Select Committee on Transport, Local Government and the Regions Appendices to the Minutes of Evidence


Supplementary memorandum by National Air Traffic Services (NAT 6A)

Dear Richard

NATS' FINANCES

  In the course of the Sub-Committee's hearing on 1 May, our representatives agreed to provide further information on the process for securing additional capital, air traffic controller numbers over the next five years, and changes in staffing levels in all disciplines over the same period.

Additional Equity

  As Chris Gibson-Smith explained at the hearing, an important element of the long-term solution to NATS' financial position is a proposal to inject additional capital into the company. The intention is that this will be provided either by the Airline Group or a third party, and will be matched by Government. The aim is to secure £50 million or more from private investors, matched by an equivalent amount from Government. This will enable the Government to maintain its 49 per cent Crown shareholding.

  We are conducting the search for a new investor on a competitive basis. The process is commercially confidential and we cannot comment on the involvement of individual companies at this stage.

  In terms of entry criteria, we are adopting broadly the same framework as was employed for the PPP competition last year. For NATS, the three key tests are:

    —  suitability in terms of safety impact;

    —  financial robustness of the equity investor; and

    —  strategic alignment with NATS' goals.

  In addition, the Government will require probity checks on potential investors to ensure that they are suitable in all areas, including national security. The selection process will be thorough and managed in close liaison with the current shareholders and the lending banks.

  Our aim is to ensure that any injection of capital will have taken place by the end of September, when the short-term loan facility expires.

STAFF NUMBERS

  The Sub-Committee asked for further information on staff numbers over the next five years. Our manpower projections are set out in the NATS Group Business Plan by category of staff. All figures are as at 31 March each year:

Air Traffic Control Officers

  Controller numbers will increase to meet forecast traffic demand, but the growth in numbers will be offset by planned improvements in productivity. The totals include student controllers and other non-operational controllers engaged in planning and training tasks.

  
2002
2003
2004
2005
2006
Controllers
1,946
1,940
1,972
2001
2,033


Air Traffic Services Assistants

  The number of assistants will reduce with changes in working practices. Further savings will be achieved through the implementation of new technologies, automating functions currently performed by assistants.

  
2002
2003
2004
2005
2006
Assistants
1,144
1,016
966
884
866


Air Traffic Control Engineers

  Initial reductions in the number of engineering posts will be found through general efficiency savings, adjustments to service level agreements and better control of changes to NATS systems. Further savings will arise from the phasing out of legacy systems and deployment of Commercial Off The Shelf (COTS) products, the collocation of technical support services in Southampton and completion of the Two Centre Strategy.

  
2002
2003
2004
2005
2006
Engineers
1,346
1,229
1,170
1,122
1,049


Management and Support Staff

  The number of management and support staff is anticipated to reduce significantly as a result of business efficiencies achieved through a thorough review of the organisation structure, through implementation of the Accommodation Strategy, and the adoption of a shared services approach to support functions.

  
2002
2003
2004
2005
2006
Support
1,089
907
828
801
695


  I hope this is helpful. No doubt you will let me know if you require any further information.

Andrew Picton

Company Secretary

16 May 2002




 
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