£50m hole shows up on Nats radar

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The Independent Online

National Air Traffic Services (Nats), which just three months ago was bailed out by the Government, is again in financial trouble - with a £50m hole in its finances.

The troubled public-private partnership said the deterioration in the aviation market following the Iraq war, and the Sars outbreak, meant it had a £50m shortfall in revenues.

Nats - whose shareholders include BA, Virgin, easyJet and BMI - can recoup £25m from the airlines, but must find the rest through cost savings over 12 months. This is on top of the £200m in cuts it has pledged to make by 2005.

Nigel Fotherby, Nats' finance director, is heading a team reviewing ways to cut the costs. He is expected to report to the company's board within a fortnight. A company spokesman said redundancies and the scaling back of a promised £1bn investment programme had been ruled out.

But following Nats' financial restructuring - with the Government injecting £65m into the business and airports operator BAA becoming a shareholder - there is little financial slack within the business. One idea thought to be under consideration is to allow air traffic controllers to take up to three months' unpaid leave.

David Luxton, national secretary of controllers' union Prospect, said: "This is a huge challenge because so many of Nats' costs are fixed. It is difficult to identify areas of excess spend. However, the union is pleased at Nats' commitment not to cut jobs."