4 NATS' finances are more robust than before. The robustness of the new financial structure has been tested by modelling a wider range of exacting scenarios than those used when setting up the PPP. For the refinancing the extent and nature of scenario testing was agreed between all the parties, including NATS' management and the Company's economic regulators in the Civil Aviation Authority, as well as independent credit rating agencies. NATS regards the combination tests, which combined possible traffic shocks with adverse trends on costs, as particularly severe scenarios which provide strong assurance of robustness. Compared to before the Composite Solution, the PPP now has a much stronger buffer of cash reserves with which to cope with possible future crises.
5 The Composite Solution avoids highly uncertain alternatives for NATS that all stakeholders, including NATS' customers, considered could be worse. Possible alternative outcomes included:
■ The Company going into administration, which could have put the value of both the Airline Group's and the Government's existing equity stake in NATS at severe risk and prejudiced the future development of the Air Traffic Control System. For the banks who had financed NATS, administration would have risked their loans, leaving the fate of these in the hands of an Administrator;
■ The Company being returned to public sector ownership and management, thereby potentially leaving NATS' customers to shoulder the entire financial burden; or
■ The banks curtailing NATS' capital and operating expenditure to the minimum required for the purposes of meeting statutory obligations and retaining the operating licence, or disposing of parts of the business. All other parties were concerned to prevent the Company being placed in such a situation from which it could not move forward.