Air Traffic Business posts year-end results

1 An airprox is a situation in which, in the opinion of a pilot or a controller, the distance between aircraft as well as their relative positions and speed have been such that the safety of the aircraft involved was or may have been compromised. 2 Before the dividend paid in April 2009.

NATS Holdings Limited (NHL) and its subsidiaries (the NATS group or NATS) reported a turnover of 767.3m (2007/8: 742.5m), and a pre-tax profit of 135.5m (2007/8: 66.7m). The groups underlying profit, which excludes exceptional items, improved by 38.4m to 143.9m (2007/08: 105.5m). Chief Executive Paul Barron said although the number of flights through UK airspace decreased significantly halfway through the year, the groups underlying profits improved through a combination of pricing linked to inflation, contract re-negotiations, cost containment and lower financing costs. The group also incurred significant exceptional staff restructuring and relocation costs in the year as it responded to the fall in traffic volumes and prepared for the entry into service of its air traffic control centre at Prestwick in 2010. These costs (51.9m) were partly offset by a profit of 43.5m from the sale of the former Heathrow control tower building. Mr Barron added that the Board had agreed to distribute the profit from this sale as a dividend to the companys shareholders in April 2009. Overall, this provided them with a moderate return in the period since part-privatisation in 2001, when the priority has been on reducing the overall debt of the group. Delay performance improved to 19.3 seconds per flight compared to 26.8 seconds in 2007/8 and although lower traffic volumes contributed to this, 98.2 per cent of the flights handled experienced no delays attributed to NATS. NATS is focused on reducing its operating cost base in its en route business - from levels previously planned - by 45m in the next two years. This will ensure that the charges for its economically regulated services for the period 2011 to 2015 are held as low as possible. Mr Barron said: Our forecasts suggest that traffic volumes may be up to 15 per cent lower over the next two years than we expected a year ago. The important thing is that we are responding to this downturn by reducing our costs and managing our liquidity and debt levels. We know the quality of our service and our charges will be rigorously reviewed by our customers and the regulator. Next year sees the culmination of NATS two-centre strategy when the companys Manchester area control function moves alongside the Scottish operation into a new centre at Prestwick in Ayrshire, to improve further its overall efficiency and flexibility. The London area terminal control centre was successfully transferred from West Drayton, near Heathrow, to the main air traffic control centre at Swanwick in Hampshire, in 2007. NATS services are provided by its two principal operating subsidiaries: NATS (En Route) plc (NERL) the economically regulated subsidiary and NATS (Services) Ltd (NSL), the groups unregulated commercial arm. NERL reported a profit before tax of 66.8m (2007/8: 62.5m), while, NSL, showed a pre-tax profit of 68.4m (2007/8: 11.5m), reflecting the profit from the sale of the Heathrow tower.