£60m rescue for air traffic control

BARCLAYS Capital has masterminded a £60m emergency rescue loan package for National Air Traffic Services, following the slump in air travel since September. Barclays, Abbey National, Bank of America and Halifax are to lend Nats £30m, with the balance coming from the Government.

The company, which was privatised less than a year ago, has also applied to the Civil Aviation Authority for permission to increase its charges. Finance director Nigel Fotherby was today expected to tell the rest of the board that negotiations over the new money are virtually finalised.

The cash injection gives Nats breathing space until the end of the year. In return, the banks are keen to ensure it is allowed to charge more. 'Most European countries have raised their prices since 11 September. We should be allowed to do the same,' said one lender.

Under the privatisation deal, Nats agreed with the CAA to cut prices this year and keep them flat or lower for a number of years. This year's cuts are going ahead but the company and its investors believe it will have to charge more in future to cope with lower volumes of air traffic.

The situation is complicated because Nats is 46%-owned by a consortium of British airlines, which will bear the brunt of increased traffic charges. The Government owns 49% and staff own 5%.

Barclays, Abbey, Halifax and Bank of America lent Nats £1.4bn on privatisation, half of which was used to pay for the deal and half for capital expenditure.