1 This report is a follow up to our July 2002 report on the Public Private Partnership for National Air Traffic Services Ltd, the UK's main air traffic control provider, (Appendix 1). We reported that the PPP contained many positive elements, but that the financial position of the Company needed strengthening to enable it to make further vital investment to expand the capacity of air traffic control. In particular, NATS' indebtedness to banks, and comparatively little equity from investors, made the organisation vulnerable to severe downturns in traffic, such as that which followed September 11th 2001.
2 Since September 11th there has been a major refinancing exercise involving NATS, its banks, the Department for Transport, the Airline Group, a new investor, BAA plc, and the Civil Aviation Authority. Reflecting contributions from each of these participants, the outcome has been described as "The Composite Solution".
3 The key question which we sought to address through our examination was whether, in light of the refinancing exercise, NATS now has robust finances, to which all the company's main stakeholders have made equitable contributions. Our approach is detailed in Appendix 2.