Chancellor "raided NATS finances"

[flowman]

From THE TIMES, 9th December 2003

Report raps air control sell-off
By Russell Hotten



THE COMMONS Public Accounts Committee today makes an attack on the Government’s part-privatisation of the National Air Traffic Service (Nats), which left the company near financial collapse.
The Department for Transport, then run by Stephen Byers, is criticised for its “blind optimism”, and the Treasury is accused of having “raided” Nats’ finances. “The taxpayer is unlikely to be the winner,” the report says.



The report adds that the restructuring of Nats by a group of airlines, including BA and Virgin, was not “robust enough” to cope with a sudden business downturn.

Transforming the organisation that controls Britain’s air space into a Public Private Partnership (PPP) was controversial, opposed by unions, sections of the aviation industry and a group of Labour MPs.

But in 2001 the Transport Department went ahead with the PPP, in which the Airline Group, a seven-airline consortium, took operational control and a 46 per cent stake.

Nats earns fees from airlines using its air space. When the September 11 terrorist attacks forced airlines to cut flights, Nats’ revenues fell.

However, Edward Leigh, chairman of the committee, says in his report: “The company’s financial difficulties cannot be wholly attributed to the after-effects of September 11: the economic regulator (Civil Aviation Authority) expressed concern at the indebtedness of Nats before those events.

“The Department (for Transport) and the Treasury took £758 million out of Nats in sale proceeds, leaving the company burdened with over twice as much debt as it carried before the PPP.

“The Department failed adequately to test the robustness of the Airline Group’s proposed financial structure for Nats.” The Airline Group had minimal financial risk, but a large amount of control over Nats, he added.

The committee criticises the department for turning Nats into a profit-seeking, but regulated, company. Mr Leigh said that a not-for-profit model “was dismissed too readily”.

He said: “The regulatory arrangements . . . have been shown to take insufficient account of the very different business risks which Nats faces.”

The profit-seeking model was chosen so that Nats had freedom to invest outside public sector financial controls. But Mr Leigh said: “The chosen regulatory structure . . . barred Nats from access to external finance for over a year, just when it was embarking on a ten-year £1 billion investment plan.”

Nats has been restructured again, with the Government, Airline Group and banks putting in about £260 million. BAA, the airports operator, injected £65 million for a 4 per cent stake.

A spokesman for Nats said the company was “on a far healthier footing”. The Airline Group said the original Nats restructuring was sound “but could never have foreseen an event like September 11”. The Transport Department said: “Nats’ PPP is a success. The company, having suffered like the rest of the aviation industry after September 11, is performing better than ever.”

[VectorLine]

There is a temptation to shout

"We told you so!..........."

But that would be childish :}

[hatsoff]

The company, having suffered like the rest of the aviation industry after September 11, is performing better than ever

Have those pension payments been paid yet?

[Jerricho]

No, go on VL. Shout it loud and clear!

[Buster the Bear]

For HM Govt, read Dictator Blair!

[saintex2002]

...Seeing NATS PPP from France and as a traditional froggy ATCo, I was always asking how this 7airlines group will be able to have money back after their investments...lower ATC fees, best arrivals or departures and delays for the others, lowering of ATCo earnings or so on...Please tell me what was the real deal...what was the interest to do so...And if you had to choose again now what will be your present answer...
...Please read these lines whithout jokes because I really think your particuliar semi-private system is watching by the whole ATCo community as a test for global policy of ATM...

[DC10RealMan]

I am bemused that anyone would think that when dealing with professional politicians, spin doctors, press barons and their associated minions, and other such low life that the truth and more importantly mistakes would be admitted. I would also like to point out that when other industries were being privatised in the mid 80s there were a lot of our colleagues who were rubbing their hands in glee at the profits that they were hoping to make, now it has come full circle and those same people are bemoaning the fact when it affects them. In answer to our French colleague, if you wish to protect your own future and that of the travelling public then fight this proposal with everything you and your colleagues possess and do not be misled by the siren call of "Les Anglo-Saxons".

[Warped Factor]

The full report from the Public Accounts Committee is here (http://www.publications.parliament.uk/pa/cm200203/cmselect/cmpubacc/80/8002.htm).

Some selected highlights from the conclusions....

The financial structure that was imposed on NATS

8. The maximisation of sale proceeds seems to have taken precedence over the financial robustness of NATS. No operable contingency plan existed to cope with the risk of a severe and sustained downturn in air traffic. Departments undertaking deals should ensure that such plans exist and that financial structures are robust enough to support them.

9. The Airline Group acquired a 46% share, a majority on the Board and operational control of NATS despite having paid only one sixteenth of the purchase price, the rest being financed by loans repayable by NATS itself. Departments undertaking PPPs should ensure that their chosen strategic partners accept risk commensurate with their control of the business and the accompanying responsibilities.

10. The Airline Group declined to provide NATS with further financial support. Leaving only the government shareholder to meet such financial requirements is difficult to reconcile with the concept of risk sharing in public / private partnerships.

WF.

[BALIX]

Makes you wonder about the 'what ifs', doesn't it?

What if we hadn't been privatised and Gordon Brown had total control over the purse strings?

What if we had been privatised but 7/11 had not happened?

What if we had been privatised but TAG had only paid the amount the company was worth which, if memory serves me correctly, was about £100 million, rather than £758 million and its associated hughe debt repayments?

What if SERCO had won the competition to buy NATS - it was believed that they had offered even more than TAG so would have had an even bigger debt to service.

Basically, the company was always going to be in the sh!t, all that varies would be the depth...

Nice to see, though, that this particular privatisation has been shown to have been a total f*ck-up by someone other than we embittered employees. I bet the Select Committee does not have the teeth, though, to demand the DoT repays some of that £758 million.

[saintex2002]

...Many thanks for your cooperation and after having read all these replies...Be sure I won't never ask again : " How the 7airlines group have his money back ??.. " ....
...But : " Is there enough money in that f!cking purse to pay you all ATCOs of UK ??.. "

...Don't put on your life jackets for the moment...I'll try to phone for you " TONY " tonight ...;)

...Stop killing, I'm with you in that DISASTER....Be strongs :ok:

[Loki]

PPP was the biggest f*ck up since Gallipoli (as an old chum used to say), as anybody with any sense knows. Problem is, that the people making the decisions haven`t got a scooby.

[terrain safe]

No they do have a scooby they just don't give a F**K. Anyway do the general public care? No. Why should they because as far as they are concerned the service is the same or better than before, the rest of it is just political BS that we all turn off from. Then they see the staff moaning about it but still taking the 'Kings Shilling'. No, nothing will change or happen because of this report because it's todays' chip paper. Only if something, God forbid, should happen will anybody actually go through all this stuff and actually care what has happened.

I really ought to stop doing this, my medical is next month!!

[Scott Voigt]

For all of you in the UK... Asking the question does the general public care??? Actually, if you are asking about do they care if you get a raise or better working conditions, the answer of course would be no. BUT, when you ask the question on who do you want controlling YOUR flight and the equipment that it takes to do so, you will find that they are 1000% behind you. It takes a LOT of commitment on your part as controllers and your association to ensure that you get the coverage in the media that you need to get the message out.

We are a very small group of workers over here percentage wise to both the govt. as well as regular work population ( as all of you are ) but we mounted a very difficult campain to fight back privitization. We didn't win, but we did hold them back. We know that we have a long way to go to win this one, but if we can help get some changes in govt. we might just pull this off. You can do it too... It takes everyone working together and getting your friends in industry to work along with you...

good luck

Scott

[Findo]

Scott - I really don't understand your post or maybe you don't understand our situation.

We fought privatisation for 12 years and delayed it all that time. Eventually we lost and this report confirms what we said all along. Privatisation was never necessary nor well carried out. We are the only privatised ATC service in the world and as far as I know nobody in the US is proposing the same. :mad:

Saintex - how will the airlines get their money back ? Well between them all they only paid about 5% of the money given to the Government. NATS borrowed the rest thus paying for it's own privatisation. :{

[flowman]

I remember all those years when there was never enough money in the pot to give us a decent pay rise, and yet when Gordon really needs it he manages to squeeze 758million out of the kitty.
Imagine how far that would have gone towards training, recruiting and posting just about everyone they needed to just about anywhere they wanted.
Think of any grievance between the union and management in the last 20 years and they could have solved them all with that kind of dosh. They could have had one of the most contented work forces on the planet in some of the best equipped surroundings. Or am I missing something?
Makes my blood boil.

flowman

(In :mad: exile)

[Scott Voigt]

Findo;

It was a responce to the folks talking about do the people care. You have to pick as to what they are going to care about and advertise it to the masses as to what your problems are and how they can be fixed...

As to the privitization part. That was an add on, and I wanted to let folks know that you can indeed fight it. Our politicians know that they can't just sell in whole our ATC system. However, they do know that they can do it a bit at a time and then before anyone knows it, it is all gone as we know it. We see it as trying to keep the camel from poking it's nose under the tent. If you don't soon the whole camel is in the tent.

regards

Scott

[saintex2002]

...To " FINDO "...

...I didn't know that airlines had only paid about 5% of the bid and NATS the rest... ( if I fully understand your post ).

...If that means the 7airlines group had 48% shares of NATS paying only 5%...and loan for the rest from previous NATS ( in fact your own purse !!!... ) ...well it was good deal indeed !!!...

...About this loan...no question...I suppose you will last a long time to recover it, won't you :rolleyes: ???

...This PPP was definitely " une connerie " as we say !!!!

...Hope your next Pay/WP plan will light :cool: your dark tunnel !!!

[wilbur.wright]

To be more accurate, the Airline Group (not to be confused with TAG - operators of Farnborough Airport) was allowed to borrow most of the purchase price of their share in NATS. They brought that borrowing into NATS when they took over, leaving NATS with the bill!