The undertaking was complex

3.5 Assembling the Composite Solution for NATS was a very complex change programme which required consistent progress on five parallel fronts, each of which were major projects in their own right. These were:

■  A cost reduction initiative within NATS [paragraphs 3.10 - 3.11];

■  Implementation of an interim solution, a temporary working capital facility;

■  Identification and selection of a new corporate shareholder [paragraphs 3.21 - 3.23];

■  Extensive revisions to NATS' three major bank facilities for the Company's acquisition, working capital and capital investment [paragraphs 1.14-1.18]; and

■  Negotiations with the Civil Aviation Authority following NATS' request for the relaxation of the price caps and other changes in the regulatory framework [paragraphs 3.13-3.14].

One of the Government's Partnership Directors told us that in his wide commercial experience this was the most complex programme he had ever encountered, on a par with the most challenging mergers and acquisitions.

3.6 The response of Air Traffic Control providers in other countries to the downturn in traffic were much simpler. Within Europe, most providers are not subject to the discipline of economic regulation and simply raised their charges to airlines in 2002 and 2003. The world's only other privatised air traffic control service, NavCanada, is also not subject to economic regulation but like NATS it is controlled by the aviation industry. By January 2002 it had implemented a balanced programme of spending cuts and drawing on reserves in response to the downturn in traffic, which limited price increases to airlines to six per cent. NavCanada, established in November 1996, had had much longer than the NATS PPP to build up reserves before September 11th.