Byers' £30m air traffic bail-out

Transport Secretary Stephen Byers was today forced into an emergency bail-out of Britain's air traffic control service as yet another government privatisation plunged into crisis.

The move, which threatens to cost the taxpayer millions of pounds, put a new and highly embarrassing question mark over Mr Byers's plans for the Underground.

A £60million rescue package has today been proposed to keep the National Air Traffic Service going less than a year after it was partprivatised in a £800 million deal.

Half the cash - £30million from the taxpayer - would be lent by Mr Byers's Transport Department, prompting fury among Tories and unions. The other half would be lent by four banks - Barclays, Abbey National, Halifax and Bank of America - which played the key role in last year's part-privatisation.

The rescue package was being discussed at a Nats board meeting today after reports that the service was on the brink of being placed into administration, only four months after the same fate befell Railtrack.

Today the Government strongly denied that Nats was close to collapse. A spokesman for Mr Byers refused to discuss any financial figures that might be seen as "commercially-confidential". However, well- placed sources told the Evening Standard that the £60 million "half and half" rescue package had already been agreed to in Whitehall and looked set to be accepted by Nats' directors.

The news landed Mr Byers with a fresh headache on top of Railtrack and ahead of his plans to press ahead with the next big part-privatisation - the Tube - a deal which will dwarf the air-traffic sell-off in terms of funds to be raised.

He was warned by Labour backbenchers last year not to go ahead with the part-privatisation of Nats on the grounds that passengers' safety might be compromised.

Shadow transport secretary Theresa May accused Mr Byers of "bungling" and repeated the Tory call for the Transport Secretary to quit. She said: "This shows that the Government's original plan for the part-privatisation of Nats was fundamentally flawed. It also screams of another bungle by Stephen Byers. Whatever happens at today's board meeting, it is clear this company is facing significant financial difficulties. Just like the crisis on the railways and London Underground, it is clear these problems will not be resolved until Stephen Byers stands aside and allows someone else to clear up after him."

A Transport Depar tment spokesman said: "We cannot discuss commercially confidential figures." However, he admitted that the air traffic control system had faced difficulties - like the rest of the aviation industry - since the 11 September terrorist attacks on America.

In return for the rescue package, Nats is likely to make an application to the Civil Aviation Authority for permission to charge airlines more for using British air space, its main source of funding.

Nats was privatised last year despite a barrage of criticism from aviation experts and opposition from Labour MPs. It was strongly supported by Tony Blair despite Labour having publicly proclaimed in 1997: "Our air is not for sale."

The £623 million new national air traffic centre opened last month at Swanwick, near Southampton. The Government now owns 49 per cent of it and the rest is owned by a group of airlines and Nats staff.

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