Byers faces fresh crisis as air traffic firm heads for £50m loss

The Government is coming under intense pressure to bail out the public-private partnership running the air traffic control system, which is understood to be heading for a £50m loss instead of a previously predicted £60m profit.

The annual conference of air traffic controllers meeting in Stockport today and tomorrow will urge Stephen Byers, the Secretary of State for Transport, to rescue of National Air Traffic Services (Nats) just three months after it came under the control of the PPP.

The £110m reversal in the fortunes of the company comes as another embarrassment to Mr Byers on top of the financial débâcle at Railtrack, which has been placed into administration. Sources say that the steep downturn in predicted income at Nats can be attributed to over-optimistic calculations by seven of Britain's biggest airlines when they formulated plans to buy 46 per cent of shares in the service, as well as the slump in air travel after11 September.

The use of smaller aircraft since the terrorist attacks has hit Natshard because the company is partly paid by tonnage.

The air traffic controllers' union Prospect said yesterday that the new organisation, in which the state retains a 49 per cent stake, is already in "serious financial difficulties". Iain Findlay, national aviation officer at the union, pointed out that the Government took £750m for the shares bought by airlines and had a responsibility to help.

"As a major stakeholder and shareholder in Nats, the Government must look again at the financial structure to prevent a 'Railtrack of the Skies'. It should be taking the idea of partnership seriously," he said.

The conferencewill call for a commitment from the Government to press ahead with the new control centre at Prestwick, Strathclyde. Construction has been delayed while Nats reviews its £1bn investment plan because of the terrorist attacks.

Mr Findlay said: "Controllers can not stand by and see a world-class service deteriorate. Just three months into privatisation we are suffering the first major cutback. Investment in vital infrastructure, such as the new air traffic control centre in Scotland, must be maintained according to the original timescale to ensure capacity and safety are not affected."

A spokesman for Nats said the company was still working out the impact the decline in air travel would have on finances.

Management had taken a number of steps to reduce costs, including the delay in the Prestwick centre and a 20 per cent reduction in support and management staff.

A spokeswoman for the Department of Transport said the Government had received no request for financial assistance. "Any such request would be treated on its merits," she said, but the provision of state aid could fall foul of European Union law.