Just spotted this on my share dealing site as I was buying some TT. shares
U.K. air-traffic controller NATS Holdings Ltd. could be floated as its shareholders look to reduce their holdings, but its chief executive remains focused on growing the business with a push deeper into international markets.
In the wake of its high-profile handling of the closure of airspace after the eruption of a volcano in Iceland spewed ash over much of Europe earlier this year, a sale would allow shareholders to realize at least part of the value of their holdings at a time when public and private sector budgets are under pressure.
A variety of options were under consideration, including "whether it will be sold through an (initial public offering) or a trade sale" or even both, NATS Chief Executive Richard Deakin said in a recent interview.
Deakin expects to learn over the next few months the extent and form of a sale. "I think it's likely there will be a fair chunk of shares" would be sold, he said.
Its two key shareholders are the British government, with a 49% interest, and the Airline Group, a consortium of seven airlines, with 42%. Each is looking at what percentage of its stake to sell, Deakin said. Another 5% stake is owned by employees and U.K. airports operator Baa Ltd. holds 4%.
The U.K. Treasury didn't return calls and the Airline Group couldn't be reached for comment. The Airline Group comprises British Airways PLC (BAY.LN), Deutsche Lufthansa AG (LHA.XE) unit bmi British Midland, Virgin Atlantic, TUI Travel PLC's (TT.LN) Thomson Airways, Monarch Airlines, easyJet PLC (EZJ.LN) and Thomas Cook Group PLC (TCG.LN).
At the same time, Deakin hopes to take the opportunity to double the work force's shareholding to 10% to better engage the 5,000 workers and ensure their interests are more closely aligned with the company's goals. Even though 80% to 90% of its employees are unionized, NATS hasn't suffered industrial action since 1981.
National Air Traffic Services was established in 1962 but rebranded as NATS in 2006. In July 2001 it became a public private partnership, which led to the division into the regulatory part, NATS (En Route) PLC, which is responsible for U.K. commercial airspace, and NATS Services Ltd., which provides takeoff and landing services at airports.
Following the terrorist attacks of 9/11 in the U.S., NATS was forced to restructure after declines in traffic volumes, which led to the government and BAA, a unit of Spain's Ferrovial SA (FER.MC), each investing GBP65 million in NATS and BAA receiving its shareholding.
NATS last year was responsible for guiding 2.2 million flights through U.K. airspace and the eastern part of the North Atlantic. It generated revenue of GBP767.3 million in fiscal 2009.
About GBP175 million of that revenue comes from NATS Services, which Deakin aims to grow, particularly in the Middle East and Asia-Pacific regions, where demand has bucked global trends over the past couple of years and the rates of growth provide attractive expansion opportunities.
NATS in July signed a deal with Oman's Ministry of Transport to redesign its airspace, or the routes that aircraft travel, in order to increase capacity, efficiency and safety. Deals like that were becoming increasingly important given the political fragility of the region and the proximity of Iran, Deakin said.
"There are also a lot opportunities for consultancy, designing airspace so that it's efficiently handled," Deakin said, adding NATS can also design airports to maximize efficiency.
Winning further business will be easier now that it has a more prominent profile following volcanic eruptions that grabbed the world's attention. Air-traffic controllers were in the spotlight in April when they closed airspace over much of Europe for all commercial flights on safety grounds after Iceland's Eyjafjallajokull volcano erupted, and ash that billowed into the sky was blown across the continent.
Deakin, 46 years old, had been in his job at NATS only two weeks when the crisis hit. Sitting in a room equipped for coordinating emergencies, the former Senior Vice President for Air Systems Division at Thales S.A. (HO.FR) recounts how he watched images of the volcanic eruption on a bank of televisions covering one wall and relayed the order to close airspace to air-traffic controllers in the 2,000-square-meter operations room below.
"It wasn't an easy decision," Deakin said, adding, "It hurt us commercially as well."
Deakin is confident the decision was the correct one. Even then Prime Minister Gordon Brown called to voice his support, Deakin said.
A spokesman for the Labour Party declined to comment.
"I'm absolutely convinced the decisions that we took were timely and proportionate and kept safety at the forefront," Deakin said.
He said the existence of ash "wasn't a figment of anyone's imagination" with the pilots of the first three Boeing Co. (BA) 747 aircraft--commercial flights flown by British Airways PLC (BAY.LN)--that landed at Heathrow after airspace was reopened all complaining of a sulphur smell as they descended from 6,000 feet.
BA declined to comment.
Still, Deakin said there would be significant differences if the volcano erupts again, namely that Europe would have a more consistent approach and that new rules would provide operators with more flexibility to allow aircraft to fly through volcanic ash provided operators, airlines and regulators were satisfied that a safe case had been demonstrated.
- By Kaveri Niththyananthan, Dow Jones Newswires; 4420 7842 9299;
[email protected]