241. Are you saying you also ran certain scenarios, not the mandatory ones the airlines were asked to run nor the ones that they chose to run, but some other scenarios which were run by CSFB as well, quite separate from these?
(Ms Lomax) Yes, and I gather that every scenario done by the other bidders, Nimbus for example, was also run by the Airline Group, so there was very extensive stress testing using all the scenarios anyone could think of.
242. And neither those that were requested mandatorily nor the ones the airline groups admitted to having done nor presumably the ones Nimbus had done included a period of two or three or four years at the beginning of the period under consideration when there was no increase in traffic?
(Ms Lomax) Two traffic scenarios were undertaken, one was a sustained period of low growth round about 3.5% in CSUs, the other was a sudden shock to CSUs in the scale of the Gulf War.
243. Is that the one that is said to be lower traffic in Year Six?
(Ms Lomax) The reason why it is in Year Six is because Year Six is the most difficult year, the year where it is most likely to fail. That is the one I am talking about.
244. That is the Gulf War.
(Ms Lomax) It was chosen because it was the most difficult year.
245. You did not do anything like the two oil shocks and nobody did anything like the two oil shocks. Did CSFB do something about the two oil shocks?
(Ms Lomax) They did tests which they thought were comparable in severity.
246. To the two oil shocks.
(Ms Lomax) The scenarios were based on looking at experience since 1983. I do not think anybody did-
247. They did not.
(Ms Lomax) Nobody modelled the two oil shocks as such, the comparable data was not available.
Mr Rendel: Nobody but nobody in all of these people who are doing the testing, whether it is CSFB, the mandatory testing, the bank or whether it is the Airline Group, nobody but nobody modelled the oil shocks. Personally I find that quite extraordinary. You did go on to say that the advisers were then asked to see what scenario would make the finances non-viable. You went on to say that they found that the only scenario that would make finances not viable was so extreme that it was not to be credible. The oil shock scenario made the finances non-viable, we are told that, because it was modelled eventually by the NAO. We are told that in paragraph 3.27. Why did the advisers not discover that an oil shocks scenario-which could not be described as non-credible because it happened twice-would make the finances non-viable. The advisers seem to have let you down very badly.
Chairman
248. We have made our point. Do you want to have one last stab at it?
(Ms Lomax) What I can do is send you a detailed note on what the stress testing was and our comments on the points that have been made.22 I think I am making the same points over and over again.
249. We are in danger of going round and round.
(Ms Lomax) You deserve to have the best written
account we can on this important point. I will end by saying we have not seen the NAO's work, I am sure it is up to standard, but we have not seen it, and it would be good if we could see it now please.
Mr Jenkins
250. The pension fund, normally companies take holidays from making a contribution because the stock market is very high and they have figures that show they can meet their obligations. In a case where we take a pension holiday because of the financial position of a company, Ms Lomax, as a majority shareholder in this corporation would you realize how embarrassing it would be if the company would fail in its obligations or meet its obligations to the pension fund. Are you taking a very close role in monitoring to ensure that this will not happen?
(Ms Lomax) I personally am not but I am sure the partnership directors we have appointed to represent the interests of the government certainly are.
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22 Ev 26-28.