings to shore up its finances.

Will air safety be affected if Nats is declared bankrupt?

No. The government would be very likely to step in and keep the service running should it run into financial problems.

Even if operations became disrupted as a result of the uncertainty, controllers would keep planes on the ground rather than risk safety in the air.

Is the government likely to step in with more funding?

This is not yet clear.

Ministers only offered limited help to British airlines following 11 September, but the government's stake in Nats would make it more likely public money will be used to keep the company afloat.

The amount required is likely to be far less than the amount being spent keeping Railtrack running in administration.

But the Treasury may well try and block any investment.

Did anyone foresee problems with part-privatising air traffic control?

Yes. The unions warned it would lead to profit being put before safety.

The Civil Aviation Authority was concerned about the delicate financial structure of Nats.

Everyone was aware of the slump in air travel, but clearly no-one could have predicted September's attacks on New York.

Could safety be compromised by the 200m savings that Nats is planning over the next five years?

The plan is to reduce the number of non-front-line staff by 20%.

That should not directly impact on safety. But there is an intention to cut controllers by 10% too in the long term.

Their jobs will be replaced in part by technology.

The new air traffic control centre at Swanwick has systems designed to offer much better support to controllers.

The question is, will cutting staff result in cutting corners over safety.

See also:

19 Feb 02 | Business
Air traffic firm denies cash crisis
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