141. At the end of the day I am the 49% owner of this company and what would be profit to me is not going to come to me because it is going to be paid to pay off the debt of my partner who borrowed the money, so I am going to pay for it, am I not?
(Ms Lomax) You managed to get £758 million in proceeds to compensate you in the beginning.
142. You sold it for £700 million.
(Ms Lomax) The value of NATS at the time, at the risk of confusing this any more, the total value of the business at the time of the sale was estimated to be rather higher than £758 million, something like £873 million, the difference between the £758 and the £873 being the value of the equity is the way I have looked at it.
143. In effect the business had gone.
(Ms Lomax) No.
144. There would never be a return from this business, anybody who thinks so would be in cloud cuckoo land.
(Ms Lomax) I do not think anybody thought of NATS as a profit generator, it was supposed to be a better deal for NATS as a business. All of the debate about it and the structure of the PPPs was about providing a better framework for NATS to provide air traffic control services not as a profit generator for the government or the Airline Group.
145. I thought I had seen something in one of the charts, one of the criteria used to depict this scheme, page 15, was providing a return to the taxpayer, you know that poor sucker out there.
(Ms Lomax) Yes.
146. Proceeds from 46% of the sale and future dividends. Somebody must have thought there was future dividends somewhere.
(Ms Lomax) The legislation does allow the PPP to pay dividends, it is just that the Airline Group put in its bid on the basis that it would not be looking for future dividends.
147. Of course it will not be looking at future dividends, that is the main benefitor from the fact we can keep the price down low, we are not transferring money from them into dividends and half of which will go back to the taxpayer. You would not have that deal?
(Ms Lomax) I am not sure I follow you.
148. If you have a company running and it makes a small amount of profit, 49% goes back to the 49% tax holder and 49% goes back to the Airline Group, now the only place that profit can be generated is in the charges to the airline companies. Am I right? If they make a profit on the airline companies, 49% of which is going to go back to the partner, they are going to be at a disadvantage and what they want to do is take up that profit totally, no profit, and therefore 49% will not go back to the partner, but the costs on them as the consumers will be less. Am I right?
(Ms Lomax) I think the impact on them as consumers-I am not sure I am entirely with you- the body that will determine the charges to consumers, to airlines, is the CAA through its economic regulation division. It is the economic regulator that sets the prices. I do not think the Airline Group has the ability to manipulate the business in NATS to its own advantage. There are various safeguards in the structure of the PPP to make sure that NATS is not run for the benefit of the Airline Group in the way that you seem to be implying.
(Mr Everitt) I also think it is critical we make profits in order to invest. We have to make profits in order to invest because that is the only way we are going to attract the income.
149. That is just money going back in, reinvestment in the company.
(Mr Everitt) Surplus being reinvested.
150. The bank get their surplus, the management get a bonus because they are now creating surpluses, what does the taxpayer get?
(Mr Everitt) When dividends are ultimately paid they will get 49% of the dividends.